As filed with the Securities and Exchange Commission on March 23, 1999
Registration No. 333-52021
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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
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PSSFC EQUIPMENT LEASE TRUST--PSSFC EQUIPMENT LEASE MASTER TRUST
PSSFC AUTO RECEIVABLES TRUST--PSSFC AUTO RECEIVABLES MASTER TRUST
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
(Exact name of registrant as specified in its charter)
(As sponsor of the Trusts described herein)
One New York Plaza
New York, New York 10292 13-3526694
(212) 778-1000 (I.R.S. Employer
Delaware (Address of registrant's principal Identification
(Jurisdiction) executive offices) No.)
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Joe Donovan
Prudential Securities Secured
Financing Corporation
One New York Plaza
New York, New York 10292
(Name and address of agent for service)
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Copies to:
Christopher J. DiAngelo, Esq.
Dewey Ballantine LLP
1301 Avenue of the Americas
New York, New York 10019
Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective.
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 426(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Proposed Proposed
Maximum Maximum Amount of
Title of Securities Amount Being Offering Price Aggregate Registration
Being Registered Registered Per Unit(1) Offering Price(1) Fee
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<S> <C> <C> <C> <C>
Asset Backed Securities..$750,000,000(2) 100% $750,000,000 $208,500.00(3)
======================================================================================
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee.
(2) In accordance with Rule 429 of the Securities and Exchange Commission's
Rules and Regulations under Securities Act of 1933, as amended, the Prospectus
included herein is a combined prospectus which also relates to the Registrant's
Registration Statement on Form S-3 (Registration No. 33-84918) (the "Prior
Registration Statement"). The amount of securities eligible to be sold under the
Prior Registration Statement ($35,187,000 as of February 1, 1999) shall be
carried forward to this Registration Statement.
(3) $198,440.00 is paid pursuant to this Registration Statement. $278.00 was
previously paid pursuant to this Registration Statement. The remaining
$10,060.00 of such amount is attributable to the amount carried forward from the
Prior Registration Statement for which a filing fee was paid at the time of
registration
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
Pursuant to Rule 429 of the Securities and Exchange Commission's Rules and
Regulations under the Securities Act of 1933, as amended, the Prospectuses
contained in this Registration Statement also relate to the Registrant's
Registration Statement on Form S-3 (Registration No. 33-84918).
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PROSPECTUS
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Equipment Lease Backed Securities Issuable in Series
PRUDENTIAL SECURITIES SECURED FINANCING
CORPORATION,
Depositor
This Prospectus describes certain Equipment Lease Backed Notes (the
"Notes") and Equipment Lease Backed Certificates (the "Certificates" and,
together with the Notes, the "Securities") that may be sold from time to time in
one or more series, in amounts, at prices and on terms to be determined at the
time of sale and to be set forth in a supplement to this Prospectus (each, a
"Prospectus Supplement"). Each series of Securities may include one or more
classes of Notes and one or more classes of Certificates, which will be issued
either by the Depositor, a Transferor (as hereinafter defined), or by a trust to
be formed by the Depositor for the purpose of issuing one or more series of such
Securities (each, a "Trust"). The Depositor, a Transferor or a Trust, as
appropriate, issuing Securities as described in this Prospectus and the related
Prospectus Supplement shall be referred to herein as the "Issuer."
Each class of Securities of any series will evidence beneficial ownership
in a segregated pool of assets (each, a "Trust Fund") (such Securities,
"Certificates") or will represent indebtedness of the Issuer secured by the
Trust Fund (such Securities, "Notes"), as described herein and in the related
Prospectus Supplement. Each Trust Fund may consist of any combination of finance
leases, installment sale contracts, loan contracts or participation interests
therein, together with all monies received relating thereto (the "Contracts").
Each Trust Fund may also include a security interest in the underlying equipment
and property relating thereto, together with the proceeds thereof (the
"Equipment" together with the Contracts, the "Receivables"). If and to the
extent specified in the related Prospectus Supplement, credit enhancement with
respect to a Trust Fund or any class of Securities may include any one or more
of the following: a financial guaranty insurance policy (a "Policy") issued by
an insurer specified in the related Prospectus Supplement, a reserve account,
letters of credit, credit or liquidity facilities, third party payments or other
support, cash deposits or other arrangements. In addition to or in lieu of the
foregoing, credit enhancement may be provided by means of subordination,
cross-support among the Receivables or over-collateralization. See "Description
of the Trust Agreement -- Credit and Cash Flow Enhancement." The Receivables in
the Trust Fund for a series will have been acquired by the Depositor from one or
more affiliates of the Depositor or from one or more entities which are
unaffiliated with the Depositor (any such affiliate or unaffiliated entity, an
"Originator"). Each Originator will be an entity, including Vendors, generally
in the business of originating or acquiring Receivables. The Depositor will
acquire the Receivables from the related Originator(s) on or prior to the date
of issuance of the related Securities, as described herein and in the related
Prospectus Supplement. The Receivables included in a Trust Fund will be serviced
by a servicer (the "Servicer") described in the related Prospectus Supplement.
Each series of Securities will include one or more classes (each, a
"Class"). A series may include one or more Classes of Securities entitled to
principal distributions, with disproportionate, nominal or no interest
distributions, or to interest distributions, with disproportionate, nominal or
no principal distributions. The rights of one or more Classes of Securities of
any series may be senior or subordinate to the rights of one or more of the
other Classes of Securities. A series may include two or more Classes of
Securities which differ as to the timing, sequential order, priority of payment,
interest rate or amount of distributions of principal or interest or both.
Information regarding each Class of Securities of a series, together with
certain characteristics of the related Receivables, will be set forth in the
related Prospectus Supplement. The rate of payment in respect of principal of
the Securities of any Class will depend on the priority of payment of such a
Class and the rate and timing of payments (including prepayments, defaults,
liquidations or repurchases of Receivables) on the related Receivables. A rate
of payment lower or higher than that anticipated may affect the weighted average
life of each Class of Securities in the manner described herein and in the
related Prospectus Supplement. See "Description of the Securities."
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "RISK
FACTORS" HEREIN AND IN THE RELATED PROSPECTUS SUPPLEMENT.
THE NOTES OF A GIVEN SERIES REPRESENT OBLIGATIONS OF THE ISSUER ONLY AND DO NOT
REPRESENT INTERESTS OF THE DEPOSITOR, ANY SERVICER, ANY ORIGINATOR OR ANY OF
THEIR RESPECTIVE AFFILIATES. THE CERTIFICATES OF A GIVEN SERIES REPRESENT
BENEFICIAL INTERESTS IN THE RELATED TRUST ONLY AND DO NOT REPRESENT INTERESTS IN
OR OBLIGATIONS OF THE DEPOSITOR, ANY TRANSFEROR, ANY SERVICER, ANY ORIGINATOR OR
ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THE SECURITIES NOR THE UNDERLYING
RECEIVABLES WILL BE GUARANTEED OR INSURED BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY OR BY THE DEPOSITOR, ANY SERVICER, ANY ORIGINATOR, ANY TRUSTEE
OR ANY OF THEIR RESPECTIVE AFFILIATES, EXCEPT AS SET FORTH IN THE RELATED
PROSPECTUS SUPPLEMENT. SEE ALSO "RISK FACTORS."
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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Offers of the Securities may be made through one or more different
methods, including offerings through underwriters as more fully described under
"Method of Distribution" herein and in the related Prospectus Supplement. Prior
to issuance, there will have been no market for the Securities of any series,
and there can be no assurance that a secondary market for the Securities will
develop, or if it does develop, it will continue.
Retain this Prospectus for future reference. This Prospectus may not be
used to consummate sales of Securities unless accompanied by a Prospectus
Supplement.
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The date of this Prospectus is ____________________.
<PAGE>
PROSPECTUS SUPPLEMENT
The Prospectus Supplement relating to a series of Securities to be offered
hereunder, among other things, will set forth with respect to such series of
Securities: (i) a description of the Class or Classes of such Securities, (ii)
the rate of interest, the "Pass-Through Rate" or "Interest Rate" or other
applicable rate (or the manner of determining such rate) and authorized
denominations of such Class of such Securities; (iii) certain information
concerning the Receivables and insurance polices, cash accounts, letters of
credit, financial guaranty insurance policies, third party guarantees or other
forms of credit enhancement, if any, relating to one or more pools of
Receivables or all or part of the related Securities; (iv) the specified
interest, if any, of each Class of Securities in, and manner and priority of,
the distributions from the Trust Fund; (v) information as to the nature and
extent of subordination with respect to such series of Securities, if any; (vi)
the payment date to Securityholders; (vii) information regarding the Servicer(s)
for the related Receivables; (viii) information regarding the Originator(s) for
the related Receivables and the underwriting guidelines employed by such
Originator(s) with respect to such Receivables, (ix) the circumstances, if any,
under which each Trust Fund may be subject to early termination; (x) information
regarding tax considerations; and (xi) additional information with respect to
the method of distribution of such Securities.
AVAILABLE INFORMATION
The Depositor has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (together with all amendments and
exhibits thereto, referred to herein as the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Securities offered pursuant to this Prospectus. For further information,
reference is made to the Registration Statement which may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549; and at the Commission's regional
offices at 500 West Madison, Suite 1400, 14th Floor, Chicago, Illinois 60661 and
Seven World Trade Center, 13th Floor, New York, New York 10048. The Commission
maintains a site on the World Wide Web at http://www.sec.gov containing reports,
proxy materials, information statements and other items. Copies of the
Registration Statement may be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates.
No person has been authorized to give any information or to make any
representation other than those contained in this Prospectus and any Prospectus
Supplement with respect hereto and, if given or made, such information or
representations must not be relied upon. This Prospectus and any Prospectus
Supplement with respect hereto do not constitute an offer to sell or a
solicitation of an offer to buy any securities other than the Securities offered
hereby and thereby, nor an offer of the Securities to any person in any state or
other jurisdiction in which such offer would be unlawful. The delivery of this
Prospectus at any time does not imply that information herein is correct as of
any time subsequent to its date.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents subsequently filed by the Depositor with respect to the
Registration Statement, either on its own behalf or on behalf of a Trust,
relating to any series of Securities referred to in the accompanying Prospectus
Supplement, with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), after the
date of this Prospectus and prior to the termination of any offering of the
Securities issued by the Issuer, shall be deemed to be incorporated by reference
in this Prospectus and to be a part of this Prospectus from the date of the
filing of such documents. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein (or in the accompanying Prospectus Supplement) or in
any other subsequently filed document which also is or is deemed to be
incorporated by reference herein, modifies or replaces such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
REPORTS TO SECURITYHOLDERS
Periodic and annual reports concerning any Security and the related Trust
Fund will be provided to the Securityholders. See "Description of the Securities
- -- Reports to Securityholders." If the Securities of a series are to be issued
in book-entry form, such reports will be provided to the Securityholder of
record and beneficial owners of such Securities will have to rely on the
procedures described herein under "Description of Securities - Book-Entry
Registration."
The Depositor will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all of the documents referred to above that have been or may be
incorporated by reference in this Prospectus (not including exhibits to the
information that is incorporated by reference unless such exhibits are
specifically incorporated by reference into the information that this Prospectus
incorporates). Such requests should be directed to: Prudential Securities
Secured Financing Corporation, One New York Plaza, New York, New York 10292,
Attention: Joe Donovan (212) 778-1000.
2
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SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus and by reference to
the information with respect to the Securities of any series contained in the
related Prospectus Supplement to be prepared and delivered in connection with
the offering of such Securities. Certain capitalized terms used in the summary
are defined elsewhere in the Prospectus on the pages indicated in the "Index of
Terms."
Issuer.................. With respect to each series of Securities, either the
Depositor, a special-purpose finance subsidiary of
the Depositor which may be organized and established
by the Depositor with respect to one or more Trust
Funds (each such special-purpose finance subsidiary,
a "Transferor") or a trust (each, a "Trust") to be
formed by the Depositor. For purposes of this
Prospectus, the term "Depositor" includes the term
"Transferor". The Depositor, a Transferor or a Trust
issuing Securities pursuant to this Prospectus and
the related Prospectus Supplement shall be referred
to herein as the "Issuer" with respect to the related
Securities. See "The Issuer."
Depositor............... Prudential Securities Secured Financing Corporation,
formerly known as P-B Secured Financing Corporation
(the "Depositor"), a Delaware corporation, a
wholly-owned limited purpose finance subsidiary of
Prudential Securities Incorporated The Depositor's
principal executive offices are located at One New
York Plaza, New York, New York 10292, and its
telephone number is (212) 778-1000. See "The
Depositor."
Servicer................ The Servicer for each Trust Fund will be specified in
the applicable Prospectus Supplement. The Servicer
will service the Receivables comprising each Trust
Fund and administer each Trust Fund pursuant to the
related Servicing Agreement. The Servicer may
subcontract all or any portion of its obligations as
Servicer under each Servicing Agreement to qualified
subservicers (each, a "Sub-Servicer") but the
Servicer will not be relieved thereby of its
liability with respect thereto. See "Servicing of the
Receivables."
Originator(s)........... The Depositor will acquire the Receivables from one
or more affiliates of the Depositor or from one or
more entities which are unaffiliated with the
Depositor (any such affiliate or unaffiliated entity,
an "Originator"). The Receivables will be either (i)
originated by the related Originator, (ii) originated
by various manufacturers of Equipment ("Vendors") and
acquired by the related Originator or (iii) acquired
by the related Originator from other originators or
owners of Receivables. In addition, to the extent
that the Depositor acquires Receivables directly from
a Vendor, such Vendor will be the Originator for
purposes of the related Receivables and this
Prospectus. See "The Originator and the Servicer".
Trustee................. The Trustee for each series of Securities will be
specified in the related Prospectus Supplement. In
addition, a Trust may separately enter into an
Indenture and may issue Notes pursuant to such
Indenture; in any such case the Trust and the
Indenture will be administered by separate,
independent trustees as required by the rules and
regulations under the Trust Indenture Act of 1939, as
amended, and the Investment Company Act of 1940, as
amended.
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The Securities.......... Each Class of Securities of any series will evidence
beneficial ownership in a segregated pool of assets
(each, a "Trust Fund") (such Securities,
"Certificates") or will represent indebtedness of the
Issuer secured by the Trust Fund (such Securities,
"Notes"), as described herein and in the related
Prospectus Supplement. Each Trust Fund may consist of
any combination of finance leases, installment sale
contracts, loan contracts or participation interests
therein, together with all monies received relating
thereto (the "Contracts"). Each Trust Fund also may
include a security interest in the underlying
equipment and property relating thereto, together
with the proceeds thereof (the "Equipment" and
together with the Contracts, the "Receivables").
The Equipment underlying the Receivables included in
each Trust Fund will be limited to personal property
which is leased or financed by the related Originator
to the Lessee pursuant to Contracts which either are
"chattel paper" (as defined in the Uniform Commercial
Code) or would be "chattel paper" but for a technical
definitional matter, but in any event are not treated
materially differently from "chattel paper" for
purposes of title transfer, security interests or
remedies on default. Such Equipment will be further
limited to personal property which is subject to
Uniform Commercial Code provisions relating to title
transfer, security interests and remedies on default
and further limited to Equipment leased to the
related Lessee for use by such Lessee in the ordinary
course of business or for home use such as medical
equipment, restaurant equipment, film and video
production equipment, other industrial and production
equipment, data processing equipment,
telecommunications equipment, office equipment and
furniture.
No Trust Fund will include Receivables with respect
to which the related Contract or the related
Equipment is subject to federal or state registration
or titling requirements which (x) differ materially
from, or supplant, standard Uniform Commercial Code
provisions governing the manner in which title or
security interests in "chattel paper" (as defined in
the Uniform Commercial Code) or the related equipment
is determined or perfected or (y) differ materially
from, or supplant, standard Uniform Commercial Code
provisions governing remedies on default. By way of
illustration of the foregoing, no Trust Fund will
include Receivables with respect to which the
underlying Contracts or Equipment relate to motor
vehicles, aircraft, ships or boats, firearms or other
weapons, railroad rolling stock or facilities such as
factories, warehouses or plants subject to state laws
governing the manner in which title or security
interest in real property is determined or perfected.
However, the Receivables may generally include
Contracts and a security interest in Equipment
relating to individual, discrete components of assets
such as the foregoing; for example a leased computer
on the ship may qualify as "Equipment", a security
interest in which may be included in a Trust Fund,
provided that both the lease and the computer are
generally within the scope of the Uniform Commercial
Code.
If and to the extent specified in the related
Prospectus Supplement, credit enhancement with
respect to a Trust Fund or any class of Securities
may include any one or more of the following: a
financial guaranty insurance policy (a "Policy")
issued by an insurer specified
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4
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in the related Prospectus Supplement, a reserve
account, letters of credit, credit or liquidity
facilities, third party payments or other support,
cash deposits or other arrangements. In addition to
or in lieu of the foregoing, credit enhancement may
be provided by means of subordination, cross-support
among the Receivables or over-collateralization. The
Depositor will acquire the Receivables from the
related Originator(s) on or prior to the date of
issuance of the related Securities, as described
herein and in the related Prospectus Supplement.
With respect to Securities issued by a Trust, each
Trust will be established pursuant to an agreement
(each, a "Pooling Agreement") by and between the
Depositor and the Trustee named therein. Each Pooling
Agreement will describe the related pool of
Receivables held by the Trust.
With respect to Securities that represent debt issued
by the Issuer, the Issuer will enter into an
indenture (each, an "Indenture") by and between the
Issuer and the trustee named on such Indenture (the
"Indenture Trustee"). Each Indenture will describe
the related pool of Receivables comprising the Trust
Fund and securing the debt issued by the related
Issuer.
The Receivables comprising each Trust Fund will be
serviced by the Servicer pursuant to a servicing
agreement (each, a "Servicing Agreement") by and
between the Servicer and the related Issuer.
In the case of any individual Trust Fund, the
contractual arrangements relating to the
establishment of a Trust, if any, the servicing of
the related Receivables and the issuance of the
related Securities may be contained in a single
agreement, or in several agreements which combine
certain aspects of the Pooling Agreement, the
Servicing Agreement and the Indenture described above
(for example, a pooling and servicing agreement, or a
servicing and collateral management agreement). For
purposes of this Prospectus, the term "Trust
Agreement" as used with respect to a Trust Fund
means, collectively, and except as otherwise
described in the related Prospectus Supplement, any
and all agreements relating to the establishment of a
Trust, if any, the servicing of the related
Receivables and the issuance of the related
Securities. The term "Trustee" means any and all
persons acting as a trustee pursuant to a Trust
Agreement.
Securities Will Be Non-Recourse.
The Securities will not be obligations, either
recourse or non-recourse (except for certain
non-recourse debt described under "Certain Tax
Considerations"), of the Depositor, the related
Servicer, the related Originator(s) or any person
other than the related Issuer. The Notes of a given
series represent obligations of the Issuer, and the
Certificates of a given series represent beneficial
interests in the related Trust only and do not
represent interests in or obligations of the
Depositor, the related Servicer, the related
Originator(s) or any of their respective affiliates
other than the related Trust. In the case of
Securities that represent beneficial ownership
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interest in the related Trust, such Securities will
represent the beneficial ownership interests in such
Trust and the sole source of payment will be the
assets of such Trust. In the case of Securities that
represent debt issued by the related Issuer, such
Securities will be secured by assets in the related
Trust Fund. Notwithstanding the foregoing, and as to
be described in the related Prospectus Supplement,
certain types of credit enhancement, such as a letter
of credit, financial guaranty insurance policy or
reserve fund may constitute a full recourse
obligation of the issuer of such credit enhancement.
General Nature of the Securities as Investments.
All of the Securities offered pursuant to this
Prospectus and the related Prospectus Supplement will
be rated in one of the four highest rating categories
by one or more Rating Agencies (as defined herein).
Additionally, all of the Securities offered pursuant
to this Prospectus and the related Prospectus
Supplement will be of the fixed-income type ("Fixed
Income Securities"). Fixed Income Securities will
generally be styled as debt instruments, having a
principal balance and a specified interest rate
("Interest Rate"). Fixed Income Securities may either
represent beneficial ownership interests in the
related Receivables held by the related Trust or debt
secured by certain assets of the related Issuer.
Each series or Class of Fixed Income Securities
offered pursuant to this Prospectus may have a
different Interest Rate, which may be a fixed or
adjustable Interest Rate. The related Prospectus
Supplement will specify the Interest Rate for each
series or Class of Fixed Income Securities described
therein, or the initial Interest Rate and the method
for determining subsequent changes to the Interest
Rate.
A series may include one or more Classes of Fixed
Income Securities ("Strip Securities") entitled (i)
to principal distributions, with disproportionate,
nominal or no interest distributions, or (ii) to
interest distributions, with disproportionate,
nominal or no principal distributions. In addition, a
series of Securities may include two or more Classes
of Fixed Income Securities that differ as to timing,
sequential order, priority of payment, Interest Rate
or amount of distribution of principal or interest or
both, or as to which distributions of principal or
interest or both on any Class may be made upon the
occurrence of specified events, in accordance with a
schedule or formula, or on the basis of collections
from designated portions of the related pool of
Receivables. Any such series may include one or more
Classes of Fixed Income Securities ("Accrual
Securities"), as to which certain accrued interest
will not be distributed but rather will be added to
the principal balance (or nominal balance, in the
case of Accrual Securities which are also Strip
Securities) thereof on each Payment Date, as
hereinafter defined, or in the manner described in
the related Prospectus Supplement.
If so provided in the related Prospectus Supplement,
a series may include one or more other Classes of
Fixed Income Securities (collectively, the "Senior
Securities") that are senior to one or more other
Classes of Fixed Income Securities (collectively, the
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"Subordinate Securities") in respect of certain
distributions of principal and interest and
allocations of losses on Receivables.
In addition, certain Classes of Senior (or
Subordinate) Securities may be senior to other
Classes of Senior (or Subordinate) Securities in
respect of such distributions or losses.
General Payment Terms of Securities.
As provided in the related Trust Agreement and as
described in the related Prospectus Supplement, the
holders of the Securities ("Securityholders") will be
entitled to receive payments on their Securities on
specified dates (each, a "Payment Date"). Payment
Dates with respect to Fixed Income Securities will
occur monthly, quarterly or semi-annually, as
described in the related Prospectus Supplement.
The related Prospectus Supplement will describe a
date (the "Record Date") preceding such Payment Date,
as of which the Trustee or its paying agent will fix
the identity of the Securityholders for the purpose
of receiving payments on the next succeeding Payment
Date. As described in the related Prospectus
Supplement, the Payment Date will be a specified day
of each month, commonly the fifteenth or twenty-fifth
day of each month (or, in the case of quarterly-pay
Securities, the fifteenth or twenty-fifth day of
every third month; and in the case of semi-annual pay
Securities, the fifteenth or twenty-fifth day of
every sixth month) and the Record Date will be the
close of business as of the last day of the calendar
month that precedes the calendar month in which such
Payment Date occurs.
Each Trust Agreement will describe a period (each, a
"Remittance Period") preceding each Payment Date (for
example, in the case of monthly-pay Securities, the
calendar month preceding the month in which a Payment
Date occurs). As more fully described in the related
Prospectus Supplement, collections received on or
with respect to the related Receivables constituting
a Trust Fund during a Remittance Period will be
required to be remitted by the Servicer to the
related Trustee prior to the related Payment Date and
will be used to fund payments to Securityholders on
such Payment Date. As may be described in the related
Prospectus Supplement, the related Trust Agreement
may provide that all or a portion of the payments
collected on or with respect to the related
Receivables may be applied by the related Trustee to
the acquisition of additional Receivables during a
specified period (rather than be used to fund
payments of principal to Securityholders during such
period), with the result that the related Securities
will possess an interest-only period, also commonly
referred to as a revolving period, which will be
followed by an amortization period. Any such interest
only or revolving period may, upon the occurrence of
certain events to be described in the related
Prospectus Supplement, terminate prior to the end of
the specified period and result in the earlier than
expected amortization of the related Securities.
In addition, and as may be described in the related
Prospectus Supplement, the related Trust Agreement
may provide that all or a portion of such collected
payments may be retained by the Trustee
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(and held in certain temporary investments, including
Receivables) for a specified period prior to being
used to fund payments of principal to
Securityholders.
Such retention and temporary investment by the
Trustee of such collected payments may be required by
the related Trust Agreement for the purpose of (a)
slowing the amortization rate of the related
Securities relative to the rent payment schedule of
the related Receivables, or (b) attempting to match
the amortization rate of the related Securities to an
amortization schedule established at the time such
Securities are issued. Any such feature applicable to
any Securities may terminate upon the occurrence of
events to be described in the related Prospectus
Supplement, resulting in distributions to the
specified Securityholders and an acceleration of the
amortization of such Securities.
As more fully specified in the related Prospectus
Supplement, neither the Securities nor the underlying
Receivables will be guaranteed or insured by any
governmental agency or instrumentality or the
Depositor, the related Servicer, the related
Originator, any Trustee, or any of their affiliates.
No Investment Companies.. Neither the Depositor nor any Trust will register as
an "investment company" under the Investment Company
Act of 1940, as amended (the "Investment Company
Act").
The Equity Interest..... With respect to each Trust, the "Equity Interest" at
any time represents the rights to the related Trust
Fund in excess of the Securityholders' interest of
all series then outstanding that were issued by such
Trust. The Equity Interest in any Trust Fund will
fluctuate as the aggregate Discounted Contract
Balance of such Trust Fund changes from time to time.
In addition, the Depositor may cause one or more of
the Trusts (such a Trust, a xxxxx "Master Trust") to
issue additional series of Securities from time to
time and any such issuance will have the effect of
decreasing the Equity Interest in the related Master
Trust to the extent of the aggregate principal amount
of the Securities. See "Description of Securities --
Master Trusts." A portion of the Equity interest in
any Trust may be sold separately in one or more
public or private transactions.
Master Trusts; Issuance of
Additional Series....... As may be described in the related Prospectus
Supplement, a Trust Agreement may authorize the
Trustee to issue certificates (the "Equity
Certificates") evidencing the Equity Interest in a
Master Trust, and may provide that, pursuant to any
one or more supplements to such Trust Agreement, the
Depositor may cause the related Trustee to issue one
or more new series of Securities and accordingly
cause a reduction in the related Equity Interest in
such Master Trust represented by the related Equity
Certificate. Under each such Trust Agreement (each, a
"Master Trust Agreement"), the Depositor may
determine the terms of any such new series. See
"Description of the Securities -- Master Trusts."
The Depositor may cause the related Trustee to offer
any such new series to the public or other investors,
in transactions either registered under the
Securities Act or exempt from registration
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thereunder, directly or through one or more
underwriters or placement agents, in fixed-price
offerings or in negotiated transactions or otherwise.
A new series to be issued by a Trust which has a
series outstanding may, unless otherwise described in
the related Prospectus Supplement, only be issued
upon satisfaction of the conditions described herein
under "Description of the Securities -- Master
Trusts", including, among others, that such issuance
will not effect the rating given to any existing
series issued by such Master Trust. Securities
secured by Receivables held by a Master Trust shall
be entitled to moneys received relating to such
Receivables on a pari passu basis with other
Securities issued pursuant to the other Trust
Agreements by such Master Trust.
Cross-Collateralization.. As described in the related Trust Agreement and the
related Prospectus Supplement, the source of payment
for Securities of each series will be the assets of
the related Trust Fund only.
However, as may be described in the related
Prospectus Supplement, a series or class of
Securities may include the right to receive moneys
from a common pool of credit enhancement which may be
available for more than one series of Securities,
such as a master reserve account, master insurance
policy or a master collateral pool consisting of
similar Receivables. Notwithstanding the foregoing,
and as described in the related Prospectus
Supplement, no payment received on any Receivable
held by any Trust may be applied to the payment of
Securities issued by any other Trust (except to the
limited extent that certain collections in excess of
the amounts needed to pay the related Securities may
be deposited in a common master reserve account or an
overcollateralization account that provides credit
enhancement for more than one series of Securities
issued pursuant to the related Trust Agreement).
Trust Fund.............. As specified in the related Prospectus Supplement,
each Trust Fund will consist of the related
Contracts, and may include a security interest in the
related Equipment. If and to the extent specified in
the related Prospectus Supplement, credit enhancement
with respect to a Trust Fund or any class of
Securities may include any one or more of the
following: a Policy issued by an insurer specified in
the related Prospectus Supplement, a reserve account,
letters of credit, credit or liquidity facilities,
repurchase obligations, third party payments or other
support, cash deposits or other arrangements. In
addition to or in lieu of the foregoing, credit
enhancement may be provided by means of
subordination, cross-support among the Receivables or
over-collateralization. See "Description of the Trust
Agreement -- Credit and Cash Flow Enhancement." The
Contracts are obligations for the lease (a "Lease")
or purchase of the Equipment, or evidence borrowings
used to acquire the Equipment, entitling the obligor
thereunder (the "Lessor") to payments of rent and
related payments and to either the return of the
Equipment at the termination of the related Contract
or, with respect to certain of the Contracts, the
payment of a purchase price for the Equipment at the
election of the obligee thereunder (the "Lessee").
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The Leases will consist of finance leases. "Finance
Leases" usually have a term greater than three years.
In a Finance Lease, the Lessor transfers
substantially all benefits and risks of ownership to
the Lessee. In accordance with Statement of Financial
Accounting Standards No. 13 ("FASB 13"), a Lease is
classified as a Finance Lease if the collectibility
of lease payments are reasonably certain and it meets
one of the following criteria: (1) the Lease
transfers title and ownership of the Equipment to the
Lessee by the end of the Lease term; (2) the Lease
contains a bargain purchase option; (3) the Lease
term at inception is at least 75% of the estimated
life of the Equipment; or (4) the present value of
the minimum Lease payments is at least 90% of the
fair market value of the Equipment at inception of
the Lease. Installment sale contracts and loan
contracts (the "Purchase Contracts") secured by the
related Equipment provide for scheduled payments
which fully amortize the amount financed by an
obligor. The related Prospectus Supplement will
describe the type and characteristics of the
Contracts included in each Trust Fund relating to the
Securities offered pursuant to this Prospectus and
the related Prospectus Supplement.
The Receivables comprising a Trust Fund will be
acquired by the Depositor from the related
Originator; such Receivables will have theretofore
been either (i) originated by such Originator, (ii)
originated by Vendors and acquired by such Originator
or (iii) acquired by such Originator from other
originators or owners of Receivables.
With respect to the Receivables comprising each Trust
Fund, the Depositor and/or the related Originator
will acquire the related Receivables from the
Originator pursuant to a Receivables Acquisition
Agreement as defined herein. The Depositor will
either transfer such Receivables to a Trust pursuant
to a Pooling Agreement or pledge the Depositor's
right, title and interest in and to such Receivables
to a Trustee on behalf of Securityholders pursuant to
an Indenture. The Contracts transferred to a Trust or
pledged to a Trustee shall have a Discounted Contract
Balance (as defined below) specified in the related
Prospectus Supplement. The rights and benefits of the
Depositor or Transferor under such Receivables
Acquisition Agreement will be assigned to the Trustee
on behalf of the related Securityholders. The
obligations of the Depositor, the related
Originator(s), the related Servicer(s), the related
Trustee and the related Indenture Trustee, if any,
under the related Trust Agreement include those
specified below and in the related Prospectus
Supplement.
The "Discounted Contract Balance" of a Contract as of
any Cut-Off Date is the present value of all of the
remaining payments scheduled to be made with respect
to such Contract, discounted at a rate specified in
the related Prospectus Supplement and the Trust
Agreement.
In addition, if so specified in the related
Prospectus Supplement, the Trust Fund will include
monies on deposit in a Pre-Funding Account (the
"Pre-Funding Account") to be established with the
Trustee, which will be used to acquire Additional
Receivables from time to
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time during the "Pre-Funding Period" specified in the
related Prospectus Supplement.
If and to the extent provided in the related
Prospectus Supplement, the Depositor will be
obligated (subject only to the availability thereof)
to acquire from the related Originator(s) and to
either transfer to a Trust or pledge to a Trustee on
behalf of Securityholders, additional Receivables
(the "Additional Receivables") from time to time
during any Pre-Funding Period specified in the
related Prospectus Supplement.
Registration of
Securities.............. Securities may be represented by global securities
registered in the name of Cede & Co. ("Cede"), as
nominee of The Depository Trust Company ("DTC"), or
another nominee. In such case, Securityholders will
not be entitled to receive definitive securities
representing such Securityholders' interests, except
in certain circumstances described in the related
Prospectus Supplement. See "Description of the
Securities -- Book Entry Registration" herein.
Credit and Cash Flow
Enhancement............. If and to the extent specified in the related
Prospectus Supplement, credit enhancement with
respect to a Trust Fund or any class of Securities
may include any one or more of the following: a
Policy issued by an insurer specified in the related
Prospectus Supplement (a "Security Insurer"), a
reserve account, letters of credit, credit or
liquidity facilities, third party payments or other
support, cash deposits or other arrangements. Any
form of credit enhancement will have certain
limitations and exclusions from coverage thereunder,
which will be described in the related Prospectus
Supplement. See "Description of the Trust Agreement
-- Credit and Cash Flow Enhancement."
Receivables Acquisition
Agreement............... As more fully described in the related Prospectus
Supplement, the Depositor and/or the related
Originator will be obligated to acquire from the
related Trust Fund any Receivable transferred
pursuant to a Pooling Agreement or pledged pursuant
to an Indenture if the interest of the
Securityholders therein is materially adversely
affected by a breach of any representation or
warranty made by the Depositor or the related
Originator with respect to such Receivable, which
breach has not been cured. To the extent that the
Depositor so acquires any Receivables, the related
Originator will be obligated to acquire such
Receivables from the Depositor pursuant to the
related Receivables Acquisition Agreement
contemporaneously with the Depositor's acquisition of
such Receivables from the applicable Trust Fund. The
obligation of the Depositor to acquire any such
Receivables with respect to which the related
Originator has breached a representation or warranty
is subject to the related Originator's acquisition of
such Receivables from the Depositor. In addition, if
so specified in the related Prospectus Supplement,
the Depositor may from time to time reacquire certain
Receivables or substitute other Receivables for such
Receivable held by a Trust Fund, subject to specified
conditions set forth in the related Trust Agreement
and Receivables Acquisition Agreement.
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Servicer's Compensation.. The Servicer shall be entitled to receive a fee for
servicing the Contracts of each Trust Fund equal to a
specified percentage of the value of the assets held
in the related Trust Fund, as set forth in the
related Prospectus Supplement. See "Description of
the Trust Agreements--Servicing Compensation" herein
and in the related Prospectus Supplement.
Certain Legal Aspects
of the Contracts........ With respect to the transfer of the Contracts to the
related Trust pursuant to a Pooling Agreement or the
pledge of the related Issuer's right, title and
interest in and to such Contracts on behalf of
Securityholders pursuant to an Indenture, the
Depositor will warrant, in each case, that such
transfer is either a valid transfer and assignment of
the Contracts to the Trust or the grant of a security
interest in the Contracts. Each Prospectus Supplement
will specify what actions will be taken by which
parties as will be required to perfect either the
Issuer's or the Securityholders' security interest in
the Contracts. The Depositor may also warrant that,
if the transfer or pledge by it to the Trust or to
the Securityholders is deemed to be a grant to the
Trust or to the Securityholders of a security
interest in the Contracts, then the related Issuer or
the Securityholders will have a first priority
perfected security interest therein, except for
certain liens which have priority over previously
perfected security interests by operation of law,
and, with certain exceptions, in the proceeds
thereof. Similar security interest and priority
representations and warranties, as described in the
related Prospectus Supplement, may also be made by
the Depositor with respect to the security interest
in the Equipment.
