<PAGE>
RULE NO. 424(b)(5)
REGISTRATION NO. 33-99294
33-66922
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED MAY 20, 1999
$761,425,000
JOHN DEERE OWNER TRUST 1999-A
$167,300,000 Class A-1 4.9988% Asset Backed Notes
$262,000,000 Class A-2 5.466% Asset Backed Notes
$186,000,000 Class A-3 5.94% Asset Backed Notes
$146,125,000 Class A-4 6.12% Asset Backed Notes
JOHN DEERE RECEIVABLES, INC., SELLER
JOHN DEERE CAPITAL CORPORATION, SERVICER
The notes represent obligations of the Trust only and do not represent
obligations of or interests in, and are not guaranteed by, John Deere
Receivables, Inc., John Deere Capital Corporation, Deere & Company, any of
their affiliates or any other person.
Investing in the notes involves risks. See "Risk Factors" on page S-8 of this
prospectus supplement and on page 12 of the related prospectus.
<TABLE>
<CAPTION>
Underwriting
Discounts and Proceeds to Final Payment
Price Commissions Seller Date
------------ ------------- ------------ ----------------
<S> <C> <C> <C> <C>
Class A-1 Notes....... 100.0000% 0.1100% 99.8900% June 19, 2000
Class A-2 Notes....... 100.0000% 0.1375% 99.8625% August 15, 2001
Class A-3 Notes....... 99.9984% 0.2000% 99.7984% October 15, 2002
Class A-4 Notes....... 99.9775% 0.2750% 99.7025% October 17, 2005
Total............... $761,389,146 $1,318,123 $760,071,023
</TABLE>
Delivery of the notes in book-entry form only will be made on or about May
27, 1999.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus supplement and the prospectus to which it relates are truthful or
complete. Any representation to the contrary is a criminal offense.
Credit Suisse First Boston
Banc of America Securities LLC
Chase Securities Inc.
Goldman, Sachs & Co.
J.P. Morgan & Co.
Salomon Smith Barney
The date of this prospectus supplement is May 20, 1999
<PAGE>
You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
different or additional information. This document may only be used where it is
legal to sell these securities. The information in this document may only be
accurate on the date of this document.
Content of Prospectus Supplement and Prospectus
We provide information to you about the notes in two separate documents that
provide varying levels of detail:
(A) this prospectus supplement, which describes the specific terms of the
notes, and
(B) the prospectus, which provides general information, some of which may
not apply to the notes.
If the terms of the notes described in this prospectus supplement vary with
the accompanying prospectus, you should rely on the information in this
prospectus supplement. This prospectus supplement may be used to offer and sell
the class A notes and may only be used if accompanied by the prospectus. This
prospectus supplement and the prospectus only relate to the class A notes. The
certificates and the class B notes are not offered under these documents.
We include cross-references in this prospectus supplement and the prospectus
to captions in these documents where you can find further related discussions.
The table of contents on page S-3 of this document provides the pages on which
these captions are located.
You can find a listing of the pages where capitalized terms used in this
prospectus supplement and the prospectus are defined under the caption "Index
of Terms" beginning on page S-34 in this prospectus supplement and under the
caption "Index of Terms" beginning on page 44 in the prospectus.
Dealer Prospectus Delivery Obligation
Until August 18, 1999, all dealers that effect transactions in these
securities, whether or not participating in this offering, may be required to
deliver a prospectus supplement and a prospectus. This is in addition to the
dealer's obligation to deliver a prospectus supplement and a prospectus when
acting as an underwriter and with respect to unsold allotments or
subscriptions.
REPORTS TO NOTEHOLDERS
Unless and until definitive notes are issued, periodic and annual unaudited
reports containing information concerning the receivables will be prepared by
the servicer of the receivables and sent on behalf of the Trust only to Cede &
Co., as nominee of The Depository Trust Company and registered holder of the
notes. See "Certain Information Regarding the Securities--Book-Entry
Registration" and "--Reports to Securityholders" in the accompanying
prospectus. Such reports will not constitute financial statements prepared in
accordance with generally accepted accounting principles. The Trust will file
with the Securities and Exchange Commission such periodic reports as are
required under the Securities Exchange Act of 1934, as amended, and the rules
and regulations thereunder and as are otherwise agreed to by the Securities and
Exchange Commission.
S-2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Summary Of Terms.................... S-4
Offered Securities................. S-4
Issuer............................ S-4
Seller............................ S-4
Servicer.......................... S-4
Indenture Trustee................. S-4
Owner Trustee..................... S-4
Closing Date...................... S-4
Payment Dates..................... S-4
Interest Payments................. S-4
Principal Payments................ S-4
Final Payment Dates............... S-5
Optional Redemption............... S-5
Priority of Payments.............. S-5
Class B Notes..................... S-5
Certificates...................... S-5
Trust Property..................... S-5
Receivables....................... S-6
Credit Enhancement................. S-6
Subordination of Certificates..... S-6
Subordination of Class B Notes.... S-6
Reserve Account................... S-6
Tax Status......................... S-6
Erisa Considerations............... S-6
Legal Investment................... S-6
Rating Of The Securities........... S-7
Risk Factors........................ S-8
Limited Ability to Resell Notes... S-8
Seasonality of Cash Flow Will
Affect Amount of Principal
Payments......................... S-8
The Trust's Only Sources of Funds
Are the Receivables and the
Reserve Account; Losses on the
Receivables May Cause Losses on
the Notes........................ S-8
Ratings of the Notes May be
Lowered or Withdrawn, Which Would
Adversely Affect the Value of the
Affected Notes................... S-8
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Trust's Relationship to the
Seller and John Deere Capital
Corporation; Financial Condition
of Deere & Company.............. S-9
The Trust.......................... S-10
General.......................... S-10
Capitalization of the Trust...... S-10
The Owner Trustee................ S-11
The Receivables Pool............... S-11
Delinquencies; Repossessions and
Net Losses...................... S-15
Maturity And Prepayment
Considerations.................... S-16
Weighted Average Lives........... S-16
The Seller And The Servicer........ S-20
John Deere Receivables, Inc...... S-20
John Deere Capital Corporation... S-20
Description Of The Notes........... S-21
General.......................... S-21
Payments of Interest............. S-21
Payments of Principal............ S-22
Description Of The Transfer And
Servicing Agreements.............. S-22
Sale and Assignment of
Receivables..................... S-23
Accounts......................... S-23
Servicing Compensation........... S-23
Distributions.................... S-23
Reserve Account.................. S-26
Federal Income Tax Considerations.. S-26
Tax Classification Of The Trust.. S-27
Tax Considerations For
Noteholders..................... S-27
Certain Iowa Tax Considerations.... S-30
Notes............................ S-30
Certificates..................... S-30
Erisa Considerations............... S-31
Underwriting....................... S-32
Legal Opinions..................... S-33
Index Of Terms..................... S-34
</TABLE>
S-3
<PAGE>
SUMMARY OF TERMS
The following summary is a short, concise description of the main terms of
the notes. For this reason, the summary does not contain all the information
that is important to you. You will find a detailed description of the terms of
the notes following this summary and in the prospectus.
OFFERED SECURITIES
<TABLE>
<CAPTION>
Class Aggregate
of Principal Interest
Notes Amount Rate
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
A-1 $167,300,000 4.9988%
A-2 $262,000,000 5.466%
A-3 $186,000,000 5.94%
A-4 $146,125,000 6.12%
</TABLE>
The class A notes will be book-entry securities clearing through The
Depository Trust Company (in the United States) or Cedelbank or Euroclear (in
Europe) in minimum denominations of $1,000 and integral multiples thereof. See
"Certain Information Regarding the Securities--Book-Entry Registration" in the
prospectus.
Issuer
John Deere Owner Trust 1999-A (the "Trust").
Seller
John Deere Receivables, Inc. (the "Seller").
Servicer
John Deere Capital Corporation (the "Servicer").
Indenture Trustee
The Bank of New York (the "Indenture Trustee").
Owner Trustee
Bankers Trust (Delaware) (the "Owner Trustee").
Closing Date
May 27, 1999.
Payment Dates
Payments on the notes will be made on the 15th day of each calendar month
(or, if not a business day, the next business day), beginning June 15, 1999.
Interest Payments
The interest rate for each class of class A notes is specified above. The
interest rate for the class B notes is 6.10% per annum. Interest on the A-1
notes and A-2 notes will be calculated on the basis of the actual number of
days in the applicable interest period divided by 360. Interest on the A-3
notes, A-4 notes and class B notes will be calculated on the basis of a 360-day
year of twelve 30-day months.
Principal Payments
The amount of principal paid on the notes on each payment date will generally
be equal to the reduction in the note value of the receivables during a
collection period. The note value of the receivables is the present value of
the scheduled payments due on the receivables, discounted at the weighted
average interest rate of the receivables as of April 30, 1999 adjusted to
reflect a monthly yield. Scheduled principal payments on each payment date will
be applied to the A-1 notes until they are paid in full. Unscheduled payments
of principal received on the receivables during that time generally will be
paid, within certain limitations, on the class B notes described below and the
certificates described below. After the A-1 notes have been paid in full,
principal payments (including unscheduled payments of principal) on each
payment date generally will be allocated between the remaining class A notes,
the class B notes and the certificates such that the resulting principal
balance of the class B notes does not exceed 4% of the note value of the
outstanding receivables and such that the resulting principal balance of the
certificates does not exceed 1.50% of the note value of the outstanding
receivables after giving effect to such principal payments. The principal
payments made on the remaining class A notes will be applied sequentially -
i.e., on the A-2 notes until paid in full, then on the A-3 notes until paid in
full and then on the A-4 notes until paid in full. See "Description of the
Notes" and "Description of the Transfer and Servicing Agreements--
Distributions" for additional detail on
S-4
<PAGE>
some of the calculations described above and for special priority rules that
would apply under certain circumstances. A collection period for a payment date
is a fiscal month specified in the sale and servicing agreement, which will end
prior to that payment date.
Final Payment Dates
The principal amount of each class of notes, to the extent not previously
repaid, will be payable in full on the payment date in the month specified
below:
<TABLE>
<CAPTION>
Class of Notes Final Payment Date
-------------- ------------------
<S> <C>
A-1 June 19, 2000
A-2 August 15, 2001
A-3 October 15, 2002
A-4 October 17, 2005
</TABLE>
Optional Redemption
The Servicer has the right to purchase the remaining receivables on any
payment date when the principal balance of the receivables has become equal to
or less than 10% of the initial principal balance of the receivables. If the
Servicer exercises this right, the notes outstanding at that time will be
redeemed in full at a price equal to their unpaid principal balance plus
accrued and unpaid interest.
Priority of Payments
In general, the collections received in respect of the receivables in a
collection period and any net investment earnings on the Trust's short-term
investments from amounts deposited in the collection account will be applied on
the next payment date in the following amounts and the following order of
priority:
1. servicing fee to the Servicer;
2. administration fee to the Administrator;
3. interest on the class A notes;
4. interest on the class B notes;
5. principal on the notes;
6. amount, if any, required to be deposited into the reserve account;
7. interest, if any, on the certificates;
8. principal on the certificates; and
9. remaining amounts, if any, to the Seller.
See "Description of Transfer and Servicing Agreements--Distributions" for
additional details, including the amount of principal to be distributed, the
sequence of payments of principal on the class A notes and special priority
rules that apply under certain circumstances.
Class B Notes
On the closing date, the Trust will issue class B notes in an aggregate
principal amount of $32,230,000 (equal to 4.00% of the initial note value). The
Seller will retain the entire principal amount of the class B notes. The class
B notes will bear interest at the rate of 6.10% per annum. No distributions of
interest will be made on the class B notes on a payment date until all amounts
of interest payable on the class A notes on that payment date have been paid
and no distributions of principal will be made on the class B notes on a
payment date until all amounts of principal payable on the class A notes on
that payment date have been paid. The class B notes are not being offered
hereby.
Certificates
On the closing date, the Trust will issue certificates in an aggregate
principal amount of $12,086,832 (equal to 1.50% of the initial note value). The
Seller will retain the entire principal amount of the certificates. The
certificates will not bear interest. No distributions will be made on the
certificates on a payment date until all amounts payable on the notes on that
payment date have been paid. The certificates are not being offered hereby.
TRUST PROPERTY
The Trust will own only the following property:
. receivables and related collections;
. bank accounts into which those collections are deposited and the short-
term investments made from those collections;
. security interests in the equipment financed under the receivables;
. any proceeds of repossessed equipment; and
. rights to proceeds from certain insurance policies covering equipment
financed under the receivables or obligors on the receivables.
S-5
<PAGE>
Receivables
The receivables will consist of agricultural and construction equipment
retail installment sale and loan contracts secured by new and used agricultural
equipment and construction equipment, the security interests in the equipment
financed thereby and the proceeds thereof. On or prior to the Closing Date, the
Trust will purchase receivables having an aggregate principal balance plus
accrued interest of approximately $810,198,097 as of April 30, 1999.
CREDIT ENHANCEMENT
Subordination of Certificates
The certificates will represent fractional undivided equity interests in the
Trust. The initial principal balance of the certificates will be $12,086,832
(equal to 1.50% of the initial note value). The certificates will serve as
credit enhancement for the notes because no distributions will be made on the
certificates on a payment date until all amounts payable on the notes on that
payment date have been paid.