Each Prospectus Supplement will specify if the
related Originator or the Depositor has filed or will
be required to file UCC (as herein defined) financing
statements identifying the Equipment as collateral
pledged in favor of the related Trust or Trustee on
behalf of the Securityholders. In the absence of such
filings any security interest in the Equipment will
not be perfected in favor of the related Trust or
Trustee. See "Risk Factors -- Certain Legal Aspects"
and "Interests in the Conveyed Property -- UCC and
Bankruptcy Considerations."
Optional Termination.... The related Servicer, the related Originator, the
Depositor, or, if specified in the related Prospectus
Supplement, certain other entities may, at their
respective options, effect early retirement of a
series of Securities under the circumstances and in
the manner set forth herein under "The Trust
Agreement - Termination; Retirement of Securities"
and in the related Prospectus Supplement.
Mandatory Termination... The Trustee, the related Servicer or certain other
entities specified in the related Prospectus
Supplement may be required to effect early retirement
of all or any portion of a series of Securities by
soliciting competitive bids for the purchase of the
related Trust Fund or otherwise, under other
circumstances and in the manner specified in "The
Trust Agreement - Termination; Retirement of
Securities" and in the related Prospectus Supplement.
Tax Considerations...... Securities of each series offered hereby will, for
federal income tax purposes, constitute either (i)
interests in a Trust treated as a grantor trust under
applicable provisions of the Code ("Grantor Trust
Securities"), (ii) debt issued by a Trust or by the
Depositor ("Debt
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Securities") or (iii) interests in a Trust which is
treated as a partnership ("Partnership Interests").
The Prospectus Supplement for each series of
Securities will summarize, subject to the limitations
stated therein, federal income tax considerations
relevant to the purchase, ownership and disposition
of such Securities.
Investors are advised to consult their tax advisors
and to review "Certain Federal and State Income Tax
Consequences" in the related Prospectus Supplement.
ERISA Considerations.... The Prospectus Supplement for each series of
Securities will summarize, subject to the limitations
discussed therein, considerations under the Employee
Retirement Income Security Act of 1974, as amended
("ERISA"), relevant to the purchase of such
Securities by employee benefit plans and individual
retirement accounts. See "ERISA Considerations" in
the related Prospectus Supplement.
Ratings................. Each Class of Securities offered pursuant to this
Prospectus and the related Prospectus Supplement will
be rated in one of the four highest rating categories
by one or more "national statistical rating
organizations", as defined in the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and
commonly referred to as "Rating Agencies". Such
ratings will address, in the opinion of such Rating
Agencies, the likelihood that the Issuer will be able
to make timely payment of all amounts due on the
related Securities in accordance with the terms
thereof. Such ratings will neither address any
prepayment or yield considerations applicable to any
Securities nor constitute a recommendation to buy,
sell or hold any Securities.
The ratings expected to be received with respect to
any Securities will be set forth in the related
Prospectus Supplement.
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RISK FACTORS
Prospective Securityholders should consider, among other things, the
following factors in connection with the purchase of the Securities:
Limited Liquidity. There can be no assurance that a secondary market for
the Securities of any series or Class will develop or, if it does develop, that
it will provide Securityholders with liquidity of investment or that it will
continue for the life of such Securities. The Prospectus Supplement for any
series of Securities may indicate that an underwriter specified therein intends
to establish and maintain a secondary market in such Securities; however, no
underwriter will be obligated to do so. The Securities will not be listed on any
securities exchange.
Ownership of Contracts. In connection with the issuance of any series of
Securities, the related Originator(s) will transfer Contracts to the Depositor.
The related Originator(s) will warrant in a Receivables Acquisition Agreement
that the transfer of the Contracts by it to the Depositor is a valid assignment,
transfer and conveyance of such Contracts. The Depositor will warrant in a Trust
Agreement (a) if the Depositor or the related Originator(s) retain title to the
Contracts, that the Trustee for the benefit of Securityholders has a valid
security interest in such Contracts, or (b) if the Depositor transfers such
Contracts to a Trust, that the transfer of the Contracts to such Trust is either
a valid assignment, transfer and conveyance of the Contracts to the Trust or the
Trustee on behalf of the Securityholders has a valid security interest in such
Contracts. As to be described in the related Prospectus Supplement, the related
Trust Agreement will provide either that the Trustee will be required to
maintain possession of the original copies of all Contracts that constitute
chattel paper or that the Depositor, the related Originator(s) or the related
Servicer will retain possession of such Contracts; provided that in case the
Depositor or an Originator retains possession of the related Contracts, the
Servicer may take possession of such original copies as necessary for the
enforcement of any Contract. If any Contracts remain in the possession of the
Depositor or an Originator, the related Prospectus Supplement may describe
specific trigger events that will require delivery to the Trustee. If the
Depositor, the Servicer, the Trustee, an Originator or other third party, while
in possession of the Contracts, sells or pledges and delivers such Contracts to
another party, in violation of the Receivables Acquisition Agreement or the
Trust Agreement, there is a risk that such other party could acquire an interest
in such Contracts having a priority over the Issuer's interest. Furthermore, if
the Depositor, the Servicer, an Originator or a third party, while in possession
of the Contracts, is rendered insolvent, such event of insolvency may result in
competing claims to ownership or security interests in the Contracts. Such an
attempt, even if unsuccessful, could result in delays in payments on the
Securities. If successful, such attempt could result in losses to the
Securityholders or an acceleration of the repayment of the Securities. The
related Originator(s) and the Depositor will make certain representations and
warranties with respect to the ownership of the Contracts as of the date of the
transfer to the Depositor and the Trust, if any, respectively. The related
Originator will be obligated to acquire any Contract from the related Trust Fund
if there is a breach of such representations and warranties that materially
adversely affects the interests of the Depositor or the Trust in such Contract
and such breach has not been cured.
Security Interest in the Equipment. Unless otherwise described in the
related Prospectus Supplement, the related Originator will also contribute a
security interest in all of its right, title and interest in and to the related
Equipment to the Depositor. The Receivables Acquisition Agreement shall require
the Originator to make certain representations and warranties with respect to
the security interest in the Equipment. The Depositor shall pledge a security
interest in all of its right, title and interest in and to such Equipment to the
Trust. Pursuant to a Trust Agreement, the Depositor shall warrant that it has
granted to the Trustee for the benefit of Securityholders a valid security
interest in such Equipment.
As specified herein and related Prospectus Supplement, because of the
administrative burden and expense that would be entailed in so doing, neither
the Originators nor the Depositor will file, or necessarily will be required to
file, UCC financing statements identifying the Equipment as collateral pledged
in favor of the related Trust or Trustee on behalf of the Securityholders. In
the absence of such filings any security interest in the Equipment will not be
perfected in favor of the related Trust or Trustee. As a result the Trust or
Trustee could lose priority of its security interest in such Equipment. Neither
the
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Originators nor the Depositor will have any obligation to reacquire Equipment as
to which such aforementioned occurrence results in the loss of lien priority
after the date such Trust Fund receives an interest in such Equipment unless
otherwise obligated in the related Prospectus Supplement.
Restrictions on Recoveries. Unless specific limitations are described on
the related Prospectus Supplement with respect to specific Contracts, all
Contracts will provide that the obligations of the Lessees thereunder are
absolute and unconditional, regardless of any defense, set-off or abatement
which the Lessee may have against the related Originator or any other person or
entity whatsoever. The Originators will warrant that no claims or defenses have
been asserted or threatened with respect to the Contracts and that all
requirements of applicable law with respect to the Contracts have been
satisfied.
In the event that the Depositor or the Trustee must rely on repossession
and disposition of Equipment to recover scheduled payments due on Defaulted
Contracts, the Issuer may not realize the full amount due on a Contract (or may
not realize the full amount on a timely basis). Other factors that may affect
the ability of the Issuer to realize the full amount due on a Contract include
whether financing statements to perfect the security interest in the Equipment
had been filed, depreciation, obsolescence, damage or loss of any item of
Equipment, and the application of Federal and state bankruptcy and insolvency
laws. As a result, the Securityholders may be subject to delays in receiving
payments and suffer loss of their investment in the Securities.
Insolvency and Bankruptcy Matters. The Depositor will take steps in
structuring the transactions contemplated hereby that are intended to ensure
that the voluntary or involuntary application for relief by the related
Originator or the Depositor (the Originators and the Depositors, collectively
for these purposes, "Debtors") under the United States Bankruptcy Code or
similar applicable state laws ("Insolvency Laws") will not result in the assets
of the related Trust Fund becoming property of the estate of a Debtor within the
meaning of such Insolvency Laws. Such steps will generally involve the creation
by the related Originator of a separate, limited-purpose subsidiary (each, a
"Finance Subsidiary") pursuant to articles of incorporation containing certain
limitations (including restrictions on the nature of such Finance Subsidiary's
business and a restriction on such Finance Subsidiary's ability to commence a
voluntary case or proceeding under any Insolvency Law without the prior
unanimous affirmative vote of all its directors). However, there can be no
assurance that the activities of any Finance Subsidiary would not result in a
court's concluding that the assets and liabilities of such Finance Subsidiary
should be consolidated with those of the related Originator in a proceeding
under any Insolvency Law.
Except to the extent otherwise described in the related Prospectus
Supplement, each Receivables Acquisition Agreement and each Trust Agreement will
generally require that the related Originator contribute the related Receivables
to a Finance Subsidiary, which will then transfer such Receivables to the
Depositor which in turn will transfer such Receivables to an Issuer. Except as
otherwise described in the related Prospectus Supplement, the Equity Interest in
a Trust Fund will be transferred to the related Finance Subsidiary.
With respect to each Trust Fund, the Trustee and all Securityholders will
covenant that they will not at any time institute against the Depositor or the
related Finance Subsidiary any bankruptcy, reorganization or other proceeding
under any federal or state bankruptcy or similar law.
For purposes of this Prospectus, the term "Originator" includes the term
"Finance Subsidiary." In addition, while an Originator is the Servicer, cash
collections held by such Originator may, subject to certain conditions, be
commingled and used for the benefit of such Originator prior to each Payment
Date and, in the event of the bankruptcy of such Originator, the Depositor, a
Trust or Trustee may not have a perfected interest in such collections.
The Depositor believes that the transfer of the Receivables by an
Originator or its Finance Subsidiary to the Depositor should be treated as a
valid assignment, transfer and conveyance of such Receivables. However, in the
event of an insolvency of such Originator, a court, among other remedies, could
attempt to recharacterize the transfer of the Receivables by such Originator to
the Depositor as a borrowing by the Originator from the Depositor or the related
Securityholders, secured by a pledge of
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such Receivables. Such an attempt, even if unsuccessful, could result in delays
in payments on the Securities. If such an attempt were successful, a court,
among other remedies, could elect to accelerate payment of the Securities and
liquidate the Receivables, with the Securityholders entitled to the then
outstanding principal amount thereof and interest thereon at the applicable
Security Interest Rate to the date of payment. Thus, the Securityholders could
lose the right to future payments of interest and might incur reinvestment
losses. As more fully described in the related Prospectus Supplement, in the
event the related Issuer is rendered insolvent, the Trustee for a Trust, in
accordance with the Trust Agreement, will promptly sell, dispose of or otherwise
liquidate the related Receivables in a commercially reasonable manner on
commercially reasonable terms. The proceeds from any such sale, disposition or
liquidation of such Receivables will be treated as collections on such
Receivables. If the proceeds from the liquidation of the Receivables and any
amount available from any credit enhancement, if any, are not sufficient to pay
Securities of the related series in full, the amount of principal returned to
such Securityholders will be reduced and such Securityholders will incur a loss.
Lessees of the Equipment may be entitled to assert against the related
Originator, the Depositor, or the Trust, if any, claims and defenses which they
have against such Originator with respect to the Receivables. The Originator(s)
will warrant that no such claims or defenses have been asserted or threatened
with respect to the Receivables and that all requirements of applicable law with
respect to the Receivables have been satisfied.
Equipment Obsolescence. In the event a Contract becomes a Defaulted
Contract and the Lessee (and any guarantor) has insufficient assets available to
pay the Contract payments on the scheduled payment dates, the only other source
of moneys (other than the applicable credit enhancements, if any) for such
amounts will be the income and proceeds from the disposition of the related
Equipment. Because the market value of equipment generally declines with age and
may be subject to sudden, significant declines in value because of technological
advances, in the event of a repossession and sale of Equipment subject to a
Defaulted Contract, the Issuer may not recover the entire amount due on such
Contract. As a result, the Securityholders may be subject to delays in receiving
payments and suffer loss of their investment in the Securities.
Delinquencies. There can be no assurance that the historical levels of
delinquencies and losses experienced by the related Originator on its equipment
lease portfolio will be indicative of the performance of the Contracts included
in any Trust Fund or that such levels will continue in the future. Delinquencies
and losses could increase significantly for various reasons, including changes
in the federal income tax laws, changes in the local, regional or national
economies or due to other events.
Subordination; Limited Assets. To the extent specified in the related
Prospectus Supplement, distributions of interest and principal on one Class of
Securities of a series may be subordinated in priority of payment to interest
and principal due on other Classes of Securities of a related series. Moreover,
each Trust Fund will not have, nor is it permitted or expected to have, any
significant assets or sources of funds other than the related Receivables and,
to the extent provided in the related Prospectus Supplement, a Pre-Funding
Account, the related reserve account and any other credit enhancement. The
Securities represent obligations solely of the related Trust or debt secured by
the related Trust Fund, and will not represent a recourse obligation to other
assets of the related Originator(s) or of the Depositor. No Securities of any
series will be insured or guaranteed by any Originator, the Depositor, the
Servicer, or the applicable Trustee. Consequently, holders of the Securities of
any series must rely for repayment primarily upon payments on the Receivables
and, if and to the extent available, amounts on deposit in the Pre-Funding
Account, if any, the reserve account, if any, and any other credit enhancement,
all as specified in the related Prospectus Supplement.
Master Trusts. As may be described in the related Prospectus Supplement, a
Master Trust may issue from time to time more than one series. While the terms
of any additional series will be specified in a supplement to the related Master
Trust Agreement, the provisions of such supplement and, therefore, the terms of
any additional series, will not be subject to prior review by, or consent of,
holders of the Securities of any series previously issued by such Master Trust.
Such terms may include methods for determining applicable investor percentages
and allocating collections, provisions creating different or
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additional security or credit enhancements and any other provisions which are
made applicable only to such series. The obligation of the related Trustee to
issue any new series is subject to the condition, among others, that such
issuance will not result in any Rating Agency reducing or withdrawing its rating
of the Securities of any outstanding series (any such reduction or withdrawal is
referred to herein as a "Ratings Effect"). There can be no assurance, however,
that the terms of any series might not have an impact on the timing or amount of
payments received by a Securityholder of another series issued by the same
Master Trust. See "Description of the Securities Master Trusts."
Book-Entry Registration. Issuance of the Securities in book-entry form may
reduce the liquidity of such Securities in the secondary trading market since
investors may be unwilling to purchase Securities for which they cannot obtain
definitive physical securities representing such Securityholders' interests,
except in certain circumstances described in the related Prospectus Supplement.
Since transactions in Securities will, in most cases, be able to be
effected only through DTC, direct or indirect participants in DTC's book-entry
system ("Direct Participants" or "Indirect Participants") or certain banks, the
ability of a Securityholder to pledge a Security to persons or entities that do
not participate in the DTC system, or otherwise to take actions in respect to
such Securities, may be limited due to lack of a physical security representing
the Securities.
Securityholders may experience some delay in their receipt of
distributions of interest on and principal of the Securities since distributions
may be required to be forwarded by the Trustee to DTC and, in such case, DTC
will be required to credit such distributions to the accounts of its
Participants which thereafter will be required to credit them to the accounts of
the applicable class of Securityholders either directly or indirectly through
Indirect Participants. See "Description of the Securities -- Book Entry
Registration."
Security Rating. The rating of Securities credit enhanced by a letter of
credit, financial guaranty insurance policy, reserve fund, credit or liquidity
facilities, cash deposits or other forms of credit enhancement (collectively
"Credit Enhancement") will depend primarily on the creditworthiness of the
issuer of such external Credit Enhancement device (a "Credit Enhancer"). Any
reduction in the rating assigned to the claims-paying ability of the related
Credit Enhancer to honor its obligations pursuant to any such Credit Enhancement
below the rating initially given to the Securities would likely result in a
reduction in the rating of the Securities.
Maturity and Prepayment Considerations. Because the rate of payment of
principal on the Securities will depend, among other things, on the rate of
payment on the related Contracts, the rate of payment of principal on the
Securities cannot be predicted. Payments on the Contracts will include scheduled
payments as well as partial and full prepayments (to the extent not replaced
with substitute Contracts), payments upon the liquidation of Defaulted
Contracts, payments upon acquisitions by the related Originator, the related
Servicer or the Depositor of Contracts from the related Trust Fund on account of
a breach of certain representations and warranties in the related Trust
Agreement, payments upon an optional acquisition by the related Originator, the
related Servicer or the Depositor of Contracts from the related Trust Fund (any
such voluntary or involuntary prepayment or other early payment of a Contract, a
"Prepayment"), and residual payments. The rate of early terminations of
Contracts due to Prepayments and defaults may be influenced by a variety of
economic and other factors, including, among others, obsolescence, then current
economic conditions and tax considerations. The risk of reinvesting
distributions of the principal of the Securities will be borne by the
Securityholders. The yield to maturity on Strip Securities or Securities
purchased at premiums or discounts to par will be extremely sensitive to the
rate of Prepayments on the related Receivables. In addition, the yield to
maturity on certain other types of classes of Securities, including Strip
Securities, Accrual Securities or certain other Classes in a series including
more than one Class of Securities, may be relatively more sensitive to the rate
of prepayment of the related Contracts than other Classes of Securities.
The Depositor does not have available to it any statistics as to
prepayment rates historically experienced in the equipment leasing industry. The
rate of Prepayments of Contracts cannot be predicted and is influenced by a wide
variety of economic, social, and other factors, including prevailing
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interest rates, the availability of alternate financing and local and regional
economic conditions. Therefore, no assurance can be given as to the level of
Prepayments that a Trust Fund will experience.
Securityholders should consider, in the case of Securities purchased at a
discount, the risk that a slower than anticipated rate of Prepayments on the
Receivables could result in an actual yield that is less than the anticipated
yield and, in the case of any Securities purchased at a premium, the risk that a
faster than anticipated rate of Prepayments on the Receivables could result in
an actual yield that is less than the anticipated yield.
Certain UCC Considerations. Certain states have adopted a version of
Article 2A of the Uniform Commercial Code ("Article 2A"). Article 2A purports to
codify many provisions of existing common law. Although there is little
precedent regarding how Article 2A will be interpreted, it may, among other
things, limit enforceability of any "unconscionable" lease or "unconscionable"
provision in a lease, provide a lessee with remedies, including the right to
cancel the lease contract, for certain lessor breaches or defaults, and may add
to or modify the terms of "consumer leases" and leases where the lessee is a
"merchant lessee". Article 2A, moreover, recognizes typical commercial lease
"hell or high water" rental payment clauses and validates reasonable liquidated
damages provisions in the event of lessor or lessee defaults. Article 2A also
recognizes the concept of freedom of contract and permits the parties in a
commercial context a wide degree of latitude to vary provisions of the law.
Contracts Related to Software and Services. Certain Contracts, as
described in the related Prospectus Supplement, may relate to software and
services that are not owned by the related Originator and in which no related
interest will be transferred to the Issuer. Accordingly, if any such Contract
becomes a Defaulted Contract, the Issuer will not realize any proceeds from the
related software and services from which to satisfy any unpaid payments under
such Contracts.
THE TRUST FUNDS
The property of each Trust Fund will include, as specified in the related
Prospectus Supplement, (i) a pool of Receivables, (ii) all moneys (including
accrued interest) due thereunder on or after the applicable Cut-off Date, (iii)
such amounts as from time to time may be held in one or more accounts
established and maintained by the Servicer pursuant to the related Trust
Agreement, as described below and in the related Prospectus Supplement, (iv) the
security interests, if any, in the Equipment relating to such pool of
Receivables, (v) the right to proceeds from claims on physical damage policies,
if any, covering such Equipment or the related Lessees, as the case may be, (vi)
the proceeds of any repossessed Equipment related to such pool of Receivables,
(vii) the rights of the Depositor under the related Receivables Acquisition
Agreement and (viii) interest earned on certain short-term investments held by
such Trust Fund, unless the related Prospectus Supplement specifies that such
earnings may be paid to the related Servicer or Originator(s). The Trust Fund
will also include, if so specified in the related Prospectus Supplement, monies
on deposit in a Pre-Funding Account, which will be used by the Trustee to
acquire or receive a security interest in Additional Receivables from time to
time during the Pre-Funding Period specified in the related Prospectus
Supplement. In addition, to the extent specified in the related Prospectus
Supplement, some combination of Credit Enhancements may be issued to or held by
the Trustee on behalf of the related Trust Fund for the benefit of the holders
of one ore more classes of Securities.
The Receivables comprising a Trust Fund will, as specifically described in
the related Prospectus Supplement, be either (i) originated by the related
Originator, (ii) originated by various Vendors and acquired by the related
Originator or (iii) acquired by the related Originator from originators or other
lessors of Receivables.
The Equipment underlying the Receivables included in each Trust Fund will
be limited to personal property which is leased or financed by the related
Originator to the Lessee pursuant to Contracts which either are "chattel paper"
(as defined in the Uniform Commercial Code) or would be "chattel paper" but for
a technical definitional matter, but in any event are not treated materially
differently from "chattel paper"
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for purposes of title transfer, security interests or remedies on default. The
Equipment underlying the Receivables will be further limited to personal
property which is subject to Uniform Commercial Code provisions relating to
title transfer, security interests and remedies on default and further limited
to Equipment leased to the related Lessee for use by such Lessee in the ordinary
course of business or for home use such as medical equipment, restaurant
equipment, film and video production equipment, other industrial and production
equipment, data processing equipment, telecommunications equipment, office
equipment and furniture.
No Trust Fund will include Receivables with respect to which the related
Contract or the related Equipment is subject to federal or state registration or
titling requirements which (x) differ materially from, or supplant, standard
Uniform Commercial Code provisions governing the manner in which title or
security interests in "chattel paper" (as defined in the Uniform Commercial
Code) or the related equipment is determined or perfected or (y) differ
materially from, or supplant, standard Uniform Commercial Code provisions
governing remedies on default. By way of illustration of the foregoing, no Trust
Fund will include Receivables with respect to which the underlying Contracts or
Equipment relate to motor vehicles, aircraft, ships or boats, firearms or other
weapons, railroad rolling stock or facilities such as factories, warehouses or
plants subject to state laws governing the manner in which title or security
interest in real property is determined or perfected. However, Receivables may
include Contracts and a security interest in Equipment relating to individual,
discrete components of assets such as the foregoing; for example a leased
computer on the ship may qualify as "Equipment", a security interest in which
may be included in a Trust Fund, provided that both the lease and the computer
are generally within the scope of the Uniform Commercial Code.
The Receivables will be acquired by the Depositor from the related
Originator pursuant to a Receivables Acquisition Agreement between the
Originator and the Depositor (each, a "Receivables Acquisition Agreement"). The
Receivables included in each Trust Fund will be selected from those Receivables
held by the Originators based on the criteria specified in the applicable Trust
Agreement and described herein or in the related Prospectus Supplement.
With respect to each series of Securities, on or prior to the Closing Date
on which the Securities are delivered to Securityholders, the Depositor will
form a Trust Fund by either (i) transferring the related Receivables into a
Trust pursuant to a Trust Agreement between the Depositor and the Trustee or
(ii) entering into an Indenture with an Indenture Trustee, relating to the
issuance of such Securities, secured by the related Receivables.
The Receivables comprising each Trust Fund will generally have been
originated by the related Originator(s) or acquired by such Originator(s) from
Vendors or from other lessors in accordance with such Originator's(s') specified
underwriting criteria. The underwriting criteria applicable to the Receivables
included in any Trust Fund will be described in all material respects in the
related Prospectus Supplement.
THE ISSUERS
With respect to each series of Securities, the Depositor will either
establish a separate Trust that will issue such Securities, or the Depositor
will issue such Securities, in each case pursuant to the related Trust
Agreement. For purposes of this Prospectus and the related Prospectus
Supplement, the Depositor, if the Depositor issues the related Securities, or
the related Trust, if a Trust issues the related Securities, shall be referred
to as the "Issuer" with respect to such Securities.
Upon the issuance of the Securities of a given series, the proceeds from
such issuance will be used by the Depositor to acquire the related Receivables
from the related Originator. The related Servicer will service the related
Receivables pursuant to the applicable Servicing Agreement, and will be
compensated for acting as the Servicer. To facilitate servicing and to minimize
administrative burden and expense, the Servicers may be appointed custodians for
the related Receivables by each Trustee and the Depositor, as may be set forth
in the related Prospectus Supplement.
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If the protection provided to the Securityholders of a given class by the
subordination of another Class of Securities of such series and by the
availability of the funds in the reserve account, if any, or any other Credit
Enhancement for such series is insufficient, the Issuer must rely solely on the
payments from the Lessees on the related Contracts, and the proceeds from the
sale of Equipment which secure or are leased under the Defaulted Contracts. In
such event, certain factors may affect such Issuer's ability to realize on the
collateral securing such Contracts, and thus may reduce the proceeds to be
distributed to the Securityholders of such series.
THE RECEIVABLES
Receivables Pools
Information with respect to the Receivables in each Trust Fund will be set
forth in the related Prospectus Supplement, including, the identity of the
related Originator(s), the related underwriting criteria and collection
policies, together with, to the extent appropriate, the composition of such
Receivables and the distribution of such Receivables by equipment type, payment
frequency and current principal balance as of the applicable Cut-off Date.
Delinquencies, Repossessions, and Net Losses
Certain information relating to the related Originator's delinquency,
repossession and net loss experience with respect to Contracts it has originated
or acquired will be set forth in each Prospectus Supplement. This information
may include, among other things, the experience with respect to all Contracts in
such Originator's portfolio during certain specified periods, including
Contracts which may not meet the criteria for selection as a Receivable for any
particular Trust Fund. There can be no assurance that the delinquency,
repossession and net loss experience on any Trust Fund will be comparable to the
related Originator's prior experience.
Maturity and Prepayment Considerations
As more fully described in the related Prospectus Supplement, if a
Contract permits a Prepayment, such payment, together with accelerated payments
resulting from defaults, will shorten the weighted average life of the related
pool of Receivables and the weighted average life of the related Securities. The
rate of Prepayments on the Receivables may be influenced by a variety of
economic, financial and other factors. In addition, under certain circumstances,
the Depositor or the related Originator will be obligated to acquire Receivables
from the related Trust Fund pursuant to the applicable Trust Agreement or
Receivables Acquisition Agreement as a result of breaches of representations and
warranties. Any reinvestment risks resulting from a faster or slower
amortization of the related Securities which results from Prepayments will be
borne entirely by the related Securityholders.
The related Prospectus Supplement will set forth certain additional
information with respect to the maturity and prepayment considerations
applicable to a particular pool of Receivables and the related series of
Securities, together with a description of any applicable prepayment penalties.
Acquisition of Receivables From Originators
The Receivables underlying a Series of Securities will be acquired by the
Depositor, either directly or through affiliates (such as a Transferor), from
the related Originator pursuant to a Receivables Acquisition Agreement between
the Depositor or such affiliate and each such Originator.
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The Depositor expects that, unless otherwise specified in the related
Prospectus Supplement, each Receivable so acquired will have been originated by
the Originator thereof in accordance with the underwriting criteria specified in
such Prospectus Supplement. Unless otherwise specified in the applicable
Prospectus Supplement, each Originator will be an institution experienced in
originating and servicing equipment leases in accordance with accepted industry
practices and prudent guidelines. Unless otherwise provided in the applicable
Prospectus Supplement, each Originator pursuant to the related Receivables
Acquisition Agreement will make certain representations and warranties to the
Depositor in respect of the related Receivables; the material terms of such
representations and warranties will be set forth in the related Prospectus
Supplement. Unless otherwise provided in the applicable Prospectus Supplement
with respect to each Series, the Depositor will assign all of its rights (except
certain rights of indemnification) and interest in the related Receivables
Acquisition Agreement to the related Trustee for the benefit of the
Securityholders of such Series, and the Originator shall thereupon be liable to
the Trustee for defective or missing documents or an uncured breach of such
Originator's representations or warranties, to the extent described in the
related Prospectus Supplement.
POOL FACTORS
The "Pool Factor" for each Class of Securities will be a seven-digit
decimal, which the Servicer will compute prior to each distribution with respect
to such Class of Securities, indicating the remaining outstanding principal
balance of such Class of Securities as of the applicable Payment Date, as a
fraction of the initial outstanding principal balance of such Class of
Securities. Each Pool Factor will be initially 1.0000000, and thereafter will
decline to reflect reductions in the outstanding principal balance of the
applicable Class of Securities. A Securityholder's portion of the aggregate
outstanding principal balance of the related Class of Securities is the product
of (i) the original aggregate purchase price of such Securityholder's Securities
and (ii) the applicable Pool Factor.
As more specifically described in the related Prospectus Supplement with
respect to each series of Securities, the related Securityholders of record will
receive reports on or about each Payment Date concerning the payments received
on the Receivables, the Pool Balance (as such term is defined in the related
Prospectus Supplement, the "Pool Balance"), each Pool Factor and various other
items of information. 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.
USE OF PROCEEDS
The proceeds from the sale of the Securities of a given series will be
applied by the Depositor to the acquisition of the related Receivables from the
related Originator. The Depositor expects that it will make additional sales of
securities similar to the Securities from time to time, but the timing and
amount of any such additional offering will be dependent upon a number of
factors, including the volume of Contracts acquired by the Depositor, prevailing
interest rates, availability of funds and general market conditions.
THE DEPOSITOR
Prudential Securities Secured Financing Corporation, formerly known as P-B
Secured Financing Corporation (the "Depositor"), was incorporated in the State
of Delaware on August 26, 1988 as a wholly-owned, limited purpose finance
subsidiary of Prudential Securities Incorporated (a wholly-owned indirect
subsidiary of The Prudential Insurance Company of America). The Depositor's
principal executive offices are located at One New York Plaza, New York, New
York 10292. Its telephone number is (212) 778-1000.
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As described herein under "The Trust Funds," the only obligations, if any,
of the Depositor with respect to a Series of Securities may be pursuant to
certain limited representations and warranties and limited undertakings to
repurchase or substitute Receivables under certain circumstances. Unless
otherwise specified in the applicable Prospectus Supplement, the Depositor will
have no servicing obligations or responsibilities with respect to any Trust
Fund. The Depositor does not have, nor is it expected in the future to have, any
significant assets.
As specified in the related Prospectus Supplement the Servicer with
respect to any Series of Securities may be an affiliate of the Depositor. As
described under "The Trust Fund," the Depositor may acquire Receivables through
or from an affiliate.
Neither the Depositor nor Prudential Securities Incorporated nor any of
its affiliates, including The Prudential Insurance Company of America, will
insure or guarantee the Certificates of any Series.
THE TRUSTEE
The Trustee for each series of Securities will be specified in the related
Prospectus Supplement. The Trustee's liability in connection with the issuance
and sale of the related Securities is limited solely to the express obligations
of such Trustee set forth in the related Trust Agreement.
With respect to each series of Securities, no resignation or removal of
the Trustee and no appointment of a successor Trustee shall become effective
until the acceptance of appointment by the successor Trustee. The Trustee may
resign for cause at any time by giving written notice thereof to the Depositor
and by mailing notice of resignation by first-class mail, postage prepaid, to
the Securityholders of such series at their addresses appearing on the Security
Register. The Trustee may be removed at any time by written notice of the
holders of Securities evidencing more than 50% of the voting rights with respect
to such series, delivered to the Trustee and the Depositor, unless an alternate
method is described in the related Prospectus Supplement. If the Trustee shall
resign, be removed, or become incapable of acting, or if a vacancy shall occur
in the office of Trustee for any cause, the Depositor shall promptly appoint a
successor Trustee. If no successor Trustee shall have been so appointed by the
Depositor or the Securityholders, or if no successor Trustee shall have accepted
appointment within 30 days after any such resignation or removal, existence of
incapability, or occurrence of such vacancy, the Trustee or any Securityholder
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
DESCRIPTION OF THE SECURITIES
General
The Securities will be issued in series. Each series of Securities (or, in
certain instances, two or more series of Securities) will be issued pursuant to
a Trust Agreement. The following summaries (together with additional summaries
under "The Trust Agreement" below) describe all material terms and provisions
relating to the Securities common to each Trust Agreement. The summaries do not
purport to be complete and are subject to, and are qualified in their entirety
by reference to, all of the provisions of the Trust Agreement for the related
Securities and the related Prospectus Supplement.
All of the Securities offered pursuant to this Prospectus and the related
Prospectus Supplement will be rated in one of the four highest rating categories
by one or more Rating Agencies.
The Securities will generally be styled as debt instruments, having a
principal balance and a specified Interest Rate. The Securities may either
represent beneficial ownership interests in the related Receivables held by the
related Trust or debt secured by certain assets of the related Issuer.
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Each series or Class of Securities offered pursuant to this Prospectus may
have a different Interest Rate, which may be a fixed or adjustable interest
rate. The related Prospectus Supplement will specify the Interest Rate for each
series or Class of Securities described therein, or the initial interest rate
and the method for determining subsequent changes to the Interest Rate.
A series may include one or more Classes of Strip Securities entitled (i)
to principal distributions, with disproportionate, nominal or no interest
distributions, or (ii) to interest distributions, with disproportionate, nominal
or no principal distributions. In addition, a series of Securities may include
two or more Classes of Securities that differ as to timing, sequential order,
priority of payment, Interest Rate or amount of distribution of principal or
interest or both, or as to which distributions of principal or interest or both
on any Class may be made upon the occurrence of specified events, in accordance
with a schedule or formula, or on the basis of collections from designated
portions of the related pool of Receivables. Any such series may include one or
more Classes of Accrual Securities, as to which certain accrued interest will
not be distributed but rather will be added to the principal balance (or nominal
balance, in the case of Accrual Securities which are also Strip Securities)
thereof on each Payment Date, as hereinafter defined, or in the manner described
in the related Prospectus Supplement.
If so provided in the related Prospectus Supplement, a series may include
one or more other Classes of Senior Securities that are senior to one or more
other Classes of Subordinate Securities in respect of certain distributions of
principal and interest and allocations of losses on Receivables.
In addition, certain Classes of Senior (or Subordinate) Securities may be
senior to other Classes of Senior (or Subordinate) Securities in respect of such
distributions or losses.
General Payment Terms of Securities
As provided in the related Trust Agreement and as described in the related
Prospectus Supplement, Securityholders will be entitled to receive payments on
their Securities on the specified Payment Dates. Payment Dates with respect to
the Securities will occur monthly, quarterly or semi-annually, as described in
the related Prospectus Supplement.