Subordination of Class B Notes
The class B notes will serve as credit enhancement for all of the class A
notes because they will be subordinated in the following manner:
. no interest will be paid on the class B notes on any payment date until
all of the interest due on the class A notes on such payment date has
been paid; and
. no principal will be paid on the class B notes on any payment date until
the principal payable on the class A notes on such payment date has been
paid.
Reserve Account
The Trust will have a reserve account. Funds in the reserve account will be
used to cover shortfalls in required payments on the notes.
. On the Closing Date, $16,114,837 (equal to 2.00% of the initial note
value) will be on deposit in the reserve account.
. As of any payment date, the reserve account will be required to equal
the greater of (i) 2.00% of the then outstanding note value at the end
of the related collection period and (ii) 1.75% of the initial note
value. However, the required reserve fund amount will not be greater
than the outstanding principal balance of the notes.
. On each payment date, any collections on the receivables that remain
after all senior payments have been made will be applied, to the extent
necessary, to increase the funds in the reserve account to the required
amount.
See "Description of the Transfer and Servicing Agreements--Reserve Account"
for a description of the required amount for the reserve account.
TAX STATUS
In the opinion of Shearman & Sterling, special federal tax counsel for the
Trust, the class A notes will be characterized as debt for federal income tax
purposes and the Trust will not be characterized as a separate entity that is
an association (or a publicly traded partnership) taxable as a corporation. See
"Federal Income Tax Considerations" and "Certain Iowa Tax Considerations" in
this prospectus supplement for information regarding the application of federal
and certain state tax laws to the notes and the Trust.
ERISA CONSIDERATIONS
Subject to the considerations discussed under "ERISA Considerations" in this
prospectus supplement and in the prospectus, the class A notes are eligible for
purchase by employee benefit plans.
LEGAL INVESTMENT
The A-1 notes will be eligible securities for purchase by money market funds
under paragraph (a)(10) of Rule 2a-7 under the Investment Company Act of 1940,
as amended.
S-6
<PAGE>
RATING OF THE SECURITIES
It is a condition to the issuance of the notes that the A-1 notes be rated in
the highest short-term rating category and that the A-2 notes, A-3 notes and A-
4 notes be rated in the highest long-term rating category, in each case by at
least two nationally recognized rating agencies. There can be no assurance that
such ratings will not be lowered or withdrawn by a rating agency if, in the
opinion of such rating agency, circumstances so warrant. See "Risk Factors--
Ratings of the Notes" in this prospectus supplement.
S-7
<PAGE>
RISK FACTORS
You should consider the following risk factors and the risk factors in the
prospectus under the heading "Risk Factors" in deciding whether to purchase the
class A notes.
Limited Ability to Resell There is currently no secondary market for the
Notes........................ class A notes. The underwriters currently
intend to make a market in the notes, but they
are not required to do so. A secondary market
may not develop. If a secondary market does
develop, it may not give you sufficient
liquidity to allow you to resell your class A
notes when you want to.
Seasonality of Cash Flow
Will Affect Amount of
Principal Payments........... Payment frequency of the receivables may be
monthly, quarterly, semiannually or annually.
Agricultural equipment retail installment sale
and loan contracts, which represent 49% of the
aggregate unpaid principal balance and accrued
interest of the receivables as of April 30,
1999, tend to have payment dates which
correspond to periods in which farmers have
stronger cash flows. As a result, the amounts
of cash distributed to noteholders will tend to
reflect this seasonality, with higher amounts
of principal paid on the payment dates
occurring in January, February and December of
each year and relatively lower amounts paid on
other payment dates.
The Trust's Only Sources of
Funds Are the Receivables
and the Reserve Account;
Losses on the Receivables
May Cause Losses on the
Notes........................
The Trust's only sources of funds for making
payments on the notes are collections on the
receivables and funds in the reserve account.
The notes are not guaranteed or otherwise
insured by the Seller, the Servicer, Deere &
Company, any of their affiliates or any other
entity. If losses are incurred on the
receivables and the funds in the reserve
account are not sufficient to cover the
resulting shortfalls in payments due on the
notes, the noteholders will incur losses on
their notes. If an event of default occurs in
respect of the notes, the receivables may be
sold to repay the notes. However, the net
proceeds of any such sale may not cover the
principal and interest due on the notes. In
addition, until the final payment date for a
class of notes, the amount of principal
required to be paid on the notes of that class
is limited to the amount available for such
payment. Consequently, the failure to pay
principal on a class of notes will not be an
event of default until the final payment date
for that class of notes.
Ratings of the Notes May Be
Lowered or Withdrawn, Which
Would Adversely Affect the
Value of the Affected
Notes........................
It is a condition to the issuance of the notes
that the A-1 notes be rated in the highest
short-term rating category and that the A-2
notes, A-3 notes and A-4 notes be rated in the
highest long-term rating category, in each case
by at least two nationally recognized rating
agencies. A rating is not a recommendation to
purchase, hold or sell securities, inasmuch as
such rating does not comment as to market price
or suitability for a particular investor. The
ratings of
S-8
<PAGE>
the class A notes address the likelihood of the
timely payment of interest on and the ultimate
repayment of principal of the notes pursuant to
their terms. There is no assurance that a
rating will remain for any given period of time
or that a rating will not be lowered or
withdrawn entirely by a rating agency if in its
judgment circumstances in the future so
warrant. If a rating is subsequently lowered or
withdrawn, the value of the affected notes
would be adversely affected. In such event, no
person or entity will be obligated to provide
any additional credit enhancement. The rating
of the notes is based primarily on the credit
quality of the receivables, the subordination
provided by the certificates and the class B
notes and the availability of funds in the
reserve account.
Trust's Relationship to the
Seller and John Deere
Capital Corporation;
Financial Condition of Deere
& Company.................... The notes represent obligations of the Trust
only. None of the Seller, the Servicer or Deere
& Company is obligated to make payments in
respect of the notes or the receivables. If
John Deere Capital Corporation were to cease
acting as the Servicer, delays in processing
payments on the receivables and information in
respect thereof could occur and result in
delays in payments to the noteholders. In
connection with the sale of receivables by John
Deere Capital Corporation to the Seller, John
Deere Capital Corporation makes representations
and warranties with respect to the
characteristics of such receivables. In certain
circumstances, John Deere Capital Corporation
and the Seller are required to repurchase
Receivables with respect to which such
representations and warranties have been
breached. See "Description of the Transfer and
Servicing Agreements--Sale and Assignment of
Receivables" in this prospectus supplement.
For additional information regarding Deere &
Company and John Deere Capital Corporation, see
"The Seller, Deere and the Servicer" in the
prospectus. Deere & Company and John Deere
Capital Corporation are subject to the
information requirements of the Securities
Exchange Act of 1934, as amended, and in
accordance therewith file reports and other
information with the Securities and Exchange
Commission.
S-9
<PAGE>
THE TRUST
General
John Deere Owner Trust 1999-A (the "Issuer" or the "Trust") will be a
business trust formed under the laws of the State of Delaware pursuant to a
trust agreement between the Seller and the Owner Trustee (the "Trust
Agreement") for the transactions described in this Prospectus Supplement. After
its formation, the Trust will not engage in any activity other than (i)
acquiring, holding and managing the Receivables and the other assets of the
Trust, (ii) issuing and making payments on the class A notes (the "Class A
Notes") offered hereby, the class B notes (the "Class B Notes" and, together
with the Class A Notes, the "Notes") and the certificates evidencing fractional
undivided equity interests in the Trust (the "Certificates"), and (iii)
engaging in related activities.
The Seller will retain the Class B Notes and the Certificates. The proceeds
from the initial sale of the Notes will be used by the Trust to purchase the
Receivables from the Seller pursuant to the sale and servicing agreement among
the Trust, the Seller and the Servicer (the "Sale and Servicing Agreement").
The Servicer will initially service the Receivables pursuant to the Sale and
Servicing Agreement, and will be compensated for acting as the Servicer. The
Servicer will designate Deere Credit Services, Inc. ("Deere Credit Services"),
an indirect wholly-owned subsidiary of Deere & Company, as its agent to service
the Receivables (in such capacity, the "Sub-Servicer") at the Servicer's
expense. See "Description of the Transfer and Servicing Agreements--Servicing
Compensation" herein. To facilitate servicing and to minimize administrative
burden and expense, the Servicer will be appointed custodian for the
Receivables by the Owner Trustee, but will not stamp the Receivables to reflect
the sale and assignment of the Receivables to the Trust, nor amend the
financing statements filed to perfect the security interest in the equipment
financed thereby (the "Financed Equipment") or the certificates of title, if
applicable, of the Financed Equipment. In the absence of amendments to the
certificates of title, the Trust may not have perfected security interests in
the Financed Equipment securing the Receivables originated in some states. See
"Certain Legal Aspects of the Receivables" in the Prospectus.
If the protection provided to the investment of the Noteholders by the
availability of funds in the Reserve Account is insufficient, the Trust must
rely solely on payments from or on behalf of the obligors (the "Obligors") on
the Receivables and the proceeds from the repossession and sale of the Financed
Equipment that secures defaulted Receivables. In such event, certain factors,
such as the Trust's not having first priority perfected security interests in
some of the Financed Equipment subject to the Receivables, may affect the
Trust's ability to realize on the collateral securing those Receivables, and
thus may reduce the proceeds available to make payments on the Notes. See
"Description of the Transfer and Servicing Agreements--Distributions" and "--
Reserve Account" herein and "Certain Legal Aspects of the Receivables" in the
Prospectus.
The Trust's principal offices are in Wilmington, Delaware, in care of Bankers
Trust (Delaware), as Owner Trustee, at the address listed below under "--The
Owner Trustee" herein.
Capitalization of the Trust
The following table illustrates the capitalization of the Trust as of the
Cutoff Date (as defined below), as if the issuance of the Notes and the
Certificates had taken place on such date:
<TABLE>
<S> <C>
Class A-1 4.9988% Asset Backed Notes.......................... $167,300,000
Class A-2 5.466% Asset Backed Notes........................... 262,000,000
Class A-3 5.94% Asset Backed Notes............................ 186,000,000
Class A-4 6.12% Asset Backed Notes............................ 146,125,000
Class B 6.10% Asset Backed Notes.............................. 32,230,000
Certificates.................................................. 12,086,832
------------
Total....................................................... $805,741,832
============
</TABLE>
S-10
<PAGE>
The Owner Trustee
Bankers Trust (Delaware) will be the Owner Trustee under the Trust Agreement.
Bankers Trust (Delaware) is a banking corporation and its principal offices are
located at E.A. Delle Donne Corporate Center, Montgomery Building, 1011 Centre
Road, Suite 200, Wilmington, Delaware 19805. The Owner Trustee's liability in
connection with the issuance and sale of the Notes and the Certificates is
limited solely to the express obligations of the Owner Trustee set forth in the
Trust Agreement and the Sale and Servicing Agreement. An entity that may become
an affiliate of the Owner Trustee is one of a number of banks with which Deere
& Company ("Deere") and John Deere Capital Corporation ("JDCC") maintain
ordinary banking relationships and from which Deere and JDCC have obtained
credit facilities and lines of credit.
THE RECEIVABLES POOL
The receivables described herein (the "Receivables") were purchased by JDCC
from the Sales Companies (described below), which either originated the
Receivables in the ordinary course of business in connection with retail sales
by the dealers (the "Dealers") or, in limited instances, acquired the
Receivables from the Dealers in the ordinary course of business. The large
majority of the aggregate principal balance of the Receivables represents
financing of new and used equipment manufactured or distributed by John Deere.
JDCC purchases contracts in accordance with its credit standards that are based
upon the buyer's ability to repay the obligation, credit history and the
downpayment on the Financed Equipment. The "Sales Companies" include Deere and
John Deere Construction Equipment Company. The Seller will purchase the
Receivables from JDCC pursuant to a purchase agreement (the "Purchase
Agreement") and sell them to the Trust pursuant to the Sale and Servicing
Agreement.
The Receivables were selected from JDCC's portfolio by several criteria,
including, as of April 30, 1999 (the "Cutoff Date"), the following: except as
described under "Certain Legal Aspects of the Receivables" in the Prospectus,
each Receivable was originated in the United States, has an Obligor which is a
United States person, has a fixed interest rate (the "APR"), is secured by a
perfected first priority security interest in the related Financed Equipment,
has a scheduled maturity of not later than May 1, 2005, provides for scheduled
payments which fully amortize the amount financed, has an outstanding principal
balance of at least $500 and is not more than 89 days past due. As of the
Cutoff Date, no Obligor on any Receivable was noted in the related records of
the Servicer or the Sub-Servicer as being the subject of a bankruptcy
proceeding. No selection procedures believed by JDCC or the Seller to be
adverse to Noteholders were used in selecting the Receivables.
Payment schedules on the Receivables are structured so that customers can
make payments in conjunction with their expected cash flows (which, as to
agricultural equipment customers, is highly seasonal and crop-related). Each
Receivable provides for fixed payments on a monthly, quarterly, semiannual,
annual or other basis. Most Receivables relating to agricultural equipment pay
on an annual basis and most other Receivables pay on a monthly basis. The fixed
payments provided for under each Receivable are sufficient to amortize fully
the amount financed and pay finance charges over the original term of the
Receivable.