The related Prospectus Supplement will describe the Record Date preceding
such Payment Date, as of which the Trustee or its paying agent will fix the
identity of the Securityholders for the purpose of receiving payments on the
next succeeding Payment Date. As more fully described in the related Prospectus
Supplement, the Payment Date may be the fifteenth or twenty-fifth day of each
month (or, in the case of quarterly-pay Securities, the fifteenth or
twenty-fifth day of every third month; and in the case of semi-annual pay
Securities, the fifteenth or twenty-fifth day of every sixth month) and the
Record Date will be the close of business as of the last day of the calendar
month that precedes the calendar month in which such Payment Date occurs.
Each Trust Agreement will describe a Remittance Period preceding each
Payment Date (for example, in the case of monthly-pay Securities, the calendar
month preceding the month in which a Payment Date occurs). As more fully
provided in the related Prospectus Supplement, collections received on or with
respect to the related Receivables held by a Trust during a Remittance Period
will be required to be remitted by the related Servicer to the related Trustee
prior to the related Payment Date and will be used to fund payments to
Securityholders on such Payment Date. As may be described in the related
Prospectus Supplement, the related Trust Agreement may provide that all or a
portion of the payments collected on or with respect to the related Receivables
may be applied by the related Trustee to the acquisition of additional
Receivables during a specified period (rather than be used to fund payments of
principal to Securityholders during such period) with the result that the
related Securities will possess an interest-only period, also commonly referred
to as a revolving period, which will be followed by an amortization period. Any
such interest only or revolving period may, upon the occurrence of certain
events to be described in the related Prospectus Supplement, terminate prior to
the end of the specified period and result in the earlier than expected
amortization of the related Securities.
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In addition, and as may be described in the related Prospectus Supplement,
the related Trust Agreement may provide that all or a portion of such collected
payments may be retained by the Trustee (and held in certain temporary
investments, including Receivables) for a specified period prior to being used
to fund payments of principal to Securityholders.
Such retention and temporary investment by the Trustee of such collected
payments may be required by the related Trust Agreement for the purposes of (a)
slowing the amortization rate of the related Securities relative to the rent
payment schedule of the related Receivables, or (b) attempting to match the
amortization rate of the related Securities to an amortization schedule
established at the time such Securities are issued. Any such feature applicable
to any Securities may terminate upon the occurrence of events to be described in
the related Prospectus Supplement, resulting in distributions to the specified
Securityholders and an acceleration of the amortization of such Securities.
Neither the Securities nor the underlying Receivables will be guaranteed
or insured by any governmental agency or instrumentality or the Depositor, the
related Servicer, the related Originator, any Trustee or any of their respective
affiliates unless specifically set forth in the related Prospectus Supplement.
As may be described in the related Prospectus Supplement, Securities of
each series covered by a particular Trust Agreement will either evidence
specified beneficial ownership interest in a separate Trust Fund created
pursuant to such Trust Agreement or represent debt secured by the related Trust
Fund. To the extent that any Trust Fund includes certificates of interest or
participations in Receivables, the related Prospectus Supplement will describe
the material terms and conditions of such certificates or participations.
Master Trusts
As may be described in the related Prospectus Supplement, each Trust
Agreement may provide that, pursuant to any one or more supplements thereto, the
Depositor may direct the related Trustee to issue from time to time new series
subject to the conditions described below (each such issuance a "Master Trust
New Issuance"). Each Master Trust New Issuance will have the effect of
decreasing the Equity Interest in the related Master Trust. Under each such
Master Trust Agreement, the Depositor may designate, with respect to any newly
issued series: (i) its name or designation; (ii) its initial principal amount
(or method for calculating such amount); (iii) its Interest Rate (or formula for
the determination thereof); (iv) the Payment Dates and the date or dates from
which interest shall accrue; (v) the method for allocating collections to
Securityholders of such series; (vi) any bank accounts to be used by such series
and the terms governing the operation of any such bank accounts; (vii) the
percentage used to calculate monthly servicing fees; (viii) the provider and
terms of any form of Credit Enhancement with respect thereto; (ix) the terms on
which the Securities of such series may be repurchased or remarketed to other
investors; (x) the number of Classes of Securities of such series, and if such
series consists of more than one Class, the rights and priorities of each such
Class; (xi) the extent to which the Securities of such series will be issuable
in book-entry form; (xii) the priority of such series with respect to any other
series; and (xiii) any other relevant terms. None of the Depositor, the related
Servicer, the related Trustee or any Master Trust is required or intends to
obtain the consent of any Securityholder of any outstanding series to issue any
additional series.
Each Master Trust Agreement provides that the Depositor may designate
terms such that each Master Trust New Issuance has an amortization period which
may have a different length and begin on a different date than such periods for
any series previously issued by the related Master Trust and then outstanding.
Moreover, each Master Trust New Issuance may have the benefits of Credit
Enhancements issued by enhancement providers different from the providers of the
Credit Enhancement, if any, with respect to any series previously issued by the
related Master Trust and then outstanding. Under each Master Trust Agreement,
the related Trustee shall hold any such Credit Enhancement only on behalf of the
Securityholders to which such Credit Enhancement relates. The Depositor will
have the option under each Master Trust Agreement to vary among series the terms
upon which a series may be repurchased
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by the Issuer or remarketed to other investors. As more fully described in a
related Prospectus Supplement, there is no limit to the number of Master Trust
New Issuances that the Depositor may cause under a Master Trust Agreement. Each
Master Trust will terminate only as provided in the related Master Trust
Agreement. There can be no assurance that the terms of any Master Trust New
Issuance might not have an impact on the timing and amount of payments received
by Securityholders of another series issued by the same Master Trust.
Under each Master Trust Agreement and pursuant to a related supplement, a
Master Trust New Issuance may only occur upon the satisfaction of certain
conditions provided in each such Master Trust Agreement. The obligation of the
related Trustee to authenticate the Securities of any such Master Trust New
Issuance and to execute and deliver the supplement to the related Master Trust
Agreement is subject to the satisfaction of the following conditions: (a) on or
before the fifth business day immediately preceding the date upon which the
Master Trust New Issuance is to occur, the Depositor shall have given the
related Trustee, the related Servicer, the Rating Agency and certain related
providers of Credit Enhancement, if any, written notice of such Master Trust New
Issuance and the date upon which the Master Trust New Issuance is to occur; (b)
the Depositor shall have delivered to the related Trustee a supplement to the
related Master Trust Agreement, in form satisfactory to such Trustee, executed
by each party to the related Master Trust Agreement other than such Trustee; (c)
the Depositor shall have delivered to the related Trustee any related Credit
Enhancement agreement; (d) the related Trustee shall have received confirmation
from the Rating Agency that such Master Trust New Issuance will not result in
any Rating Agency reducing or withdrawing its rating with respect to any other
series or Class of such Trust (any such reduction or withdrawal is referred to
herein as a "Ratings Effect"); (e) the Depositor shall have delivered to the
related Trustee, the Rating Agency and certain providers of Credit Enhancement,
if any, an opinion of counsel acceptable to the related Trustee that for federal
income tax purposes (i) following such Master Trust New Issuance the related
Master Trust will not be deemed to be an association (or publicly traded
partnership) taxable as a corporation, (ii) such Master Trust New Issuance will
not affect the tax characterization as debt of Securities of any outstanding
series or Class issued by such Master Trust that were characterized as debt at
the time of their issuance and (iii) such Master Trust New Issuance will not
cause or constitute an event in which gain or loss would be recognized by any
Securityholders or the related Master Trust; and (f) any other conditions
specified in any supplement. Upon satisfaction of the above conditions, the
related Trustee shall execute the supplement to the related Master Trust
Agreement and issue the Securities of such new series.
Book-Entry Registration
As may be described in the related Prospectus Supplement, Securityholders
of a given series may hold their Securities through DTC (in the United States)
or CEDEL or Euroclear (in Europe) if they are participants of such systems, or
indirectly through organizations that are participants in such systems.
Cede, as nominee for DTC, will hold the global Securities in respect of a
given series. CEDEL and Euroclear will hold omnibus positions on behalf of the
CEDEL Participants (as defined below) and the Euroclear Participants (as defined
below) (collectively, the "Participants"), respectively, through customers'
securities accounts in CEDEL's and Euroclear's names on the books of their
respective depositaries (collectively, the "Depositaries") which in turn will
hold such positions in customers' securities accounts in the Depositaries' names
on the books of DTC.
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 UCC and a "clearing agency"
registered pursuant to Section 17A of the Exchange Act. DTC was created to hold
securities for its Participants and to facilitate the clearance and settlement
of securities transactions between Participants through electronic book-entries,
thereby eliminating the need for physical movement of notes or certificates.
Participants include securities brokers and dealers, banks, trust companies and
clearing corporations. 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 ("Indirect Participants").
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Transfers between DTC Participants will occur in accordance with DTC
rules. Transfers between CEDEL Participants and Euroclear Participants will
occur in the ordinary way in accordance with their applicable rules and
operating procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through CEDEL
Participants or Euroclear Participants, on the other, will be effected in DTC in
accordance with DTC rules on behalf of the relevant European international
clearing system by its Depositary; however, such cross-market transactions will
require delivery of instructions to the relevant European international clearing
system by the counterparty in such system in accordance with its rules and
procedures and within its established deadlines (European time). The relevant
European international clearing system will, if the transaction meets its
settlement requirements, deliver instructions to its Depositary to take action
to effect final settlement on its behalf by delivering or receiving securities
in DTC, and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to DTC. CEDEL Participants and Euroclear
Participants may not deliver instructions directly to the Depositaries.
Because of time-zone differences, credits of securities in CEDEL or
Euroclear as a result of a transaction with a DTC Participant will be made
during the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions in such
securities settled during such processing will be reported to the relevant CEDEL
Participant or Euroclear Participant on such business day. Cash received in
CEDEL or Euroclear as a result of sales of securities by or through a CEDEL
Participant or a Euroclear Participant to a DTC Participant will be received
with value on the DTC settlement date but will be available in the relevant
CEDEL or Euroclear cash account only as of the business day following settlement
in DTC.
The Securityholders of a given series that are not Participants or
Indirect Participants but desire to purchase, sell or otherwise transfer
ownership of, or other interests in, Securities of such series may do so only
through Participants and Indirect Participants. In addition, Securityholders of
a given series will receive all distributions of principal and interest through
the Participants who in turn will receive them from DTC. Under a book-entry
format, Securityholders of a given series may experience some delay in their
receipt of payments, since such payments will be forwarded by the applicable
Trustee to Cede, as nominee for DTC. DTC will forward such payments to its
Participants, which thereafter will forward them to Indirect Participants or
such Securityholders. It is anticipated that the only "Securityholder" in
respect of any series will be Cede, as nominee of DTC. Securityholder of a given
series will not be recognized as Securityholders of such series, and such
Securityholders will be permitted to exercise the rights of Securityholders of
such series only indirectly through DTC and its Participants.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers of
Securities of a given series among Participants on whose behalf it acts with
respect to such Securities and to receive and transmit distributions of
principal of, and interest on, such Securities. Participants and Indirect
Participants with which the Securityholders of a given series have accounts with
respect to such Securities similarly are required to make book-entry transfers
and receive and transmit such payments on behalf of their respective
Securityholders of such series. Accordingly, although such Securityholders will
not possess 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 of a given series to pledge Securities of such series to persons
or entities that do not participate in the DTC system, or to otherwise act with
respect to such Securities, may be limited due to the lack of a physical
certificate for such Securities.
DTC will advise the Trustee in respect of each Series that it will take
any action permitted to be taken by a Securityholder of the related series only
at the direction of one or more Participants to whose accounts with DTC the
Securities of such series are credited. DTC may take conflicting actions with
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respect to other undivided interests to the extent that such actions are taken
on behalf of Participants whose holdings include such undivided interests.
CEDEL is incorporated under the laws of Luxembourg as a professional
depository. CEDEL holds securities for its participating organizations ("CEDEL
Participants") and facilitates the clearance and settlement of securities
transactions between CEDEL Participants through electronic book-entry changes in
accounts of CEDEL Participants, thereby eliminating the need for physical
movement of certificates. Transactions may be settled in CEDEL in any of 28
currencies, including United States dollars. CEDEL provides to its CEDEL
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. CEDEL interfaces with domestic markets in several
countries. As a professional depository, CEDEL is subject to regulation by the
Luxembourg Monetary Institute. CEDEL Participants are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. Indirect access to CEDEL is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a CEDEL Participant, either directly or indirectly.
Euroclear was created in 1968 to hold securities for participants of the
Euroclear System ("Euroclear Participants") and to clear and settle transactions
between Euroclear Participants through simultaneous electronic book-entry
delivery against payment, thereby eliminating the need for physical movement of
certificates and any risk from lack of simultaneous transfers of securities and
cash. Transactions may now be settled in any of 28 currencies, including United
States dollars. The Euroclear System includes various other services, including
securities lending and borrowing and interfaces with domestic markets in several
countries generally similar to the arrangements for cross-market transfers with
DTC described above. Euroclear is operated by Morgan Guaranty Trust Company of
New York, Brussels, Belgium office, under contract with Euroclear Clearance
System, S.C., a Belgian cooperative corporation (the "Cooperative"). All
operations are conducted by the "Euroclear Operator" (as defined below), and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear Operator, not the Cooperative. The Cooperative establishes
policy for the Euroclear System on behalf of Euroclear Participants. Euroclear
Participants include banks (including central banks), securities brokers and
dealers and other professional financial intermediaries and may include the
Underwriters. Indirect access to the Euroclear System is also available to other
firms that clear through or maintain a custodial relationship with a Euroclear
Participant, either directly or indirectly.
The "Euroclear Operator" is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear and
the related Operating Procedures of the Euroclear System and applicable Belgian
law (collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawal of
securities and cash from the Euroclear System, and receipts of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific certificates
to specific securities clearance accounts. The Euroclear Operator acts under the
Terms and Conditions only on behalf of Euroclear Participants and has no record
of relationship with persons holding through Euroclear Participants.
Except as required by law, the Trustee in respect of a series will not
have any liability for any aspect of the records relating to or payments made or
account of beneficial ownership interests of the related Securities held by
Cede, as nominee for DTC, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
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Definitive Notes
As may be described in the related Prospectus Supplement, the Securities
will be issued in fully registered, certificated form ("Definitive Securities")
to the Securityholders of a given series or their nominees, rather than to DTC
or its nominee, only if (i) the Trustee in respect of the related series advises
in writing that DTC is no longer willing or able to discharge properly its
responsibilities as depository with respect to such Securities and such Trustee
is unable to locate a qualified successor, (ii) such Trustee, at its option,
elects to terminate the book-entry-system through DTC or (iii) after the
occurrence of an "Event of Default" under the related Indenture or a default by
the Servicer under the related Trust Agreements, Securityholders representing at
least a majority of the outstanding principal amount of such Securities advise
the applicable Trustee through DTC in writing that the continuation of a
book-entry system through DTC (or a successor thereto) is no longer in such
Securityholders' best interest.
Upon the occurrence of any event described in the immediately preceding
paragraph, the applicable Trustee will be required to notify all such
Securityholders through Participants of the availability of Definitive
Securities. Upon surrender by DTC of the definitive certificates representing
such Securities and receipt of instructions for re-registration, the applicable
Trustee will reissue such Securities as Definitive Securities to such
Securityholders.
Distributions of principal of, and interest on, such Securities will
thereafter be made by the applicable Trustee in accordance with the procedures
set forth in the related Indenture or Trust Agreement directly to holders of
Definitive Securities in whose names the Definitive Securities were registered
at the close of business on the applicable Record Date specified for such
Securities in the related Prospectus Supplement. Such distributions will be made
by check mailed to the address of such holder as it appears on the register
maintained by the applicable Trustee. The final payment on any such Security,
however, will be made only upon presentation and surrender of such Security at
the office or agency specified in the notice of final distribution to the
applicable Securityholders.
Definitive Securities in respect of a given series of Securities will be
transferable and exchangeable at the offices of the applicable Trustee or of a
certificate registrar named in a notice delivered to holders of such Definitive
Securities. No service charge will be imposed for any registration of transfer
or exchange, but the applicable Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge imposed in connection therewith.
Reports to Securityholders
With respect to each series of Securities, on or prior to each Payment
Date for such series, the related Servicer or the related Trustee will forward
or cause to be forwarded to each holder of record of such class of Securities a
statement or statements with respect to the related Trust Fund setting forth the
information specifically described in the related Trust Agreement which
generally will include the following information:
(i) the amount of the distribution with respect to each class of
Securities;
(ii) the amount of such distribution allocable to principal;
(iii) the amount of such distribution allocable to interest;
(iv) the Pool Balance, if applicable, as of the close of business on
the last day of the related Remittance Period;
(v) the aggregate outstanding principal balance and the Pool Factor
for each Class of Securities after giving effect to all payments reported
under (ii) above on such Payment Date;
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(vi) the amount paid to the Servicer, if any, with respect to the
related Remittance Period;
(vii) the amount of the aggregate purchase amounts for Receivables
that have been reacquired, if any, for such Remittance Period; and
(viii) the amount of coverage under any letter of credit, financial
guaranty insurance policy, reserve account or other form of credit
enhancement covering default risk as of the close of business on the
applicable Payment Date and a description of any Credit Enhancement
substituted therefor.
Each amount set forth pursuant to subclauses (i), (ii), (iii) and (v) with
respect to the Securities of any series will be expressed as a dollar amount per
$1,000 of the initial principal balance of such Securities, as applicable.
Within the prescribed period of time for tax reporting purposes after the
end of each calendar year, the applicable Trustee will provide to the
Securityholders a statement containing the amounts described in (ii) and (iii)
above for that calendar year and any other information required by applicable
tax laws, for the purpose of the Securityholders' preparation of federal income
tax returns.
DESCRIPTION OF THE TRUST AGREEMENTS
The following summary describes certain terms of each Trust Agreement
pursuant to which a Trust Fund will be created and the related Securities in
respect of such Trust Fund will be issued. For purposes of this Prospectus, the
term "Trust Agreement" as used with respect to a Trust means, collectively, and
except as otherwise specified, any and all agreements relating to the
establishment of the related Trust, the servicing of the related Receivables and
the issuance of the related Securities, including without limitation the
Indenture, (i.e. pursuant to which any Notes shall be issued). Forms of the
Trust Agreement have been filed as exhibits to the Registration Statement of
which the Prospectus forms a part. The summary does not purport to be complete.
It is qualified in its entirety by reference to the provisions of the Trust
Agreements.
Acquisition of the Receivables Pursuant to a Receivables Acquisition Agreement
On the Closing Date specified with respect to any given series of
Securities, the Depositor will acquire the related Receivables from the related
Originator pursuant to a Receivables Acquisition Agreement. The Depositor will
either transfer such Receivables to a Trust pursuant to a Pooling Agreement, or
will pledge the Depositor's right, title and interests in and to such
Receivables to a Trustee on behalf of Securityholders pursuant to an Indenture.
The rights and benefits of the Depositor under such Receivables Acquisition
Agreement will be assigned to the Trustee on behalf of Securityholders as
collateral for the Securities of the related series issued by a Trust or
pursuant to an Indenture. The obligations of the Depositor and the related
Servicer under such Trust Agreements include those specified below and in the
related Prospectus Supplement.
As more fully described in the related Prospectus Supplement, the
Depositor and/or the related Originator will be obligated to acquire from the
related Trust Fund its interest in any Receivable transferred to a Trust or
pledged to a Trustee on behalf of Securityholders if the interest of the
Securityholders therein is materially adversely affected by a breach of any
representation or warranty made by the Depositor or the related Originator with
respect to such Receivable, which breach has not been cured following the
discovery by or notice to the Depositor of the breach. To the extent that the
Depositor so acquires any Receivables, the related Originator will be obligated
to acquire such Receivables from the Depositor pursuant to the related
Receivables Acquisition Agreement contemporaneously with the Depositor's
acquisition of its interest in such Receivables from the applicable Trust Fund.
The obligation of the Depositor to acquire any such Receivables with respect to
which an
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Originator has breached a representation or warranty is subject to such
Originator's acquisition of such Receivables from the Depositor. In addition, if
so specified in the related Prospectus Supplement, the Depositor may from time
to time reacquire certain Receivables or substitute other Receivables for such
Receivable held by a Trust Fund subject to specified conditions set forth in the
related Trust Agreement and Receivables Acquisition Agreement.
Accounts
With respect to each series of Securities issued by a Trust, the related
Servicer will establish and maintain with the applicable Trustee one or more
accounts, in the name of such Trustee on behalf of the related Securityholders,
into which all payments made on or with respect to the related Receivables will
be deposited (the "Collection Account"). The Servicer will also establish and
maintain with such Trustee separate accounts, in the name of such Trustee on
behalf of such Securityholders, in which amounts released from the Collection
Account and the reserve account or other Credit Enhancement, if any, for
distribution to such Securityholders will be deposited and from which
distributions to such Securityholders will be made (the "Distribution Account").
Any other accounts to be established with respect to a Trust, including
any reserve account, will be described in the related Prospectus Supplement.
For any series of Securities, funds in the Collection Account, the
Distribution Account, any reserve account and other accounts identified as such
in the related Prospectus Supplement (collectively, the "Trust Accounts") shall
be invested as provided in the related Trust Agreement in Eligible Investments.
"Eligible Investments" are generally limited to investments acceptable to the
Rating Agencies as being consistent with the rating of such Securities. Subject
to certain conditions, Eligible Investments may include securities issued by the
Depositor, the related Originator, the related Servicer or their respective
affiliates or other trusts created by the Depositor or its affiliates. Except as
described below or in the related Prospectus Supplement, Eligible Investments
are limited to obligations or securities that mature not later than the business
day immediately preceding the related Payment Date. However, subject to certain
conditions, funds in the reserve account may be invested in securities that will
not mature prior to the date of the next distribution and will not be sold to
meet any shortfalls. Thus, the amount of cash in any reserve account at any time
may be less than the balance of such reserve account. If the amount required to
be withdrawn from any reserve account to cover shortfalls in collections on the
related Receivables exceeds the amount of cash in such reserve account a
temporary shortfall in the amounts distributed to the related Securityholders
could result, which could, in turn, increase the average life of the Securities
of such series. Except as otherwise specified in the related Prospectus
Supplement, investment earnings on funds deposited in the applicable Trust
Accounts, net of losses and investment expenses (collectively, "Investment
Earnings"), shall be deposited in the applicable Collection Account on each
Payment Date and shall be treated as collections of interest on the related
Receivables.
The Trust Accounts will be maintained as Eligible Deposit Accounts.
"Eligible Deposit Account" means either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate trust
department of a depository institution organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
(or any domestic branch of a foreign bank), having corporate trust powers and
acting as trustee for funds deposited in such account, so long as any of the
securities of such depository institution has a credit rating from each Rating
Agency in one of its generic rating categories which signifies investment grade.
"Eligible Institution" means, with respect to a Trust, (a) the corporate trust
department of the related Indenture Trustee or the related Trustee, as
applicable, or (b) a depository institution organized under the laws of the
United States of America or any one of the states thereof or the District of
Columbia (or any domestic branch of a foreign bank), which (i) (A) has either
(w) a long-term unsecured debt rating acceptable to the Rating Agencies or (x) a
short-term unsecured debt rating or certificate of deposit rating acceptable to
the Rating Agencies or (B) the parent corporation of which has either (y) a
long-term unsecured debt rating acceptable to the Rating Agencies
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or (z) 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.
To the extent that an Originator's or a Servicer's unsecured debt ratings
are acceptable to the Rating Agencies, amounts deposited to any Trust Account
may be commingled with Originator's or Servicer's general account moneys. Any
rights to so commingle moneys will be described in the related Prospectus
Supplement.
The Servicer
The Servicer under each Trust Agreement will be named in the related
Prospectus Supplement. The entity serving as Servicer may be an affiliate of the
Depositor and may have other business relationships with the Depositor or the
Depositor's affiliates. The Servicer with respect to each Series will service
the Receivables contained in the Trust Fund for such Series. Any Servicer may
delegate its servicing responsibilities to one or more sub-servicers, but will
not be relieved of its liabilities with respect thereto.
Each Servicer will make certain representations and warranties regarding
its authority to enter into, and its ability to perform its obligations under,
the related Trust Agreement. An uncured breach of such a representation or
warranty that in any respect materially and adversely affects the interests of
the Securityholders will constitute a Servicer Default by such Servicer under
the related Trust Agreement.
Servicing Procedures
Each Trust Agreement will provide that the related Servicer will make
reasonable efforts to collect all payments due with respect to the Receivables
held in the related Trust Fund and, in a manner consistent with the related
Trust Agreement, will continue such collection procedures as such Servicer
follows with respect to the particular type of Receivable in the particular pool
it services for itself and others. Consistent with its normal procedures, the
Servicer may, in its discretion and on a case-by-case basis, arrange with the
Lessee on a Receivable to extend or modify the payment schedule. Some of such
arrangements (including, without limitation any extension of the payment
schedule beyond the final scheduled Payment Date for the related Securities may
result in the Servicer acquiring such Receivable if such Contract becomes a
Defaulted Contract. The Servicer may sell the Equipment securing the respective
Defaulted Contract, if any, at a public or private sale, or take any other
action permitted by applicable law. See "Certain Legal Aspects of the
Receivables".
The material aspects of any particular Servicer's collections procedures
will be set forth in the related Prospectus Supplement.
Payments on Receivables
With respect to each series of Securities, the related Servicer will
deposit all payments on the related Receivables (from whatever source) and all
proceeds of such Receivables collected within two (2) business days of receipt
thereof in the related collection facility, such as a lock-box account or
collection account. Moneys deposited in such collection facility for a Trust
Fund may be commingled with funds from other sources. As specified in the
related Prospectus Supplement, the related Servicer will be required to deposit
payments on the related Receivables (from whatever source) collected during each
collection period (each, a "Collection Period") into the related Collection
Account on a specified day each month. Pending deposit into the related
Collection Account, collections in such collection facility may be invested by
the related Servicer at its own risk and for its own benefit, and will not be
segregated from funds of the related Servicer.
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Servicing Compensation
As may be described in the related Prospectus Supplement with respect to
any series of securities issued by a Trust, the related Servicer will be
entitled to receive a servicing fee for each Collection Period (the "Servicing
Fee") in an amount equal to a specified percentage per annum (as set forth in
the related Prospectus Supplement, the "Servicing Fee Rate") of the value of the
assets held in the related Trust Fund, generally as of the first day of such
Collection Period. Each Prospectus Supplement and Servicing Agreement will
specify the priority of distributions with respect to the Servicing Fee
(together with any portion of the Servicing Fee that remains unpaid from prior
Payment Dates), such Servicing Fee may be paid prior to any distribution to the
related Securityholders.
Each Servicer will also collect and retain any late fees, the penalty
portion of interest paid on past due amounts and other administrative fees or
similar charges allowed by applicable law with respect to the Receivables, and
will be entitled to reimbursement from each Trust for certain liabilities.
Payments by or on behalf of Lessees will be allocated to scheduled payments and
late fees and other charges in accordance with such Servicer's normal practices
and procedures.
The Servicing Fee will compensate the related Servicer for performing the
functions of a third party servicer of similar types of receivables as an agent
for their beneficial owner, including collecting and posting all payments,
responding to inquiries of Lessees on the related Receivables, investigating
delinquencies, sending payment coupons to Lessees, reporting tax information to
Lessees, paying costs of collection and disposition of defaults, and policing
the collateral. The Servicing Fee also will compensate the related Servicer for
administering the related Receivables, accounting for collections and furnishing
statements to the applicable Trustee and the applicable Indenture Trustee, if
any, with respect to distributions. The Servicing Fee also will reimburse the
related Servicer for certain taxes, accounting fees, outside auditor fees, data
processing costs and other costs incurred in connection with administering the
Receivables.
Distributions
With respect to each series of Securities, beginning on the Payment Date
specified in the related Prospectus Supplement, distributions of principal and
interest (or, where applicable, of principal or interest only) on each Class of
such Securities entitled thereto will be made by the applicable Indenture
Trustee to the Noteholders and by the applicable Trustee to the
Certificateholders of such series. The timing, calculation, allocation, order,
source, priorities of and requirements for each class of Noteholders and all
distributions to each class of Certificateholders of such series will be set
forth in the related Prospectus Supplement.
With respect to each series of Securities, on each Payment Date
collections on the related Receivables will be transferred from the Collection
Account to the Distribution Account for distribution to Securityholders,
respectively, to the extent provided in the related Prospectus Supplement.
Credit Enhancement, such as a reserve account, may be available to cover any
shortfalls in the amount available for distribution on such date, to the extent
specified in the related Prospectus Supplement. As more fully described in the
related Prospectus Supplement, and unless otherwise specified therein,
distributions in respect of principal of a Class of Securities of a given series
will be subordinate to distributions in respect of interest on such Class, and
distributions in respect of the Certificates of such series may be subordinate
to payments in respect of the Notes of such series.
Credit and Cash Flow Enhancements
The amounts and types of Credit Enhancement arrangements, if any, and the
provider thereof, if applicable, with respect to each class of Securities of a
given series will be set forth in the related Prospectus Supplement. If and to
the extent provided in the related Prospectus Supplement, credit
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enhancement may be in the form of a Policy, subordination of one or more Classes
of Securities, reserve accounts, overcollateralization, letters of credit,
credit or liquidity facilities, third party payments or other support, surety
bonds, guaranteed cash deposits or such other arrangements as may be described
in the related Prospectus Supplement or any combination of two or more of the
foregoing. If specified in the applicable Prospectus Supplement, Credit
Enhancement for a Class of Securities may cover one or more other Classes of
Securities of the same series, and Credit Enhancement for a series of Securities
may cover one or more other series of Securities.
The presence of Credit Enhancement for the benefit of any Class or series
of Securities is intended to enhance the likelihood of receipt by the
Securityholders or such Class or series of the full amount of principal and
interest due thereon and to decrease the likelihood that such Securityholders
will experience losses. As more specifically provided in the related Prospectus
Supplement, the credit enhancement for a Class or series of Securities will not
provide protection against all risks of loss and will not guarantee repayment of
the entire principal balance and interest thereon. If losses occur which exceed
the amount covered by any Credit Enhancement or which are not covered by any
Credit Enhancement, Securityholders of any Class or series will bear their
allocable share of deficiencies, as described in the related Prospectus
Supplement. In addition, if a form of Credit Enhancement covers more than one
series of Securities, Securityholders of any such series will be subject to the
risk that such Credit Enhancement will be exhausted by the claims of
Securityholders of other series.
Statements to Indenture Trustees and Trustees
Prior to each Payment Date with respect to each series of Securities, the
related Servicer will provide to the applicable Indenture Trustee and/or the
applicable Trustee and Credit Enhancer as of the close of business on the last
day of the preceding related Collection Period a statement setting forth
substantially the same information as is required to be provided in the periodic
reports provided to Securityholders of such series described under "Description
of the Securities--Reports to Securityholders".
Evidence as to Compliance
Each Trust Agreement will provide that a firm of independent public
accountants will furnish to the related Trust and/or the applicable Indenture
Trustee and Credit Enhancer, annually, a statement as to compliance by the
related Servicer during the preceding twelve months (or, in the case of the
first such certificate, the period from the applicable Closing Date) with
certain standards relating to the servicing of the Receivables.
Each Trust Agreement will also provide for delivery to the related Trust
and/or the applicable Indenture Trustee of a certificate signed by an officer of
the related Servicer stating that such Servicer either has fulfilled its
obligations under such Trust Agreement in all material respects throughout the
preceding 12 months (or, in the case of the first such certificate, the period
from the applicable Closing Date) or, if there has been a default in the
fulfillment of any such obligation in any material respect, describing each such
default. Each Servicer also will agree to give each Indenture Trustee and each
Trustee notice of certain "Servicer Defaults" (as defined below) under the
related Trust Agreement.
Copies of such statements and certificates may be obtained by
Securityholders by a request in writing addressed to the applicable Indenture
Trustee or the applicable Trustee.
Certain Matters Regarding the Servicers
Each Trust Agreement will provide that the related Servicer may not resign
from its obligations and duties as Servicer thereunder, except upon
determination that the performance by such Servicer of
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such duties is no longer permissible under applicable law. No such resignation
will become effective until the related Trustee or a successor servicer has
assumed such Servicer's servicing obligations and duties under the Trust
Agreement.
Except as otherwise provided in the related Prospectus Supplement, each
Trust Agreement will further provide that neither the related Servicer nor any
of its respective directors, officers, employees, or agents shall be under any
liability to the related Issuer or the related Securityholders for taking any
action or for refraining from taking any action pursuant to such Trust
Agreement, or for errors in judgment; provided, however, that neither such
Servicer nor any such person will be protected against any liability that would
otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties thereunder. In addition, such Trust Agreement will
provide that the related Servicer is under no obligation to appear in,
prosecute, or defend any legal action that is not incidental to its servicing
responsibilities under such Trust Agreement and that, in its opinion, may cause
it to incur any expense or liability.
Under the circumstances specified in any such Trust Agreement, any entity
into which the related Servicer may be merged or consolidated, or any entity
resulting from any merger or consolidation to which such Servicer is a party, or
any entity succeeding to the business of the Servicer or, with respect to its
obligations as Servicer, which corporation or other entity in each of the
foregoing cases assumes the obligations of such Servicer, will be the successor
to such Servicer under such Trust Agreement.
Servicer Default
Except as otherwise provided in the related Prospectus Supplement,
"Servicer Default" under a Trust Agreement will include (i) any failure by the
related Servicer to deliver to the applicable Trustee for deposit in any of the
related Trust Accounts any required payment or to direct such Trustee to make
any required distributions therefrom, which failure continues unremedied for
greater than three (3) Business Days after written notice from such Trustee is
received by such Servicer or after discovery by such Servicer; (ii) any failure
by such Servicer or the related Originator, as the case may be, duly to observe
or perform in any material respect any other covenant or agreement in such Trust
Agreement, which failure materially and adversely affects the rights of the
related Securityholders and which continues unremedied for greater than ninety
(90) days after the giving of written notice of such failure (1) to such
Servicer or the related Originator, as the case may be, by the applicable
Trustee or (2) to the Servicer or the related Originator, as the case may be,
and to the applicable Trustee by holders of the related Securities, as
applicable, evidencing not less than 25% of the voting rights of such
outstanding Securities; and (iii) any Insolvency Event. An "Insolvency Event"
shall mean financial insolvency, readjustment of debt, marshalling of assets and
liabilities, or similar proceedings with respect to the Servicer or the related
Originator and certain actions by the Servicer or the related Originator
indicating its insolvency, reorganization pursuant to bankruptcy proceedings, or
inability to pay its obligations.