The composition of the Receivables and the distribution of the Receivables by
equipment type, payment frequency, current principal balance plus accrued
interest, and the geographic distribution, all as of the Cutoff Date, are set
forth in the following tables. For purposes of the data in the following tables
only, Aggregate Balances of the Receivables have been calculated as the sum of
the principal balances of the Receivables plus accrued interest thereon as of
the Cutoff Date. Totals may not add to 100% due to rounding.
S-11
<PAGE>
COMPOSITION OF THE RECEIVABLES
<TABLE>
<CAPTION>
Weighted Average Weighted
APR of Average Weighted Average
Receivables Aggregate Number of Remaining Term Original Term Average Balance
(Range) Balance Receivables (Range) (Range) (Range)
---------------- --------------- ----------- --------------- ----------------- ---------------
<S> <C> <C> <C> <C> <C>
7.920% $810,198,096.58 25,624 41.08 months 51.34 months $31,618.72
(4.87% to 15.08%) (3 to 71 months) (12 to 72 months)(1) ($506.64 to
$2,711,366.62)
</TABLE>
- --------
(1) Based on scheduled payments and assuming no prepayments.
DISTRIBUTION OF THE RECEIVABLES BY APR
<TABLE>
<CAPTION>
Percent of
Number of Aggregate Aggregate
APR Range Receivables Balance Balance
- --------- ----------- --------------- ----------
<S> <C> <C> <C>
4.00% to 4.99%.......................... 212 $ 8,386,043.08 1.04%
5.00% to 5.99%.......................... 2,911 108,444,982.03 13.38
6.00% to 6.99%.......................... 5,130 204,413,910.66 25.23
7.00% to 7.99%.......................... 6,550 182,111,177.82 22.48
8.00% to 8.99%.......................... 2,486 82,743,828.37 10.21
9.00% to 9.99%.......................... 2,917 111,021,421.19 13.70
10.00% to 10.99%......................... 2,614 65,411,127.97 8.07
11.00% to 11.99%......................... 2,084 35,476,520.29 4.38
12.00% and above......................... 720 12,189,085.17 1.50
------ --------------- ------
Total.................................. 25,624 $810,198,096.58 100.00%
====== =============== ======
</TABLE>
DISTRIBUTION OF THE RECEIVABLES BY EQUIPMENT TYPE
<TABLE>
<CAPTION>
Percent of
Number of Aggregate Aggregate
Type Receivables Balance Balance
- ---- ----------- --------------- ----------
<S> <C> <C> <C>
Agricultural
New.................................... 8,369 $160,760,600.85 19.84%
Used................................... 9,194 235,310,283.55 29.04
Construction
New.................................... 5,854 340,441,599.73 42.02
Used................................... 2,207 73,685,612.45 9.09
------ --------------- ------
Total................................ 25,624 $810,198,096.58 100.00%
====== =============== ======
</TABLE>
S-12
<PAGE>
DISTRIBUTION OF THE RECEIVABLES BY PAYMENT FREQUENCY
<TABLE>
<CAPTION>
Percent of
Number of Aggregate Aggregate
Frequency Receivables Balance Balance
- --------- ----------- --------------- ----------
<S> <C> <C> <C>
Annual(1)................................ 11,636 $323,970,403.53 39.99%
Semiannual............................... 653 16,503,039.07 2.04
Quarterly................................ 186 3,568,888.43 0.44
Monthly.................................. 13,149 466,155,765.55 57.54
------ --------------- ------
Total.................................. 25,624 $810,198,096.58 100.00%
====== =============== ======
</TABLE>
- --------
(1) Based on aggregate balance, approximately 6.64%, 6.72% and 6.80% of the
Receivables have annual scheduled payments within the Collection Period
relating to the Payment Dates in January, February and December,
respectively.
DISTRIBUTION OF THE RECEIVABLES BY CURRENT BALANCE
<TABLE>
<CAPTION>
Percent of
Number of Aggregate Aggregate
Current Balance Range Receivables Balance Balance
- --------------------- ----------- --------------- ----------
<S> <C> <C> <C>
$ 500- 10,000 7,355 $ 41,258,905.97 5.09%
10,001- 20,000.......................... 5,625 80,832,135.97 9.98
20,001- 30,000.......................... 3,179 78,551,046.66 9.70
30,001- 40,000.......................... 2,430 84,461,450.22 10.42
40,001- 50,000.......................... 1,906 85,034,907.18 10.50
50,001- 75,000.......................... 2,866 172,914,304.90 21.34
75,001-100,000.......................... 1,133 97,484,268.74 12.03
100,001-200,000.......................... 987 125,926,691.24 15.54
200,001 and above........................ 143 43,734,385.70 5.40
------ --------------- ------
Total.................................. 25,624 $810,198,096.58 100.00%
====== =============== ======
</TABLE>
S-13
<PAGE>
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES
<TABLE>
<CAPTION>
Percent of
Number of Aggregate Aggregate
State(1) Receivables Balance Balance
- -------- ----------- --------------- ----------
<S> <C> <C> <C>
Alabama.................................. 616 $ 16,858,951.35 2.08%
Alaska................................... 16 574,626.93 0.07
Arizona.................................. 184 7,797,676.63 0.96
Arkansas................................. 597 20,658,420.37 2.55
California............................... 794 30,173,985.63 3.72
Colorado................................. 490 16,001,775.56 1.98
Connecticut.............................. 179 6,662,453.49 0.82
Delaware................................. 74 2,317,452.73 0.29
Florida.................................. 770 22,089,970.43 2.73
Georgia.................................. 955 35,926,470.32 4.43
Hawaii................................... 2 59,327.10 0.01
Idaho.................................... 261 8,518,265.36 1.05
Illinois................................. 853 27,381,089.82 3.38
Indiana.................................. 598 19,023,697.95 2.35
Iowa..................................... 1,098 27,965,825.13 3.45
Kansas................................... 759 25,617,204.27 3.16
Kentucky................................. 518 13,593,237.53 1.68
Louisiana................................ 479 17,628,058.80 2.18
Maine.................................... 182 6,731,660.91 0.83
Maryland................................. 235 6,675,978.60 0.82
Massachusetts............................ 234 9,365,100.81 1.16
Michigan................................. 713 23,347,776.51 2.88
Minnesota................................ 1,059 30,906,219.53 3.81
Mississippi.............................. 513 20,440,555.36 2.52
Missouri................................. 791 21,529,093.64 2.66
Montana.................................. 327 9,702,200.87 1.20
Nebraska................................. 650 18,434,646.99 2.28
Nevada................................... 58 2,996,321.56 0.37
New Hampshire............................ 89 3,496,016.46 0.43
New Jersey............................... 202 6,805,435.12 0.84
New Mexico............................... 155 6,681,901.89 0.82
New York................................. 545 16,239,950.19 2.00
North Carolina........................... 1,373 38,585,942.44 4.76
North Dakota............................. 348 11,878,872.67 1.47
Ohio..................................... 827 25,935,998.21 3.20
Oklahoma................................. 460 14,789,505.94 1.83
Oregon................................... 727 21,769,293.88 2.69
Pennsylvania............................. 747 15,759,634.56 1.95
Rhode Island............................. 36 1,699,716.65 0.21
South Carolina........................... 343 9,713,576.47 1.20
South Dakota............................. 442 13,419,342.25 1.66
Tennessee................................ 562 13,778,067.57 1.70
Texas.................................... 1,937 52,568,722.08 6.49
Utah..................................... 182 6,078,680.50 0.75
Vermont.................................. 126 4,040,975.65 0.50
Virginia................................. 854 29,253,457.03 3.61
Washington............................... 619 23,233,915.50 2.87
West Virginia............................ 358 19,951,878.02 2.46
Wisconsin................................ 545 21,796,020.13 2.69
Wyoming.................................. 142 3,743,149.19 0.46
------ --------------- ------
Total.................................... 25,624 $810,198,096.58 100.00%
====== =============== ======
</TABLE>
- --------
(1) Based on billing addresses of Obligors.
S-14
<PAGE>
Delinquencies; Repossessions and Net Losses
Set forth below is certain information concerning JDCC's experience in the
United States pertaining to delinquencies and repossessions on JDCC's retail
agricultural and construction equipment receivables (including variable rate
receivables, fixed rate receivables and variable rate receivables that are
subject to an interest rate cap arrangement). The division of the Receivables
between agricultural and construction equipment differs from the division in
JDCC's entire portfolio. Delinquencies, repossessions and net losses on
agricultural and construction equipment receivables are affected by economic
conditions generally. In addition, delinquencies, repossessions and net losses
on agricultural equipment receivables may be affected by commodity market
prices, weather conditions such as flood, drought and early frost and the level
of farmers' income, while delinquencies, repossessions and net losses on
construction equipment receivables may be affected by the level of housing
starts and non-residential construction. Generally, when an account becomes 120
days delinquent, accrual of finance income is suspended, the collateral is
repossessed or the account is designated for litigation. There can be no
assurance that the delinquency, repossession and net loss experience on the
Receivables will be comparable to that set forth below.
DELINQUENCY EXPERIENCE
<TABLE>
<CAPTION>
At October 31, At January 31,
------------------------------------------------ ------------------
1994 1995 1996 1997 1998 1998 1999
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Number of Contracts:
Gross Portfolio........... 190,912 194,759 197,829 205,202 213,711 206,184 213,860
Period of Delinquency:
31-59 Days............... 2,285 2,826 2,959 2,541 2,949 4,109 4,299
60+ Days................. 2,102 2,722 4,178 3,632 3,849 4,548 5,156
-------- -------- -------- -------- -------- -------- --------
Total Delinquencies..... 4,387 5,548 7,137 6,173 6,798 8,657 9,455
======== ======== ======== ======== ======== ======== ========
Total Delinquencies as a
Percent of Gross
Portfolio................ 2.30% 2.85% 3.61% 3.01% 3.18% 4.20% 4.42%
<CAPTION>
Face Amount of Contracts(1): (Dollars in Millions)
<S> <C> <C> <C> <C> <C> <C> <C>
Gross Portfolio........... $4,114.2 $4,671.6 $4,885.2 $5,291.3 $5,582.2 $5,339.7 $5,581.2
Period of Delinquency:
31-59 Days............... $ 47.9 $ 64.5 $ 79.6 $ 75.9 $ 87.0 $ 114.1 $ 122.0
60+ Days................. 39.4 61.7 105.7 86.3 109.5 115.5 145.2
-------- -------- -------- -------- -------- -------- --------
Total Delinquencies..... $ 87.3 $ 126.2 $ 185.3 $ 162.2 $ 196.5 $ 229.6 $ 267.2
======== ======== ======== ======== ======== ======== ========
Total Delinquencies as a
Percent of Gross
Portfolio................ 2.12% 2.70% 3.79% 3.07% 3.52% 4.30% 4.79%
</TABLE>
- --------
(1) Face amounts and percentages are based on the gross amount of all unpaid
installments scheduled to be paid on each contract, including unearned
finance and other charges. The information in the table includes previously
sold contracts that continued to be serviced by Deere Credit Services.
S-15
<PAGE>
CREDIT LOSS/REPOSSESSION EXPERIENCE(1)
<TABLE>
<CAPTION>
Three Months Ended
Year Ended October 31, January 31,
------------------------------------------------ --------------------
1994 1995 1996 1997 1998 1998(5) 1999(5)
-------- -------- -------- -------- -------- --------- ---------
(Dollars in Millions)
<S> <C> <C> <C> <C> <C> <C> <C>
Total Agricultural and
Construction:
Average Gross Portfolio
Managed During the
Period(2)............. $3,892.4 $4,392.9 $4,778.4 $5,088.3 $5,436.7 $ 5,315.5 $ 5,581.7
Repossessions as a
Percentage of Average
Gross Portfolio
Managed(2)............ 0.86% 0.65% 0.85% 1.08% 1.08% 0.75% 0.86%
Net Losses as a
Percentage of Average
Gross Portfolio
Managed(3)(4)......... 0.15% 0.10% 0.14% 0.27% 0.27% 0.18% 0.27%
Net Losses as a
Percentage of
Liquidations(3)(4).... 0.26% 0.17% 0.21% 0.43% 0.43% 0.21% 0.30%
</TABLE>
- --------
(1) Except as indicated, all amounts and percentages are based on the gross
amount of all unpaid installments scheduled to be paid on each contract,
including unearned finance and other charges.
(2) Average Gross Portfolio Managed includes agricultural and construction
equipment retail notes owned by JDCC, other financial institutions and
securitization trusts. All such retail notes are serviced by Deere Credit
Services.
(3) Liquidations represent a reduction in the outstanding balances of the
contracts as a result of cash payments and charge-offs.
(4) Net Losses are equal to the aggregate net balances of all contracts that
are determined to be uncollectible less any recoveries (before giving
effect to any recoveries relating to Dealer reserves). Dealer reserves in
respect of the Receivables are not available to the Trust.
(5) Rates have been annualized. Annualized rates are not necessarily indicative
of experience for the year.