Rights upon Servicer Default
As more fully described in the related Prospectus Supplement, as long as a
Servicer Default under a Trust Agreement remains unremedied, the applicable
Trustee, Credit Enhancer or holders of Securities of the related series
evidencing not less than 25% of the voting rights of such then outstanding
Securities may terminate all the rights and obligations of the Servicer, if any,
under such Trust Agreement, whereupon a successor servicer appointed by such
Trustee or such Trustee will succeed to all the responsibilities, duties and
liabilities of the Servicer under such Trust Agreement and will be entitled to
similar compensation arrangements. If, however, a bankruptcy trustee or similar
official has been appointed for the Servicer, and no Servicer Default other than
such appointment has occurred, such bankruptcy trustee or official may have the
power to prevent the applicable Trustee or such Securityholders from effecting a
transfer of servicing. In the event that the Trustee is unwilling or unable to
so act, it may appoint, or petition a court of competent jurisdiction for the
appointment of, a successor with a net worth of at least $25,000,000 and whose
regular business includes the servicing of a similar
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type of receivables. Such Trustee may make such arrangements for compensation to
be paid, which in no event may be greater than the servicing compensation
payable to the Servicer under the related Trust Agreement.
Waiver of Past Defaults
With respect to each Trust Fund, unless otherwise provided in the related
Prospectus Supplement and subject to the approval of any Credit Enhancer, the
holders of Notes evidencing at least a majority of the voting rights of such
then outstanding Securities may, on behalf of all Securityholders of the related
Securities, waive any default by the Servicer, or by the related Originator, in
the performance of its obligations under the related Trust Agreement and its
consequences, except a default in making any required deposits to or payments
from any of the Trust Accounts in accordance with such Trust Agreement. No such
waiver shall impair the Securityholders' rights with respect to subsequent
defaults.
Amendment
As more fully described in the related Prospectus Supplement, each of the
Trust Agreements may be amended by the parties thereto, without the consent of
the related Securityholders, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of such Trust
Agreements or of modifying in any manner the rights of such Securityholders;
provided that such action will not, in the opinion of counsel satisfactory to
the applicable Trustee, materially and adversely affect the interests of any
such Securityholder and subject to the approval of any Credit Enhancer. As may
be describe in the related Prospectus Supplement, the Trust Agreements may also
be amended by the Depositor, the Servicer, and the applicable Trustee with the
consent of the holders of Securities evidencing at least a majority of the
voting rights of such then outstanding Securities for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
such Trust Agreements or of modifying in any manner the rights of such
Securityholders; provided, however, that no such amendment may (i) increase or
reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on the related Receivables or distributions that are
required to be made for the benefit of such Securityholders or (ii) reduce the
aforesaid percentage of the Securities of such series which are required to
consent to any such amendment, without the consent of the Securityholders of
such series.
Insolvency Event
As described in the related Prospectus Supplement, if an Insolvency Event
occurs with respect to a Debtor relating to the applicable Trust Fund, the
related Trust will terminate, and the Receivables held in the related Trust Fund
will be liquidated and each such Trust will be terminated 90 days after the date
of such Insolvency Event, unless, before the end of such 90-day period, the
Trustee of such Trust shall have received written instructions from each of the
related Securityholders (other than the Depositor) and/or Credit Enhancer to the
effect that such party disapproves of the liquidation of such Receivables.
Promptly after the occurrence of any Insolvency Event with respect to a Debtor,
notice thereof is required to be given to such Securityholders and/or Credit
Enhancer; provided, however, that any failure to give such required notice will
not prevent or delay termination of any Trust. Upon termination of any Trust,
the applicable Trustee shall direct that the assets of such Trust be promptly
sold (other than the related Trust Accounts) in a commercially reasonable manner
and on commercially reasonable terms. The proceeds from any such sale,
disposition or liquidation of such Receivables will be treated as collections on
such Receivables and deposited in the related Collection Account. If the
proceeds from the liquidation of such Receivables and any amounts on deposit in
the Reserve Account, if any, and the related Distribution Account are not
sufficient to pay the Securities of the related series in full, and no
additional Credit Enhancement is available, the amount of principal returned to
Securityholders will be reduced and some or all of such Securityholders will
incur a loss.
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Each Trust Agreement will provide that the applicable Trustee does not
have the power to commence a voluntary proceeding in bankruptcy with respect to
any related Trust without the unanimous prior approval of all Certificateholders
(including the Depositor, if applicable) of such Trust and the delivery to such
Trustee by each such Certificateholder of a certificate certifying that such
Certificateholder reasonably believes that such Trust is insolvent.
Termination
With respect to each Trust, the obligations of the related Servicer, the
related Originator(s), the Depositor and the applicable Trustee pursuant to the
related Trust Agreement will terminate upon the earlier to occur of (i) the
maturity or other liquidation of the last related Receivable and the disposition
of any amounts received upon liquidation of any such remaining Receivables and
(ii) the payment to Securityholders of the related series of all amounts
required to be paid to them pursuant to such Trust Agreement. As more fully
described in the related Prospectus Supplement, in order to avoid excessive
administrative expense, the related Servicer will be permitted in respect of the
applicable Trust Fund, unless otherwise specified in the related Prospectus
Supplement, at its option to purchase from such Trust Fund, as of the end of any
Collection Period immediately preceding a Payment Date, if the Discounted
Contract Balance of the related Contracts is less than a specified percentage
(set forth in the related Prospectus Supplement) of the initial Pool Balance in
respect of such Trust Fund, all such remaining Receivables at a price equal to
the aggregate of the Purchase Amounts thereof as of the end of such Collection
Period. The related Securities will be redeemed following such purchase.
If and to the extent provided in the related Prospectus Supplement with
respect to a Trust Fund, the applicable Trustee will, within ten days following
a Payment Date as of which the Pool Balance is equal to or less than the
percentage of the initial Pool Balance specified in the related Prospectus
Supplement, solicit bids for the purchase of the Receivables remaining in such
Trust, in the manner and subject to the terms and conditions set forth in such
Prospectus Supplement. If such Trustee receives satisfactory bids as described
in such Prospectus Supplement, then the Receivables remaining in such Trust Fund
will be sold to the highest bidder.
As more fully described in the related Prospectus Supplement, any
outstanding Notes of the related series will be redeemed 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
pursuant to the applicable Trust Agreement may effect the prepayment of the
Certificates of such series.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
General
The Contracts that comprise the Receivables will be "chattel paper" as
defined in the Uniform Commercial Code. Pursuant to the UCC for most purposes, a
sale of chattel paper is treated in a manner similar to a transaction creating a
security interest in chattel paper. The Depositor, the related Servicer and/or
the related Originator(s) will cause the filing of appropriate UCC-1 financing
statements to be made with the appropriate governmental authorities. Under the
Trust Agreement, the related Servicer will be obligated from time to time to
take such actions as are necessary to protect and perfect the Trust's or the
Trustee's interests in the Contracts and their proceeds.
The Equipment
The related Originator will convey a security interest in the related
Equipment to the Depositor. UCC financing statements will not be filed to
perfect any security interest in the Equipment unless otherwise specified in the
related Prospectus Supplement. Moreover, in the event of the
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repossession and resale of Equipment, it may be subject to a superior lien. In
such case, the senior lienholder may be entitled to be paid the full amount of
the indebtedness owed to it out of the sale proceeds before such proceeds could
be applied to the payment of claims of the related Servicer on behalf of the
Trust.
In the event of a default by the Lessee, the related Servicer on behalf of
the related Trustee may take action to enforce such Defaulted Contract by
repossession and resale of the leased Equipment. Under the UCC in most states, a
creditor can, without prior notice to the debtor, repossess assets securing a
defaulted contract by the Lessee's voluntary surrender of such assets or by
"self-help" repossession that does not involve a breach of the peace and by
judicial process.
In the event of a default by the Lessee, some jurisdictions require that
the Lessee be notified of the default and be given a time period within which it
may cure the default prior to repossession. Generally, this right of
reinstatement may be exercised on a limited number of occasions in any one-year
period.
The UCC and other state laws place restrictions on repossession sales,
including requirements that the secured party provide the Lessee with reasonable
notice of the date, time and place of any public sale and/or the date after
which any private sale of the collateral may be held and that any such sale be
conducted in a commercially reasonable manner. Each Trust Agreement may require
the related Servicer to sell promptly any repossessed item of Equipment,
reacquire such Equipment from the Trust Fund, re - lease such Equipment for the
benefit of the Securityholders or take such other action as specified in the
related Prospectus Supplement.
Under most state laws, a Lessee has the right to redeem collateral for its
obligations prior to actual sale by paying the secured party the unpaid balance
of the obligation plus reasonable expenses for repossession, holding and
preparing the collateral for disposition and arranging for its sale, plus, to
the extent provided for in the written agreement of the parties, reasonable
attorneys' fees.
In addition, because the market value of the equipment of the type
financed pursuant to the Receivables generally declines with age and because of
obsolescence, the net disposition proceeds of leased Equipment at any time
during the term of the lease may be less than the outstanding balance on the
Contract principal balance which it secures. Because of this, and because other
creditors may have rights in the related leased Equipment superior to those of
the related Trust Fund, the related Servicer may not be able to recover the
entire amount due on a Defaulted Contract in the event that such Servicer elects
to repossess and sell such leased Equipment at any time.
Under the UCC and laws applicable in most states, a creditor is entitled
to obtain a deficiency judgment from a Lessee for any deficiency on repossession
and resale of the asset securing the unpaid balance of such Lessee's contract.
However, some states impose prohibitions or limitations on deficiency judgments.
In most jurisdictions the courts, in interpreting the UCC, would impose upon a
creditor an obligation to repossess the equipment in a commercially reasonable
manner and to "mitigate damages" in the event of a Lessee's failure to cure a
default. The creditor would be required to exercise reasonable judgment and
follow acceptable commercial practice in seizing and disposing of the equipment
and to offset the net proceeds of such disposition against its claim. In
addition, a Lessee may successfully invoke an election of remedies defense to a
deficiency claim in the event that the related Servicer's repossession and sale
of the leased Equipment is found to be a retention discharging the Lessee from
all further obligations under UCC Section 9-505(2). If a deficiency judgment
were granted, the judgment would be a personal judgment against the Lessee for
the shortfall, but a defaulting Lessee may 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.
Certain statutory provisions, including federal and state bankruptcy and
insolvency laws, may also limit the ability of the related Servicer to repossess
and resell collateral or obtain a deficiency judgment. In the event of the
bankruptcy or reorganization of a Lessee, various provisions of the Bankruptcy
Code of 1978 (the "Bankruptcy Code") and related laws may interfere with or
eliminate the
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ability of the Servicer or the Trustee to enforce its rights under the
Receivables. If bankruptcy proceedings were instituted in respect of a Lessee,
the Trustee could be prevented from continuing to collect payments due from or
on behalf of such Lessee or exercising any remedies assigned to such Trustee
without the approval of the bankruptcy court, and the bankruptcy court could
permit the Lessee to use or dispose of the leased Equipment and provide the
Trustee with a lien on substitute collateral, so long as such substitute
collateral constituted "adequate protection" as defined under the Bankruptcy
Code.
In addition, certain of the Receivables may be leased by the Originator to
governmental entities. Payment by governmental authorities of amounts due under
such Contracts may be contingent upon legislative approval. Accordingly, payment
delays and collection difficulties as described in the related Prospectus
Supplement may limit collections with respect to certain governmental Contracts.
These UCC and bankruptcy provisions, in addition to the possible decrease
in value of a repossessed item of Equipment may limit the amount realized on the
sale of the collateral to less than the amount due on the related Receivable.
CERTAIN TAX CONSIDERATIONS
The Prospectus Supplement for each series of Securities will summarize,
subject to the limitations stated therein, federal income tax considerations
relevant to the purchase, ownership and disposition of such Securities.
ERISA CONSIDERATIONS
The Prospectus Supplement for each series of Securities will summarize,
subject to the limitations discussed therein, considerations under ERISA
relevant to the purchase of such Securities by employee benefit plans and
individual retirement accounts.
METHODS OF DISTRIBUTION
The Securities offered hereby and by the related Prospectus Supplement
will be offered in series through one or more of the methods described below.
The Prospectus Supplement prepared for each series will describe the method of
offering being utilized for that series and will state the public offering or
purchase price of such series and the net proceeds to the Depositor from such
sale.
The Depositor intends that Securities will be offered through the
following methods from time to time and that offerings may be made concurrently
through more than one of these methods or that an offering of a particular
series of Securities may be made through a combination of two or more of these
methods. Such methods are as follows:
1. By negotiated firm commitment or best efforts underwriting and
public re-offering by underwriters;
2. By placements by the Depositor with institutional investors
through dealers;
3. By direct placements by the Depositor with institutional
investors; and
4. By competitive bid.
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In addition, if specified in the related Prospectus Supplement, a series
of Securities may be offered in whole or in part in exchange for the Receivables
(and other assets, if applicable) that would comprise the Trust Fund in respect
of such Securities.
If underwriters are used in a sale of any Securities (other than in
connection with an underwriting on a best efforts basis), such Securities will
be acquired by the underwriters for their own account and may be resold from
time to time in one or more transactions, including negotiated transactions, at
fixed public offering prices or at varying prices to be determined at the time
of sale or at the time of commitment therefor. The Securities will be set forth
on the cover of the Prospectus Supplement relating to such series and the
members of the underwriting syndicate, if any, will be named in such Prospectus
Supplement.
In connection with the sale of the Securities, underwriters may receive
compensation from the Depositor or from purchasers of the Securities in the form
of discounts, concessions or commissions. Underwriters and dealers participating
in the distribution of the Securities may be deemed to be underwriters in
connection with such Securities, and any discounts or commissions received by
them from the Depositor and any profit on the resale of Securities by them may
be deemed to be underwriting discounts and commissions under the Securities Act.
The Prospectus Supplement will describe any such compensation paid by the
Depositor.
It is anticipated that the underwriting agreement pertaining to the sale
of any series of Securities will provide that the obligations of the
underwriters will be subject to certain conditions precedent, that the
underwriters will be obligated to purchase all such Securities if any are
purchased (other than in connection with an underwriting on a best efforts
basis) and that, in limited circumstances, the Depositor will indemnify the
several underwriters and the underwriters will indemnify the Depositor against
certain civil liabilities, including liabilities under the Securities Act or
will contribute to payments required to be made in respect thereof.
The Prospectus Supplement with respect to any series offered by placements
through dealers will contain information regarding the nature of such offering
and any agreements to be entered into between the Depositor and purchasers of
Securities of such series.
Purchasers of Securities, including dealers, may, depending on the facts
and circumstances of such purchases, be deemed to be "underwriters" within the
meaning of the Securities Act in connection with reoffers and sales by them of
Securities. Holders of Securities should consult with their legal advisors in
this regard prior to any such reoffer or sale.
LEGAL OPINIONS
Certain legal matters relating to the issuance of the Securities of any
series, including certain federal and state income tax consequences with respect
thereto, will be passed upon by Dewey Ballantine LLP, New York, New York, or
other counsel specified in the related Prospectus Supplement.
FINANCIAL INFORMATION
A Trust Fund will be formed with respect to each Series of Securities and
no Trust Fund will engage in any business activities or have any assets or
obligations prior to the issuance of the related Series of Securities, except
for serial issuances by a Master Trust. The Depositor's activities will be
limited solely to the activities of Trust Funds to be formed with respect to
each Series of Securities. Accordingly, no financial statements with respect to
any Trust Fund will be included in this Prospectus or in the related Prospectus
Supplement.
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A Prospectus Supplement may contain the financial statements of the
related Credit Enhancer, if any.
ADDITIONAL INFORMATION
This Prospectus, together with the Prospectus Supplement for each series
of Securities, contains a summary of the material terms of the applicable
exhibits to the Registration Statement and the documents referred to herein and
therein. Copies of such exhibits are on file at the offices of the Securities
and Exchange Commission in Washington, D.C., and may be obtained at rates
prescribed by the Commission upon request to the Commission and may be
inspected, without charge, at the Commission's offices.
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INDEX OF TERMS
Set forth below is a list of the defined terms used in this Prospectus and
the pages on which the definitions of such terms may be found herein.
Accrual Securities...........................................................6
Additional Receivables......................................................11
Article 2A..................................................................18
Bankruptcy Code.............................................................37
Cede........................................................................11
CEDEL Participants..........................................................27
Certificates..............................................................1, 4
Class........................................................................1
clearing agency.............................................................25
clearing corporation........................................................25
Collection Account..........................................................30
Collection Period...........................................................31
Commission...................................................................2
Contracts.................................................................1, 4
Cooperative.................................................................27
Credit Enhancement..........................................................17
Credit Enhancer.............................................................17
Debt Securities.............................................................13
Debtors.....................................................................15
Definitive Securities.......................................................28
Depositaries................................................................25
Depositor................................................................3, 21
Direct Participants.........................................................17
Discounted Contract Balance.................................................10
Distribution Account........................................................30
DTC.........................................................................11
Eligible Deposit Account....................................................30
Eligible Institution........................................................30
Eligible Investments........................................................30
Equipment.............................................................1, 4, 19
Equity Certificates..........................................................8
Equity Interest..............................................................8
ERISA.......................................................................13
Euroclear Operator..........................................................27
Euroclear Participants......................................................27
Event of Default............................................................28
Exchange Act.............................................................2, 13
FASB 13.....................................................................10
Finance Leases..............................................................10
Finance Subsidiary..........................................................15
Fixed Income Securities......................................................6
Grantor Trust Securities....................................................12
Indenture....................................................................5
Indenture Trustee............................................................5
Indirect Participants...................................................17, 25
Insolvency Laws.............................................................15
Interest Rate.............................................................2, 6
investment company...........................................................8
Investment Company Act.......................................................8
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Investment Earnings.........................................................30
Issuer...................................................................3, 19
Lease........................................................................9
Lessee.......................................................................9
Lessor.......................................................................9
Master Trust.................................................................8
Master Trust Agreement.......................................................8
Master Trust New Issuance...................................................24
Notes.....................................................................1, 4
Originator................................................................1, 3
Participants................................................................25
Partnership Interests.......................................................13
Pass-Through Rate............................................................2
Payment Date.................................................................7
Policy....................................................................1, 4
Pool Balance................................................................21
Pool Factor.................................................................21
Pooling Agreement............................................................5
Pre-Funding Account.........................................................10
Pre-Funding Period..........................................................11
Prepayment..................................................................17
Prospectus Supplement........................................................1
Purchase Contracts..........................................................10
Rating Agencies.............................................................13
Ratings Effect..........................................................17, 25
Receivables...........................................................1, 4, 31
Receivables Acquisition Agreement...........................................19
Record Date..................................................................7
Registration Statement.......................................................2
Remittance Period............................................................7
Securities...........................................................1, 12, 13
Securities Act...............................................................2
Security Insurer............................................................11
Securityholder..............................................................26
Securityholders..........................................................7, 33
Senior Securities............................................................6
Servicer..................................................................1, 3
Servicer Default............................................................34
Servicer Defaults...........................................................33
Servicing Agreement..........................................................5
Servicing Fee...............................................................32
Servicing Fee Rate..........................................................32
Strip Securities.............................................................6
Subordinate Securities.......................................................7
Sub-Servicer.................................................................3
Terms and Conditions........................................................27
The Trust Agreement.........................................................22
Transferor...................................................................3
Trust.....................................................................1, 3
Trust Accounts..............................................................30
Trust Agreement..........................................................5, 29
Trust Fund................................................................1, 4
Trustee......................................................................5
Vendors......................................................................3
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===============================================================================
No person has been authorized to give any information or to make any
representations other than those contained or incorporated by reference in this
Prospectus Supplement or the Prospectus in connection with the offer made by
this Prospectus Supplement and the Prospectus and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Depositor or the Underwriter(s). This Prospectus Supplement and the
Prospectus do not constitute an offer or solicitation by anyone in any state in
which such offer or solicitation is not authorized or in which the person making
such offer or solicitation is not qualified to do so or to anyone to whom it is
unlawful to make such offer or solicitation. The delivery of this Prospectus
Supplement or the Prospectus at any time does not imply that information herein
or therein is correct as of any time subsequent to its date.
---------------------------
TABLE OF CONTENTS
Prospectus Supplement
Prospectus
Page
----
PROSPECTUS SUPPLEMENT.......................................................2
AVAILABLE INFORMATION.......................................................2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.............................2
REPORTS TO SECURITYHOLDERS..................................................2
SUMMARY OF TERMS............................................................3
RISK FACTORS...............................................................14
THE TRUST FUNDS............................................................18
THE ISSUERS................................................................19
THE RECEIVABLES............................................................20
POOL FACTORS...............................................................21
USE OF PROCEEDS............................................................21
THE DEPOSITOR..............................................................21
THE TRUSTEE................................................................22
DESCRIPTION OF THE SECURITIES..............................................22
DESCRIPTION OF THE TRUST AGREEMENTS........................................29
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES...................................36
CERTAIN TAX CONSIDERATIONS.................................................38
ERISA CONSIDERATIONS.......................................................38
METHODS OF DISTRIBUTION....................................................38
LEGAL OPINIONS.............................................................39
FINANCIAL INFORMATION......................................................39
ADDITIONAL INFORMATION.....................................................40
INDEX OF TERMS..............................................................i
-----------------------------
Until _____________, 199_(90 days after the date of this Prospectus
Supplement), all dealers effecting transactions in the Securities, whether or
not participating in this distribution, may be required to deliver a Prospectus
Supplement and a Prospectus. This is in addition to the obligation of dealers to
deliver a Prospectus Supplement and a Prospectus when acting as underwriter(s)
and with respect to their unsold allotments or subscriptions.
================================================================================
================================================================================
EQUIPMENT LEASE
BACKED
SECURITIES 199_-_
------------------------------
PROSPECTUS SUPPLEMENT
------------------------------
[Underwriter]
===============================================================================
<PAGE>
PROSPECTUS
- --------------------------------------------------------------------------------
Auto Receivables Backed Securities Issuable in Series
PRUDENTIAL SECURITIES SECURED FINANCING
CORPORATION,
Depositor
This Prospectus describes certain Auto Receivables Backed Notes (the
"Notes) and Auto Receivables Backed Certificates (the "Certificates" and,
together with the Notes, the "Securities") that may be sold from time to time in
one or more series, in amounts, at prices and on terms to be determined at the
time of sale and to be set forth in a supplement to this Prospectus (each, a
"Prospectus Supplement"). Each series of Securities may include one or more
classes of Notes and one or more classes of Certificates, which will be issued
either by the Depositor, a Transferor (as hereinafter defined), or by a trust to
be formed by the Depositor for the purpose of issuing one or more series of such
Securities (each, a "Trust"). The Depositor, a Transferor or a Trust, as
appropriate, issuing Securities as described in this Prospectus and the related
Prospectus Supplement shall be referred to herein as the "Issuer."
Each class of Securities of any series will evidence beneficial ownership
in a segregated pool of assets (each, a "Trust Fund") (such Securities,
"Certificates") or will represent indebtedness of the Issuer secured by the
Trust Fund (such Securities, "Notes"), as described herein and in the related
Prospectus Supplement. Each Trust Fund may consist of any combination of retail
installment sales contracts between manufacturers, dealers or certain other
originators and retail purchasers secured by new and used automobiles and light
duty trucks financed thereby, or participation interests therein, together with
all monies received relating thereto (the "Contracts"). Each Trust Fund may also
include a security interest in the underlying new and used automobiles and light
duty trucks and property relating thereto, together with the proceeds thereof
(the "Vehicles" together with the Contracts, the "Receivables"). If and to the
extent specified in the related Prospectus Supplement, credit enhancement with
respect to a Trust Fund or any class of Securities may include any one or more
of the following: a financial guaranty insurance policy (a "Policy") issued by
an insurer specified in the related Prospectus Supplement, a reserve account,
letters of credit, credit or liquidity facilities, third party payments or other
support, cash deposits or other arrangements. In addition to or in lieu of the
foregoing, credit enhancement may be provided by means of subordination,
cross-support among the Receivables or over-collateralization. See "Description
of the Trust Agreement -- Credit and Cash Flow Enhancement." The Receivables in
the Trust Fund for a series will have been acquired by the Depositor from one or
more affiliates of the Depositor or from one or more entities which are
unaffiliated with the Depositor (any such affiliate or unaffiliated entity, an
"Originator"). Each Originator will be an entity, including Vendors, generally
in the business of originating or acquiring Receivables. The Depositor will
acquire the Receivables from the related Originator(s) on or prior to the date
of issuance of the related Securities, as described herein and in the related
Prospectus Supplement. The Receivables included in a Trust Fund will be serviced
by a servicer (the "Servicer") described in the related Prospectus Supplement.
Each series of Securities will include one or more classes (each, a
"Class"). A series may include one or more Classes of Securities entitled to
principal distributions, with disproportionate, nominal or no interest
distributions, or to interest distributions, with disproportionate, nominal or
no principal distributions. The rights of one or more Classes of Securities of
any series may be senior or subordinate to the rights of one or more of the
other Classes of Securities. A series may include two or more Classes of
Securities which differ as to the timing, sequential order, priority of payment,
interest rate or amount of distributions of principal or interest or both.
Information regarding each Class of Securities of a series, together with
certain characteristics of the related Receivables, will be set forth in the
related Prospectus Supplement. The rate of payment in respect of principal of
the Securities of any Class will depend on the priority of payment of such a
Class and the rate and timing of payments (including prepayments, defaults,
liquidations or repurchases of Receivables) on the related Receivables. A rate
of payment lower or higher than that anticipated may affect the weighted average
life of each Class of Securities in the manner described herein and in the
related Prospectus Supplement. See "Description of the Securities."
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "RISK
FACTORS" HEREIN AND IN THE RELATED PROSPECTUS SUPPLEMENT.
THE NOTES OF A GIVEN SERIES REPRESENT OBLIGATIONS OF THE ISSUER ONLY AND DO NOT
REPRESENT INTERESTS OF THE DEPOSITOR, ANY SERVICER, ANY ORIGINATOR OR ANY OF
THEIR RESPECTIVE AFFILIATES. THE CERTIFICATES OF A GIVEN SERIES REPRESENT
BENEFICIAL INTERESTS IN THE RELATED TRUST ONLY AND DO NOT REPRESENT INTERESTS IN
OR OBLIGATIONS OF THE DEPOSITOR, ANY TRANSFEROR, ANY SERVICER, ANY ORIGINATOR OR
ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THE SECURITIES NOR THE UNDERLYING
RECEIVABLES WILL BE GUARANTEED OR INSURED BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY OR BY THE DEPOSITOR, ANY SERVICER, ANY ORIGINATOR, ANY TRUSTEE
OR ANY OF THEIR RESPECTIVE AFFILIATES, EXCEPT AS SET FORTH IN THE RELATED
PROSPECTUS SUPPLEMENT. SEE ALSO "RISK FACTORS."
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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Offers of the Securities may be made through one or more different
methods, including offerings through underwriters as more fully described under
"Method of Distribution" herein and in the related Prospectus Supplement. Prior
to issuance, there will have been no market for the Securities of any series,
and there can be no assurance that a secondary market for the Securities will
develop, or if it does develop, it will continue.
Retain this Prospectus for future reference. This Prospectus may not be
used to consummate sales of Securities unless accompanied by a Prospectus
Supplement.
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The date of this Prospectus is __________, 1994.
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PROSPECTUS SUPPLEMENT
The Prospectus Supplement relating to a series of Securities to be
offered hereunder, among other things, will set forth with respect to such
series of Securities: (i) a description of the Class or Classes of such
Securities, (ii) the rate of interest, the "Pass-Through Rate" or "Interest
Rate" or other applicable rate (or the manner of determining such rate) and
authorized denominations of such Class of such Securities; (iii) certain
information concerning the Receivables and insurance polices, cash accounts,
letters of credit, financial guaranty insurance policies, third party guarantees
or other forms of credit enhancement, if any, relating to one or more pools of
Receivables or all or part of the related Securities; (iv) the specified
interest, if any, of each Class of Securities in, and manner and priority of,
the distributions from the Trust Fund; (v) information as to the nature and
extent of subordination with respect to such series of Securities, if any; (vi)
the payment date to Securityholders; (vii) information regarding the Servicer(s)
for the related Receivables; (viii) information regarding the Originator(s) for
the related Receivables and the underwriting guidelines employed by such
Originator(s) with respect to such Receivables, (ix) the circumstances, if any,
under which each Trust Fund may be subject to early termination; (x) information
regarding tax considerations; and (xi) additional information with respect to
the method of distribution of such Securities.
AVAILABLE INFORMATION
The Depositor has filed with the Securities and Exchange Commission
(the "Commission") a Registration Statement (together with all amendments and
exhibits thereto, referred to herein as the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Securities offered pursuant to this Prospectus. For further information,
reference is made to the Registration Statement which may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549; and at the Commission's regional
offices at 500 West Madison, Suite 1400, 14th Floor, Chicago, Illinois 60661 and
Seven World Trade Center, 13th Floor, New York, New York 10048. The Commission
maintains a site on the World Wide Web at http://www.sec.gov containing reports,
proxy materials, information statements, and other items. Copies of the
Registration Statement may be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates.
No person has been authorized to give any information or to make any
representation other than those contained in this Prospectus and any Prospectus
Supplement with respect hereto and, if given or made, such information or
representations must not be relied upon. This Prospectus and any Prospectus
Supplement with respect hereto do not constitute an offer to sell or a
solicitation of an offer to buy any securities other than the Securities offered
hereby and thereby, nor an offer of the Securities to any person in any state or
other jurisdiction in which such offer would be unlawful. The delivery of this
Prospectus at any time does not imply that information herein is correct as of
any time subsequent to its date.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents subsequently filed by the Depositor with respect to
the Registration Statement, either on its own behalf or on behalf of a Trust,
relating to any series of Securities referred to in the accompanying Prospectus
Supplement, with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), after the
date of this Prospectus and prior to the termination of any offering of the
Securities issued by the Issuer, shall be deemed to be incorporated by reference
in this Prospectus and to be a part of this Prospectus from the date of the
filing of such documents. Any statement contained herein or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein (or in the accompanying Prospectus Supplement) or in
any other subsequently filed document which also is or is deemed to be
incorporated by reference herein, modifies or replaces such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
REPORTS TO SECURITYHOLDERS
Periodic and annual reports concerning any Security and the related
Trust Fund will be provided to the Securityholders. See "Description of the
Securities -- Reports to Securityholders." If the Securities of a series
2
<PAGE>
are to be issued in book-entry form, such reports will be provided to the
Securityholder of record and beneficial owners of such Securities will have to
rely on the procedures described herein under "Description of Securities -
Book-Entry Registration."
The Depositor will provide without charge to each person to whom
this Prospectus is delivered, on the written or oral request of such person, a
copy of any or all of the documents referred to above that have been or may be
incorporated by reference in this Prospectus (not including exhibits to the
information that is incorporated by reference unless such exhibits are
specifically incorporated by reference into the information that this Prospectus
incorporates). Such requests should be directed to: Prudential Securities
Secured Financing Corporation, One New York Plaza, New York, New York 10292,
Attention: Joe Donovan.
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SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to
the detailed information appearing elsewhere in this Prospectus and by reference
to the information with respect to the Securities of any series contained in the
related Prospectus Supplement to be prepared and delivered in connection with
the offering of such Securities. Certain capitalized terms used in the summary
are defined elsewhere in the Prospectus on the pages indicated in the "Index of
Terms."
Issuer.................. With respect to each series of Securities, either the
Depositor, a special-purpose finance subsidiary of
the Depositor which may be organized and established
by the Depositor with respect to one or more Trust
Funds (each such special-purpose finance subsidiary,
a "Transferor") or a trust (each, a "Trust") to be
formed by the Depositor. For purposes of this
Prospectus, the term "Depositor" includes the term
"Transferor". The Depositor, a Transferor or a Trust
issuing Securities pursuant to this Prospectus and
the related Prospectus Supplement shall be referred
to herein as the "Issuer" with respect to the related
Securities. See "The Issuer."
Depositor............... Prudential Securities Secured Financing Corporation,
formerly known as P-B Secured Financing Corporation
(the "Depositor"), a Delaware corporation, a
wholly-owned limited purpose finance subsidiary of
Prudential Securities Incorporated The Depositor's
principal executive offices are located at One New
York Plaza, New York, New York 10292, and its
telephone number is (212) 778-1000. See "The
Depositor."
Servicer................ The Servicer for each Trust Fund will be specified in
the applicable Prospectus Supplement. The Servicer
will service the Receivables comprising each Trust
Fund and administer each Trust Fund pursuant to the
related Servicing Agreement. The Servicer may
subcontract all or any portion of its obligations as
Servicer under each Servicing Agreement to qualified
subservicers (each, a "Sub-Servicer") but the
Servicer will not be relieved thereby of its
liability with respect thereto. See "Servicing of the
Receivables."
Originator(s)........... The Depositor will acquire the Receivables from one
or more affiliates of the Depositor or from one or
more entities which are unaffiliated with the
Depositor (any such affiliate or unaffiliated entity,
an "Originator"). The Receivables will be either (i)
originated by the related Originator, (ii) originated
by various manufacturers of Vehicles
("Manufacturers") and acquired by the related
Originator, (iii) originated by various dealers,
which may or may not be affiliated with one or more
Manufacturers ("Dealers", and together with
Manufacturers, "Vendors") or (iv) acquired by the
related Originator from other originators or owners
of Receivables. In addition, to the extent that the
Depositor acquires Receivables directly from a
Vendor, such Vendor will be the Originator for
purposes of the related Receivables and this
Prospectus. See "The Originator" and "The Servicer"
in the related Prospectus Supplement.
Trustee................. The Trustee for each series of Securities will be
specified in the related Prospectus Supplement. In
addition, a Trust may separately enter into an
Indenture and may issue Notes pursuant to such
Indenture; in any such case the Trust and the
Indenture will be administered by separate,
independent trustees as required by the rules and
regulations under the Trust Indenture Act of 1939 and
the Investment Company Act of 1940.
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The Securities.......... Each Class of Securities of any series will evidence
beneficial ownership in a segregated pool of assets
(each, a "Trust Fund") (such Securities,
"Certificates") or will represent indebtedness of
the Issuer secured by the Trust Fund (such
Securities, "Notes"), as described herein and in the
related Prospectus Supplement. Each Trust Fund may
consist of any combination of retail installment
sales contracts between manufacturers, dealers or
certain other originators and retail purchasers
secured by new and used automobiles and light duty
trucks financed thereby, or participation interests
therein, together with all monies received relating
thereto (the "Contracts"). Each Trust Fund also may
include a security interest in the underlying new and
used automobiles and light duty trucks and property
relating thereto, together with the proceeds thereof
(the "Vehicles" and together with the Contracts, the
"Receivables").
Each Trust Fund will include Receivables with
respect to which the related Contract or the related
underlying Vehicles is subject to federal or state
registration or titling requirements. No Trust Fund
will include Receivables with respect to which the
underlying Contracts or Vehicles relate to office
equipment, aircraft, ships or boats, firearms or
other weapons, railroad rolling stock or facilities
such as factories, warehouses or plants subject to
state laws governing the manner in which title or
security interest in real property is determined or
perfected.
If and to the extent specified in the related
Prospectus Supplement, credit enhancement with
respect to a Trust Fund or any class of Securities
may include any one or more of the following: a
financial guaranty insurance policy (a "Policy")
issued by an insurer specified in the related
Prospectus Supplement, a reserve account, letters of
credit, credit or liquidity facilities, third party
payments or other support, cash deposits or other
arrangements. In addition to or in lieu of the
foregoing, credit enhancement may be provided by
means of subordination, cross-support among the
Receivables or over-collateralization. The Depositor
will acquire the Receivables from the related
Originator(s) on or prior to the date of issuance of
the related Securities, as described herein and in
the related Prospectus Supplement.
With respect to Securities issued by a Trust, each
Trust will be established pursuant to an agreement
(each, a "Pooling Agreement") by and between the
Depositor and the Trustee named therein. Each Pooling
Agreement will describe the related pool of
Receivables held by the Trust.
With respect to Securities that represent debt issued
by the Issuer, the Issuer will enter into an
indenture (each, an "Indenture") by and between the
Issuer and the trustee named on such Indenture (the
"Indenture Trustee"). Each Indenture will describe
the related pool of Receivables comprising the Trust
Fund and securing the debt issued by the related
Issuer.
The Receivables comprising each Trust Fund will be
serviced by the Servicer pursuant to a servicing
agreement (each, a "Servicing Agreement") by and
between the Servicer and the related Issuer.
In the case of any individual Trust Fund, the
contractual arrangements relating to the
establishment of a Trust, if any, the servicing of
the related Receivables and the issuance of the
related Securities may be contained in a single
agreement, or in several agreements which combine
certain aspects of the Pooling Agreement, the
Servicing Agreement and the Indenture described above
(for example, a pooling and servicing agreement, or a
servicing and collateral management agreement). For
purposes of this
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Prospectus, the term "Trust Agreement" as used with
respect to a Trust Fund means, collectively, and
except as otherwise described in the related
Prospectus Supplement, any and all agreements
relating to the establishment of a Trust, if any, the
servicing of the related Receivables and the issuance
of the related Securities. The term "Trustee" means
any and all persons acting as a trustee pursuant to a
Trust Agreement.
Securities Will Be Non-Recourse.
The Securities will not be obligations, either
recourse or non-recourse (except for certain
non-recourse debt described under "Certain Tax
Considerations"), of the Depositor, the related
Servicer, the related Originator(s) or any person
other than the related Issuer. The Notes of a given
series represent obligations of the Issuer, and the
Certificates of a given series represent beneficial
interests in the related Trust only and do not
represent interests in or obligations of the
Depositor, the related Servicer, the related
Originator(s) or any of their respective affiliates
other than the related Trust. In the case of
Securities that represent beneficial ownership
interest in the related Trust, such Securities will
represent the beneficial ownership interests in such
Trust and the sole source of payment will be the
assets of such Trust. In the case of Securities that
represent debt issued by the related Issuer, such
Securities will be secured by assets in the related
Trust Fund. Notwithstanding the foregoing, and as to
be described in the related Prospectus Supplement,
certain types of credit enhancement, such as a letter
of credit, financial guaranty insurance policy or
reserve fund may constitute a full recourse
obligation of the issuer of such credit enhancement.
General Nature of the Securities as Investments.
All of the Securities offered pursuant to this
Prospectus and the related Prospectus Supplement will
be rated in one of the four highest rating categories
by one or more Rating Agencies (as
defined herein).
Additionally, all of the Securities offered pursuant
to this Prospectus and the related Prospectus
Supplement will be of the fixed-income type ("Fixed
Income Securities""). Fixed Income Securities will
generally be styled as debt instruments, having a
principal balance and a specified interest rate
("Interest Rate"). Fixed Income Securities may either
represent beneficial ownership interests in the
related Receivables held by the related Trust or debt
secured by certain assets of the related Issuer.
Each series or Class of Fixed Income Securities
offered pursuant to this Prospectus may have a
different Interest Rate, which may be a fixed or
adjustable Interest Rate. The related Prospectus
Supplement will specify the Interest Rate for each
series or Class of Fixed Income Securities described
therein, or the initial Interest Rate and the method
for determining subsequent changes to the Interest
Rate.
A series may include one or more Classes of Fixed
Income Securities ("Strip Securities") entitled (i)
to principal distributions, with disproportionate,
nominal or no interest distributions, or (ii) to
interest distributions, with disproportionate,
nominal or no principal distributions. In addition, a
series of Securities may include two or more Classes
of Fixed Income Securities that differ as to timing,
sequential order, priority of payment, Interest Rate
or amount of distribution of principal or interest or
both, or as to which distributions of principal or
interest or both on any Class may be made upon
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the occurrence of specified events, in accordance
with a schedule or formula, or on the basis of
collections from designated portions of the related
pool of Receivables. Any such series may include one
or more Classes of Fixed Income Securities ("Accrual
Securities"), as to which certain accrued interest
will not be distributed but rather will be added to
the principal balance (or nominal balance, in the
case of Accrual Securities which are also Strip
Securities) thereof on each Payment Date, as
hereinafter defined, or in the manner described in
the related Prospectus Supplement.
If so provided in the related Prospectus Supplement,
a series may include one or more other Classes of
Fixed Income Securities (collectively, the "Senior
Securities") that are senior to one or more other
Classes of Fixed Income Securities (collectively, the
"Subordinate Securities") in respect of certain
distributions of principal and interest and
allocations of losses on Receivables.
In addition, certain Classes of Senior (or
Subordinate) Securities may be senior to other
Classes of Senior (or Subordinate) Securities in
respect of such distributions or losses.
General Payment Terms of Securities.
As provided in the related Trust Agreement and as
described in the related Prospectus Supplement, the
holders of the Securities ("Securityholders") will be
entitled to receive payments on their Securities on
specified dates (each, a "Payment Date"). Payment
Dates with respect to Fixed Income Securities will
occur monthly, quarterly or semi-annually, as
described in the related Prospectus Supplement.
The related Prospectus Supplement will describe a
date (the "Record Date") preceding such Payment Date,
as of which the Trustee or its paying agent will fix
the identity of the Securityholders for the purpose
of receiving payments on the next succeeding Payment
Date. As described in the related Prospectus
Supplement, the Payment Date will be a specified day
of each month, commonly the fifteenth or twenty-fifth
day of each month (or, in the case of quarterly-pay
Securities, the fifteenth or twenty-fifth day of
every third month; and in the case of semi-annual pay
Securities, the fifteenth or twenty-fifth day of
every sixth month) and the Record Date will be the
close of business as of the last day of the calendar
month that precedes the calendar month in which such
Payment Date occurs.
Each Trust Agreement will describe a period (each, a
"Remittance Period") preceding each Payment Date (for
example, in the case of monthly-pay Securities, the
calendar month preceding the month in which a Payment
Date occurs). As more fully described in the related
Prospectus Supplement, collections received on or
with respect to the related Receivables constituting
a Trust Fund during a Remittance Period will be
required to be remitted by the Servicer to the
related Trustee prior to the related Payment Date and
will be used to fund payments to Securityholders on
such Payment Date. As may be described in the related
Prospectus Supplement, the related Trust Agreement
may provide that all or a portion of the payments
collected on or with respect to the related
Receivables may be applied by the related Trustee to
the acquisition of additional Receivables during a
specified period (rather than be used to fund
payments of principal to Securityholders during such
period), with the result that the related Securities
will possess an interest-only period, also commonly
referred to as a revolving period, which
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will be followed by an amortization period. Any such
interest only or revolving period may, upon the
occurrence of certain events to be described in the
related Prospectus Supplement, terminate prior to the
end of the specified period and result in the earlier
than expected amortization of the related Securities.
In addition, and as may be described in the related
Prospectus Supplement, the related Trust Agreement
may provide that all or a portion of such collected
payments may be retained by the Trustee (and held in
certain temporary investments, including Receivables)
for a specified period prior to being used to fund
payments of principal to Securityholders.
Such retention and temporary investment by the
Trustee of such collected payments may be required by
the related Trust Agreement for the purpose of (a)
slowing the amortization rate of the related
Securities relative to the rent payment schedule of
the related Receivables, or (b) attempting to match
the amortization rate of the related Securities to an
amortization schedule established at the time such
Securities are issued. Any such feature applicable to
any Securities may terminate upon the occurrence of
events to be described in the related Prospectus
Supplement, resulting in distributions to the
specified Securityholders and an acceleration of the
amortization of such Securities.
As more fully specified in the related Prospectus
Supplement, neither the Securities nor the underlying
Receivables will be guaranteed or insured by any
governmental agency or instrumentality or the
Depositor, the related Servicer, the related
Originator, any Trustee, or any of their affiliates.
No Investment Companies. Neither the Depositor nor any Trust will register as
an "investment company" under the Investment Company
Act of 1940, as amended (the "Investment Company
Act").
The Equity Interest..... With respect to each Trust, the "Equity Interest" at
any time represents the rights to the related Trust
Fund in excess of the Securityholders' interest of
all series then outstanding that were issued by such
Trust. The Equity Interest in any Trust Fund will
fluctuate as the aggregate Discounted Contract
Balance of such Trust Fund changes from time to time.
In addition, the Depositor may cause one or more of
the Trusts (such a Trust, a "Master Trust") to issue
additional series of Securities from time to time and
any such issuance will have the effect of decreasing
the Equity Interest in the related Master Trust to
the extent of the aggregate principal amount of the
Securities. See "Description of Securities -- Master
Trusts." A portion of the Equity interest in any
Trust may be sold separately in one or more public or
private transactions.
Master Trusts; Issuance of
Additional Series....... As may be described in the related Prospectus
Supplement, a Trust Agreement may authorize the
Trustee to issue certificates (the "Equity
Certificates") evidencing the Equity Interest in a
Master Trust, and may provide that, pursuant to any
one or more supplements to such Trust Agreement, the
Depositor may cause the related Trustee to issue one
or more new series of Securities and accordingly
cause a reduction in the related Equity Interest in
such Master Trust represented by the related Equity
Certificate. Under each such Trust Agreement (each, a
"Master Trust Agreement"), the Depositor may
determine the terms of any such new series. See
"Description of the Securities -- Master Trusts."
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The Depositor may cause the related Trustee to offer
any such new series to the public or other investors,
in transactions either registered under the
Securities Act or exempt from registration
thereunder, directly or through one or more
underwriters or placement agents, in fixed-price
offerings or in negotiated transactions or otherwise.
A new series to be issued by a Trust which has a
series outstanding may, unless otherwise described in
the related Prospectus Supplement, only be issued
upon satisfaction of the conditions described herein
under "Description of the Securities -- Master
Trusts", including, among others, that such issuance
will not effect the rating given to any existing
series issued by such Master Trust. Securities
secured by Receivables held by a Master Trust shall
be entitled to moneys received relating to such
Receivables on a pari passu basis with other
Securities issued pursuant to the other Trust
Agreements by such Master Trust.
Cross-Collateralization. As described in the related Trust Agreement and the
related Prospectus Supplement, the source of payment
for Securities of each series will be the assets of
the related Trust Fund only.
However, as may be described in the related
Prospectus Supplement, a series or class of
Securities may include the right to receive moneys
from a common pool of credit enhancement which may be
available for more than one series of Securities,
such as a master reserve account, master insurance
policy or a master collateral pool consisting of
similar Receivables. Notwithstanding the foregoing,
and as described in the related Prospectus
Supplement, no payment received on any Receivable
held by any Trust may be applied to the payment of
Securities issued by any other Trust (except to the
limited extent that certain collections in excess of
the amounts needed to pay the related Securities may
be deposited in a common master reserve account or an
overcollateralization account that provides credit
enhancement for more than one series of Securities
issued pursuant to the related Trust Agreement).
Trust Funds............. As specified in the related Prospectus Supplement,
each Trust Fund will consist of the related
Contracts, and may include a security interest in
the related Vehicles. If and to the extent specified
in the related Prospectus Supplement, credit
enhancement with respect to a Trust Fund or any
class of Securities may include any one or more of
the following: a Policy issued by an insurer
specified in the related Prospectus Supplement, a
reserve account, letters of credit, credit or
liquidity facilities, repurchase obligations, third
party payments or other support, cash deposits or
other arrangements. In addition to or in lieu of the
foregoing, credit enhancement may be provided by
means of subordination, cross-support among the
Receivables or over-collateralization. See
"Description of the Trust Agreement -- Credit and
Cash Flow Enhancement." The Contracts are
obligations for the purchase of the Vehicles, or
evidence borrowings used to acquire the Vehicles. As
specified in the related Prospectus Supplement, the
Contracts may consist of any combination of Rule of
78s Contracts, Fixed Value Contracts or Simple
Interest Contracts. Generally, "Rule of 78s
Contracts" provide for fixed level monthly payments
which will amortize the full amount of the Contract
over its term. The Rule of 78s Contracts provide for
allocation of payments according to the "sum of
periodic balances" or "sum of monthly payments"
method (the "Rule of 78s"). Each Rule of 78s
Contract provides for the payment by the Obligor of
a specified total amount of payments, payable in
monthly installments on the related due date, which
total represents the
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principal amount financed and finance charges in an
amount calculated on the basis of a stated annual
percentage rate ("APR") for the term of such
Contract. The rate at which such amount of finance
charges is earned and, correspondingly, the amount of
each fixed monthly payment allocated to reduction of
the outstanding principal balance of the related
Contract are calculated in accordance with the Rule
of 78s. Under the Rule of 78s, the portion of each
payment allocable to interest is higher during the
early months of the term of a Contract and lower
during later months than that under a constant yield
method for allocating payments between interest and
principal. Notwithstanding the foregoing, as
specified in the related Prospectus Supplement, all
payments received by the related Servicer on or in
respect of the Rule of 78s Contracts may be allocated
on an actuarial basis.
Generally, the "Fixed Value Contracts" provide for
monthly payments with a final fixed value payment
which is greater than the scheduled monthly payments.
A Fixed Value Contract provides for amortization of
the loan over a series of fixed level payment monthly
installments, but also requires a final fixed value
payment due after payment of such monthly
installments which may be satisfied by (i) payment in
full in cash of such amount, (ii) transfer of the
vehicle to the related Originator provided certain
conditions are satisfied or (iii) refinancing the
fixed value payment in accordance with certain
conditions. With respect to Fixed Value Contracts, as
specified in the related Prospectus Supplement, only
the principal and interest payments due prior to the
final fixed value payment and not the final fixed
value payment may be included initially in the
related Trust Fund.
"Simple Interest Contracts" provide for the
amortization of the amount financed under the
receivable over a series of fixed level monthly
payments. However, unlike the monthly payment under
Rule of 78s Contracts, each monthly payment consists
of an installment of interest which is calculated on
the basis of the outstanding principal balance of the
receivable multiplied by the stated APR and further
multiplied by the period elapsed (as a fraction of a
calendar year) since the preceding payment of
interest was made. As payments are received under a
Simple Interest Contract, the amount received is
applied first to interest accrued to the date of
payment and the balance is applied to reduce the
unpaid principal balance. Accordingly, if an Obligor
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. 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
pays a fixed monthly installment 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 an Obligor elects to prepay a Rule of 78s Contract
in full, it is entitled to a rebate of the portion of
the outstanding balance then due and payable
attributable to unearned finance charges. If a Simple
Interest Contract is prepaid, rather than receive a
rebate, the Obligor is required to pay interest only
to the date of prepayment. The amount of a rebate
under a Rule of 78s
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Contract calculated in accordance with the Rule of
78s will always be less than had such rebate been
calculated on an actuarial basis and generally will
be less than the remaining scheduled payments of
interest that would be due under a Simple Interest
Contract for which all payments were made on
schedule. Distributions to Securityholders may not be
affected by Rule of 78s rebates under the Rule of 78s
Contract because pursuant to the related Prospectus
Supplement such distributions may be determined using
the actuarial method.
The related Prospectus Supplement will further
describe the type and characteristics of the
Contracts included in each Trust Fund relating to the
Securities offered pursuant to this Prospectus and
the related Prospectus Supplement.
The Receivables comprising a Trust Fund will be
acquired by the Depositor from the related
Originator; such Receivables will have theretofore
been either (i) originated by such Originator, (ii)
originated by Vendors and acquired by such Originator
or (iii) acquired by such Originator from other
originators or owners of Receivables.
With respect to the Receivables comprising each Trust
Fund, the Depositor and/or the related Originator
will acquire the related Receivables from the
Originator pursuant to a Receivables Acquisition
Agreement as defined herein. The Depositor will
either transfer such Receivables to a Trust pursuant
to a Pooling Agreement or pledge the Depositor's
right, title and interest in and to such Receivables
to a Trustee on behalf of Securityholders pursuant to
an Indenture. The Contracts transferred to a Trust or
pledged to a Trustee shall have a Discounted Contract
Balance (as defined below) specified in the related
Prospectus Supplement. The rights and benefits of the
Depositor or Transferor under such Receivables
Acquisition Agreement will be assigned to the Trustee
on behalf of the related Securityholders. The
obligations of the Depositor, the related
Originator(s), the related Servicer(s), the related
Trustee and the related Indenture Trustee, if any,
under the related Trust Agreement include those
specified below and in the related Prospectus
Supplement.
The "Discounted Contract Balance" of a Contract as of
any Cut-Off Date is the present value of all of the
remaining payments scheduled to be made with respect
to such Contract, discounted at a rate specified in
the related Prospectus Supplement and the Trust
Agreement.
In addition, if so specified in the related
Prospectus Supplement, the Trust Fund will include
monies on deposit in a Pre-Funding Account (the
"Pre-Funding Account") to be established with the
Trustee, which will be used to acquire Additional
Receivables from time to time during the "Pre-Funding
Period" specified in the related Prospectus
Supplement. The Pre-Funding Account, if any, will be
reduced during the related Pre-Funding Period by the
amount thereof used to purchase Additional
Receivables. Any amount remaining in the Pre-Funding
Account at the end of the related Pre-Funding Period
will be distributed to the related Securityholders,
pro rata, on the Payment Date immediately following
the end of the Pre-Funding Period.
If and to the extent provided in the related
Prospectus Supplement, the Depositor will be
obligated (subject only to the availability thereof)
to acquire from the related Originator(s) and to
either transfer to a Trust or pledge to a Trustee on
behalf of Securityholders, additional Receivables
(the
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"Additional Receivables") from time to time during
any Pre-Funding Period specified in the related
Prospectus Supplement.
Registration of
Securities ............. Securities may be represented by global securities
registered in the name of Cede & Co. ("Cede"), as
nominee of The Depository Trust Company ("DTC"), or
another nominee. In such case, Securityholders will
not be entitled to receive definitive securities
representing such Securityholders' interests, except
in certain circumstances described in the related
Prospectus Supplement. See "Description of the
Securities -- Book Entry Registration" herein.
Credit and Cash Flow
Enhancement............. If and to the extent specified in the related
Prospectus Supplement, credit enhancement with
respect to a Trust Fund or any class of Securities
may include any one or more of the following: a
Policy issued by an insurer specified in the related
Prospectus Supplement (a "Security Insurer"), a
reserve account, letters of credit, credit or
liquidity facilities, third party payments or other
support, cash deposits or other arrangements. Any
form of credit enhancement will have certain
limitations and exclusions from coverage thereunder,
which will be described in the related Prospectus
Supplement. See "Description of the Trust Agreement
-- Credit and Cash Flow Enhancement."
Receivables Acquisition
Agreement............... As more fully described in the related Prospectus
Supplement, the Depositor and/or the related
Originator will be obligated to acquire from the
related Trust Fund any Receivable transferred
pursuant to a Pooling Agreement or pledged pursuant
to an Indenture if the interest of the
Securityholders therein is materially adversely
affected by a breach of any representation or
warranty made by the Depositor or the related
Originator with respect to such Receivable, which
breach has not been cured. To the extent that the
Depositor so acquires any Receivables, the related
Originator will be obligated to acquire such
Receivables from the Depositor pursuant to the
related Receivables Acquisition Agreement
contemporaneously with the Depositor's acquisition of
such Receivables from the applicable Trust Fund. The
obligation of the Depositor to acquire any such
Receivables with respect to which the related
Originator has breached a representation or warranty
is subject to the related Originator's acquisition of
such Receivables from the Depositor. In addition, if
so specified in the related Prospectus Supplement,
the Depositor may from time to time reacquire certain
Receivables or substitute other Receivables for such
Receivable held by a Trust Fund, subject to specified
conditions set forth in the related Trust Agreement
and Receivables Acquisition Agreement.
Servicer's Compensation. The Servicer shall be entitled to receive a fee for
servicing the Contracts of each Trust Fund equal to a
specified percentage of the value of the assets held
in the related Trust Fund, as set forth in the
related Prospectus Supplement. See "Description of
the Trust Agreements -- Servicing Compensation"
herein and in the related Prospectus Supplement.
Certain Legal Aspects
of the Contracts........ With respect to the transfer of the Contracts to the
related Trust pursuant to a Pooling Agreement or the
pledge of the related Issuer's right, title and
interest in and to such Contracts on behalf of
Securityholders pursuant to an Indenture, the
Depositor will warrant, in each case, that such
transfer is either a valid transfer and assignment of
the Contracts to the Trust or the
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grant of a security interest in the Contracts. Each
Prospectus Supplement will specify what actions will
be taken by which parties as will be required to
perfect either the Issuer's or the Securityholders'
security interest in the Contracts. The Depositor may
also warrant that, if the transfer or pledge by it to
the Trust or to the Securityholders is deemed to be a
grant to the Trust or to the Securityholders of a
security interest in the Contracts, then the related
Issuer or the Securityholders will have a first
priority perfected security interest therein, except
for certain liens which have priority over previously
perfected security interests by operation of law,
and, with certain exceptions, in the proceeds
thereof. Similar security interest and priority
representations and warranties, as described in the
related Prospectus Supplement, may also be made by
the Depositor with respect to the Vehicles.
Perfection of security interests in automobiles and
light duty trucks is generally governed by the
vehicle registration or titling laws of the state in
which each vehicle is registered or titled. In most
states, a security interest in a vehicle is perfected
by notation of the secured party's lien on the
vehicle's certificate of title. Each Prospectus
Supplement will specify whether, due to the
administrative burden and expense, the Depositor, the
related Servicer or the Trustee will amend any
certificate of title to identify the Depositor or the
Trustee as the new secured party on the certificates
of title relating to the Vehicles. See "Certain Legal
Aspects of the Receivables."
Each Prospectus Supplement will specify if the
related Originator or the Depositor has filed or will
be required to file UCC (as herein defined) financing
statements identifying the Vehicles as collateral
pledged in favor of the related Trust or Trustee on
behalf of the Securityholders. In the absence of such
filings any security interest in the Vehicles will
not be perfected in favor of the related Trust or
Trustee. See "Certain Legal Aspects of the
Receivables."
Optional Termination.... The related Servicer, the related Originator, the
Depositor, or, if specified in the related Prospectus
Supplement, certain other entities may, at their
respective options, effect early retirement of a
series of Securities under the circumstances and in
the manner set forth herein under "The Trust
Agreement - Termination; Retirement of Securities"
and in the related Prospectus Supplement.
Mandatory Termination... The Trustee, the related Servicer or certain other
entities specified in the related Prospectus
Supplement may be required to effect early retirement
of all or any portion of a series of Securities by
soliciting competitive bids for the purchase of the
related Trust Fund or otherwise, under other
circumstances and in the manner specified in "The
Trust Agreement - Termination; Retirement of
Securities" and in the related Prospectus Supplement.
Tax Considerations...... Securities of each series offered hereby will, for
federal income tax purposes, constitute either (i)
interests in a Trust treated as a grantor trust under
applicable provisions of the Code ("Grantor Trust
Securities"), (ii) debt issued by a Trust or by the
Depositor ("Debt Securities") or (iii) interests in a
Trust which is treated as a partnership ("Partnership
Interests").
The Prospectus Supplement for each series of
Securities will summarize, subject to the limitations
stated therein, federal income tax considerations
relevant to the purchase, ownership and disposition
of such Securities.
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Investors are advised to consult their tax advisors
and to review "Certain Federal and State Income Tax
Consequences" in the related Prospectus
Supplement.
ERISA Considerations.... The Prospectus Supplement for each series of
Securities will summarize, subject to the limitations
discussed therein, considerations under the Employee
Retirement Income Security Act of 1974, as amended
("ERISA"), relevant to the purchase of such
Securities by employee benefit plans and individual
retirement accounts. See "ERISA Considerations" in
the related Prospectus Supplement.
Ratings................. Each Class of Securities offered pursuant to this
Prospectus and the related Prospectus Supplement will
be rated in one of the four highest rating categories
by one or more "national statistical rating
organizations", as defined in the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and
commonly referred to as "Rating Agencies". Such
ratings will address, in the opinion of such Rating
Agencies, the likelihood that the Issuer will be able
to make timely payment of all amounts due on the
related Securities in accordance with the terms
thereof. Such ratings will neither address any
prepayment or yield considerations applicable to any
Securities nor constitute a recommendation to buy,
sell or hold any Securities.
The ratings expected to be received with respect to
any Securities will be set forth in the related
Prospectus Supplement.
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RISK FACTORS
Prospective Securityholders should consider, among other things, the
following factors in connection with the purchase of the Securities:
Limited Liquidity. There can be no assurance that a secondary market
for the Securities of any series or Class will develop or, if it does develop,
that it will provide Securityholders with liquidity of investment or that it
will continue for the life of such Securities. The Prospectus Supplement for any
series of Securities may indicate that an underwriter specified therein intends
to establish and maintain a secondary market in such Securities; however, no
underwriter will be obligated to do so. The Securities will not be listed on any
securities exchange.
Ownership of Contracts. In connection with the issuance of any
series of Securities, the related Originator(s) will transfer Contracts to the
Depositor. The related Originator(s) will warrant in a Receivables Acquisition
Agreement that the transfer of the Contracts by it to the Depositor is a valid
assignment, transfer and conveyance of such Contracts. The Depositor will
warrant in a Trust Agreement (a) if the Depositor or the related Originator(s)
retain title to the Contracts, that the Trustee for the benefit of
Securityholders has a valid security interest in such Contracts, or (b) if the
Depositor transfers such Contracts to a Trust, that the transfer of the
Contracts to such Trust is either a valid assignment, transfer and conveyance of
the Contracts to the Trust or the Trustee on behalf of the Securityholders has a
valid security interest in such Contracts. As to be described in the related
Prospectus Supplement, the related Trust Agreement will provide either that the
Trustee will be required to maintain possession of the original copies of all
Contracts that constitute chattel paper or that the Depositor, the related
Originator(s) or the related Servicer will retain possession of such Contracts;
provided that in case the Depositor or an Originator retains possession of the
related Contracts, the Servicer may take possession of such original copies as
necessary for the enforcement of any Contract. If any Contracts remain in the
possession of the Depositor or an Originator, the related Prospectus Supplement
may describe specific trigger events that will require delivery to the Trustee.
If the Depositor, the Servicer, the Trustee, an Originator or other third party,
while in possession of the Contracts, sells or pledges and delivers such
Contracts to another party, in violation of the Receivables Acquisition
Agreement or the Trust Agreement, there is a risk that such other party could
acquire an interest in such Contracts having a priority over the Issuer's
interest. Furthermore, if the Depositor, the Servicer, an Originator or a third
party, while in possession of the Contracts, is rendered insolvent, such event
of insolvency may result in competing claims to ownership or security interests
in the Contracts. Such an attempt, even if unsuccessful, could result in delays
in payments on the Securities. If successful, such attempt could result in
losses to the Securityholders or an acceleration of the repayment of the
Securities. The related Originator(s) and the Depositor will make certain
representations and warranties with respect to the ownership of the Contracts as
of the date of the transfer to the Depositor and the Trust, if any,
respectively. The related Originator will be obligated to acquire any Contract
from the related Trust Fund if there is a breach of such representations and
warranties that materially adversely affects the interests of the Depositor or
the Trust in such Contract and such breach has not been cured.
Security Interests. The transfer of the Receivables by the related
Originators to the Depositor pursuant to each Receivables Acquisition Agreement
and then by the Depositor to the Trustee pursuant to the related Trust
Agreement, the perfection of the security interests in the Receivables and the
enforcement of rights to realize on the 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. As specified in each Prospectus Supplement, the
related Servicer will take such action as is required to perfect the rights of
the Trustee in the Receivables. If, through inadvertence or otherwise, a third
party were to purchase (including the taking of a security interest in) a
Receivable for new value in the ordinary course of its business, without actual
knowledge of the Trust's interest, and take possession of a Receivable, the
purchaser would acquire an interest in such Receivable superior to the interest
of the Trust. As further specified in each Prospectus Supplement, no action will
be taken to perfect the rights of the Trustee in proceeds of the VSI Insurance
Policy or of any other insurance policies covering individual Vehicles or
Obligors. Therefore, the rights of a third party with an interest in such
proceeds could prevail against the rights of the Trust prior to the time such
proceeds are deposited by the related Servicer into a Trust Account. See
"Certain Legal Aspects of the Receivables".
Restrictions on Recoveries. Unless specific limitations are
described on the related Prospectus Supplement with respect to specific
Contracts, all Contracts will provide that the obligations of the Obligors
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thereunder are absolute and unconditional, regardless of any defense, set-off or
abatement which the Obligor may have against the related Originator or any other
person or entity whatsoever. The Originators will warrant that no claims or
defenses have been asserted or threatened with respect to the Contracts and that
all requirements of applicable law with respect to the Contracts have been
satisfied.
In the event that the Depositor or the Trustee must rely on
repossession and disposition of Vehicles to recover scheduled payments due on
Defaulted Contracts, the Issuer may not realize the full amount due on a
Contract (or may not realize the full amount on a timely basis). Other factors
that may affect the ability of the Issuer to realize the full amount due on a
Contract include whether amendments to certificates of title relating to the
Vehicles had been filed, whether financing statements to perfect the security
interest in the Vehicles had been filed, depreciation, obsolescence, damage or
loss of any Vehicle, and the application of Federal and state bankruptcy and
insolvency laws. As a result, the Securityholders may be subject to delays in
receiving payments and suffer loss of their investment in the Securities.
Insolvency and Bankruptcy Matters. The Depositor will take steps in
structuring the transactions contemplated hereby that are intended to ensure
that the voluntary or involuntary application for relief by the related
Originator or the Depositor (the Originators and the Depositors, collectively
for these purposes, "Debtors") under the United States Bankruptcy Code or
similar applicable state laws ("Insolvency Laws") will not result in the assets
of the related Trust Fund becoming property of the estate of a Debtor within the
meaning of such Insolvency Laws. Such steps will generally involve the creation
by the related Originator of a separate, limited-purpose subsidiary (each, a
"Finance Subsidiary") pursuant to articles of incorporation containing certain
limitations (including restrictions on the nature of such Finance Subsidiary's
business and a restriction on such Finance Subsidiary's ability to commence a
voluntary case or proceeding under any Insolvency Law without the prior
unanimous affirmative vote of all its directors). However, there can be no
assurance that the activities of any Finance Subsidiary would not result in a
court's concluding that the assets and liabilities of such Finance Subsidiary
should be consolidated with those of the related Originator in a proceeding
under any Insolvency Law.
Except to the extent otherwise described in the related Prospectus
Supplement, each Receivables Acquisition Agreement and each Trust Agreement will
generally require that the related Originator contribute the related Receivables
to a Finance Subsidiary, which will then transfer such Receivables to the
Depositor which in turn will transfer such Receivables to an Issuer. Except as
otherwise described in the related Prospectus Supplement, the Equity Interest in
a Trust Fund will be transferred to the related Finance Subsidiary.
With respect to each Trust Fund, the Trustee and all Securityholders
will covenant that they will not at any time institute against the Depositor or
the related Finance Subsidiary any bankruptcy, reorganization or other
proceeding under any federal or state bankruptcy or similar law.
For purposes of this Prospectus, the term "Originator" includes the
term "Finance Subsidiary." In addition, while an Originator is the Servicer,
cash collections held by such Originator may, subject to certain conditions, be
commingled and used for the benefit of such Originator prior to each Payment
Date and, in the event of the bankruptcy of such Originator, the Depositor, a
Trust or Trustee may not have a perfected interest in such collections.
The Depositor believes that the transfer of the Receivables by an
Originator or its Finance Subsidiary to the Depositor should be treated as a
valid assignment, transfer and conveyance of such Receivables. However, in the
event of an insolvency of such Originator, a court, among other remedies, could
attempt to recharacterize the transfer of the Receivables by such Originator to
the Depositor as a borrowing by the Originator from the Depositor or the related
Securityholders, secured by a pledge of such Receivables. Such an attempt, even
if unsuccessful, could result in delays in payments on the Securities. If such
an attempt were successful, a court, among other remedies, could elect to
accelerate payment of the Securities and liquidate the Receivables, with the
Securityholders entitled to the then outstanding principal amount thereof and
interest thereon at the applicable Security Interest Rate to the date of
payment. Thus, the Securityholders could lose the right to future payments of
interest and might incur reinvestment losses. As more fully described in the
related Prospectus Supplement, in the event the related Issuer is rendered
insolvent, the Trustee for a Trust, in accordance with the Trust Agreement, will
promptly sell, dispose of or otherwise liquidate the related Receivables in a
commercially reasonable manner on commercially reasonable terms. The proceeds
from any such sale, disposition or liquidation of such Receivables
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will be treated as collections on such Receivables. If the proceeds from the
liquidation of the Receivables and any amount available from any credit
enhancement, if any, are not sufficient to pay Securities of the related series
in full, the amount of principal returned to such Securityholders will be
reduced and such Securityholders will incur a loss.
Obligors of the Vehicles may be entitled to assert against the
related Originator, the Depositor, or the Trust, if any, claims and defenses
which they have against such Originator with respect to the Receivables. The
Originator(s) will warrant that no such claims or defenses have been asserted or
threatened with respect to the Receivables and that all requirements of
applicable law with respect to the Receivables have been satisfied.
Insurance on Vehicles. Each Receivable generally requires the
related Obligor to maintain insurance covering physical damage to the Vehicle in
an amount not less than the unpaid principal balance of such Receivable pursuant
to which the Originator is named as a loss payee. Since the Obligors select
their own insurers to provide the requisite coverage, the specific terms and
conditions of their policies may vary.
In addition to physical damage insurance which may be required to be
maintained by the Obligors pursuant to the Receivables, each Vehicle, as
specified in the related Prospectus Supplement, may be insured against physical
damage risks by a policy of vendor's single interest physical damage insurance
(the "VSI Insurance Policy") which provides limited coverage (subject to
deductibles) for, among other things, (i) physical loss or damage from any
external cause to such vehicle and (ii) inability to locate such vehicle or the
related Obligor. The VSI Insurance Policy generally provides coverage in an
amount equal to the lowest of: (i) the actual cash value of such Vehicle at the
time of loss or damage, plus $3,000; (ii) the cost of repair or replacement of
such Vehicle; (iii) the unpaid principal balance, not more than 120 days past
due, computed as of the date of loss, of the related Receivable, less interest,
insurance, finance and other carrying charges; and (iv) $50,000. Accordingly,
recovery under the VSI Insurance Policy may be less than the outstanding
principal and interest due on the related Receivable. In the event of any such
shortfall Securityholders could suffer a loss on their investment.
Delinquencies. There can be no assurance that the historical levels
of delinquencies and losses experienced by the related Originator on its
equipment lease portfolio will be indicative of the performance of the Contracts
included in any Trust Fund or that such levels will continue in the future.
Delinquencies and losses could increase significantly for various reasons,
including changes in the federal income tax laws, changes in the local, regional
or national economies or due to other events.
Subordination; Limited Assets. To the extent specified in the
related Prospectus Supplement, distributions of interest and principal on one
Class of Securities of a series may be subordinated in priority of payment to
interest and principal due on other Classes of Securities of a related series.