MATURITY AND PREPAYMENT CONSIDERATIONS
All of the Receivables are prepayable at any time. Each prepayment will
shorten the weighted average life of the Receivables and the weighted average
life of the Notes. (For this purpose, the term "prepayments" includes voluntary
prepayments, liquidations due to default, as well as receipts of proceeds from
insurance policies.) Weighted average life means the average amount of time in
which each dollar of principal is repaid. The rate of prepayments on the
Receivables may be influenced by a variety of economic, financial, climatic and
other factors. The amount of prepayments on agricultural equipment installment
sale and loan contracts similar to such Receivables has historically tended to
increase during periods in which farmers have strong cash flows. In addition,
under certain circumstances, JDCC is obligated to repurchase Receivables
pursuant to the Purchase Agreement, the Seller is obligated to repurchase
Receivables pursuant to the Sale and Servicing Agreement and the Servicer is
obligated pursuant to the Sale and Servicing Agreement to purchase Receivables.
See "Description of the Transfer and Servicing Agreements--Sale and Assignment
of Receivables" herein and "Description of the Transfer and Servicing
Agreements--Servicing Procedures" in the Prospectus. Any reinvestment risks
resulting from a faster or slower incidence of prepayment of Receivables than
is expected by a Noteholder will be borne entirely by such Noteholder. See also
"Description of the Notes--Optional Redemption" herein regarding the Servicer's
option to purchase the Receivables when the aggregate principal amount of the
Receivables is 10% or less of the aggregate principal balance of the
Receivables as of the Cutoff Date. Such purchase would result in the redemption
of the Notes that are outstanding.
Weighted Average Lives
The following information is given solely to illustrate the effect of
prepayments of the Receivables on the weighted average life of the Notes under
the stated assumptions and is not a prediction of the prepayment rate that
might actually be experienced by the Receivables.
S-16
<PAGE>
Prepayments on retail installment sale contracts can be measured relative to
a prepayment standard or model. The model used in this Prospectus Supplement is
based on a constant prepayment rate ("CPR"). CPR is determined by the
percentage of principal outstanding at the beginning of a period that prepays
during that period, stated as an annualized rate. The CPR prepayment model,
like any prepayment model, does not purport to be either an historical
description of prepayment experience or a prediction of the anticipated rate of
prepayment.
The tables on pages S-17 through S-20 have been prepared on the basis of
certain assumptions, including that: (a) all of the Receivables have an APR of
7.920%, (b) the initial Note Value is equal to $805,741,832.82, (c) the
Receivables prepay in full at the specified monthly CPR, with no repurchases,
(d) each scheduled payment on the Receivables is made on the last day of each
Collection Period, (e) distributions are made on each Payment Date in
accordance with the description set forth under "Description of the Transfer
and Servicing Agreements--Distributions," (f) the Closing Date is May 27, 1999
and (g) the Servicer exercises its option to purchase the Receivables on the
earliest permitted Payment Date. The tables indicate the projected weighted
average life of each class of Notes and set forth the percent of the initial
principal balance of each class of Notes that is projected to be outstanding
after each of the Payment Dates shown at various CPR percentages.
The information included in the following tables represents forward-looking
statements and involves risks and uncertainties that could cause actual results
to differ materially from those in the forward-looking statements. The actual
characteristics and performance of the Receivables will differ from the
assumptions used in constructing the tables on pages S-17 through S-20. The
assumptions used are hypothetical and have been provided only to give a general
sense of how the principal cash flows might behave under varying prepayment
scenarios. For example, it is highly unlikely that the Receivables will prepay
at a constant CPR until maturity or that all of the Receivables will prepay at
the same CPR. Moreover, the diverse terms of Receivables could produce slower
or faster principal distributions than indicated in the tables at the various
CPRs specified. Any difference between such assumptions and the actual
characteristics and performance of the Receivables will affect the percentages
of initial balances outstanding over time and the weighted average lives of the
Notes.
S-17
<PAGE>
Percentage of Initial Principal Amount of the Notes at Various CPR Percentages
<TABLE>
<CAPTION>
A-1 Notes A-2 Notes
------------------------ ------------------------
Payment Date 0% 13% 15% 17% 19% 0% 13% 15% 17% 19%
- ------------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Closing Date................ 100 100 100 100 100 100 100 100 100 100
June 1999................... 92 87 86 85 84 100 100 100 100 100
July 1999................... 83 74 72 71 69 100 100 100 100 100
August 1999................. 74 61 58 56 54 100 100 100 100 100
September 1999.............. 64 47 44 41 38 100 100 100 100 100
October 1999................ 54 33 30 26 22 100 100 100 100 100
November 1999............... 45 21 17 12 8 100 100 100 100 100
December 1999............... 33 6 1 0 0 100 100 100 98 94
January 2000................ 16 0 0 0 0 100 92 88 85 82
February 2000............... 0 0 0 0 0 100 81 77 73 70
March 2000.................. 0 0 0 0 0 94 70 66 62 59
April 2000.................. 0 0 0 0 0 86 60 56 52 48
May 2000.................... 0 0 0 0 0 80 53 49 45 41
June 2000................... 0 0 0 0 0 74 46 42 38 33
July 2000................... 0 0 0 0 0 69 40 35 31 26
August 2000................. 0 0 0 0 0 63 33 29 24 19
September 2000.............. 0 0 0 0 0 58 26 22 17 13
October 2000................ 0 0 0 0 0 52 20 15 10 6
November 2000............... 0 0 0 0 0 46 14 9 4 0
December 2000............... 0 0 0 0 0 39 6 2 0 0
January 2001................ 0 0 0 0 0 30 0 0 0 0
February 2001............... 0 0 0 0 0 21 0 0 0 0
March 2001.................. 0 0 0 0 0 12 0 0 0 0
April 2001.................. 0 0 0 0 0 4 0 0 0 0
May 2001.................... 0 0 0 0 0 0 0 0 0 0
June 2001................... 0 0 0 0 0 0 0 0 0 0
July 2001................... 0 0 0 0 0 0 0 0 0 0
August 2001................. 0 0 0 0 0 0 0 0 0 0
September 2001.............. 0 0 0 0 0 0 0 0 0 0
October 2001................ 0 0 0 0 0 0 0 0 0 0
November 2001............... 0 0 0 0 0 0 0 0 0 0
December 2001............... 0 0 0 0 0 0 0 0 0 0
January 2002................ 0 0 0 0 0 0 0 0 0 0
February 2002............... 0 0 0 0 0 0 0 0 0 0
March 2002.................. 0 0 0 0 0 0 0 0 0 0
April 2002.................. 0 0 0 0 0 0 0 0 0 0
May 2002.................... 0 0 0 0 0 0 0 0 0 0
June 2002................... 0 0 0 0 0 0 0 0 0 0
July 2002................... 0 0 0 0 0 0 0 0 0 0
August 2002................. 0 0 0 0 0 0 0 0 0 0
September 2002.............. 0 0 0 0 0 0 0 0 0 0
October 2002................ 0 0 0 0 0 0 0 0 0 0
November 2002............... 0 0 0 0 0 0 0 0 0 0
December 2002............... 0 0 0 0 0 0 0 0 0 0
January 2003................ 0 0 0 0 0 0 0 0 0 0
February 2003............... 0 0 0 0 0 0 0 0 0 0
March 2003.................. 0 0 0 0 0 0 0 0 0 0
April 2003.................. 0 0 0 0 0 0 0 0 0 0
May 2003.................... 0 0 0 0 0 0 0 0 0 0
Weighted Average Life
(years)(1)................. 0.43 0.32 0.31 0.29 0.28 1.41 1.08 1.04 1.00 0.96
</TABLE>
- --------
(1) The weighted average life of an A-1 Note or an A-2 Note is determined by:
(a) multiplying the amount of each principal payment on the applicable Note
by the number of years from the date of issuance of such Note to the
related Payment Date, (b) adding the results, and (c) dividing the sum by
the related initial principal amount of such Note.
This table has been prepared based on the assumptions described on page S-17
(including the assumptions regarding the characteristics and performance of the
Receivables, which will differ from the actual characteristics and performance
thereof) and should be read in conjunction therewith.
S-18
<PAGE>
Percentage of Initial Principal Amount of the Notes at Various CPR Percentages
<TABLE>
<CAPTION>
A-3 Notes A-4 Notes
------------------------ ------------------------
Payment Date 0% 13% 15% 17% 19% 0% 13% 15% 17% 19%
- ------------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Closing Date................ 100 100 100 100 100 100 100 100 100 100
June 1999................... 100 100 100 100 100 100 100 100 100 100
July 1999................... 100 100 100 100 100 100 100 100 100 100
August 1999................. 100 100 100 100 100 100 100 100 100 100
September 1999.............. 100 100 100 100 100 100 100 100 100 100
October 1999................ 100 100 100 100 100 100 100 100 100 100
November 1999............... 100 100 100 100 100 100 100 100 100 100
December 1999............... 100 100 100 100 100 100 100 100 100 100
January 2000................ 100 100 100 100 100 100 100 100 100 100
February 2000............... 100 100 100 100 100 100 100 100 100 100
March 2000.................. 100 100 100 100 100 100 100 100 100 100
April 2000.................. 100 100 100 100 100 100 100 100 100 100
May 2000.................... 100 100 100 100 100 100 100 100 100 100
June 2000................... 100 100 100 100 100 100 100 100 100 100
July 2000................... 100 100 100 100 100 100 100 100 100 100
August 2000................. 100 100 100 100 100 100 100 100 100 100
September 2000.............. 100 100 100 100 100 100 100 100 100 100
October 2000................ 100 100 100 100 100 100 100 100 100 100
November 2000............... 100 100 100 100 99 100 100 100 100 100
December 2000............... 100 100 100 96 89 100 100 100 100 100
January 2001................ 100 96 90 83 77 100 100 100 100 100
February 2001............... 100 84 78 71 65 100 100 100 100 100
March 2001.................. 100 73 66 60 54 100 100 100 100 100
April 2001.................. 100 62 56 50 44 100 100 100 100 100
May 2001.................... 98 55 49 43 37 100 100 100 100 100
June 2001................... 92 49 43 37 31 100 100 100 100 100
July 2001................... 86 43 37 31 25 100 100 100 100 100
August 2001................. 79 37 31 25 20 100 100 100 100 100
September 2001.............. 73 31 25 19 14 100 100 100 100 100
October 2001................ 66 24 19 13 8 100 100 100 100 100
November 2001............... 60 19 14 8 3 100 100 100 100 100
December 2001............... 52 13 8 2 0 100 100 100 100 97
January 2002................ 41 4 0 0 0 100 100 99 93 87
February 2002............... 31 0 0 0 0 100 95 89 83 78
March 2002.................. 21 0 0 0 0 100 85 80 74 70
April 2002.................. 12 0 0 0 0 100 77 72 67 62
May 2002.................... 7 0 0 0 0 100 72 67 62 58
June 2002................... 3 0 0 0 0 100 68 63 59 54
July 2002................... 0 0 0 0 0 100 64 59 55 0
August 2002................. 0 0 0 0 0 95 60 56 0 0
September 2002.............. 0 0 0 0 0 90 56 0 0 0
October 2002................ 0 0 0 0 0 84 52 0 0 0
November 2002............... 0 0 0 0 0 80 0 0 0 0
December 2002............... 0 0 0 0 0 75 0 0 0 0
January 2003................ 0 0 0 0 0 65 0 0 0 0
February 2003............... 0 0 0 0 0 56 0 0 0 0
March 2003.................. 0 0 0 0 0 0 0 0 0 0
April 2003.................. 0 0 0 0 0 0 0 0 0 0
May 2003.................... 0 0 0 0 0 0 0 0 0 0
Weighted Average Life
(years)(1)................. 2.57 2.13 2.06 2.00 1.94 3.67 3.24 3.12 3.05 2.97
</TABLE>
S-19
<PAGE>
- --------
(1) The weighted average life of an A-3 Note or an A-4 Note is determined by:
(a) multiplying the amount of each principal payment on the applicable Note
by the number of years from the date of issuance of such Note to the
related Payment Date, (b) adding the results, and (c) dividing the sum by
the related initial principal amount of such Note.
This table has been prepared based on the assumptions described on page S-17
(including the assumptions regarding the characteristics and performance of the
Receivables, which will differ from the actual characteristics and performance
thereof) and should be read in conjunction therewith.
THE SELLER AND THE SERVICER
John Deere Receivables, Inc.
Information about the Seller is set forth under "The Seller, Deere and the
Servicer" in the Prospectus.
John Deere Capital Corporation
At January 31, 1999, JDCC and its subsidiaries had 1155 full- and part-time
employees. At January 31, 1999, receivables and leases administered by the
Company, which includes retail notes sold, were $8.656 billion. Additional
information about JDCC is set forth under "The Seller, Deere and the Servicer"
in the Prospectus.
Year 2000 Compliance. Deere has established a global program to address the
inability of certain computer and infrastructure systems to process dates in
the Year 2000 and later. The major assessment areas include business
information systems, mainframe and personal computers, software, the
distributed network, the shop floor, facilities systems, Deere's products,
product research and development facilities, and the readiness of Deere's
suppliers and distribution network. The program includes the following phases:
identification and assessment, business criticality analysis, project work
prioritization, compliance plan development, remediation and testing,
production implementation, and contingency plan development for mission
critical systems.