Moreover, each Trust Fund will not have, nor is it permitted or expected to
have, any significant assets or sources of funds other than the related
Receivables and, to the extent provided in the related Prospectus Supplement, a
Pre-Funding Account, the related reserve account and any other credit
enhancement. The Securities represent obligations solely of the related Trust or
debt secured by the related Trust Fund, and will not represent a recourse
obligation to other assets of the related Originator(s) or of the Depositor. No
Securities of any series will be insured or guaranteed by any Originator, the
Depositor, the Servicer, or the applicable Trustee. Consequently, holders of the
Securities of any series must rely for repayment primarily upon payments on the
Receivables and, if and to the extent available, amounts on deposit in the
Pre-Funding Account, if any, the reserve account, if any, and any other credit
enhancement, all as specified in the related Prospectus Supplement.
Master Trusts. As may be described in the related Prospectus
Supplement, a Master Trust may issue from time to time more than one series.
While the terms of any additional series will be specified in a supplement to
the related Master Trust Agreement, the provisions of such supplement and,
therefore, the terms of any additional series, will not be subject to prior
review by, or consent of, holders of the Securities of any series previously
issued by such Master Trust. Such terms may include methods for determining
applicable investor percentages and allocating collections, provisions creating
different or additional security or credit enhancements and any other provisions
which are made applicable only to such series. The obligation of the related
Trustee to issue any new series is subject to the condition, among others, that
such issuance will not result in any Rating Agency reducing or withdrawing its
rating of the Securities of any outstanding series (any such reduction or
withdrawal is referred to herein as a "Ratings Effect"). There can be no
assurance, however, that the terms of any
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series might not have an impact on the timing or amount of payments received by
a Securityholder of another series issued by the same Master Trust. See
"Description of the Securities -- Master Trusts."
Book-Entry Registration. Issuance of the Securities in book-entry
form may reduce the liquidity of such Securities in the secondary trading market
since investors may be unwilling to purchase Securities for which they cannot
obtain definitive physical securities representing such Securityholders'
interests, except in certain circumstances described in the related Prospectus
Supplement.
Since transactions in Securities will, in most cases, be able to be
effected only through DTC, direct or indirect participants in DTC's book-entry
system ("Direct Participants" or "Indirect Participants") or certain banks, the
ability of a Securityholder to pledge a Security to persons or entities that do
not participate in the DTC system, or otherwise to take actions in respect to
such Securities, may be limited due to lack of a physical security representing
the Securities.
Securityholders may experience some delay in their receipt of
distributions of interest on and principal of the Securities since distributions
may be required to be forwarded by the Trustee to DTC and, in such case, DTC
will be required to credit such distributions to the accounts of its
Participants which thereafter will be required to credit them to the accounts of
the applicable class of Securityholders either directly or indirectly through
Indirect Participants. See "Description of the Securities -- Book Entry
Registration."
Security Rating. The rating of Securities credit enhanced by a
letter of credit, financial guaranty insurance policy, reserve fund, credit or
liquidity facilities, cash deposits or other forms of credit enhancement
(collectively "Credit Enhancement") will depend primarily on the
creditworthiness of the issuer of such external Credit Enhancement device (a
"Credit Enhancer"). Any reduction in the rating assigned to the claims-paying
ability of the related Credit Enhancer to honor its obligations pursuant to any
such Credit Enhancement below the rating initially given to the Securities would
likely result in a reduction in the rating of the Securities.
Maturity and Prepayment Considerations. Because the rate of payment
of principal on the Securities will depend, among other things, on the rate of
payment on the related Contracts, the rate of payment of principal on the
Securities cannot be predicted. Payments on the Contracts will include scheduled
payments as well as partial and full prepayments (to the extent not replaced
with substitute Contracts), payments upon the liquidation of Defaulted
Contracts, payments upon acquisitions by the related Originator, the related
Servicer or the Depositor of Contracts from the related Trust Fund on account of
a breach of certain representations and warranties in the related Trust
Agreement, payments upon an optional acquisition by the related Originator, the
related Servicer or the Depositor of Contracts from the related Trust Fund (any
such voluntary or involuntary prepayment or other early payment of a Contract, a
"Prepayment"), and residual payments. The rate of early terminations of
Contracts due to Prepayments and defaults may be influenced by a variety of
economic and other factors, including, among others, obsolescence, then current
economic conditions and tax considerations. The risk of reinvesting
distributions of the principal of the Securities will be borne by the
Securityholders. The yield to maturity on Strip Securities or Securities
purchased at premiums or discounts to par will be extremely sensitive to the
rate of Prepayments on the related Receivables. In addition, the yield to
maturity on certain other types of classes of Securities, including Strip
Securities, Accrual Securities or certain other Classes in a series including
more than one Class of Securities, may be relatively more sensitive to the rate
of prepayment of the related Contracts than other Classes of Securities.
The Depositor does not have available to it any statistics as to
prepayment rates historically experienced in the equipment leasing industry. The
rate of Prepayments of Contracts cannot be predicted and is influenced by a wide
variety of economic, social, and other factors, including prevailing interest
rates, the availability of alternate financing and local and regional economic
conditions. Therefore, no assurance can be given as to the level of Prepayments
that a Trust Fund will experience.
Securityholders should consider, in the case of Securities purchased
at a discount, the risk that a slower than anticipated rate of Prepayments on
the Receivables could result in an actual yield that is less than the
anticipated yield and, in the case of any Securities purchased at a premium, the
risk that a faster than anticipated rate of Prepayments on the Receivables could
result in an actual yield that is less than the anticipated yield.
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THE TRUST FUNDS
The property of each Trust Fund will include, as specified in the
related Prospectus Supplement, (i) a pool of Receivables, (ii) all moneys
(including accrued interest) due thereunder on or after the applicable Cut-off
Date, (iii) such amounts as from time to time may be held in one or more
accounts established and maintained by the Servicer pursuant to the related
Trust Agreement, as described below and in the related Prospectus Supplement,
(iv) the security interests, if any, in the Vehicles relating to such pool of
Receivables, (v) the right to proceeds from claims on physical damage policies,
if any, covering such Vehicles or the related Obligors, as the case may be, (vi)
the proceeds of any repossessed Vehicles related to such pool of Receivables,
(vii) the rights of the Depositor under the related Receivables Acquisition
Agreement and (viii) interest earned on certain short-term investments held by
such Trust Fund, unless the related Prospectus Supplement specifies that such
earnings may be paid to the related Servicer or Originator(s). The Trust Fund
will also include, if so specified in the related Prospectus Supplement, monies
on deposit in a Pre-Funding Account, which will be used by the Trustee to
acquire or receive a security interest in Additional Receivables from time to
time during the Pre-Funding Period specified in the related Prospectus
Supplement. In addition, to the extent specified in the related Prospectus
Supplement, some combination of Credit Enhancements may be issued to or held by
the Trustee on behalf of the related Trust Fund for the benefit of the holders
of one ore more classes of Securities.
The Receivables comprising a Trust Fund will, as specifically
described in the related Prospectus Supplement, be either (i) originated by the
related Originator, (ii) originated by various manufacturers and acquired by the
related Originator, (iii) originated by various Dealers and acquired by the
related Originator or (iv) acquired by the related Originator from originators
or owners of Receivables.
Each Trust Fund will include Receivables with respect to which the
related Contract or the related underlying Vehicles is subject to federal or
state registration or titling requirements. No Trust Fund will include
Receivables with respect to which the underlying Contracts or Vehicles relate to
office equipment, aircraft, ships or boats, firearms or other weapons, railroad
rolling stock or facilities such as factories, warehouses or plants subject to
state laws governing the manner in which title or security interest in real
property is determined or perfected.
The Receivables will be acquired by the Depositor from the related
Originator pursuant to a Receivables Acquisition Agreement between the
Originator and the Depositor (each, a "Receivables Acquisition Agreement"). The
Receivables included in each Trust Fund will be selected from those Receivables
held by the Originators based on the criteria specified in the applicable Trust
Agreement and described herein or in the related Prospectus Supplement.
With respect to each series of Securities, on or prior to the
Closing Date on which the Securities are delivered to Securityholders, the
Depositor will form a Trust Fund by either (i) transferring the related
Receivables into a Trust pursuant to a Trust Agreement between the Depositor and
the Trustee or (ii) entering into an Indenture with an Indenture Trustee,
relating to the issuance of such Securities, secured by the related Receivables.
The Receivables comprising each Trust Fund will generally have been
originated by the related Originator(s) or acquired by such Originator(s) from
Vendors or from other lessors in accordance with such Originator's(s') specified
underwriting criteria. The underwriting criteria applicable to the Receivables
included in any Trust Fund will be described in all material respects in the
related Prospectus Supplement.
THE ISSUERS
With respect to each series of Securities, the Depositor will either
establish a separate Trust that will issue such Securities, or the Depositor
will issue such Securities, in each case pursuant to the related Trust
Agreement. For purposes of this Prospectus and the related Prospectus
Supplement, the Depositor, if the Depositor issues the related Securities, or
the related Trust, if a Trust issues the related Securities, shall be referred
to as the "Issuer" with respect to such Securities.
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Upon the issuance of the Securities of a given series, the proceeds
from such issuance will be used by the Depositor to acquire the related
Receivables from the related Originator. The related Servicer will service the
related Receivables pursuant to the applicable Servicing Agreement, and will be
compensated for acting as the Servicer. To facilitate servicing and to minimize
administrative burden and expense, the Servicers may be appointed custodians for
the related Receivables by each Trustee and the Depositor, as may be set forth
in the related Prospectus Supplement.
If the protection provided to the Securityholders of a given class
by the subordination of another Class of Securities of such series and by the
availability of the funds in the reserve account, if any, or any other Credit
Enhancement for such series is insufficient, the Issuer must rely solely on the
payments from the Obligors on the related Contracts, and the proceeds from the
sale of Vehicles which secure or are leased under the Defaulted Contracts. In
such event, certain factors may affect such Issuer's ability to realize on the
collateral securing such Contracts, and thus may reduce the proceeds to be
distributed to the Securityholders of such series.
THE RECEIVABLES
Receivables Pools
Information with respect to the Receivables in each Trust Fund will
be set forth in the related Prospectus Supplement, including, the identity of
the related Originator(s), the related underwriting criteria and collection
policies, together with, to the extent appropriate, the composition of such
Receivables and the distribution of such Receivables by equipment type, payment
frequency and current principal balance as of the applicable Cut-off Date.
The Contracts
As specified in the related Prospectus Supplement, the Contracts may
consist of any combination of Rule of 78s Contracts, Fixed Value Contracts or
Simple Interest Contracts. Generally, "Rule of 78s Contracts" provide for fixed
level monthly payments which will amortize the full amount of the Contract over
its term. The Rule of 78s Contracts provide for allocation of payments according
to the "sum of periodic balances" or "sum of monthly payments" method (the "Rule
of 78s"). Each Rule of 78s Contract provides for the payment by the Obligor of a
specified total amount of payments, payable in monthly installments on the
related due date, which total represents the principal amount financed and
finance charges in an amount calculated on the basis of a stated annual
percentage rate ("APR") for the term of such Contract. The rate at which such
amount of finance charges is earned and, correspondingly, the amount of each
fixed monthly payment allocated to reduction of the outstanding principal
balance of the related Contract are calculated in accordance with the Rule of
78s. Under the Rule of 78s, the portion of each payment allocable to interest is
higher during the early months of the term of a Contract and lower during later
months than that under a constant yield method for allocating payments between
interest and principal. Notwithstanding the foregoing, as specified in the
related Prospectus Supplement, all payments received by the related Servicer on
or in respect of the Rule of 78s Contracts may be allocated on an actuarial
basis.
Generally, the "Fixed Value Contracts" provide for monthly payments
with a final fixed value payment which is greater than the scheduled monthly
payments. A Fixed Value Contract provides for amortization of the loan over a
series of fixed level payment monthly installments, but also requires a final
fixed value payment due after payment of such monthly installments which may be
satisfied by (i) payment in full in cash of such amount, (ii) transfer of the
vehicle to the related Originator provided certain conditions are satisfied or
(iii) refinancing the fixed value payment in accordance with certain conditions.
With respect to Fixed Value Contracts, as specified in the related Prospectus
Supplement, only the principal and interest payments due prior to the final
fixed value payment and not the final fixed value payment may be included
initially in the related Trust Fund.
"Simple Interest Contracts" provide for the amortization of the
amount financed under the receivable over a series of fixed level monthly
payments. However, unlike the monthly payment under Rule of 78s Contracts, each
monthly payment consists of an installment of interest which is calculated on
the basis of the outstanding principal balance of the receivable multiplied by
the stated APR and further multiplied by the period elapsed (as a fraction of a
calendar year) since the preceding payment of interest was made. As payments are
received under a Simple Interest Contract, the amount received is applied first
to interest accrued to the date of
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payment and the balance is applied to reduce the unpaid principal balance.
Accordingly, if an Obligor 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. 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 pays
a fixed monthly installment 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 an Obligor elects to prepay a Rule of 78s Contract in full, it is
entitled to a rebate of the portion of the outstanding balance then due and
payable attributable to unearned finance charges. If a Simple Interest Contract
is prepaid, rather than receive a rebate, the Obligor is required to pay
interest only to the date of prepayment. The amount of a rebate under a Rule of
78s Contract calculated in accordance with the Rule of 78s will always be less
than had such rebate been calculated on an actuarial basis and generally will be
less than the remaining scheduled payments of interest that would be due under a
Simple Interest Contract for which all payments were made on schedule.
Distributions to Security holders may not be affected by Rule of 78s rebates
under the Rule of 78s Contract because pursuant to the related Prospectus
Supplement such distributions may be determined using the actuarial method.
Delinquencies, Repossessions, and Net Losses
Certain information relating to the related Originator's
delinquency, repossession and net loss experience with respect to Contracts it
has originated or acquired will be set forth in each Prospectus Supplement. This
information may include, among other things, the experience with respect to all
Contracts in such Originator's portfolio during certain specified periods,
including Contracts which may not meet the criteria for selection as a
Receivable for any particular Trust Fund. There can be no assurance that the
delinquency, repossession and net loss experience on any Trust Fund will be
comparable to the related Originator's prior experience.
Maturity and Prepayment Considerations
As more fully described in the related Prospectus Supplement, if a
Contract permits a Prepayment, such payment, together with accelerated payments
resulting from defaults, will shorten the weighted average life of the related
pool of Receivables and the weighted average life of the related Securities. The
rate of Prepayments on the Receivables may be influenced by a variety of
economic, financial and other factors. In addition, under certain circumstances,
the Depositor or the related Originator will be obligated to acquire Receivables
from the related Trust Fund pursuant to the applicable Trust Agreement or
Receivables Acquisition Agreement as a result of breaches of representations and
warranties. Any reinvestment risks resulting from a faster or slower
amortization of the related Securities which results from Prepayments will be
borne entirely by the related Securityholders.
The related Prospectus Supplement will set forth certain additional
information with respect to the maturity and prepayment considerations
applicable to a particular pool of Receivables and the related series of
Securities, together with a description of any applicable prepayment penalties.
Acquisition of Receivables From Originators
The Receivables underlying a Series of Securities will be acquired
by the Depositor, either directly or through affiliates (such as a Transferor),
from the related Originator pursuant to a Receivables Acquisition Agreement
between the Depositor or such affiliate and each such Originator.
The Depositor expects that, unless otherwise specified in the
related Prospectus Supplement, each Receivable so acquired will have been
originated by the Originator thereof in accordance with the underwriting
criteria specified in such Prospectus Supplement. Unless otherwise specified in
the applicable Prospectus Supplement, each Originator will be an institution
experienced in originating and servicing equipment leases in
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accordance with accepted industry practices and prudent guidelines. Unless
otherwise provided in the applicable Prospectus Supplement, each Originator
pursuant to the related Receivables Acquisition Agreement will make certain
representations and warranties to the Depositor in respect of the related
Receivables; the material terms of such representations and warranties will be
set forth in the related Prospectus Supplement. Unless otherwise provided in the
applicable Prospectus Supplement with respect to each Series, the Depositor will
assign all of its rights (except certain rights of indemnification) and interest
in the related Receivables Acquisition Agreement to the related Trustee for the
benefit of the Securityholders of such Series, and the Originator shall
thereupon be liable to the Trustee for defective or missing documents or an
uncured breach of such Originator's representations or warranties, to the extent
described in the related Prospectus Supplement.
POOL FACTORS
The "Pool Factor" for each Class of Securities will be a seven-digit
decimal, which the Servicer will compute prior to each distribution with respect
to such Class of Securities, indicating the remaining outstanding principal
balance of such Class of Securities as of the applicable Payment Date, as a
fraction of the initial outstanding principal balance of such Class of
Securities. Each Pool Factor will be initially 1.0000000, and thereafter will
decline to reflect reductions in the outstanding principal balance of the
applicable Class of Securities. A Securityholder's portion of the aggregate
outstanding principal balance of the related Class of Securities is the product
of (i) the original aggregate purchase price of such Securityholder's Securities
and (ii) the applicable Pool Factor.
As more specifically described in the related Prospectus Supplement
with respect to each series of Securities, the related Securityholders of record
will receive reports on or about each Payment Date concerning the payments
received on the Receivables, the Pool Balance (as such term is defined in the
related Prospectus Supplement, the "Pool Balance"), each Pool Factor and various
other items of information. 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.
USE OF PROCEEDS
The proceeds from the sale of the Securities of a given series will
be applied by the Depositor to the acquisition of the related Receivables from
the related Originator. The Depositor expects that it will make additional sales
of securities similar to the Securities from time to time, but the timing and
amount of any such additional offering will be dependent upon a number of
factors, including the volume of Contracts acquired by the Depositor, prevailing
interest rates, availability of funds and general market conditions.
THE DEPOSITOR
Prudential Securities Secured Financing Corporation, formerly known
as P-B Secured Financing Corporation (the "Depositor"), was incorporated in the
State of Delaware on August 26, 1988 as a wholly-owned, limited purpose finance
subsidiary of Prudential Securities Incorporated (a wholly-owned indirect
subsidiary of The Prudential Insurance Company of America). The Depositor's
principal executive offices are located at One New York Plaza, New York, New
York 10292. Its telephone number is (212) 778-1000.
As described herein under "The Trust Funds," the only obligations,
if any, of the Depositor with respect to a Series of Securities may be pursuant
to certain limited representations and warranties and limited undertakings to
repurchase or substitute Receivables under certain circumstances. Unless
otherwise specified in the applicable Prospectus Supplement, the Depositor will
have no servicing obligations or responsibilities with respect to any Trust
Fund. The Depositor does not have, nor is it expected in the future to have, any
significant assets.
As specified in the related Prospectus Supplement the Servicer with
respect to any Series of Securities may be an affiliate of the Depositor. As
described under "The Trust Fund," the Depositor may acquire Receivables through
or from an affiliate.
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Neither the Depositor nor Prudential Securities Incorporated nor any
of its affiliates, including The Prudential Insurance Company of America, will
insure or guarantee the Certificates of any Series.
THE TRUSTEE
The Trustee for each series of Securities will be specified in the
related Prospectus Supplement. The Trustee's liability in connection with the
issuance and sale of the related Securities is limited solely to the express
obligations of such Trustee set forth in the related Trust Agreement.
With respect to each series of Securities, no resignation or removal
of the Trustee and no appointment of a successor Trustee shall become effective
until the acceptance of appointment by the successor Trustee. The Trustee may
resign for cause at any time by giving written notice thereof to the Depositor
and by mailing notice of resignation by first-class mail, postage prepaid, to
the Securityholders of such series at their addresses appearing on the Security
Register. The Trustee may be removed at any time by written notice of the
holders of Securities evidencing more than 50% of the voting rights with respect
to such series, delivered to the Trustee and the Depositor, unless an alternate
method is described in the related Prospectus Supplement. If the Trustee shall
resign, be removed, or become incapable of acting, or if a vacancy shall occur
in the office of Trustee for any cause, the Depositor shall promptly appoint a
successor Trustee. If no successor Trustee shall have been so appointed by the
Depositor or the Securityholders, or if no successor Trustee shall have accepted
appointment within 30 days after any such resignation or removal, existence of
incapability, or occurrence of such vacancy, the Trustee or any Securityholder
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
DESCRIPTION OF THE SECURITIES
General
The Securities will be issued in series. Each series of Securities
(or, in certain instances, two or more series of Securities) will be issued
pursuant to a Trust Agreement. The following summaries (together with additional
summaries under "The Trust Agreement" below) describe all material terms and
provisions relating to the Securities common to each Trust Agreement. The
summaries do not purport to be complete and are subject to, and are qualified in
their entirety by reference to, all of the provisions of the Trust Agreement for
the related Securities and the related Prospectus Supplement.
All of the Securities offered pursuant to this Prospectus and the
related Prospectus Supplement will be rated in one of the four highest rating
categories by one or more Rating Agencies.
The Securities will generally be styled as debt instruments, having
a principal balance and a specified Interest Rate. The Securities may either
represent beneficial ownership interests in the related Receivables held by the
related Trust or debt secured by certain assets of the related Issuer.
Each series or Class of Securities offered pursuant to this
Prospectus may have a different Interest Rate, which may be a fixed or
adjustable interest rate. The related Prospectus Supplement will specify the
Interest Rate for each series or Class of Securities described therein, or the
initial interest rate and the method for determining subsequent changes to the
Interest Rate.
A series may include one or more Classes of Strip Securities
entitled (i) to principal distributions, with disproportionate, nominal or no
interest distributions, or (ii) to interest distributions, with
disproportionate, nominal or no principal distributions. In addition, a series
of Securities may include two or more Classes of Securities that differ as to
timing, sequential order, priority of payment, Interest Rate or amount of
distribution of principal or interest or both, or as to which distributions of
principal or interest or both on any Class may be made upon the occurrence of
specified events, in accordance with a schedule or formula, or on the basis of
collections from designated portions of the related pool of Receivables. Any
such series may include one or more Classes of Accrual Securities, as to which
certain accrued interest will not be distributed but rather will be added to the
principal balance (or nominal balance, in the case of Accrual Securities which
are also Strip Securities) thereof on each Payment Date, as hereinafter defined,
or in the manner described in the related Prospectus Supplement.
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If so provided in the related Prospectus Supplement, a series may
include one or more other Classes of Senior Securities that are senior to one or
more other Classes of Subordinate Securities in respect of certain distributions
of principal and interest and allocations of losses on Receivables.
In addition, certain Classes of Senior (or Subordinate) Securities
may be senior to other Classes of Senior (or Subordinate) Securities in respect
of such distributions or losses.
General Payment Terms of Securities
As provided in the related Trust Agreement and as described in the
related Prospectus Supplement, Securityholders will be entitled to receive
payments on their Securities on the specified Payment Dates. Payment Dates with
respect to the Securities will occur monthly, quarterly or semi-annually, as
described in the related Prospectus Supplement.
The related Prospectus Supplement will describe the Record Date
preceding such Payment Date, as of which the Trustee or its paying agent will
fix the identity of the Securityholders for the purpose of receiving payments on
the next succeeding Payment Date. As more fully described in the related
Prospectus Supplement, the Payment Date may be the fifteenth or twenty-fifth day
of each month (or, in the case of quarterly-pay Securities, the fifteenth or
twenty-fifth day of every third month; and in the case of semi-annual pay
Securities, the fifteenth or twenty-fifth day of every sixth month) and the
Record Date will be the close of business as of the last day of the calendar
month that precedes the calendar month in which such Payment Date occurs.
Each Trust Agreement will describe a Remittance Period preceding
each Payment Date (for example, in the case of monthly-pay Securities, the
calendar month preceding the month in which a Payment Date occurs). As more
fully provided in the related Prospectus Supplement, collections received on or
with respect to the related Receivables held by a Trust during a Remittance
Period will be required to be remitted by the related Servicer to the related
Trustee prior to the related Payment Date and will be used to fund payments to
Securityholders on such Payment Date. As may be described in the related
Prospectus Supplement, the related Trust Agreement may provide that all or a
portion of the payments collected on or with respect to the related Receivables
may be applied by the related Trustee to the acquisition of additional
Receivables during a specified period (rather than be used to fund payments of
principal to Securityholders during such period) with the result that the
related Securities will possess an interest-only period, also commonly referred
to as a revolving period, which will be followed by an amortization period. Any
such interest only or revolving period may, upon the occurrence of certain
events to be described in the related Prospectus Supplement, terminate prior to
the end of the specified period and result in the earlier than expected
amortization of the related Securities.
In addition, and as may be described in the related Prospectus
Supplement, the related Trust Agreement may provide that all or a portion of
such collected payments may be retained by the Trustee (and held in certain
temporary investments, including Receivables) for a specified period prior to
being used to fund payments of principal to Securityholders.
Such retention and temporary investment by the Trustee of such
collected payments may be required by the related Trust Agreement for the
purposes of (a) slowing the amortization rate of the related Securities relative
to the rent payment schedule of the related Receivables, or (b) attempting to
match the amortization rate of the related Securities to an amortization
schedule established at the time such Securities are issued. Any such feature
applicable to any Securities may terminate upon the occurrence of events to be
described in the related Prospectus Supplement, resulting in distributions to
the specified Securityholders and an acceleration of the amortization of such
Securities.
Neither the Securities nor the underlying Receivables will be
guaranteed or insured by any governmental agency or instrumentality or the
Depositor, the related Servicer, the related Originator, any Trustee or any of
their respective affiliates unless specifically set forth in the related
Prospectus Supplement.
As may be described in the related Prospectus Supplement, Securities
of each series covered by a particular Trust Agreement will either evidence
specified beneficial ownership interest in a separate Trust Fund
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created pursuant to such Trust Agreement or represent debt secured by the
related Trust Fund. To the extent that any Trust Fund includes certificates of
interest or participations in Receivables, the related Prospectus Supplement
will describe the material terms and conditions of such certificates or
participations.
Master Trusts
As may be described in the related Prospectus Supplement, each Trust
Agreement may provide that, pursuant to any one or more supplements thereto, the
Depositor may direct the related Trustee to issue from time to time new series
subject to the conditions described below (each such issuance a "Master Trust
New Issuance"). Each Master Trust New Issuance will have the effect of
decreasing the Equity Interest in the related Master Trust. Under each such
Master Trust Agreement, the Depositor may designate, with respect to any newly
issued series: (i) its name or designation; (ii) its initial principal amount
(or method for calculating such amount); (iii) its Interest Rate (or formula for
the determination thereof); (iv) the Payment Dates and the date or dates from
which interest shall accrue; (v) the method for allocating collections to
Securityholders of such series; (vi) any bank accounts to be used by such series
and the terms governing the operation of any such bank accounts; (vii) the
percentage used to calculate monthly servicing fees; (viii) the provider and
terms of any form of Credit Enhancement with respect thereto; (ix) the terms on
which the Securities of such series may be repurchased or remarketed to other
investors; (x) the number of Classes of Securities of such series, and if such
series consists of more than one Class, the rights and priorities of each such
Class; (xi) the extent to which the Securities of such series will be issuable
in book-entry form; (xii) the priority of such series with respect to any other
series; and (xiii) any other relevant terms. None of the Depositor, the related
Servicer, the related Trustee or any Master Trust is required or intends to
obtain the consent of any Securityholder of any outstanding series to issue any
additional series.
Each Master Trust Agreement provides that the Depositor may
designate terms such that each Master Trust New Issuance has an amortization
period which may have a different length and begin on a different date than such
periods for any series previously issued by the related Master Trust and then
outstanding. Moreover, each Master Trust New Issuance may have the benefits of
Credit Enhancements issued by enhancement providers different from the providers
of the Credit Enhancement, if any, with respect to any series previously issued
by the related Master Trust and then outstanding. Under each Master Trust
Agreement, the related Trustee shall hold any such Credit Enhancement only on
behalf of the Securityholders to which such Credit Enhancement relates. The
Depositor will have the option under each Master Trust Agreement to vary among
series the terms upon which a series may be repurchased by the Issuer or
remarketed to other investors. As more fully described in a related Prospectus
Supplement, there is no limit to the number of Master Trust New Issuances that
the Depositor may cause under a Master Trust Agreement. Each Master Trust will
terminate only as provided in the related Master Trust Agreement. There can be
no assurance that the terms of any Master Trust New Issuance might not have an
impact on the timing and amount of payments received by Securityholders of
another series issued by the same Master Trust.
Under each Master Trust Agreement and pursuant to a related
supplement, a Master Trust New Issuance may only occur upon the satisfaction of
certain conditions provided in each such Master Trust Agreement. The obligation
of the related Trustee to authenticate the Securities of any such Master Trust
New Issuance and to execute and deliver the supplement to the related Master
Trust Agreement is subject to the satisfaction of the following conditions: (a)
on or before the fifth business day immediately preceding the date upon which
the Master Trust New Issuance is to occur, the Depositor shall have given the
related Trustee, the related Servicer, the Rating Agency and certain related
providers of Credit Enhancement, if any, written notice of such Master Trust New
Issuance and the date upon which the Master Trust New Issuance is to occur; (b)
the Depositor shall have delivered to the related Trustee a supplement to the
related Master Trust Agreement, in form satisfactory to such Trustee, executed
by each party to the related Master Trust Agreement other than such Trustee; (c)
the Depositor shall have delivered to the related Trustee any related Credit
Enhancement agreement; (d) the related Trustee shall have received confirmation
from the Rating Agency that such Master Trust New Issuance will not result in
any Rating Agency reducing or withdrawing its rating with respect to any other
series or Class of such Trust (any such reduction or withdrawal is referred to
herein as a "Ratings Effect"); (e) the Depositor shall have delivered to the
related Trustee, the Rating Agency and certain providers of Credit Enhancement,
if any, an opinion of counsel acceptable to the related Trustee that for federal
income tax purposes (i) following such Master Trust New Issuance the related
Master Trust will not be deemed to be an association (or publicly traded
partnership) taxable as a
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corporation, (ii) such Master Trust New Issuance will not affect the tax
characterization as debt of Securities of any outstanding series or Class issued
by such Master Trust that were characterized as debt at the time of their
issuance and (iii) such Master Trust New Issuance will not cause or constitute
an event in which gain or loss would be recognized by any Securityholders or the
related Master Trust; and (f) any other conditions specified in any supplement.
Upon satisfaction of the above conditions, the related Trustee shall execute the
supplement to the related Master Trust Agreement and issue the Securities of
such new series.
Book-Entry Registration
As may be described in the related Prospectus Supplement,
Securityholders of a given series may hold their Securities through DTC (in the
United States) or CEDEL or Euroclear (in Europe) if they are participants of
such systems, or indirectly through organizations that are participants in such
systems.
Cede, as nominee for DTC, will hold the global Securities in respect
of a given series. CEDEL and Euroclear will hold omnibus positions on behalf of
the CEDEL Participants (as defined below) and the Euroclear Participants (as
defined below) (collectively, the "Participants"), respectively, through
customers' securities accounts in CEDEL's and Euroclear's names on the books of
their respective depositaries (collectively, the "Depositaries") which in turn
will hold such positions in customers' securities accounts in the Depositaries'
names on the books of DTC.
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 UCC and a "clearing agency"
registered pursuant to Section 17A of the Exchange Act. DTC was created to hold
securities for its Participants and to facilitate the clearance and settlement
of securities transactions between Participants through electronic book-entries,
thereby eliminating the need for physical movement of notes or certificates.
Participants include securities brokers and dealers, banks, trust companies and
clearing corporations. 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 ("Indirect Participants").
Transfers between DTC Participants will occur in accordance with DTC
rules. Transfers between CEDEL Participants and Euroclear Participants will
occur in the ordinary way in accordance with their applicable rules and
operating procedures.
Cross-market transfers between persons holding directly or
indirectly through DTC, on the one hand, and directly or indirectly through
CEDEL Participants or Euroclear Participants, on the other, will be effected in
DTC in accordance with DTC rules on behalf of the relevant European
international clearing system by its Depositary; however, such cross-market
transactions will require delivery of instructions to the relevant European
international clearing system by the counterparty in such system in accordance
with its rules and procedures and within its established deadlines (European
time). The relevant European international clearing system will, if the
transaction meets its settlement requirements, deliver instructions to its
Depositary to take action to effect final settlement on its behalf by delivering
or receiving securities in DTC, and making or receiving payment in accordance
with normal procedures for same-day funds settlement applicable to DTC. CEDEL
Participants and Euroclear Participants may not deliver instructions directly to
the Depositaries.
Because of time-zone differences, credits of securities in CEDEL or
Euroclear as a result of a transaction with a DTC Participant will be made
during the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions in such
securities settled during such processing will be reported to the relevant CEDEL
Participant or Euroclear Participant on such business day. Cash received in
CEDEL or Euroclear as a result of sales of securities by or through a CEDEL
Participant or a Euroclear Participant to a DTC Participant will be received
with value on the DTC settlement date but will be available in the relevant
CEDEL or Euroclear cash account only as of the business day following settlement
in DTC.
The Securityholders of a given series that are not Participants or
Indirect Participants but desire to purchase, sell or otherwise transfer
ownership of, or other interests in, Securities of such series may do so only
through Participants and Indirect Participants. In addition, Securityholders of
a given series will receive all distributions of principal and interest through
the Participants who in turn will receive them from DTC. Under a
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book-entry format, Securityholders of a given series may experience some delay
in their receipt of payments, since such payments will be forwarded by the
applicable Trustee to Cede, as nominee for DTC. DTC will forward such payments
to its Participants, which thereafter will forward them to Indirect Participants
or such Securityholders. It is anticipated that the only "Securityholder" in
respect of any series will be Cede, as nominee of DTC. Securityholder of a given
series will not be recognized as Securityholders of such series, and such
Securityholders will be permitted to exercise the rights of Securityholders of
such series only indirectly through DTC and its Participants.
Under the rules, regulations and procedures creating and affecting
DTC and its operations (the "Rules"), DTC is required to make book-entry
transfers of Securities of a given series among Participants on whose behalf it
acts with respect to such Securities and to receive and transmit distributions
of principal of, and interest on, such Securities. Participants and Indirect
Participants with which the Securityholders of a given series have accounts with
respect to such Securities similarly are required to make book-entry transfers
and receive and transmit such payments on behalf of their respective
Securityholders of such series. Accordingly, although such Securityholders will
not possess 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 of a given series to pledge Securities of such series to persons
or entities that do not participate in the DTC system, or to otherwise act with
respect to such Securities, may be limited due to the lack of a physical
certificate for such Securities.
DTC will advise the Trustee in respect of each Series that it will
take any action permitted to be taken by a Securityholder of the related series
only at the direction of one or more Participants to whose accounts with DTC the
Securities of such series are credited. DTC may take conflicting actions with
respect to other undivided interests to the extent that such actions are taken
on behalf of Participants whose holdings include such undivided interests.
CEDEL is incorporated under the laws of Luxembourg as a professional
depository. CEDEL holds securities for its participating organizations ("CEDEL
Participants") and facilitates the clearance and settlement of securities
transactions between CEDEL Participants through electronic book-entry changes in
accounts of CEDEL Participants, thereby eliminating the need for physical
movement of certificates. Transactions may be settled in CEDEL in any of 28
currencies, including United States dollars. CEDEL provides to its CEDEL
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. CEDEL interfaces with domestic markets in several
countries. As a professional depository, CEDEL is subject to regulation by the
Luxembourg Monetary Institute. CEDEL Participants are recognized financial
institutions around the world, including underwriters, securities brokers and
dealers, banks, trust companies, clearing corporations and certain other
organizations. Indirect access to CEDEL is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a CEDEL Participant, either directly or indirectly.
Euroclear was created in 1968 to hold securities for participants of
the Euroclear System ("Euroclear Participants") and to clear and settle
transactions between Euroclear Participants through simultaneous electronic
book-entry delivery against payment, thereby eliminating the need for physical
movement of certificates and any risk from lack of simultaneous transfers of
securities and cash. Transactions may now be settled in any of 28 currencies,
including United States dollars. The Euroclear System includes various other
services, including securities lending and borrowing and interfaces with
domestic markets in several countries generally similar to the arrangements for
cross-market transfers with DTC described above. Euroclear is operated by Morgan
Guaranty Trust Company of New York, Brussels, Belgium office, under contract
with Euroclear Clearance System, S.C., a Belgian cooperative corporation (the
"Cooperative"). All operations are conducted by the "Euroclear Operator" (as
defined below), and all Euroclear securities clearance accounts and Euroclear
cash accounts are accounts with the Euroclear Operator, not the Cooperative. The
Cooperative establishes policy for the Euroclear System on behalf of Euroclear
Participants. Euroclear Participants include banks (including central banks),
securities brokers and dealers and other professional financial intermediaries
and may include the Underwriters. Indirect access to the Euroclear System is
also available to other firms that clear through or maintain a custodial
relationship with a Euroclear Participant, either directly or indirectly.
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The "Euroclear Operator" is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear
Operator are governed by the Terms and Conditions Governing Use of Euroclear and
the related Operating Procedures of the Euroclear System and applicable Belgian
law (collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawal of
securities and cash from the Euroclear System, and receipts of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific certificates
to specific securities clearance accounts. The Euroclear Operator acts under the
Terms and Conditions only on behalf of Euroclear Participants and has no record
of relationship with persons holding through Euroclear Participants.
Except as required by law, the Trustee in respect of a series will
not have any liability for any aspect of the records relating to or payments
made or account of beneficial ownership interests of the related Securities held
by Cede, as nominee for DTC, or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
Definitive Notes
As may be described in the related Prospectus Supplement, the
Securities will be issued in fully registered, certificated form ("Definitive
Securities") to the Securityholders of a given series or their nominees, rather
than to DTC or its nominee, only if (i) the Trustee in respect of the related
series advises in writing that DTC is no longer willing or able to discharge
properly its responsibilities as depository with respect to such Securities and
such Trustee is unable to locate a qualified successor, (ii) such Trustee, at
its option, elects to terminate the book-entry-system through DTC or (iii) after
the occurrence of an "Event of Default" under the related Indenture or a default
by the Servicer under the related Trust Agreements, Securityholders representing
at least a majority of the outstanding principal amount of such Securities
advise the applicable Trustee through DTC in writing that the continuation of a
book-entry system through DTC (or a successor thereto) is no longer in such
Securityholders' best interest.
Upon the occurrence of any event described in the immediately
preceding paragraph, the applicable Trustee will be required to notify all such
Securityholders through Participants of the availability of Definitive
Securities. Upon surrender by DTC of the definitive certificates representing
such Securities and receipt of instructions for re-registration, the applicable
Trustee will reissue such Securities as Definitive Securities to such
Securityholders.
Distributions of principal of, and interest on, such Securities will
thereafter be made by the applicable Trustee in accordance with the procedures
set forth in the related Indenture or Trust Agreement directly to holders of
Definitive Securities in whose names the Definitive Securities were registered
at the close of business on the applicable Record Date specified for such
Securities in the related Prospectus Supplement. Such distributions will be made
by check mailed to the address of such holder as it appears on the register
maintained by the applicable Trustee. The final payment on any such Security,
however, will be made only upon presentation and surrender of such Security at
the office or agency specified in the notice of final distribution to the
applicable Securityholders.
Definitive Securities in respect of a given series of Securities
will be transferable and exchangeable at the offices of the applicable Trustee
or of a certificate registrar named in a notice delivered to holders of such
Definitive Securities. No service charge will be imposed for any registration of
transfer or exchange, but the applicable 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
With respect to each series of Securities, on or prior to each
Payment Date for such series, the related Servicer or the related Trustee will
forward or cause to be forwarded to each holder of record of such class of
Securities a statement or statements with respect to the related Trust Fund
setting forth the information specifically described in the related Trust
Agreement which generally will include the following information:
(i) the amount of the distribution with respect to
each class of Securities;
(ii) the amount of such distribution allocable to principal;
(iii) the amount of such distribution allocable to interest;
(iv) the Pool Balance, if applicable, as of the close of
business on the last day of the related Remittance Period;
(v) the aggregate outstanding principal balance and the Pool
Factor for each Class of Securities after giving effect to all payments
reported under (ii) above on such Payment Date;
(vi) the amount paid to the Servicer, if any, with respect to
the related Remittance Period;
(vii) the amount of the aggregate purchase amounts for
Receivables that have been reacquired, if any, for such Remittance Period;
and
(viii) the amount of coverage under any letter of credit,
financial guaranty insurance policy, reserve account or other form of
credit enhancement covering default risk as of the close of business on
the applicable Payment Date and a description of any Credit Enhancement
substituted therefor.
Each amount set forth pursuant to subclauses (i), (ii), (iii) and
(v) with respect to the Securities of any series will be expressed as a dollar
amount per $1,000 of the initial principal balance of such Securities, as
applicable.
Within the prescribed period of time for tax reporting purposes
after the end of each calendar year, the applicable Trustee will provide to the
Securityholders a statement containing the amounts described in (ii) and (iii)
above for that calendar year and any other information required by applicable
tax laws, for the purpose of the Securityholders' preparation of federal income
tax returns.
DESCRIPTION OF THE TRUST AGREEMENTS
The following summary describes certain terms of each Trust
Agreement pursuant to which a Trust Fund will be created and the related
Securities in respect of such Trust Fund will be issued. For purposes of this
Prospectus, the term "Trust Agreement" as used with respect to a Trust means,
collectively, and except as otherwise specified, any and all agreements relating
to the establishment of the related Trust, the servicing of the related
Receivables and the issuance of the related Securities, including without
limitation the Indenture, (i.e. pursuant to which any Notes shall be issued).
Forms of the Trust Agreement have been filed as exhibits to the Registration
Statement of which the Prospectus forms a part. The summary does not purport to
be complete. It is qualified in its entirety by reference to the provisions of
the Trust Agreements.
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Acquisition of the Receivables Pursuant to a Receivables Acquisition Agreement
On the Closing Date specified with respect to any given series of
Securities, the Depositor will acquire the related Receivables from the related
Originator pursuant to a Receivables Acquisition Agreement. The Depositor will
either transfer such Receivables to a Trust pursuant to a Pooling Agreement, or
will pledge the Depositor's right, title and interests in and to such
Receivables to a Trustee on behalf of Securityholders pursuant to an Indenture.
The rights and benefits of the Depositor under such Receivables Acquisition
Agreement will be assigned to the Trustee on behalf of Securityholders as
collateral for the Securities of the related series issued by a Trust or
pursuant to an Indenture. The obligations of the Depositor and the related
Servicer under such Trust Agreements include those specified below and in the
related Prospectus Supplement.
As more fully described in the related Prospectus Supplement, the
Depositor and/or the related Originator will be obligated to acquire from the
related Trust Fund its interest in any Receivable transferred to a Trust or
pledged to a Trustee on behalf of Securityholders if the interest of the
Securityholders therein is materially adversely affected by a breach of any
representation or warranty made by the Depositor or the related Originator with
respect to such Receivable, which breach has not been cured following the
discovery by or notice to the Depositor of the breach. To the extent that the
Depositor so acquires any Receivables, the related Originator will be obligated
to acquire such Receivables from the Depositor pursuant to the related
Receivables Acquisition Agreement contemporaneously with the Depositor's
acquisition of its interest in such Receivables from the applicable Trust Fund.
The obligation of the Depositor to acquire any such Receivables with respect to
which an Originator has breached a representation or warranty is subject to such
Originator's acquisition of such Receivables from the Depositor. In addition, if
so specified in the related Prospectus Supplement, the Depositor may from time
to time reacquire certain Receivables or substitute other Receivables for such
Receivable held by a Trust Fund subject to specified conditions set forth in the
related Trust Agreement and Receivables Acquisition Agreement.
Accounts
With respect to each series of Securities issued by a Trust, the
related Servicer will establish and maintain with the applicable Trustee one or
more accounts, in the name of such Trustee on behalf of the related
Securityholders, into which all payments made on or with respect to the related
Receivables will be deposited (the "Collection Account"). The Servicer will also
establish and maintain with such Trustee separate accounts, in the name of such
Trustee on behalf of such Securityholders, in which amounts released from the
Collection Account and the reserve account or other Credit Enhancement, if any,
for distribution to such Securityholders will be deposited and from which
distributions to such Securityholders will be made (the "Distribution Account").
Any other accounts to be established with respect to a Trust,
including any reserve account, will be described in the related Prospectus
Supplement.
For any series of Securities, funds in the Collection Account, the
Distribution Account, any reserve account and other accounts identified as such
in the related Prospectus Supplement (collectively, the "Trust Accounts") shall
be invested as provided in the related Trust Agreement in Eligible Investments.
"Eligible Investments" are generally limited to investments acceptable to the
Rating Agencies as being consistent with the rating of such Securities. Subject
to certain conditions, Eligible Investments may include securities issued by the
Depositor, the related Originator, the related Servicer or their respective
affiliates or other trusts created by the Depositor or its affiliates. Except as
described below or in the related Prospectus Supplement, Eligible Investments
are limited to obligations or securities that mature not later than the business
day immediately preceding the related Payment Date. However, subject to certain
conditions, funds in the reserve account may be invested in securities that will
not mature prior to the date of the next distribution and will not be sold to
meet any shortfalls. Thus, the amount of cash in any reserve account at any time
may be less than the balance of such reserve account. If the amount required to
be withdrawn from any reserve account to cover shortfalls in collections on the
related Receivables exceeds the amount of cash in such reserve account a
temporary shortfall in the amounts distributed to the related Securityholders
could result, which could, in turn, increase the average life of the Securities
of such series. Except as otherwise specified in the related Prospectus
Supplement, investment earnings on funds deposited in the applicable Trust
Accounts, net of losses and investment expenses (collectively, "Investment
Earnings"), shall be deposited in the applicable Collection Account on each
Payment Date and shall be treated as collections of interest on the related
Receivables.
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The Trust Accounts will be maintained as Eligible Deposit Accounts.
"Eligible Deposit Account" means either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate trust
department of a depository institution organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
(or any domestic branch of a foreign bank), having corporate trust powers and
acting as trustee for funds deposited in such account, so long as any of the
securities of such depository institution has a credit rating from each Rating
Agency in one of its generic rating categories which signifies investment grade.
"Eligible Institution" means, with respect to a Trust, (a) the corporate trust
department of the related Indenture Trustee or the related Trustee, as
applicable, or (b) a depository institution organized under the laws of the
United States of America or any one of the states thereof or the District of
Columbia (or any domestic branch of a foreign bank), which (i) (A) has either
(w) a long-term unsecured debt rating acceptable to the Rating Agencies or (x) a
short-term unsecured debt rating or certificate of deposit rating acceptable to
the Rating Agencies or (B) the parent corporation of which has either (y) a
long-term unsecured debt rating acceptable to the Rating Agencies or (z) 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.
To the extent that an Originator's or a Servicer's unsecured debt
ratings are acceptable to the Rating Agencies, amounts deposited to any Trust
Account may be commingled with Originator's or Servicer's general account
moneys. Any rights to so commingle moneys will be described in the related
Prospectus Supplement.
The Servicer
The Servicer under each Trust Agreement will be named in the related
Prospectus Supplement. The entity serving as Servicer may be an affiliate of the
Depositor and may have other business relationships with the Depositor or the
Depositor's affiliates. The Servicer with respect to each Series will service
the Receivables contained in the Trust Fund for such Series. Any Servicer may
delegate its servicing responsibilities to one or more sub-servicers, but will
not be relieved of its liabilities with respect thereto.
Each Servicer will make certain representations and warranties
regarding its authority to enter into, and its ability to perform its
obligations under, the related Trust Agreement. An uncured breach of such a
representation or warranty that in any respect materially and adversely affects
the interests of the Securityholders will constitute a Servicer Default by such
Servicer under the related Trust Agreement.
Servicing Procedures
Each Trust Agreement will provide that the related Servicer will
make reasonable efforts to collect all payments due with respect to the
Receivables held in the related Trust Fund and, in a manner consistent with the
related Trust Agreement, will continue such collection procedures as such
Servicer follows with respect to the particular type of Receivable in the
particular pool it services for itself and others. Consistent with its normal
procedures, the Servicer may, in its discretion and on a case-by-case basis,
arrange with the Obligor on a Receivable to extend or modify the payment
schedule. Some of such arrangements (including, without limitation any extension
of the payment schedule beyond the final scheduled Payment Date for the related
Securities may result in the Servicer acquiring such Receivable if such Contract
becomes a Defaulted Contract. The Servicer may sell the Equipment securing the
respective Defaulted Contract, if any, at a public or private sale, or take any
other action permitted by applicable law. See "Certain Legal Aspects of the
Receivables".
The material aspects of any particular Servicer's collections
procedures will be set forth in the related Prospectus Supplement.
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Payments on Receivables
With respect to each series of Securities, the related Servicer will
deposit all payments on the related Receivables (from whatever source) and all
proceeds of such Receivables collected within two (2) business days of receipt
thereof in the related collection facility, such as a lock-box account or
collection account. Moneys deposited in such collection facility for a Trust
Fund may be commingled with funds from other sources. As specified in the
related Prospectus Supplement, the related Servicer will be required to deposit
payments on the related Receivables (from whatever source) collected during each
collection period (each, a "Collection Period") into the related Collection
Account on a specified day each month. Pending deposit into the related
Collection Account, collections in such collection facility may be invested by
the related Servicer at its own risk and for its own benefit, and will not be
segregated from funds of the related Servicer.
Servicing Compensation
As may be described in the related Prospectus Supplement with
respect to any series of securities issued by a Trust, the related Servicer will
be entitled to receive a servicing fee for each Collection Period (the
"Servicing Fee") in an amount equal to a specified percentage per annum (as set
forth in the related Prospectus Supplement, the "Servicing Fee Rate") of the
value of the assets held in the related Trust Fund, generally as of the first
day of such Collection Period. Each Prospectus Supplement and Servicing
Agreement will specify the priority of distributions with respect to the
Servicing Fee (together with any portion of the Servicing Fee that remains
unpaid from prior Payment Dates), such Servicing Fee may be paid prior to any
distribution to the related Securityholders.
Each Servicer will also collect and retain any late fees, the
penalty portion of interest paid on past due amounts and other administrative
fees or similar charges allowed by applicable law with respect to the
Receivables, and will be entitled to reimbursement from each Trust for certain
liabilities. Payments by or on behalf of Obligors will be allocated to scheduled
payments and late fees and other charges in accordance with such Servicer's
normal practices and procedures.
The Servicing Fee will compensate the related Servicer for
performing the functions of a third party servicer of similar types of
receivables as an agent for their beneficial owner, including collecting and
posting all payments, responding to inquiries of Obligors on the related
Receivables, investigating delinquencies, sending payment coupons to Obligors,
reporting tax information to Obligors, paying costs of collection and
disposition of defaults, and policing the collateral. The Servicing Fee also
will compensate the related Servicer for administering the related Receivables,
accounting for collections and furnishing statements to the applicable Trustee
and the applicable Indenture Trustee, if any, with respect to distributions. The
Servicing Fee also will reimburse the related Servicer for certain taxes,
accounting fees, outside auditor fees, data processing costs and other costs
incurred in connection with administering the Receivables.
Distributions
With respect to each series of Securities, beginning on the Payment
Date specified in the related Prospectus Supplement, distributions of principal
and interest (or, where applicable, of principal or interest only) on each Class
of such Securities entitled thereto will be made by the applicable Indenture
Trustee to the Noteholders and by the applicable Trustee to the
Certificateholders of such series. The timing, calculation, allocation, order,
source, priorities of and requirements for each class of Noteholders and all
distributions to each class of Certificateholders of such series will be set
forth in the related Prospectus Supplement.
With respect to each series of Securities, on each Payment Date
collections on the related Receivables will be transferred from the Collection
Account to the Distribution Account for distribution to Securityholders,
respectively, to the extent provided in the related Prospectus Supplement.
Credit Enhancement, such as a reserve account, may be available to cover any
shortfalls in the amount available for distribution on such date, to the extent
specified in the related Prospectus Supplement. As more fully described in the
related Prospectus Supplement, and unless otherwise specified therein,
distributions in respect of principal of a Class of Securities of a given series
will be subordinate to distributions in respect of interest on such Class, and
distributions in respect of the Certificates of such series may be subordinate
to payments in respect of the Notes of such series.
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Credit and Cash Flow Enhancements
The amounts and types of Credit Enhancement arrangements, if any,
and the provider thereof, if applicable, with respect to each class of
Securities of a given series will be set forth in the related Prospectus
Supplement. If and to the extent provided in the related Prospectus Supplement,
credit enhancement may be in the form of a Policy, subordination of one or more
Classes of Securities, reserve accounts, overcollateralization, letters of
credit, credit or liquidity facilities, third party payments or other support,
surety bonds, guaranteed cash deposits or such other arrangements as may be
described in the related Prospectus Supplement or any combination of two or more
of the foregoing. If specified in the applicable Prospectus Supplement, Credit
Enhancement for a Class of Securities may cover one or more other Classes of
Securities of the same series, and Credit Enhancement for a series of Securities
may cover one or more other series of Securities.
The presence of Credit Enhancement for the benefit of any Class or
series of Securities is intended to enhance the likelihood of receipt by the
Securityholders or such Class or series of the full amount of principal and
interest due thereon and to decrease the likelihood that such Securityholders
will experience losses. As more specifically provided in the related Prospectus
Supplement, the credit enhancement for a Class or series of Securities will not
provide protection against all risks of loss and will not guarantee repayment of
the entire principal balance and interest thereon. If losses occur which exceed
the amount covered by any Credit Enhancement or which are not covered by any
Credit Enhancement, Securityholders of any Class or series will bear their
allocable share of deficiencies, as described in the related Prospectus
Supplement. In addition, if a form of Credit Enhancement covers more than one
series of Securities, Securityholders of any such series will be subject to the
risk that such Credit Enhancement will be exhausted by the claims of
Securityholders of other series.
Statements to Indenture Trustees and Trustees
Prior to each Payment Date with respect to each series of
Securities, the related Servicer will provide to the applicable Indenture
Trustee and/or the applicable Trustee and Credit Enhancer as of the close of
business on the last day of the preceding related Collection Period a statement
setting forth substantially the same information as is required to be provided
in the periodic reports provided to Securityholders of such series described
under "Description of the Securities--Reports to Securityholders".
Evidence as to Compliance
Each Trust Agreement will provide that a firm of independent public
accountants will furnish to the related Trust and/or the applicable Indenture
Trustee and Credit Enhancer, annually, a statement as to compliance by the
related Servicer during the preceding twelve months (or, in the case of the
first such certificate, the period from the applicable Closing Date) with
certain standards relating to the servicing of the Receivables.
Each Trust Agreement will also provide for delivery to the related
Trust and/or the applicable Indenture Trustee of a certificate signed by an
officer of the related Servicer stating that such Servicer either has fulfilled
its obligations under such Trust Agreement in all material respects throughout
the preceding 12 months (or, in the case of the first such certificate, the
period from the applicable Closing Date) or, if there has been a default in the
fulfillment of any such obligation in any material respect, describing each such
default. Each Servicer also will agree to give each Indenture Trustee and each
Trustee notice of certain "Servicer Defaults" (as defined below) under the
related Trust Agreement.
Copies of such statements and certificates may be obtained by
Securityholders by a request in writing addressed to the applicable Indenture
Trustee or the applicable Trustee.
Certain Matters Regarding the Servicers
Each Trust Agreement will provide that the related Servicer may not
resign from its obligations and duties as Servicer thereunder, except upon
determination that the performance by such Servicer of such duties is no longer
permissible under applicable law. No such resignation will become effective
until the related Trustee or a successor servicer has assumed such Servicer's
servicing obligations and duties under the Trust Agreement.
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Except as otherwise provided in the related Prospectus Supplement,
each Trust Agreement will further provide that neither the related Servicer nor
any of its respective directors, officers, employees, or agents shall be under
any liability to the related Issuer or the related Securityholders for taking
any action or for refraining from taking any action pursuant to such Trust
Agreement, or for errors in judgment; provided, however, that neither such
Servicer nor any such person will be protected against any liability that would
otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties thereunder. In addition, such Trust Agreement will
provide that the related Servicer is under no obligation to appear in,
prosecute, or defend any legal action that is not incidental to its servicing
responsibilities under such Trust Agreement and that, in its opinion, may cause
it to incur any expense or liability.
Under the circumstances specified in any such Trust Agreement, any
entity into which the related Servicer may be merged or consolidated, or any
entity resulting from any merger or consolidation to which such Servicer is a
party, or any entity succeeding to the business of the Servicer or, with respect
to its obligations as Servicer, which corporation or other entity in each of the
foregoing cases assumes the obligations of such Servicer, will be the successor
to such Servicer under such Trust Agreement.
Servicer Default
Except as otherwise provided in the related Prospectus Supplement,
"Servicer Default" under a Trust Agreement will include (i) any failure by the
related Servicer to deliver to the applicable Trustee for deposit in any of the
related Trust Accounts any required payment or to direct such Trustee to make
any required distributions therefrom, which failure continues unremedied for
greater than three (3) Business Days after written notice from such Trustee is
received by such Servicer or after discovery by such Servicer; (ii) any failure
by such Servicer or the related Originator, as the case may be, duly to observe
or perform in any material respect any other covenant or agreement in such Trust
Agreement, which failure materially and adversely affects the rights of the
related Securityholders and which continues unremedied for greater than ninety
(90) days after the giving of written notice of such failure (1) to such
Servicer or the related Originator, as the case may be, by the applicable
Trustee or (2) to the Servicer or the related Originator, as the case may be,
and to the applicable Trustee by holders of the related Securities, as
applicable, evidencing not less than 25% of the voting rights of such
outstanding Securities; and (iii) any Insolvency Event. An "Insolvency Event"
shall mean financial insolvency, readjustment of debt, marshalling of assets and
liabilities, or similar proceedings with respect to the Servicer or the related
Originator and certain actions by the Servicer or the related Originator
indicating its insolvency, reorganization pursuant to bankruptcy proceedings, or
inability to pay its obligations.
Rights upon Servicer Default
As more fully described in the related Prospectus Supplement, as
long as a Servicer Default under a Trust Agreement remains unremedied, the
applicable Trustee, Credit Enhancer or holders of Securities of the related
series evidencing not less than 25% of the voting rights of such then
outstanding Securities may terminate all the rights and obligations of the
Servicer, if any, under such Trust Agreement, whereupon a successor servicer
appointed by such Trustee or such Trustee will succeed to all the
responsibilities, duties and liabilities of the Servicer under such Trust
Agreement and will be entitled to similar compensation arrangements. If,
however, a bankruptcy trustee or similar official has been appointed for the
Servicer, and no Servicer Default other than such appointment has occurred, such
bankruptcy trustee or official may have the power to prevent the applicable
Trustee or such Securityholders from effecting a transfer of servicing. In the
event that the Trustee is unwilling or unable to so act, it may appoint, or
petition a court of competent jurisdiction for the appointment of, a successor
with a net worth of at least $25,000,000 and whose regular business includes the
servicing of a similar type of receivables. Such Trustee may make such
arrangements for compensation to be paid, which in no event may be greater than
the servicing compensation payable to the Servicer under the related Trust
Agreement.
Waiver of Past Defaults
With respect to each Trust Fund, unless otherwise provided in the
related Prospectus Supplement and subject to the approval of any Credit
Enhancer, the holders of Notes evidencing at least a majority of the voting
rights of such then outstanding Securities may, on behalf of all Securityholders
of the related Securities, waive any default by the Servicer, or by the related
Originator, in the performance of its obligations under the related Trust
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Agreement and its consequences, except a default in making any required deposits
to or payments from any of the Trust Accounts in accordance with such Trust
Agreement. No such waiver shall impair the Securityholders' rights with respect
to subsequent defaults.
Amendment
As more fully described in the related Prospectus Supplement, each
of the Trust Agreements may be amended by the parties thereto, without the
consent of the related Securityholders, for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of such Trust
Agreements or of modifying in any manner the rights of such Securityholders;
provided that such action will not, in the opinion of counsel satisfactory to
the applicable Trustee, materially and adversely affect the interests of any
such Securityholder and subject to the approval of any Credit Enhancer. As may
be describe in the related Prospectus Supplement, the Trust Agreements may also
be amended by the Depositor, the Servicer, and the applicable Trustee with the
consent of the holders of Securities evidencing at least a majority of the
voting rights of such then outstanding Securities for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
such Trust Agreements or of modifying in any manner the rights of such
Securityholders; provided, however, that no such amendment may (i) increase or
reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on the related Receivables or distributions that are
required to be made for the benefit of such Securityholders or (ii) reduce the
aforesaid percentage of the Securities of such series which are required to
consent to any such amendment, without the consent of the Securityholders of
such series.
Insolvency Event
As described in the related Prospectus Supplement, if an Insolvency
Event occurs with respect to a Debtor relating to the applicable Trust Fund, the
related Trust will terminate, and the Receivables held in the related Trust Fund
will be liquidated and each such Trust will be terminated 90 days after the date
of such Insolvency Event, unless, before the end of such 90-day period, the
Trustee of such Trust shall have received written instructions from each of the
related Securityholders (other than the Depositor) and/or Credit Enhancer to the
effect that such party disapproves of the liquidation of such Receivables.
Promptly after the occurrence of any Insolvency Event with respect to a Debtor,
notice thereof is required to be given to such Securityholders and/or Credit
Enhancer; provided, however, that any failure to give such required notice will
not prevent or delay termination of any Trust. Upon termination of any Trust,
the applicable Trustee shall direct that the assets of such Trust be promptly
sold (other than the related Trust Accounts) in a commercially reasonable manner
and on commercially reasonable terms. The proceeds from any such sale,
disposition or liquidation of such Receivables will be treated as collections on
such Receivables and deposited in the related Collection Account. If the
proceeds from the liquidation of such Receivables and any amounts on deposit in
the Reserve Account, if any, and the related Distribution Account are not
sufficient to pay the Securities of the related series in full, and no
additional Credit Enhancement is available, the amount of principal returned to
Securityholders will be reduced and some or all of such Securityholders will
incur a loss.
Each Trust Agreement will provide that the applicable Trustee does
not have the power to commence a voluntary proceeding in bankruptcy with respect
to any related Trust without the unanimous prior approval of all
Certificateholders (including the Depositor, if applicable) of such Trust and
the delivery to such Trustee by each such Certificateholder of a certificate
certifying that such Certificateholder reasonably believes that such Trust is
insolvent.
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Termination
With respect to each Trust, the obligations of the related Servicer,
the related Originator(s), the Depositor and the applicable Trustee pursuant to
the related Trust Agreement will terminate upon the earlier to occur of (i) the
maturity or other liquidation of the last related Receivable and the disposition
of any amounts received upon liquidation of any such remaining Receivables and
(ii) the payment to Securityholders of the related series of all amounts
required to be paid to them pursuant to such Trust Agreement. As more fully
described in the related Prospectus Supplement, in order to avoid excessive
administrative expense, the related Servicer will be permitted in respect of the
applicable Trust Fund, unless otherwise specified in the related Prospectus
Supplement, at its option to purchase from such Trust Fund, as of the end of any
Collection Period immediately preceding a Payment Date, if the Discounted
Contract Balance of the related Contracts is less than a specified percentage
(set forth in the related Prospectus Supplement) of the initial Pool Balance in
respect of such Trust Fund, all such remaining Receivables at a price equal to
the aggregate of the Purchase Amounts thereof as of the end of such Collection
Period. The related Securities will be redeemed following such purchase.
If and to the extent provided in the related Prospectus Supplement
with respect to a Trust Fund, the applicable Trustee will, within ten days
following a Payment Date as of which the Pool Balance is equal to or less than
the percentage of the initial Pool Balance specified in the related Prospectus
Supplement, solicit bids for the purchase of the Receivables remaining in such
Trust, in the manner and subject to the terms and conditions set forth in such
Prospectus Supplement. If such Trustee receives satisfactory bids as described
in such Prospectus Supplement, then the Receivables remaining in such Trust Fund
will be sold to the highest bidder.
As more fully described in the related Prospectus Supplement, any
outstanding Notes of the related series will be redeemed 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
pursuant to the applicable Trust Agreement may effect the prepayment of the
Certificates of such series.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
General
The transfer of the Receivables by the related Originators to the
Depositor pursuant to each Receivables Acquisition Agreement and then by the
Depositor to the Trustee pursuant to the related Trust Agreement, the perfection
of the security interests in the Receivables and the enforcement of rights to
realize on the 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. As specified in each Prospectus Supplement, the related Servicer will
take such action as is required to perfect the rights of the Trustee in the
Receivables. If, through inadvertence or otherwise, a third party were to
purchase (including the taking of a security interest in) a Receivable for new
value in the ordinary course of its business, without actual knowledge of the
Trust's interest, and take possession of a Receivable, the purchaser would
acquire an interest in such Receivable superior to the interest of the Trust. As
further specified in each Prospectus Supplement, no action will be taken to
perfect the rights of the Trustee in proceeds of the VSI Insurance Policy or of
any other insurance policies covering individual Vehicles or Obligors.
Therefore, the rights of a third party with an interest in such proceeds could
prevail against the rights of the Trust prior to the time such proceeds are
deposited by the related Servicer into a Trust Account.
Security Interests in the Financed Vehicles
General
Retail installment sale contracts such as the Receivables evidence
the credit sale of automobiles and light duty trucks by dealers to consumers.
The contracts also constitute personal property security agreements and include
grants of security interests in the related automobiles and light duty trucks
under the UCC. Perfection of security interests in automobiles and light duty
trucks is generally governed by the vehicle registration or titling laws of the
state in which each vehicle is registered or titled. In most states a security
interest in a vehicle is perfected by notation of the secured party's lien on
the vehicle's certificate of title.
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Unless otherwise specified in the related Prospectus Supplement, all
of the Contracts acquired from Originators name the related Originator as
obligee or assignee and as the secured party. As specified in the related
Prospectus Supplement, the related Originator will represent that it has taken
all actions necessary under the laws of the state in which the related vehicles
are titled to perfect its security interest in such vehicles, including, where
applicable, having a notation of its lien recorded on the related certificate of
title.
Perfection
Pursuant to the related Receivables Acquisition Agreement, the
Originator will sell and assign the Receivables and its security interests in
the Vehicles to the Depositor and, pursuant to the related Trust Agreement, the
Depositor will assign to the Trustee the Receivables and its interest in the
Originator's security interests in the Financed Vehicles. Each of the related
Prospectus Supplements will specify whether, because of the administrative
burden and expense, the Depositor, the related Servicer or the Trustee will
amend any certificate of title to identify the Depositor or the Trustee as the
new secured party on the certificates of title relating to the Vehicles. Each of
the related Prospectus Supplements will specify the UCC financing statements to
be filed in order to perfect the transfer to the Depositor of the Receivables
and the transfer to the Trustee of the Receivables. Further, although neither
the Depositor nor the Trustee will rely on possession of the Receivables as the
legal basis for the perfection of their respective interests therein or in the
security interests in the Vehicles, the related Servicer, as specified in the
related Prospectus Supplement, will continue to hold the Receivables and any
certificates of title relating to the Vehicles in its possession as custodian
for the Trustee pursuant to the related Trust Agreement which, as a practical
matter, should preclude any other party from claiming a competing security
interest in the Receivables on the basis that the security interest is perfected
by possession.
A security interest in a motor vehicle registered in most states may
be perfected against creditors and subsequent purchasers without notice for
valuable consideration only by one or more of the following: depositing with the
related Department of Motor Vehicles or analogous state office a properly
endorsed certificate of title for the vehicle showing the secured party as legal
owner or lienholder thereon, or filing a sworn notice of lien with the related
Department of Motor Vehicles or analogous state office and noting such lien on
the certificate of title, or, if the vehicle has not been previously registered,
filing an application in usual form for an original registration together with
an application for registration of the secured party as legal owner or
lienholder, as the case may be. However, under the laws of most states, a
transferee of a security interest in a motor vehicle is not required to reapply
to the related Department of Motor Vehicles or analogous state office for a
transfer of registration when the security interest is sold or when the interest
of the transferee arises from the transfer of a security interest by the
lienholder to secure payment or performance of an obligation. Accordingly, under
the laws of such states, the assignment by the related Originators of their
interests in the Receivables to the Depositor Seller under the related
Receivables Acquisition Agreement, and the assignment by the Depositor of its
interest in the Receivables to the Trustee under the related Trust Agreement are
effective conveyances of the respective security interests of the related
Originators and the Depositor in the Receivables, and specifically, the
Vehicles, without such re-registration and without amendment of any lien noted
on the related certificate of title, and (subject to the immediately succeeding
paragraphs) the Depositor will succeed to the related Originator's rights as
secured party and the Trustee will succeed to the Depositor's rights as secured
party.
Although re-registration of the vehicle is not necessary to convey a
perfected security interest in the Vehicles to the Trustee, the Trustee's
security interest could be defeated through fraud, negligence, forgery or
administrative error since it may not be listed as legal owner or lienholder on
the certificates of title to the Vehicles. However, in the absence of fraud,
negligence, forgery or administrative error , the notation of the related
Originator's lien on the certificates of title will be sufficient to protect the
Trust against the rights of subsequent purchasers of a Vehicle or subsequent
creditors who take a security interest in a Vehicle. In each Receivables
Acquisition Agreement, the related Originators will represent and warrant, and
in the related Trust Agreement, the Depositor will represent and warrant that it
has, or has taken all action necessary to obtain, a perfected security interest
in each Vehicle. If there are any Vehicles as to which the related Originator
failed to obtain a first priority perfected security interest, its security
interest would be subordinate to, among others, subsequent purchasers of such
Vehicles and holders of first priority perfected security interests therein.
Such a failure, however, would constitute a breach of the related Originator's
representations and warranties under the related Receivables Acquisition
Agreement and the Depositor's representations and warranties under the related
Trust Agreement. Accordingly, pursuant to the related Trust Agreement, the
Depositor would be required to repurchase the related
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Receivables from the Trustee and, pursuant to the related Receivables
Acquisition Agreement, the related Originators would be required to repurchase
such Receivables from the Depositor, in each case unless the breach were cured.