Deere is on schedule to become Year 2000 ready with its mission critical
activities and systems, allowing substantial time for further testing,
verification and the final conversion of less important systems. Over 95
percent of Deere's systems (which include the systems of JDCC and Deere Credit
Services) identified as being mission critical have been tested and verified as
being Year 2000 compliant. Deere's goal remains to have all remaining mission
critical and non-mission critical systems compliant by October 31, 1999, and
the progress to date makes this goal realistic. Deere has initiated information
and infrastructure systems modifications in its effort to ensure that both
information technology (IT) and non-IT systems are compliant. Deere is
requiring suppliers of new software or equipment and third parties who develop
or modify software to provide written certification that their products are
Year 2000 compliant and have been tested accordingly. In some instances, Deere
is independently testing the software. Deere is also working with suppliers to
confirm embedded systems are compliant and perform the necessary testing.
Deere is assessing the Year 2000 readiness of its product suppliers and
dealers, raising awareness among its supply base by sponsoring seminars and
developing contingency plans for its mission critical suppliers. Deere has
surveyed its major suppliers and is following up as appropriate with risk
assessment and prioritization based on mission criticality. Date testing is in
process with many suppliers. A survey of Deere's dealers is also in process and
readiness progress will be assessed throughout 1999. A dealer communications
team has been established to provide dealers with pertinent information,
possible areas of investigation and follow-up on dealers' readiness.
S-20
<PAGE>
The total cost of the modifications and upgrades to date has not been
material and the future costs to become Year 2000 ready are not expected to be
material. These costs are expensed as incurred and do not include the cost of
scheduled replacement software. Other major systems projects have not been
deferred due to the Year 2000 compliance projects.
Although no assurances can be given as to Deere's readiness, particularly as
it relates to third parties, based upon the progress to date, Deere does not
expect the consequences of any of its unanticipated or unsuccessful
modifications to have a material adverse effect on its financial position or
results of operations. However, the failure to correct a material Year 2000
problem could result in the interruption of certain normal business activities
and operations. With respect to the servicing of the Receivables, such a
failure could affect the Servicer's ability to collect the Receivables and
therefore could affect the Trust's ability to make timely payments on the Notes
in the amounts required under the Indenture and the Sale and Servicing
Agreement.
DESCRIPTION OF THE NOTES
General
The Notes will be issued pursuant to the Indenture. A copy of the Indenture
will be filed with the Securities and Exchange Commission following the
issuance of the Securities. The following summary describes certain terms of
the Notes and the Indenture. The summary does not purport to be complete and is
qualified in its entirety by reference to the provisions of the Notes and the
Indenture. The following summary supplements, and to the extent inconsistent
therewith replaces, the description of the general terms and provisions of the
Notes of any given series and the related Indenture set forth in the
Prospectus. The Bank of New York, a New York banking corporation, will be the
Indenture Trustee under the Indenture.
Payments of Interest
The per annum interest rate (the "Interest Rate") for each class of Notes is
as follows:
<TABLE>
<CAPTION>
Interest Rate
(per annum)
-------------
<S> <C>
Class A-1 Notes................................................ 4.9988%
Class A-2 Notes................................................ 5.466%
Class A-3 Notes................................................ 5.94%
Class A-4 Notes................................................ 6.12%
Class B Notes.................................................. 6.10%
</TABLE>
A "Payment Date" will be the 15th day of each month or, if any such date is
not a Business Day, the next succeeding Business Day, commencing June 15, 1999.
Interest on the A-1 Notes will also be payable on June 19, 2000 if the A-1
Notes have not been paid in full prior to that time. Interest on the A-1 Notes
and the A-2 Notes will accrue from and including the Closing Date or from and
including the most recent Payment Date to which interest has been paid to but
excluding the current Payment Date. Interest on the A-1 Notes and A-2 Notes
will be calculated on the basis of the actual number of days occurring in the
period for which such interest is payable divided by 360. Interest on the A-3
Notes, A-4 Notes and Class B Notes will accrue from and including the 15th day
of each month (or the Closing Date in the case of the first Payment Date) to
and including the 14th day of the next month and will be calculated on the
basis of a 360-day year consisting of twelve 30-day months. Interest accrued as
of any Payment Date but not paid on such Payment Date will be due on the next
Payment Date together with interest on such amount at the related Interest
Rate. Interest payments on the Notes will generally be derived from (i) the
Total Distribution Amount remaining after the payment of the Servicing Fee and
the Administration Fee and (ii) amounts in the Reserve Account. See
"Description of the Transfer and Servicing Agreements--Distributions" and "--
Reserve Account" herein. Interest will not be paid on the Class B Notes on any
Payment Date until all interest due on the Class A Notes on that Payment Date
has been paid. If the available funds are not sufficient to pay the amount of
interest payable on the Class A Notes on any Payment Date, the Class A
Noteholders will receive their ratable share (based upon the total amount of
interest due on each class of Class A Notes) of the amount available to be
distributed in respect of interest on the Class A Notes.
S-21
<PAGE>
Payments of Principal
Principal payments will be made to the A-1 Noteholders on each Payment Date
in an amount equal to the Note Principal Distributable Amount until the
principal balance of the A-1 Notes is reduced to zero. The Note Principal
Distributable Amount is described under "Description of the Transfer and
Servicing Agreements--Distributions". While the A-1 Notes are outstanding,
unscheduled payments of principal on the Receivables will, subject to certain
limitations, be paid on the Class B Notes and the Certificates on account of
principal. After the A-1 Notes have been paid in full, principal payments will
be paid on the remaining Class A Notes, the Class B Notes and the Certificates
such that the resulting principal balance of the Class B Notes does not exceed
4% of the Note Value of the outstanding Receivables and the resulting principal
balance of the Certificates does not exceed 1.50% of the Note Value of the
outstanding Receivables. The principal payments made on the remaining Class A
Notes will be applied sequentially--i.e., on the A-2 Notes until all of the A-2
Notes have been paid in full, then on the A-3 Notes until all of the A-3 Notes
have been paid in full and then on the A-4 Notes until all of the A-4 Notes
have been paid in full. See "Description of the Transfer and Servicing
Agreements--Distributions--Payments on the Notes" for additional details on
such calculations. Principal will also be payable on the A-1 Notes on June 19,
2000 if the A-1 Notes have not been paid in full prior to such date.
The principal amount of each class of Notes, to the extent not previously
paid, will be payable in full on the Payment Date in the month specified below:
<TABLE>
<CAPTION>
Class of Notes Final Payment Date
-------------- ------------------
<S> <C>
A-1 June 19, 2000
A-2 August 15, 2001
A-3 October 15, 2002
A-4 October 17, 2005
</TABLE>
Following an Event of Default and acceleration of the Notes (or if any class
of Notes remains outstanding, on or after the Final Payment Date for that
class), principal payments (including such amounts representing any unscheduled
principal payments and principal proceeds from the sale of the Receivables in
connection with an Event of Default as described in the Prospectus under the
heading "Description of Notes--The Indenture--Events of Default; Rights upon
Event of Default") will be made ratably to the Class A Noteholders until the
principal balance of the Class A Notes is reduced to zero and then to the Class
B Noteholder until the principal balance of the Class B Notes is reduced to
zero.
Optional Redemption. The Servicer has the right to purchase the remaining
Receivables on a Payment Date when the aggregate principal balance of the
Receivables becomes equal to or less than 10% of the aggregate principal
balance of the Receivables as of the Cutoff Date. If the Servicer exercises
this right, the Notes outstanding at that time will be redeemed in full at a
price equal to their unpaid principal balance plus accrued and unpaid interest.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain terms of the Sale and Servicing
Agreement pursuant to which the Trust is purchasing and the Servicer is
undertaking to service, or cause the Sub-Servicer to service, the Receivables;
the Purchase Agreement pursuant to which the Seller is purchasing the
Receivables; the administration agreement between the Trust and JDCC (the
"Administration Agreement") pursuant to which JDCC, as the administrator (the
"Administrator"), will undertake certain administrative duties with respect to
the Trust; and the Trust Agreement pursuant to which the Trust will be created
and the Certificates will be issued (collectively, the "Transfer and Servicing
Agreements"). A copy of each of the Transfer and Servicing Agreements will be
filed with the Securities and Exchange Commission following the issuance of the
Notes. This summary does not purport to be complete and is subject to, and
qualified in its entirety by reference to, the provisions of the Transfer and
Servicing Agreements. The following summary supplements and, to the extent
inconsistent therewith, replaces the description set forth under the heading
"Description of the Transfer and Servicing Agreements" in the Prospectus.
S-22
<PAGE>
Sale and Assignment of Receivables
Certain information with respect to the conveyance on the Closing Date of the
Receivables from JDCC to the Seller pursuant to the Purchase Agreement and from
the Seller to the Trust pursuant to the Sale and Servicing Agreement is set
forth under "Description of the Transfer and Servicing Agreements--Sale and
Assignment of Receivables" in the Prospectus.
Accounts
In addition to the Accounts referred to in the Prospectus under "Description
of Transfer and Servicing Agreements--Accounts", the Servicer will also
establish and maintain at the office of the Indenture Trustee the Reserve
Account in the name of the Indenture Trustee on behalf of the Noteholders and
the Certificateholder.
Servicing Compensation
The Servicer will be entitled to receive the Servicing Fee for each
Collection Period in an amount equal to 1% per annum of the aggregate principal
balance of the Receivables as of the first day of such Collection Period. The
Servicing Fee will be paid prior to any payment to the Noteholders and prior to
payment of the Administration Fee. See "Description of the Transfer and
Servicing Agreements--Servicing Compensation" in the Prospectus.
Distributions
Deposits to Collection Account. By the third business day prior to a Payment
Date (each a "Determination Date"), the Servicer will provide (or cause to be
provided) to the Indenture Trustee certain information with respect to the
related Collection Period, including the amount of aggregate collections on the
Receivables and the aggregate Purchase Amount of Receivables to be repurchased
by the Seller or to be purchased by the Servicer. A "Collection Period" for a
Payment Date is a fiscal month, specified in the Sale and Servicing Agreement,
that will end prior to that Payment Date.
On or before each Payment Date, the Servicer will cause the Total
Distribution Amount to be deposited into the Collection Account. The "Total
Distribution Amount" for a Payment Date shall be the aggregate collections
(including any Liquidation Proceeds) in respect of the Receivables during the
related Collection Period plus net investment earnings on short-term
investments of such collections during such Collection Period. The Total
Distribution Amount on any Payment Date shall exclude all payments and proceeds
(including Liquidation Proceeds) of (i) any Receivables for which a Purchase
Amount has been included in the Total Distribution Amount in a prior Collection
Period and (ii) any Liquidated Receivable after the reassignment of such
Liquidated Receivable by the Trust to the Seller.
"Liquidated Receivables" means defaulted Receivables in respect of which the
Financed Equipment has been sold or otherwise disposed of and "Liquidation
Proceeds" means all proceeds of the Liquidated Receivables, net of expenses
incurred by the Servicer in connection with such liquidation and any amounts
required by law to be remitted to the Obligor on such Liquidated Receivables.
Deposits to the Distribution Accounts. On the second business day prior to
each Payment Date, the Servicer shall instruct the Indenture Trustee to make
deposits and distributions for receipt by the Servicer or Administrator or for
deposit in the applicable Trust Account on the following Payment Date.
Distributions of the Total Distribution Amount shall be made in the following
order of priority to the extent of the Total Distribution Amount remaining
after application pursuant to the prior clause or clauses:
(i) to the Servicer, the Servicing Fee and all unpaid Servicing Fees from
prior Collection Periods;
(ii) to the Administrator, the Administration Fee and all unpaid
Administration Fees from prior Collection Periods;
S-23
<PAGE>
(iii) to the Note Distribution Account, accrued and unpaid interest on
the Notes;
(iv) to the Note Distribution Account, the Note Principal Distributable
Amount;
(v) to the Reserve Account, the amount, if any, required to be deposited
into the Reserve Account;.
(vi) to the Certificate Distribution Account, accrued and unpaid
interest, if any, on the Certificates;
(vii) to the Certificate Distribution Account, the Certificate Monthly
Principal Distributable Amount; and
(viii) any remaining amounts to the Trust for distribution to the Seller.
The "Principal Distributable Amount" for any Payment Date will be the sum of
(i) the Principal Distribution Amount and (ii) the Principal Carryover
Shortfall. The "Principal Distribution Amount" for a Payment Date will be equal
to the Note Value at the beginning of the related Collection Period less the
Note Value at the end of that Collection Period. The "Principal Carryover
Shortfall" for a Payment Date will be the excess of (i) the Principal
Distributable Amount for the preceding Payment Date over (ii) the amount that
was actually deposited into the Note Distribution Account and the Certificate
Distribution Account on account of principal on such preceding Payment Date.
The "Note Principal Distributable Amount" for any Payment Date will be the
sum of (i) the Class A Monthly Principal Distributable Amount (defined below)
and (ii) the Class B Monthly Principal Distributable Amount (defined below).