Continuity of Perfection
Under the laws of most states, a perfected security interest in a
motor vehicle continues for four months after the vehicle is moved to a new
state from the one in which it is initially registered and thereafter until the
owner re-registers such motor vehicle in the new state. A majority of states
generally require surrender of a 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 reregistration through the request from the
Obligor under the related installment sale contract to surrender possession of
the certificate of title to assist in such re-registration. In the case of
vehicles registered in states providing for the notation of a lien on the
certificate of title but not requiring possession by the secured party (such as
Texas), 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 reperfect its security
interest in the vehicle in the state of relocation. However, these procedural
safeguards will not protect the secured party if, through fraud, forgery or
administrative error, the debtor somehow procures a new certificate of title
that does not list the secured party's lien. Additionally, in states that do not
require surrender of a certificate of title for re-registration of a vehicle,
re-registration could defeat perfection. In each of the Trust Agreements, the
related Servicer will be required to 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 Vehicle, the related Servicer
will have an opportunity to require satisfaction of the related Receivable
before release of the lien, either because the related Servicer will be required
to surrender possession of the certificate of title in connection with the sale,
or because the related Servicer will receive notice as a result of its lien
noted thereon. Pursuant to the related Trust Agreement, the related Servicer
will hold the certificates of title for the related Vehicles as custodian for
the Trustee. Under the related Trust Agreement, the related Servicer will be
obligated to take appropriate steps, at its own expense, to maintain perfected
security interests in the Vehicles.
Priority of Certain Liens Arising by Operation of Law
Under the laws of most states, certain statutory liens such as
mechanics', repairmen's and garagemen's liens for repairs performed on a motor
vehicle, motor vehicle accident liens, towing and storage liens, liens arising
under various state and federal criminal statutes and liens for unpaid taxes
take priority over even a first priority perfected security interest in such
vehicle by operation of law. The UCC also grants priority to certain federal tax
liens over the lien of a secured party. The laws of most states and federal law
permit the confiscation of motor vehicles by governmental authorities under
certain circumstances if used in or acquired with the proceeds of unlawful
activities, which may result in the loss of a secured party's perfected security
interest in a confiscated vehicle. The related Originators will represent and
warrant to the Depositor in the related Receivables Acquisition Agreement and
the Depositor will represent and warrant to the Trustee in the related Trust
Agreement that, as of the related Closing Date, each security interest in a
Vehicle shall be a valid, subsisting and enforceable first priority security
interest in such Vehicle. However, liens for repairs or taxes superior to the
security interest of the Trustee in any such Vehicle, or the confiscation of
such Vehicle, could arise at any time during the term of a Receivable. No notice
will be given to the Trustee or any Securityholder in the event such a lien or
confiscation arises and any such lien or confiscation arising after the related
Closing Date would not give rise to the related Originator's repurchase
obligation under the related Receivables Acquisition Agreement or the
Depositor's repurchase obligation under the related Trust Agreement.
Repossession
In the event of default by an Obligor, the holder of the related
retail installment sale contract has all the remedies of a secured party under
the UCC, except where specifically limited by other state laws. The UCC remedies
of a secured party include the right to repossession by self-help means, unless
such means would constitute a breach of the peace. Unless a vehicle is
voluntarily surrendered, self-help repossession is accomplished simply by taking
possession of the related financed vehicle. In cases where the Obligor objects
or raises a defense to repossession, or if otherwise required by applicable
state law, a court order is obtained from the appropriate state
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court, and the vehicle must then be recovered in accordance with that order. In
some jurisdictions, the secured party is required to notify the debtor of the
default and the intent to repossess the collateral and give the debtor 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. Other jurisdictions permit repossession without
prior notice if it can be accomplished without a breach of the peace (although
in some states, a course of conduct in which the creditor has accepted late
payments has been held to create a right by the Obligor to receive prior
notice).
Notice of Sale; Redemption Rights
The UCC and other state laws require a 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. In
addition, some states also impose substantive timing requirements on the sale of
repossessed vehicles in certain circumstances and/or various substantive timing
and content requirements on such notices. In most states, under certain
circumstances after a financed vehicle has been repossessed, the Obligor may
redeem the collateral by paying the delinquent installments and other amounts
due. The Obligor has the right to redeem the collateral prior to actual sale or
entry by the secured party into a contract for sale of the collateral by paying
the secured party the unpaid principal balance of the obligation, accrued
interest thereon, reasonable expenses for repossessing, holding, and preparing
the collateral for disposition and arranging for its sale, plus, in some
jurisdictions, reasonable attorneys' fees and legal expenses or in some other
states, by payment of delinquent installments on the unpaid principal balance of
the related obligation.
Deficiency Judgments and Excess Proceeds
The proceeds of resale of the Vehicles generally will be applied
first to the expenses of resale and repossession and then to the satisfaction of
the indebtedness. In many instances, the remaining principal amount of such
indebtedness will exceed such proceeds. Under the UCC and laws applicable in
some states, a creditor is entitled to bring an action to obtain a deficiency
judgment from a debtor for any deficiency on repossession and resale of a motor
vehicle securing such debtor's loan; however, in some states, a creditor may not
seek a deficiency judgment from a debtor whose financed vehicle had an initial
cash sales price of $3,450 or less. Some states, impose prohibitions or
limitations or notice requirements on actions for deficiency judgments. In
addition to the notice requirement described above, the UCC requires that every
aspect of the sale or other disposition, including the method, manner, time,
place and terms, be "commercially reasonable". Generally, courts have held that
when a sale is not "commercially reasonable", the secured party loses its right
to a deficiency judgment. In addition, the UCC permits the debtor or other
interested party to recover for any loss caused by noncompliance with the
provisions of the UCC. Also, prior to a sale, the UCC permits the debtor or
other interested person to obtain an order mandating that the secured party
refrain from disposing of the collateral if it is established that the secured
party is not proceeding in accordance with the "default" provisions under the
UCC. However, the deficiency judgment would be a personal judgment against the
Obligor for the shortfall, and a defaulting Obligor can be expected to have very
little capital or sources of income available following repossession. Therefore,
in many cases, it may not be useful to seek a deficiency judgment or, if one is
obtained, it may be settled at a significant discount or be uncollectible.
Occasionally, after resale of a 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 such lienholder exists or if there are remaining
funds, the UCC requires the creditor to remit the surplus to the Obligor under
the contract.
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, state adaptations of the National Consumer Act and of the Uniform
Consumer Credit Code, state motor vehicle retail installment sale acts, state
"lemon" laws and other similar laws. In addition,
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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 Trustee to enforce consumer finance contracts such as the Receivables.
The so-called "Holder-in-Due-Course Rule" of the Federal Trade
Commission (the "FTC Rule") has the effect of subjecting any assignee of the
seller in a consumer credit transaction (and certain related creditors and their
assignees) to all claims and defenses which the Obligor in the transaction could
assert against the seller. Liability under the FTC 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 FTC Rule is generally duplicated by the Uniform Consumer Credit
Code, other state statutes or the common law in certain states. To the extent
that the Receivables will be subject to the requirements of the FTC Rule, the
Trustee, as holder of the Receivables, will be subject to any claims or defenses
that the purchaser of the related Vehicle may assert against the seller of such
Vehicle. Such claims will be limited to a maximum liability equal to the amounts
paid by the Obligor under the related Receivable.
Under most state vehicle dealer licensing laws, sellers of
automobiles and light duty trucks are required to be licensed to sell vehicles
at retail sale. In addition, with respect to used vehicles, the Federal Trade
Commission's Rule on Sale of Used Vehicles requires that all sellers of used
vehicles prepare, complete and display a "Buyer's Guide" which explains the
warranty coverage for such vehicles. Furthermore, Federal Odometer Regulations
promulgated under the Motor Vehicle Information and Cost Savings Act and the
motor vehicle title laws of most states require that all sellers of used
vehicles furnish a written statement signed by the seller certifying the
accuracy of the odometer reading. If a seller is not properly licensed or if
either a Buyer's Guide or Odometer Disclosure Statement was not provided to the
purchaser of a Vehicle, the Obligor may be able to assert a defense against the
seller of the Vehicle. If an Obligor on a Receivable were successful in
asserting any such claim or defense, the related Servicer would pursue on behalf
of the Trust any reasonable remedies against the seller or manufacturer of the
vehicle, subject to certain limitations as to the expense of any such action to
be specified in the related Trust Agreement.
Any such loss, to the extent not covered by credit support (as
specified in the Related Prospectus Supplement), could result in losses to the
Securityholders. As specified in the related Prospectus Supplement, if an
Obligor were successful in asserting any such claim or defense as described in
this paragraph or the two immediately preceding paragraphs, such claim or
defense may constitute a breach of a representation and warranty under the
related Receivables Acquisition Agreement and the related Trust Agreement and
may create an obligation of the related Originator and the Depositor to
repurchase such Receivable unless the breach were cured.
Courts have applied general equitable principles to secured parties
pursuing repossession or litigation involving deficiency balances. These
equitable principles may have the effect of relieving an Obligor from some or
all of the legal consequences of a default.
In several cases, consumers have asserted that the self-help
remedies of secured parties under the UCC and related laws violate the due
process protections of the 14th 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.
As specified in the related Prospectus Supplement, the related
Originators and the Depositor will represent and warrant under the related
Receivables Acquisition Agreement and the related Trust Agreement, respectively,
that each Receivable complies with all requirements of law in all material
respects. Accordingly, if an Obligor has a claim against the Trustee for
violation of any law and such claim materially and adversely affects the
Trustee's interest in a Receivable, such violation would constitute a breach of
representation and warranty under the related Receivables Acquisition Agreement
and the related Trust Agreement and would create an obligation of the related
Originators and the Depositor to repurchase such Receivable unless the breach
were cured.
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Other Limitations
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 a contract or chance the rate of interest and time of
repayment of the indebtedness. Any such shortfall, to the extent not covered by
credit support (as specified in each Prospectus Supplement), could result in
losses to the Securityholders.
CERTAIN TAX CONSIDERATIONS
The Prospectus Supplement for each series of Securities will
summarize, subject to the limitations stated therein, federal income tax
considerations relevant to the purchase, ownership and disposition of such
Securities.
ERISA CONSIDERATIONS
The Prospectus Supplement for each series of Securities will
summarize, subject to the limitations discussed therein, considerations under
ERISA relevant to the purchase of such Securities by employee benefit plans and
individual retirement accounts.
METHODS OF DISTRIBUTION
The Securities offered hereby and by the related Prospectus
Supplement will be offered in series through one or more of the methods
described below. The Prospectus Supplement prepared for each series will
describe the method of offering being utilized for that series and will state
the public offering or purchase price of such series and the net proceeds to the
Depositor from such sale.
The Depositor intends that Securities will be offered through the
following methods from time to time and that offerings may be made concurrently
through more than one of these methods or that an offering of a particular
series of Securities may be made through a combination of two or more of these
methods. Such methods are as follows:
1. By negotiated firm commitment or best efforts
underwriting and public re-offering by underwriters;
2. By placements by the Depositor with institutional investors
through dealers;
3. By direct placements by the Depositor with institutional
investors; and
4. By competitive bid.
In addition, if specified in the related Prospectus Supplement, a
series of Securities may be offered in whole or in part in exchange for the
Receivables (and other assets, if applicable) that would comprise the Trust Fund
in respect of such Securities.
If underwriters are used in a sale of any Securities (other than in
connection with an underwriting on a best efforts basis), such Securities will
be acquired by the underwriters for their own account and may be resold from
time to time in one or more transactions, including negotiated transactions, at
fixed public offering prices or at varying prices to be determined at the time
of sale or at the time of commitment therefor. The Securities will be set
41
<PAGE>
forth on the cover of the Prospectus Supplement relating to such series and the
members of the underwriting syndicate, if any, will be named in such Prospectus
Supplement.
In connection with the sale of the Securities, underwriters may
receive compensation from the Depositor or from purchasers of the Securities in
the form of discounts, concessions or commissions. Underwriters and dealers
participating in the distribution of the Securities may be deemed to be
underwriters in connection with such Securities, and any discounts or
commissions received by them from the Depositor and any profit on the resale of
Securities by them may be deemed to be underwriting discounts and commissions
under the Securities Act. The Prospectus Supplement will describe any such
compensation paid by the Depositor.
It is anticipated that the underwriting agreement pertaining to the
sale of any series of Securities will provide that the obligations of the
underwriters will be subject to certain conditions precedent, that the
underwriters will be obligated to purchase all such Securities if any are
purchased (other than in connection with an underwriting on a best efforts
basis) and that, in limited circumstances, the Depositor will indemnify the
several underwriters and the underwriters will indemnify the Depositor against
certain civil liabilities, including liabilities under the Securities Act or
will contribute to payments required to be made in respect thereof.
The Prospectus Supplement with respect to any series offered by
placements through dealers will contain information regarding the nature of such
offering and any agreements to be entered into between the Depositor and
purchasers of Securities of such series.
Purchasers of Securities, including dealers, may, depending on the
facts and circumstances of such purchases, be deemed to be "underwriters" within
the meaning of the Securities Act in connection with reoffers and sales by them
of Securities. Holders of Securities should consult with their legal advisors in
this regard prior to any such reoffer or sale.
LEGAL OPINIONS
Certain legal matters relating to the issuance of the Securities of
any series, including certain federal and state income tax consequences with
respect thereto, will be passed upon by Dewey Ballantine LLP, New York, New
York, or other counsel specified in the related Prospectus Supplement.
FINANCIAL INFORMATION
A Trust Fund will be formed with respect to each Series of
Securities and no Trust Fund will engage in any business activities or have any
assets or obligations prior to the issuance of the related Series of Securities,
except for serial issuances by a Master Trust. The Depositor's activities will
be limited solely to the activities of Trust Funds to be formed with respect to
each Series of Securities. Accordingly, no financial statements with respect to
any Trust Fund will be included in this Prospectus or in the related Prospectus
Supplement.
A Prospectus Supplement may contain the financial statements of the
related Credit Enhancer, if any.
ADDITIONAL INFORMATION
This Prospectus, together with the Prospectus Supplement for each
series of Securities, contains a summary of the material terms of the applicable
exhibits to the Registration Statement and the documents referred to herein and
therein. Copies of such exhibits are on file at the offices of the Securities
and Exchange Commission in Washington, D.C., and may be obtained at rates
prescribed by the Commission upon request to the Commission and may be
inspected, without charge, at the Commission's offices.
42
<PAGE>
INDEX OF TERMS
Set forth below is a list of the defined terms used in this
Prospectus and the pages on which the definitions of such terms may be found
herein.
Accrual Securities...........................................................7
Additional Receivables......................................................12
Cede........................................................................12
CEDEL Participants..........................................................27
Certificates..............................................................1, 5
Class........................................................................1
Collection Account..........................................................30
Collection Period...........................................................32
Commission...................................................................2
Contracts.................................................................1, 5
Cooperative.................................................................27
Credit Enhancement..........................................................18
Credit Enhancer.............................................................18
Debt Securities.............................................................13
Definitive Securities.......................................................28
Depositaries................................................................26
Depositor................................................................4, 22
Direct Participants.........................................................18
Discounted Contract Balance.................................................11
Distribution Account........................................................30
Eligible Deposit Account....................................................31
Eligible Institution........................................................31
Eligible Investments........................................................30
Equity Certificates..........................................................8
ERISA.......................................................................14
Euroclear Operator......................................................27, 28
Euroclear Participants......................................................27
Exchange Act.............................................................2, 14
Finance Subsidiary..........................................................16
Fixed Income Securities......................................................6
Grantor Trust Securities....................................................13
Indenture....................................................................5
Indenture Trustee............................................................5
Indirect Participants...................................................18, 26
Insolvency Event............................................................34
Insolvency Laws.............................................................16
Interest Rate.............................................................2, 6
Investment Company Act.......................................................8
Investment Earnings.........................................................30
Issuer...................................................................4, 19
Master Trust.................................................................8
Master Trust Agreement.......................................................8
Master Trust New Issuance...................................................25
Notes.....................................................................1, 5
Originator................................................................1, 4
Participants................................................................26
Partnership Interests.......................................................13
Pass-Through Rate............................................................2
Payment Date.................................................................7
Policy....................................................................1, 5
Pool Balance................................................................22
i
<PAGE>
Pool Factor.................................................................22
Pooling Agreement............................................................5
Pre-Funding Account.........................................................11
Pre-Funding Period..........................................................11
Prepayment..................................................................18
Prospectus Supplement........................................................1
Ratings Effect..........................................................17, 25
Receivables...............................................................1, 5
Receivables Acquisition Agreement...........................................19
Record Date..................................................................7
Registration Statement.......................................................2
Remittance Period............................................................7
Rules.......................................................................27
Securities...................................................................1
Securities Act...............................................................2
Security Insurer............................................................12
Securityholders..............................................................7
Senior Securities............................................................7
Servicer.....................................................................1
Servicer Defaults...........................................................33
Servicing Agreement..........................................................5
Servicing Fee...............................................................32
Servicing Fee Rate..........................................................32
Strip Securities.............................................................6
Subordinate Securities.......................................................7
Sub-Servicer.................................................................4
Terms and Conditions........................................................28
Transferor...................................................................4
Trust.....................................................................1, 4
Trust Accounts..............................................................30
Trust Agreement..............................................................6
Trust Fund................................................................1, 5
Trustee......................................................................6
Vehicles..................................................................1, 5
ii
<PAGE>
================================================================================
No person has been authorized to give any information or to make any
representations other than those contained or incorporated by reference in this
Prospectus Supplement or the Prospectus in connection with the offer made by
this Prospectus and, if given or made, such information or representations must
not be relied upon as having been authorized by the Depositor or the
Underwriter(s). This Prospectus Supplement and the Prospectus do not constitute
an offer or solicitation by anyone in any state in which such offer or
solicitation is not authorized or in which the person making such offer or
solicitation is not qualified to do so or to anyone to whom it is unlawful to
make such offer or solicitation. The delivery of this Prospectus Supplement or
the Prospectus at any time does not imply that information herein or therein is
correct as of any time subsequent to its date.
------------------
TABLE OF CONTENTS
Prospectus Supplement
Prospectus
Page
----
PROSPECTUS SUPPLEMENT........................................................2
AVAILABLE INFORMATION........................................................2
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE....................................................................2
REPORTS TO SECURITYHOLDERS...................................................2
SUMMARY OF TERMS.............................................................4
RISK FACTORS................................................................15
THE TRUST FUNDS.............................................................19
THE ISSUERS.................................................................19
THE RECEIVABLES.............................................................20
POOL FACTORS................................................................22
USE OF PROCEEDS.............................................................22
THE DEPOSITOR...............................................................22
THE TRUSTEE.................................................................23
DESCRIPTION OF THE SECURITIES...............................................23
DESCRIPTION OF THE TRUST AGREEMENTS.........................................29
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
CERTAIN TAX CONSIDERATIONS..................................................41
ERISA CONSIDERATIONS........................................................41
METHODS OF DISTRIBUTION.....................................................41
LEGAL OPINIONS..............................................................42
FINANCIAL INFORMATION.......................................................42
ADDITIONAL INFORMATION......................................................42
INDEX OF TERMS...............................................................i
------------------
================================================================================
================================================================================
PSSFC
AUTO RECEIVABLES
TRUST 1994-1
--------------------------
PROSPECTUS SUPPLEMENT
--------------------------
[Underwriter]
Until ________,199_ (90 days after the date of this Prospectus
Supplement), all dealers effecting transactions in _________, whether or not
participating in this distribution, may be required to deliver a Prospectus
Supplement and a Prospectus. This is in addition to the obligation of dealers to
deliver a Prospectus Supplement and a Prospectus when acting as underwriter(s)
and with respect to their unsold allotments or subscriptions.
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses in connection with the
issuance and distribution of the securities being registered, other than
underwriting discounts and commissions. All of the amounts shown are estimates,
except the SEC registration fee.
SEC registration fee................... $ 208,500
Legal fees and expenses................ 200,000
Accounting fees and expenses........... 120,000
Blue Sky fees and expenses............. 60,000
Rating agency fees..................... 100,000
Owner Trustee fees and expenses........ 60,000
Indenture Trustee fees and expenses.... 120,000
Credit Enhancer ....................... 200,000
Printing and engraving................. 150,000
Miscellaneous.......................... 200,000
----------
Total............................ $1,418,500
----------
- ----------
* To be completed by Amendment.
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law provides that a
Delaware corporation may indemnify any persons, including officers and
directors, who are, or are threatened to be made, parties to any threatened,
pending or completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person was an officer or director
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided such officer or
director acted in good faith and in a manner he reasonably believed to be in or
not opposed to the corporation's best interests and, for criminal proceedings,
had no reasonable cause to believe that his conduct was illegal. A Delaware
corporation may indemnify officers and directors and in an action by or in the
right of the corporation under the same conditions, except that no
indemnification is permitted without judicial approval if the officer or
director is adjudged to be liable to the corporation. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses which
such officer or director actually and reasonably incurred.
The agreements which the Registrant will enter into for each series of
Securities will provide that the Registrant and any director, officer, employee
or agent of the Registrant will be entitled to indemnification by the Trust Fund
and will be held harmless against any loss, liability or expense incurred in
connection with any legal action relating to such agreements or the Securities,
other than any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence in the performance of his or its duties
thereunder or by reason of reckless disregard of his or its obligations and
duties thereunder.
Section 8 of the form of underwriting agreements filed as a part of
Exhibit 1 to this Registration Statement provides for indemnification of
directors and officers who sign the Registration Statement and controlling
persons of the Registrant by the underwriters, and for indemnification of each
underwriter and its controlling persons by the Registrant, against certain
liabilities.
II-1
<PAGE>
Item 16. Exhibits.
Exhibit
- -------
1.1* - Form of Underwriting Agreement for the Notes (PSSFC
Equipment Lease Trust and PSSFC Equipment Lease Master Trust)
1.2* - Form of Underwriting Agreement for the Certificates (PSSFC
Equipment Lease Trust and PSSFC Equipment Lease Master Trust)
1.3** - Form of Underwriting Agreement for the Notes (PSSFC Auto
Receivables Trust and PSSFC Auto Receivables Master Trust)
1.4** - Form of Underwriting Agreement for the Certificates (PSSFC
Auto Receivables Trust and PSSFC Auto Receivables Master
Trust)
4.1* - Form of Indenture between the Trust and the Indenture
Trustee (PSSFC Equipment Lease Trust and PSSFC Equipment
Lease Master Trust)
4.2* - Form of Indenture between the Registrant and the Indenture
Trustee (PSSFC Equipment Lease Trust and PSSFC Equipment
Lease Master Trust)
4.3* - Form of Pooling and Servicing Agreement between the Trust,
the Registrant and the Servicer (PSSFC Equipment Lease Trust
and PSSFC Equipment Lease Master Trust)
4.4* - Form of Trust Agreement between the Registrant and the
Trustee (PSSFC Equipment Lease Trust and PSSFC Equipment
Lease Master Trust)
4.5** - Form of Indenture between the Trust and the Indenture
Trustee (PSSFC Auto Receivables Trust and PSSFC Auto
Receivables Master Trust)
4.6** - Form of Indenture between the Registrant and the Indenture
Trustee (PSSFC Auto Receivables Trust and PSSFC Auto
Receivables Master Trust)
4.7** - Form of Pooling and Servicing Agreement between the Trust,
the Registrant and the Servicer (PSSFC Auto Receivables Trust
and PSSFC Auto Receivables Master Trust)
4.8** - Form of Trust Agreement between the Registrant and the
Trustee (PSSFC Auto Receivables Trust and PSSFC Auto
Receivables Master Trust)
5.1*** - Opinion of Dewey Ballantine LLP with respect to legality
8.1*** - Opinion of Dewey Ballantine LLP with respect to tax matters
10.1* - Form of Receivables Acquisition Agreement (PSSFC Equipment
Lease Trust and PSSFC Equipment Lease Master Trust)
10.2** - Form of Receivables Acquisition Agreement (PSSFC Auto
Receivables Trust and PSSFC Auto Receivables Master Trust)
23.1*** - Consent of Dewey Ballantine LLP (included in Exhibits 5.1
and 8.1)
99.1** - Form of Prospectus Supplement -- Certificates and Notes
(PSSFC Equipment Lease Trust and PSSFC Equipment Lease
Master Trust)
II-2
<PAGE>
99.2* - Form of Prospectus Supplement-- Notes (PSSFC Equipment Lease
Trust and PSSFC Equipment Lease Master Trust)
99.3* - Form of Prospectus Supplement -- Certificates (PSSFC Equipment
Lease Trust and PSSFC Equipment Lease Master Trust)
99.4* - Form of Prospectus Supplement - Master Trust (PSSFC Equipment Lease
Trust and PSSFC Equipment Lease Master Trust)
99.5** - Form of Prospectus Supplement -- Certificates and Notes
(PSSFC Auto Receivables Trust and PSSFC Auto Receivables
Master Trust)
99.6** - Form of Prospectus Supplement -- Notes (PSSFC Auto Receivables
Trust and PSSFC Auto Receivables Master Trust)
99.7** - Form of Prospectus Supplement -- Certificates (PSSFC Auto
Receivables Trust and PSSFC Auto Receivables Master Trust)
99.8** - Form of Prospectus Supplement - Master Trust (PSSFC Auto
Receivables Trust and PSSFC Auto Receivables Master Trust)
- ----------
* Such Exhibits are hereby incorporated by reference to the Registrant's
Registration Statement on Form S-3 (Reg. No. 33-79830).
** Such Exhibits are hereby incorporated by reference to the Registrant's
Registration Statement on Form S-3 (Reg. No. 33-84918).
*** Filed herewith.
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(a) (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;
(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 is 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 Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% 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;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the Registration Statement is on Form S-3, Form S-8 or Form F-3, and
the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the Registration Statement.
II-3
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in this 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) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions referred to in Item 15 of
this Registration Statement, or otherwise, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 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 of 1933 and will be governed by the
final adjudication of such issue.
(d) That,
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this Registration Statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
or 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) To file an application for the purpose of determining the
eligibility of the trustee to act under subsection (a) of Section 310 of the
Trust Indenture Act in accordance with the rules and regulations prescribed by
the Commission under Section 305(b)(2) of the Trust Indenture Act.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this amendment to this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of New York, State of New York on the 23 day of
March, 1999.
PRUDENTIAL SECURITIES SECURED
FINANCING CORPORATION
By /s/ Vincent T. Pica, II
------------------------------
Vincent T. Pica, II
President and Director
II-5
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this amendment
to this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Vincent T. Pica, II President (Principal March 23, 1999
- ------------------------- Executive Officer) and
Vincent T. Pica, II Director
/s/ P. Carter Rise
- ------------------------- Director March 23, 1999
P. Carter Rise
/s/ Martin Pfinsgraff
- ------------------------- Director March 23, 1999
Martin Pfinsgraff
/s/ Leland B. Paton
- ------------------------- Director March 23, 1999
Leland B. Paton
/s/ William J. Horan Chief Financial Officer March 23, 1999
- ------------------------- (Principal Financial
William J. Horan Officer and Principal
Accounting Officer)
II-6
<PAGE>
EXHIBIT INDEX
Exhibit
1.1* - Form of Underwriting Agreement for the Notes
(PSSFC Equipment Lease Trust and PSSFC Equipment
Lease Master Trust)
1.2* - Form of Underwriting Agreement for the
Certificates (PSSFC Equipment Lease Trust and
PSSFC Equipment Lease Master Trust)
1.3** - Form of Underwriting Agreement for the Notes
(PSSFC Auto Receivables Trust and PSSFC Auto
Receivables Master Trust)
1.4** - Form of Underwriting Agreement for the
Certificates (PSSFC Auto Receivables Trust and
PSSFC Auto Receivables Master Trust)
4.1* - Form of Indenture between the Trust and the
Indenture Trustee (PSSFC Equipment Lease Trust
and PSSFC Equipment Lease Master Trust)
4.2* - Form of Indenture between the Registrant and the
Indenture Trustee (PSSFC Equipment Lease Trust
and PSSFC Equipment Lease Master Trust)
4.3* - Form of Pooling and Servicing Agreement between
the Trust, the Registrant and the Servicer (PSSFC
Equipment Lease Trust and PSSFC Equipment Lease
Master Trust)
4.4* - Form of Trust Agreement between the Registrant
and the Trustee (PSSFC Equipment Lease Trust and
PSSFC Equipment Lease Master Trust)
4.5** - Form of Indenture between the Trust and the
Indenture Trustee (PSSFC Auto Receivables Trust
and PSSFC Auto Receivables Master Trust)
4.6** - Form of Indenture between the Registrant and the
Indenture Trustee (PSSFC Auto Receivables Trust
and PSSFC Auto Receivables Master Trust)
4.7** - Form of Pooling and Servicing Agreement between
the Trust, the Registrant and the Servicer (PSSFC
Auto Receivables Trust and PSSFC Auto
Receivables Master Trust)
4.8** - Form of Trust Agreement between the Registrant
and the Trustee (PSSFC Auto Receivables Trust
and PSSFC Auto Receivables Master Trust)
5.1*** - Opinion of Dewey Ballantine LLP with respect to
legality
8.1*** - Opinion of Dewey Ballantine LLP with respect to
tax matters
10.1* - Form of Receivables Acquisition Agreement (PSSFC
Equipment Lease Trust and PSSFC Equipment Lease
Master Trust)
10.2** - Form of Receivables Acquisition Agreement (PSSFC
Auto Receivables Trust and PSSFC Auto
Receivables Master Trust)
23.1*** - Consent of Dewey Ballantine LLP (included in Exhibits
5.1 and 8.1)
<PAGE>
99.1** - Form of Prospectus Supplement-- Certificates and
Notes (PSSFC Equipment Lease Trust and PSSFC
Equipment Lease Master Trust)
99.2* - Form of Prospectus Supplement -- Notes (PSSFC
Equipment Lease Trust and PSSFC Equipment Lease
Master Trust)
99.3* - Form of Prospectus Supplement -- Certificates
(PSSFC Equipment Lease Trust and PSSFC Equipment
Lease Master Trust)
99.4* - Form of Prospectus Supplement - Master Trust
(PSSFC Equipment Lease Trust and PSSFC Equipment
Lease Master Trust)
99.5** - Form of Prospectus Supplement-- Certificates and
Notes (PSSFC Auto Receivables Trust and PSSFC
Auto Receivables Master Trust)
99.6** - Form of Prospectus Supplement -- Notes (PSSFC
Auto Receivables Trust and PSSFC Auto
Receivables Master Trust)
99.7** - Form of Prospectus Supplement -- Certificates
(PSSFC Auto Receivables Trust and PSSFC Auto
Receivables Master Trust)
99.8** - Form of Prospectus Supplement - Master Trust
(PSSFC Auto Receivables Trust and PSSFC Auto
Receivables Master Trust)
- ----------
* Such Exhibits are hereby incorporated by reference to the
Registrant's Registration Statement on Form S-3 (Reg. No. 33-79830).
** Such Exhibits are hereby incorporated by reference to the
Registrant's Registration Statement on Form S-3 (Reg. No. 33-84918).
*** Filed herewith.
Exhibit 5.1
[Letterhead of Dewey Ballantine LLP]
March 23, 1999
Prudential Securities Secured
Financing Corporation
One New York Plaza, 15th Floor
New York, New York 10292
Re: Equipment Lease Backed Certificates and Notes
Auto Loan Receivable Backed Certificates and Notes
Ladies and Gentlemen:
We have acted as counsel to Prudential Securities Secured Financing
Corporation ("Prudential" or the "Registrant") in connection with the
preparation and filing of the registration statement on Form S-3 (such
registration statement, the "Registration Statement") being filed today with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, as
amended (the "Act"), in respect of Equipment Lease Backed Certificates or Notes
and Auto Loan Receivable Backed Certificates or Notes (collectively, the
"Securities") which the Registrant plans to offer in series, each series to be
issued under a separate pooling and servicing agreement, indenture or trust
agreement (a "Trust Agreement"), in substantially one of the forms incorporated
by reference as Exhibits to the Registration Statement, among Prudential, a
servicer to be identified in the prospectus supplement for such series of
Securities (the "Servicer" for such series), and a trustee to be identified in
the prospectus supplement for such series of Securities (the "Trustee" for such
series).
We have examined and relied on the originals or copies certified or
otherwise identified to our satisfaction of all such documents and records of
Prudential and such other instruments and other certificates of public
officials, officers and representatives of Prudential and such other persons,
and we have made such investigations of law, as we have deemed appropriate as a
basis for the opinions expressed below.
The opinions expressed below are subject to bankruptcy, insolvency,
reorganization, moratorium and other laws relating to or affecting creditors'
rights generally and to general equity principles.
We are admitted to the Bar of the State of New York and we express no
opinion as to the laws of any other jurisdiction except as to matters that are
governed by
<PAGE>
Federal law or the laws of the State of New York. All opinions expressed herein
are based on laws, regulations and policy guidelines currently in force and may
be affected by future regulations.
Based upon the foregoing, we are of the opinion that:
1. When, in respect of a series of Securities, a Trust Agreement has
been duly authorized by all necessary action and duly executed and
delivered by Prudential, the Servicer and the Trustee for such series,
such Trust Agreement will be a valid and legally binding obligation of
Prudential; and
2. When a Trust Agreement for a series of Securities has been duly
authorized by all necessary action and duly executed and delivered by
Prudential, the Servicer and the Trustee for such series, and when the
Securities of such series have been duly executed and authenticated in
accordance with the provisions of the Trust Agreement, and issued and sold
as contemplated in the Registration Statement and the prospectus, as
amended or supplemented and delivered pursuant to Section 5 of the Act in
connection therewith, such Securities will be legally and validly issued,
fully paid and nonassessable, and the holders of such Securities will be
entitled to the benefits of such Trust Agreement.
We hereby consent to the filing of this opinion as an Exhibit to the
Registration Statement and to the reference to Dewey Ballantine LLP in the
Registration Statement and in future related prospectus supplements under the
heading "Legal Matters."
This opinion is furnished by us as counsel to the Registrant and is solely
for the benefit of the addressees hereof. It may not be relied upon by any other
person or for any other purpose without our prior written consent.
Very truly yours,
DEWEY BALLANTINE LLP
Exhibit 8.1
[Letterhead of Dewey Ballantine LLP]
March 23, 1999
Prudential Securities Secured
Financing Corporation
One New York Plaza, 15th Floor
New York, New York 10292
Re: Equipment Lease Backed Certificates and Notes
Auto Loan Receivable Backed Certificates and Notes
Ladies and Gentlemen:
We have acted as counsel to Prudential Securities Secured Financing
Corporation ("Prudential" or the "Registrant") in connection with the
preparation and filing of a registration statement on Form S-3 (the
"Registration Statement") being filed today with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended (the "Act"), in
respect of Equipment Lease Backed Certificates or Notes and Auto Loan Receivable
Backed Certificates or Notes (collectively, the "Securities") which Prudential
plans to offer in series. Our advice formed the basis for the description of
federal income tax consequences appearing under the heading "Certain Federal
Income Tax Consequences" in the prospectus contained in the Registration
Statement. Such description does not purport to discuss all possible federal
income tax consequences of an investment in the Securities, but with respect to
those tax consequences which are discussed in our opinion, the description is
accurate.
We hereby consent to the filing of this letter as an Exhibit to the
Registration Statement and to the reference to Dewey Ballantine LLP in the
Registration Statement and in future related prospectus supplements under the
heading "Certain Federal Income Tax Consequences."
Very truly yours,
DEWEY BALLANTINE LLP