The "Note Value," as of any calculation date, will be the present value of
the scheduled and unpaid payments on the Receivables discounted at the
Effective Yield. For purposes of calculating Note Value, in the event of a
defaulted Receivable, (a) prior to repossession of the Financed Equipment
securing such defaulted Receivable, the scheduled payments on such Receivable
will be computed based on the amounts that would have been the scheduled
payments had such default not occurred, (b) after the time at which the
Financed Equipment securing such defaulted Receivable has been repossessed, but
prior to liquidation of such defaulted Receivable, the principal balance of
such defaulted Receivable shall be added to such Note Value, but there shall be
deemed to be no scheduled payments due on such defaulted Receivable and (c)
after liquidation of such defaulted Receivable there shall be deemed to be no
scheduled payments due on such Receivable. As a result of the calculations
described in the preceding sentence, as of the end of any Collection Period,
the Note Value of the Receivables, to the extent it relates to a defaulted
Receivable, will be reduced only after liquidation of any defaulted Receivable.
The "Effective Yield" is 7.920%, which is the weighted average APR of the
Receivables as of the Cutoff Date adjusted to reflect a monthly yield.
Amounts deposited into the Certificate Distribution Account will be
distributed to the Certificateholder, which will be the Seller, and will not be
available to make payments on the Notes.
Payments on the Notes. On each Payment Date, all amounts on deposit in the
Note Distribution Account (other than investment earnings, if any, on amounts
in the Note Distribution Account) will be distributed to the Noteholders in the
following order of priority:
(i) accrued and unpaid interest on the outstanding principal balance of
each class of Class A Notes at the applicable Interest Rate;
(ii) accrued and unpaid interest on the outstanding principal balance of
the Class B Notes at the Interest Rate for the Class B Notes;
(iii) the Class A Monthly Principal Distributable Amount in the following
order of priority:
(a) to the A-1 Noteholders until the principal balance of the A-1
Notes is reduced to zero;
(b) to the A-2 Noteholders until the principal balance of the A-2
notes is reduced to zero;
S-24
<PAGE>
(c) to the A-3 Noteholders until the principal balance of the A-3
Notes is reduced to zero; and
(d) to the A-4 Noteholders until the principal balance of the A-4
Notes is reduced to zero; and
(iv) the Class B Monthly Principal Distributable Amount to the Class B
Noteholder, which will be the Seller, until the principal balance of the
Class B Notes is reduced to zero.
The "Class A Monthly Principal Distributable Amount" for any Payment Date
will be the Principal Distributable Amount less the sum of (i) the Class B
Monthly Principal Distributable Amount and (ii) the Certificate Monthly
Principal Distributable Amount; provided that the Class A Monthly Principal
Distributable Amount will not exceed the outstanding principal balance of the
Class A Notes; provided further that on the Final Payment Date for each class
of Class A Notes, the Class A Monthly Principal Distributable Amount will at
least equal the outstanding principal balance of such class of Class A Notes.
The "Class B Monthly Principal Distributable Amount" for any Payment Date
will be the sum of (a) the Class B Adjusted Principal Distributable Amount and
(b) the Class B Principal Carryover Shortfall; provided that the Class B
Monthly Principal Distributable Amount will not exceed the outstanding
principal balance of the Class B Notes; provided further that on the Final
Payment Date for the Class B Notes, the Class B Monthly Principal Distributable
Amount will include the amount necessary to reduce the principal balance of the
Class B Notes to zero.
The "Class B Adjusted Principal Distributable Amount" for any Payment Date
will be an amount equal to the excess, if any, of (a) the outstanding principal
balance of the Class B Notes (before giving effect to payments on that Payment
Date) less any Class B Principal Carryover Shortfall over (b) the Class B
Percentage of the Note Value as of the end of the related Collection Period;
provided that if on such Payment Date any principal of A-1 Notes remains
outstanding, then the Class B Adjusted Principal Distributable Amount will not
exceed an amount equal to the aggregate unscheduled principal payments on the
Receivables received during that Collection Period. Notwithstanding the above,
on and after the Payment Date on which the principal balance of the Class A
Notes is reduced to zero, the Class B Adjusted Principal Distributable Amount
will be the Principal Distributable Amount less the sum of (i) the amount, if
any, necessary to reduce the aggregate principal balances of the Class A Notes
to zero and (ii) the Certificate Monthly Principal Distributable Amount.
The "Class B Principal Carryover Shortfall" for any Payment Date will be the
excess of (a) the Class B Monthly Principal Distributable Amount for the
preceding Payment Date over (b) the amount of principal actually paid to the
Class B Noteholders on such preceding Payment Date.
The "Class B Percentage" will be 4%.
The "Certificate Adjusted Principal Distributable Amount" for any Payment
Date will be an amount equal to the excess, if any, of (a) the outstanding
principal amount of the Certificates (before giving effect to payments on that
Payment Date) less any Certificate Principal Carryover Shortfall over (b) the
Certificate Percentage of the outstanding Note Value as of the end of the
related Collection Period; provided that if on such Payment Date any principal
of the Class A-1 Notes remains outstanding, the Certificate Adjusted Principal
Distributable Amount will not exceed an amount equal to the aggregate
unscheduled principal payments on the Receivables received during that
Collection Period less the Class B Adjusted Principal Distributable Amount.
The "Certificate Monthly Principal Distributable Amount" will be the sum of
(a) the Certificate Adjusted Principal Distributable Amount and (b) the
Certificate Principal Carryover Shortfall; provided that the Certificate
Monthly Principal Distributable Amount shall not exceed the outstanding
principal balance of the Certificates.
The "Certificate Principal Carryover Shortfall" for any Payment Date will be
the excess of (a) the Certificate Monthly Principal Distributable Amount for
the preceding Payment Date over (b) the amount of principal actually paid to
the Certificateholders on such preceding Payment Date.
The "Certificate Percentage" will be 1.50%.
S-25
<PAGE>
Reserve Account
The Certificateholder will not receive any distributions on any Payment Date
until all amounts payable on the Notes on that Payment Date have been paid. The
protection against losses on the Receivables afforded to the Noteholders will
be effected both by this subordination of the Certificates and by the
establishment of the Reserve Account. The Reserve Account will be created with
the initial deposit by the Seller on the Closing Date of $16,114,837 (equal to
2.00% of initial Note Value), and will be augmented on each Payment Date, by
deposit therein of the amount specified in clause (v) under "--Distributions--
Deposits to the Distribution Accounts" above. Amounts on deposit in the Reserve
Account will be released to the Seller to the extent that the amount on deposit
in the Reserve Account exceeds the Specified Reserve Account Balance.
"Specified Reserve Account Balance" with respect to any Payment Date, means
the greater of (a) 2.00% of the Note Value as of the close of business on the
last day of the related Collection Period and (b) 1.75% of initial Note Value
provided that the Specified Reserve Account Balance shall not exceed the
outstanding principal amount of the Notes immediately preceding such Payment
Date less the Principal Distribution Amount to be deposited in the Note
Distribution Account on such Payment Date, and upon payment of all of the
interest and principal due on the Notes the Specified Reserve Account Balance
shall be zero. Any decrease in the Specified Reserve Account Balance is subject
to satisfaction of certain loss and delinquency tests specified in the Sale and
Serving Agreement.
Amounts held from time to time in the Reserve Account will continue to be
held for the benefit of Noteholders. Funds will be withdrawn from cash in the
Reserve Account to the extent that the Total Distribution Amount (after the
payment of the Servicing Fee and the Administration Fee) with respect to any
Collection Period is less than the amount of principal and interest payable on
the Notes on the related Payment Date and will be deposited in the Note
Distribution Account.
The Specified Reserve Account Balance may be reduced, or the definition
otherwise modified, without the consent of the Noteholders, provided that the
Rating Agencies confirm in writing that such reduction or modification will not
result in a reduction or withdrawal of the then current rating of any class of
the Notes.
The subordination of the Certificates and the Class B Notes and the
availability of funds in the Reserve Account is intended to enhance the
likelihood of receipt by Class A Noteholders of the full amount of principal
and interest due them and to decrease the likelihood that the Class A
Noteholders will experience losses. However, in certain circumstances, the
Reserve Account could be depleted and losses on the Receivables could exceed
the aggregate principal balance of the Certificates and the Class B Notes.
FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of material federal income tax considerations
relevant to the purchase, ownership and disposition of the Class A Notes. This
summary does not purport to deal with all aspects of federal income taxation
that may be relevant to holders of the Class A Notes in light of their specific
investment circumstances, nor to certain types of holders subject to special
treatment under the federal income tax laws (for example, banks, life insurance
companies, dealers in securities and tax-exempt organizations). This discussion
is based upon current provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), the Treasury regulations (proposed, temporary and final)
promulgated thereunder, judicial decisions and Internal Revenue Service ("IRS")
rulings, all of which are subject to change, which change may be retroactively
applied in a manner that could adversely affect a holder of one or more of the
Class A Notes. The information below is directed to investors that will hold
the Class A Notes as capital assets (generally, property held for investment)
within the meaning of Section 1221 of the Code.
S-26
<PAGE>
Prospective investors are advised to consult their own tax advisors with
regard to the federal income tax consequences of purchasing, holding and
disposing of the Class A Notes, as well as the tax consequences arising under
the laws of any state, foreign country or other jurisdiction. The Trust will be
provided with an opinion of Shearman & Sterling, special federal tax counsel of
the Trust ("Federal Tax Counsel") regarding certain federal income tax matters
discussed below. The Trust has not sought, nor does it intend to seek, a ruling
from the IRS that its position as reflected in the discussion below will be
accepted by the IRS.
Tax Classification of the Trust
Federal Tax Counsel will advise the Trust that, based upon the terms of the
Trust Agreement and related documents and transactions as described in the
Prospectus and this Prospectus Supplement (and assuming ongoing compliance with
such agreement and documents), the Trust will not be classified as a separate
association (or as a publicly traded partnership) taxable as a corporation for
federal income tax purposes. This advice will be based upon the assumption that
the terms of the Trust Agreement and related documents will be complied with
and upon the conclusion that the nature of the income of the Trust will exempt
it from the rule that certain publicly traded partnerships are taxable as
corporations. Further, under current Treasury regulations, a business entity
such as the Trust with a single owner will be disregarded as an entity separate
from its owner for U.S. federal income tax purposes unless the entity elects to
be classified as an association. Thus, since the Seller retains the Class B
Notes and the Certificates and so long as the Class A Notes are respected as
indebtedness, the Trust will be disregarded as an entity separate from the
Seller for those purposes because the Seller is the sole owner of the Trust and
the Trust will not elect to be an association. The Trust Agreement also
provides that if the Trust has more than one owner, the Trust will elect to be
treated as a partnership.
Prospective investors should be aware that opinions of counsel are not
binding on the IRS. If the Trust were taxable as a separate corporation for
federal income tax purposes, the Trust would be subject to corporate income tax
on its income from the Receivables, possibly reduced by its interest expense on
the Class A Notes unless recharacterized as equity. Any such corporate income
tax could materially reduce the amount of cash available to make payments on
the Class A Notes.
Tax Considerations for Noteholders
Treatment of Notes as Indebtedness. The Seller will agree, and the
Noteholders will agree by their purchase of the Class A Notes, to treat the
Class A Notes as indebtedness for U.S. federal income tax purposes. Federal Tax
Counsel will advise the Trust that, based upon the terms of the Class A Notes
and the documents and transactions relating thereto as described in the
Prospectus and this Prospectus Supplement, the Class A Notes will be classified
as debt for federal income tax purposes. Except as otherwise noted below under
"Possible Alternative Treatments of Notes," the remainder of this discussion
assumes, in accordance with the opinion of Federal Tax Counsel, the Class A
Notes would be treated as debt for federal income tax purposes.
Interest Income on the Notes. Subject to the discussion below and except with
respect to Short-Term Notes (as defined below), stated interest on the Class A
Notes will be taxable to a Noteholder as ordinary income when received or
accrued in accordance with such Noteholder's method of tax accounting. Under
Treasury regulations relating to the tax treatment of debt instruments issued
with original issue discount (the "OID Regulations"), a Class A Note will be
treated as issued with original issue discount ("OID") if the excess of the
stated redemption price at maturity of the Class A Note over the issue price of
the Class A Note exceeds a de minimis amount, that is, an amount that is less
than 1/4 of one percent of the stated redemption price at maturity of the Class
A Note multiplied by its weighted average maturity. Generally, the issue price
of a Class A Note is the first price at which a substantial amount of the Class
A Notes comprising the issue of which that Class A Note is included is sold to
purchasers other than bond houses, brokers or similar persons or organizations
acting in the capacity of underwriters, placement agents or wholesalers. Under
the OID Regulations, the stated redemption price at maturity of a Class A Note
is the sum of all payments provided by the Class A Note other than qualified
stated interest, which is stated interest that is unconditionally payable in
S-27
<PAGE>
cash at least annually at a single fixed rate. For this purpose, interest is
unconditionally payable only if reasonable remedies exist to compel timely
payment or the debt instrument otherwise provides terms and conditions that
make the likelihood of late payment or nonpayment a remote contingency. The
Trust and the Seller will take the position that, except with respect to Short-
Term Notes, stated interest on the Class A Notes represents qualified stated
interest and is not included in the stated redemption price at maturity of the
Class A Notes or taxed to holders as OID. This position is based on the view
that the likelihood of late payment or nonpayment of interest on the Class A
Notes because of limitations on the monthly payment of interest as a result of
insufficient funds is remote.
It is expected that, except as described below, the Class A Notes will not be
issued with OID if, as anticipated, the Class A Notes will be sold to the
public at a first price of par or at a first price representing a de minimis
discount from their principal amount. Under the OID Regulations, a holder of a
Class A Note issued with a de minimis amount of OID must include such discount
in income as gain, on a pro rata basis, as principal payments are made on the
Class A Note.
If one or more of the classes of Class A Notes are issued with OID in excess
of a de minimis amount, a holder of such a Class A Note (including a cash basis
holder) generally would be required to include the OID on the Class A Note in
income under the accrual method. Further in the case of a debt instrument, the
principal on which is subject to prepayment as a result of prepayments on the
underlying collateral, OID is computed by taking into account the anticipated
rate of prepayments assumed in pricing the debt instrument.
Short-Term Notes. A holder of a Class A Note that has a fixed maturity date
of not more than one year from the issue date of such Class A Note (a "Short-
Term Note") may be subject to special rules. Under the OID Regulations, all
stated interest on a Short-Term Note will be treated as OID. An accrual basis
holder of a Short-Term Note (and certain cash method holders, including
regulated investment companies, as set forth in section 1281 of the Code)
generally would be required to report interest income as interest accrues on a
straight-line basis over the term of each interest period. Other cash basis
holders of a Short-Term Note would in general, be required to report interest
income as interest is paid (or, if earlier, upon the taxable disposition of the
Short-Term Note). However, a cash basis holder of a Short-Term Note reporting
interest income as it is paid may be required to defer a portion of any
interest expense otherwise deductible on indebtedness incurred to purchase or
carry the Short-Term Note until the taxable disposition of the Short-Term Note.
A cash basis taxpayer may elect to accrue interest income on all nongovernment
debt obligations with a term of one year or less, in which case the taxpayer
would include interest on the Short-Term Note in income as it accrues, but
would not be subject to the interest expense deferral rule referred to in the
preceding sentence. Certain special rules apply if a Short-Term Note is
purchased for more or less than its principal amount.
Market Discount and Premium. A holder who purchases a Class A Note with a
fixed maturity date of more than one year from its issue date at a market
discount (generally, at a cost less than its remaining principal amount or
remaining stated redemption price at maturity) that exceeds a statutorily
defined de minimis amount will be subject to the "market discount" rules of the
Code. These rules provide, in part, that gain on the sale or other disposition
of a debt instrument with a term of more than one year and partial principal
payments on such a debt instrument are treated as ordinary income to the extent
of accrued market discount not previously included in income. The market
discount rules also provide for deferral of interest deductions with respect to
debt incurred to purchase or carry a Class A Note that has market discount. A
holder who purchases a Class A Note at a premium (generally, at a cost in
excess of its remaining principal or remaining stated redemption price at
maturity) may elect to amortize such premium as an offset to interest income
under the premium amortization rules of the Code.
Sale or Other Disposition. If a Noteholder sells a Class A Note, such holder
will recognize gain or loss in an amount equal to the difference between the
amount realized on the sale and the holder's adjusted tax basis in the Class A
Note. The adjusted tax basis of a Class A Note to a particular Noteholder will
equal the holder's cost for the Class A Note, increased by any market discount
or original issue discount previously included by such Noteholder in income
with respect to the Class A Note and decreased by the amount of bond
S-28
<PAGE>
premium (if any) previously amortized and by the amount of principal payments
previously received by such Noteholder with respect to such Class A Note. Any
such gain or loss will be capital gain or loss if the Class A Note was held as
a capital asset, except for gain attributable to accrued interest or accrued
market discount not previously included in income. Further, in the case of
Class A Notes that are Short-Term Notes, a portion of the gain recognized on
the sale may also be treated as ordinary income if the Noteholder acquired the
Note at a discount. Capital losses generally may be used only to offset capital
gains.
Foreign Holders. If interest paid (or accrued) to a Noteholder who is a
nonresident alien, foreign corporation or other non-United States person (a
"foreign person") is not effectively connected with the conduct of a trade or
business within the United States by the foreign person, the interest generally
will be considered "portfolio interest", and generally will not be subject to
United States federal income tax and withholding tax provided the foreign
person (i) is not actually or constructively a "10% shareholder" of the Trust
or the Seller or a "controlled foreign corporation" with respect to which the
Trust or the Seller is a "related person" within the meaning of the Code and
(ii) provides the person otherwise required to withhold U.S. tax an appropriate
statement, signed under penalties of perjury, certifying that the beneficial
owner of the Class A Note is a foreign person and providing the foreign
person's name and address. The statement may be made on a Form W-8 or W-8BEN or
substantially similar substitute form by the person who owns the Class A Note
and, if the information provided in the statement changes, the foreign person
must so inform the person otherwise required to withhold U.S. tax within 30
days of such change. The statement generally must be provided in the year a
payment occurs or in either of the two preceding years. If a Class A Note is
held through a securities clearing organization or certain other financial
institutions, the organization or institution may provide a signed statement to
the withholding agent. However, in that case, the signed statement must be
accompanied by a Form W-8 or W-8BEN or substitute form provided by the foreign
person that owns the Class A Note. If interest on a Class A Note paid to a
foreign person is not portfolio interest, then it will be subject to United
States federal income and withholding tax at a rate of 30%, unless reduced or
eliminated pursuant to an applicable tax treaty.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a Class A Note by a foreign person will be exempt from
United States federal income and withholding tax, provided that (i) the gain is
not effectively connected with the conduct of a trade or business in the United
States by the foreign person and (ii) in the case of an individual foreign
person, the foreign person is not present in the United States for 183 days or
more in the taxable year or certain other conditions are not met.
If the interest, gain or income on a Class A Note held by a foreign person is
effectively connected with the conduct of a trade or business in the United
States by the foreign person (although exempt from the withholding tax
previously discussed if the holder provides an appropriate statement), the
holder generally will be subject to United States federal income tax on the
interest, gain or income at regular federal income tax rates. In addition, if
the foreign person is a foreign corporation, it may be subject to a branch
profits tax on its "effectively connected earnings and profits" within the
meaning of the Code for the taxable year, as adjusted for certain items, at a
30% rate (or a lower rate under an applicable tax treaty).
Information Reporting and Backup Withholding. The Trust will be required to
report to the IRS, and to each Noteholder of record, the amount of interest
paid on the Class A Notes (and the amount of interest withheld for federal
income taxes, if any) for each calendar year, except as to exempt holders
(generally, holders that are corporations, tax-exempt organizations, qualified
pension and profit-sharing trusts, individual retirement accounts, or
nonresident aliens who provide certification as to their status as
nonresidents). Accordingly, each holder (other than exempt holders who are not
subject to the reporting requirements) will be required to provide, under
penalties of perjury, a certificate containing the holder's name, address,
correct federal taxpayer identification number and a statement that the holder
is not subject to backup withholding. Should a nonexempt Noteholder fail to
provide the required certification, the Trust will be required to withhold 31%
of the amount of interest otherwise payable to the holder, and remit the
withheld amount to the IRS as a credit against the holder's federal income tax
liability.
S-29
<PAGE>
New Withholding Regulations. Recently, the Treasury Department issued new
regulations (the "New Regulations") that modify the certification requirements
for the portfolio interest exception described above and make certain changes
to the back-up withholding and information reporting rules. The New
Regulations, in general, do not significantly alter the substantive withholding
and information reporting rules but rather attempt to unify certification
procedures and forms and clarify reliance standards, and are generally
effective for payments made after December 31, 2000. It is possible that
withholding agents may request new withholding exemption forms from holders in
order to qualify for continued exemption from withholding when the New
Regulations become effective. Holders should consult their own tax advisors to
determine the effects of the application of the New Regulations to their
particular circumstances.
Possible Alternative Treatments of Notes. If, contrary to the opinion of
Federal Tax Counsel, the IRS successfully asserted that one or more series of
the Class A Notes did not represent debt for federal income tax purposes these
Class A Notes might be treated as equity interests in the Trust. If so treated,
the Trust might be treated as a publicly traded partnership taxable as a
corporation with its income subject to corporate tax and other potentially
adverse tax consequences (and the publicly traded partnership taxable as a
corporation would not be able to reduce its taxable income by deductions for
interest expense on Notes recharacterized as equity). Alternatively, the more
likely in the view of Federal Tax Counsel, the Trust would be treated as a
publicly traded partnership that would not be taxable as a corporation because
the Trust would meet certain qualifying income tests. Nonetheless, treatment of
the Class A Notes as equity interests in such a partnership could have adverse
tax consequences to certain holders of the Class A Notes. For example, income
to certain tax-exempt entities (including pension funds) would be "unrelated
business taxable income", income to foreign holders generally would be subject
to U.S. tax and U.S. tax return filing and withholding requirements and
individual holders might be subject to certain limitations on their ability to
deduct their share of Trust expenses. The Trust Agreement and related documents
provide that, in the event the Class A Notes are not treated as debt, then the
Noteholders, Seller and the Servicer agree to treat the Trust as a partnership.
CERTAIN IOWA TAX CONSIDERATIONS
The following is a discussion of certain Iowa state tax considerations. Lane
& Waterman of Davenport, Iowa has acted as special Iowa tax counsel for the
Trust regarding certain state tax matters discussed below. There are no
reported cases or rulings on similar transactions by the Iowa Department of
Revenue and Finance ("IDOR"). Thus, the opinion of counsel is based upon
present provisions of Iowa statutes and the regulations promulgated thereunder,
all of which are subject to change (which change may be retroactive) and
further interpretation by the IDOR. No ruling on any of the issues discussed
below will be sought from the IDOR.
Notes
Assuming the Notes will be treated as debt for federal income tax purposes,
the Notes will be treated as debt for Iowa income tax purposes. Accordingly,
Noteholders not otherwise subject to taxation in Iowa should not become subject
to taxation in Iowa solely because of a holder's ownership of Notes. However, a
Noteholder already subject to Iowa's individual or corporate income tax could
be required to pay additional Iowa tax as a result of the Noteholder's
ownership or disposition of Notes.
The Trust
The activities to be undertaken by the Sub-Servicer in servicing and
collecting the receivables will take place in Iowa. The State of Iowa imposes a
state individual income tax and a corporate income tax which is imposed on
corporations and other entities doing business in the State of Iowa.
If the arrangement created by the Trust is disregarded or treated as a
partnership (not taxable as a corporation) for federal income tax purposes, in
the opinion of Lane & Waterman, the same treatment should also apply for Iowa
tax purposes. In either case, the Trust should not be subject to income
taxation in Iowa.
S-30
<PAGE>
If the Certificates are instead treated as ownership interests in an
association taxable as a corporation or a "publicly traded partnership" taxable
as a corporation, then the hypothetical entity should not be subject to Iowa
income tax because of its activities in Iowa.
Because each state's income tax laws vary, it is impossible to predict the
income tax consequences to the holders of Notes in all of the state taxing
jurisdictions in which they are already subject to tax. Noteholders are urged
to consult their own advisors with respect to state income and franchise taxes.
THE FEDERAL AND STATE INCOME TAX DISCUSSIONS SET FORTH ABOVE ARE INCLUDED FOR
GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A
NOTEHOLDER'S PARTICULAR TAX SITUATION. PROSPECTIVE PURCHASERS SHOULD CONSULT
THEIR TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE
PURCHASE, OWNERSHIP AND DISPOSITION OF THE CLASS A NOTES, INCLUDING THE TAX
CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE
EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
imposes certain duties on persons who are fiduciaries of pension, profit-
sharing or other employee benefit plans subject to ERISA (each, an "ERISA
Plan"), including the requirements of investment prudence and diversification
and the requirement that an ERISA Plan's investments be made in accordance with
the documents governing the ERISA Plan. Under ERISA, any person that exercises
any authority or control respecting the management or disposition of the assets
of an ERISA Plan is considered to be a fiduciary of such plan. In addition,
ERISA and the Code prohibit an ERISA Plan that is subject to Title I of ERISA
or a "plan," as defined in, and subject to, Section 4975 of the Code, including
an individual retirement account (each, a "Plan"), from engaging in certain
transactions with persons that are "parties in interest," as defined in ERISA,
or "disqualified persons," as defined in the Code, with respect to the Plan,
subject to certain exemptions that may be applicable. A violation of these
"prohibited transaction" rules may generate excise tax and other liabilities
under ERISA and the Code.
Plan fiduciaries must determine whether the acquisition and holding of the
Class A Notes would result in a prohibited transaction under ERISA or the Code.
In making this determination, the fiduciary of a Plan that is a prospective
purchaser of the Class A Notes should determine whether the Seller, an
underwriter, the Indenture Trustee, the Owner Trustee or any of their
affiliates is a "party in interest" or a "disqualified person" with respect to
such Plan.
Certain employee benefit plans, such as governmental plans, are not subject
to the restrictions of ERISA, and the assets of such plans may be invested in
the Class A Notes without regard to the ERISA considerations described above.
The investment in the Class A Notes by such employee benefit plans may,
however, be subject to other applicable federal, state and local laws, which
should be carefully considered by such employee benefit plans before investing
in the Class A Notes.
EVERY PLAN AND GOVERNMENT PLAN CONSIDERING THE ACQUISITION OF THE CLASS A
NOTES SHOULD CONSULT WITH ITS COUNSEL WITH RESPECT TO THE POTENTIAL
APPLICABILITY OF ERISA, SECTION 4975 OF THE CODE AND ANY OTHER LAWS RELEVANT TO
SUCH INVESTMENT.
S-31
<PAGE>
UNDERWRITING
Under the terms and subject to the conditions set forth in an underwriting
agreement dated May 20, 1999, the Seller has agreed to cause the Trust to sell
to the underwriters named below, for whom Credit Suisse First Boston
Corporation is acting as representative, the following respective principal
amounts of the Class A Notes:
<TABLE>
<CAPTION>
Principal Principal Principal Principal
Amount of Amount of Amount of Amount of
Underwriters A-1 Notes A-2 Notes A-3 Notes A-4 Notes
- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Credit Suisse First Boston
Corporation.............. $ 58,555,000 $ 91,700,000 $ 65,100,000 $ 51,143,750
Banc of America Securities
LLC...................... 21,749,000 34,060,000 24,180,000 18,996,250
Chase Securities Inc...... 21,749,000 34,060,000 24,180,000 18,996,250
Goldman, Sachs & Co. ..... 21,749,000 34,060,000 24,180,000 18,996,250
J.P. Morgan Securities
Inc. .................... 21,749,000 34,060,000 24,180,000 18,996,250
Salomon Smith Barney
Inc. .................... 21,749,000 34,060,000 24,180,000 18,996,250
------------ ------------ ------------ ------------
$167,300,000 $262,000,000 $186,000,000 $146,125,000
============ ============ ============ ============
</TABLE>
The underwriting agreement provides that the underwriters are obligated to
purchase all of the Class A Notes if any are purchased. The underwriting
agreement provides that if an underwriter defaults, the purchase commitments of
non-defaulting underwriters may be increased or the offering of the Class A
Notes may be terminated. The underwriters propose initially to offer the A-1
Notes, the A-2 Notes, the A-3 Notes and the A-4 Notes to the public at the
respective prices on the cover page of this prospectus supplement and to
selling group members at that price less a concession not in excess of 0.065%
per A-1 Note, 0.0825% per A-2 Note, 0.120% per A-3 Note and 0.165% per A-4
Note. The underwriters and selling group members may allow a discount not in
excess of 0.04% per A-1 Note, 0.05% per A-2 Note, 0.0875% per A-3 Note and
0.11% per A-4 Note on sales to other broker/dealers. After the initial public
offering, the public offering price and concession and discount to
broker/dealers may be changed.
The Seller estimates that its out of pocket expenses for this offering will
be approximately $935,000. The Underwriters have agreed with the Seller to pay
certain expenses incurred in connection with the issuance and distribution of
the Notes.
The Class A Notes are a new issue of securities with no established trading
market. One or more of the underwriters intends to make a secondary market for
the Class A Notes. However, they are not obligated to do so and may discontinue
making a secondary market for the Class A Notes at any time without notice. No
assurance can be given as to how liquid the trading market for the Class A
Notes will be.
The Seller and JDCC have agreed to indemnify the underwriters against
liabilities under the Securities Act, or contribute to payments that the
underwriters may be required to make in that respect.
In the ordinary course of their respective business, the underwriters and
their respective affiliates have engaged and may in the future engage in
investment banking or commercial banking transactions with JDCC and its
affiliates.
The representative, on behalf of the underwriters, may engage in stabilizing
transactions, syndicate covering transactions and penalty bids in accordance
with Rule 104 of Regulation M under the Securities Exchange Act of 1934.
Stabilizing transactions permit bids to purchase the underlying security so
long as the stabilizing bids do not exceed a specified maximum. Syndicate
covering transactions involve purchases of the Class A Notes in the open market
after the distribution has been completed in order to cover syndicate short
positions. Penalty bids permit the representative to reclaim a selling
concession from a syndicate member when the Class A Notes originally sold by
such syndicate member are purchased in a syndicate covering transaction to
cover syndicate short positions. Such stabilizing transactions, syndicate
covering transactions and penalty bids may cause the price of the Class A Notes
to be higher than it would otherwise be in the absence of such transactions.
These transactions, if commenced, may be discontinued at any time.
S-32
<PAGE>
LEGAL OPINIONS
In addition to the legal opinions described in the Prospectus, certain legal
matters relating to the Notes and the Certificates will be passed upon for the
Trust, the Seller and the Servicer by Shearman & Sterling, New York, New York
and by Richards, Layton & Finger, Wilmington, Delaware, and for the
underwriters by Brown & Wood LLP, New York, New York. Certain federal income
tax and other matters will be passed upon for the Trust by Shearman & Sterling,
and certain Iowa state income tax and other matters will be passed upon for the
Trust by Lane & Waterman, Davenport, Iowa.
S-33
<PAGE>
INDEX OF TERMS
Set forth below is a list of the defined terms used in this Prospectus
Supplement and the pages on which the definitions of such terms may be found
herein.
<TABLE>
<CAPTION>
Page
----
<S> <C>
Administration Agreement................................................... S-22
Administrator.............................................................. S-22
APR........................................................................ S-11
Certificate Adjusted Principal Distributable Amount........................ S-25
Certificate Monthly Principal Distributable Amount......................... S-25
Certificate Percentage..................................................... S-25
Certificate Principal Carryover Shortfall.................................. S-25
Certificates............................................................... S-10
Class A Monthly Principal Distributable Amount............................. S-25
Class A Notes.............................................................. S-10
Class B Adjusted Principal Distributable Amount............................ S-25
Class B Monthly Principal Distributable Amount............................. S-25
Class B Notes.............................................................. S-10
Class B Percentage......................................................... S-25
Class B Principal Carryover Shortfall...................................... S-25
Code....................................................................... S-26
Collection Period.......................................................... S-23
CPR........................................................................ S-17
Cutoff Date................................................................ S-11
Dealers.................................................................... S-11
Deere...................................................................... S-11
Deere Credit Services...................................................... S-10
Determination Date......................................................... S-23
Effective Yield............................................................ S-24
ERISA...................................................................... S-31
ERISA Plan................................................................. S-31
Federal Tax Counsel........................................................ S-27
Financed Equipment......................................................... S-10
foreign person............................................................. S-29
IDOR....................................................................... S-30
Indenture Trustee.......................................................... S-4
Interest Rate.............................................................. S-21
IRS........................................................................ S-26
Issuer..................................................................... S-10
JDCC....................................................................... S-11
Liquidated Receivables..................................................... S-23
Liquidation Proceeds....................................................... S-23
New Regulations............................................................ S-30
Note Principal Distributable Amount........................................ S-24
Note Value................................................................. S-24
Notes...................................................................... S-10
Obligors................................................................... S-10
OID........................................................................ S-27
OID Regulations............................................................ S-27
Owner Trustee.............................................................. S-4
Payment Date............................................................... S-21
Plan....................................................................... S-31
</TABLE>
S-34
<PAGE>
<TABLE>
<S> <C>
prepayments........................................................... S-16
Principal Carryover Shortfall......................................... S-24
Principal Distributable Amount........................................ S-24
Principal Distribution Amount......................................... S-24
Purchase Agreement.................................................... S-11
Receivables........................................................... S-11
Sale and Servicing Agreement.......................................... S-10
Sales Companies....................................................... S-11
Seller................................................................ S-4
Servicer.............................................................. S-4
Short-Term Note....................................................... S-28
Specified Reserve Account Balance..................................... S-26
Sub-Servicer.......................................................... S-10
Total Distribution Amount............................................. S-23
Transfer and Servicing Agreements..................................... S-22
Trust................................................................. S-4, S-10
Trust Agreement....................................................... S-10
</TABLE>
S-35
<PAGE>
PROSPECTUS
JOHN DEERE OWNER TRUSTS
Asset Backed Notes
Asset Backed Certificates
----------------
JOHN DEERE RECEIVABLES, INC., Seller
JOHN DEERE CAPITAL CORPORATION, Servicer
The Asset Backed Notes (the "Notes") and the Asset Backed Certificates (the
"Certificates" and, together with the Notes, the "Securities") described
herein 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 relating to either the Notes or the Certificates or both, as
the case may be, to this Prospectus (each, a "Prospectus Supplement"). Each
series of Securities, which will include one or more classes of Notes and one
or more classes of Certificates, will be issued either by a trust to be formed
with respect to such series (each, a "Trust") or by Deere Receivables
Corporation ("DRC") (each an "Issuer") as described in the relevant Prospectus
Supplement. See "Certain Tax Considerations" Each Trust will be formed
pursuant to a Trust Agreement to be entered into between John Deere
Receivables, Inc., as Seller (the "Seller"), and the trustee specified in the
related Prospectus Supplement (the "Owner Trustee"). The Notes of each series
will be issued and secured pursuant to an Indenture between the related Issuer
and the indenture trustee specified in the related Prospectus Supplement (the
"Indenture Trustee") and will represent indebtedness of such Issuer. The
Certificates of each series will represent fractional undivided interests in
the related trust. The property of each Issuer will include a pool of
agricultural and construction equipment retail installment sale and loan
contracts (the "Receivables") purchased by such Issuer from the Seller on or
prior to the date of issuance by such Issuer of the related Securities, as
described herein and in the related Prospectus Supplement. If so provided in
the related Prospectus Supplement, additional Receivables may be purchased by
the relevant Issuer from the Seller during the term of the Notes.
Except as otherwise provided in the related Prospectus Supplement, each
class of Securities of any series will represent the right to receive a
specified amount of payments of principal and interest, at the rates, on the
dates and in the manner described herein and in the related Prospectus
Supplement. The right of each class of Securities to receive payments may be
senior or subordinate to the rights of one or more of the other classes of
such series. Distributions on Certificates of a series may be subordinated in
priority to payments due on the related Notes to the extent described herein
and in the related Prospectus Supplement. A series may also include one or
more classes of Notes or Certificates which differ as to the timing and
priority of payment, interest rate or amount of distributions in respect of
principal or interest or both. A series may also include one or more classes
of Notes or Certificates entitled to distributions in respect of principal
with disproportionate, nominal or no interest distributions, or to interest
distributions, with disproportionate, nominal or no distributions in respect
of principal. The rate of payment in respect of principal of the Notes and
distributions in respect of the Certificate Balance of the Certificates 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 and
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.
Prospective investors should consider the factors set forth under "Risk
Factors" starting on page 12 herein and in the related Prospectus Supplement.
Retain this Prospectus for future reference. This Prospectus may not be used
to consummate sales of Securities unless accompanied by a Prospectus
Supplement.
----------------
THE NOTES OF A GIVEN SERIES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES
OF SUCH SERIES REPRESENT BENEFICIAL INTERESTS IN, THE RELATED ISSUER ONLY
AND DO NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF JOHN DEERE
RECEIVABLES, INC., JOHN DEERE CAPITAL CORPORATION, DEERE & COMPANY
OR ANY OF THEIR RESPECTIVE AFFILIATES. NEITHER THE SECURITIES NOR
THE RECEIVABLES ARE ISSUED OR GUARANTEED BY ANY GOVERNMENTAL
AGENCY.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
----------------
The date of this Prospectus is May 20, 1999
<PAGE>
AVAILABLE INFORMATION
The Seller, as originator of each Trust and DRC, 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 Notes and Certificates 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, 14th Floor, Chicago, Illinois 60661 and Seven World Trade Center, 13th
Floor, New York, New York 10048. 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. The Commission
maintains a web site at http://www.sec.gov. that contains reports and other
documents filed by registrants electronically with the Commission.
Until 90 days after the date of any Prospectus Supplement, all dealers
effecting transactions in the Notes or the Certificates, whether or not
participating in the related 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
underwriters and with respect to their unsold allotments or subscriptions.
Upon receipt of a request by an investor who has received an electronic
Prospectus Supplement and Prospectus from an Underwriter or a request by such
investor's representative within the period during which there is an obligation
to deliver a Prospectus Supplement and Prospectus, the Seller or the
Underwriters will promptly deliver, or cause to be delivered, without charge,
to such investor a paper copy of the Prospectus Supplement and Prospectus.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents subsequently filed by the Servicer on behalf of the Issuer
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 such
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
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.
The Servicer on behalf of any Issuer 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: John Deere
Capital Corporation, Suite 600, First Interstate Bank Building, 1 East First
Street, Reno, Nevada 89501, Attention: Manager (702) 786-5527.
2
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
AVAILABLE INFORMATION...................................................... 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................ 2
SUMMARY OF TERMS........................................................... 4
RISK FACTORS............................................................... 12
THE TRUSTS................................................................. 14
The Owner Trustee........................................................ 15
THE TRUST PROPERTY......................................................... 15
THE RECEIVABLES POOL....................................................... 16
Delinquencies, Repossessions, and Net Losses............................. 16
Maturity and Prepayment Considerations................................... 16
POOL FACTORS AND TRADING INFORMATION....................................... 17
USE OF PROCEEDS............................................................ 17
THE SELLER, DEERE AND THE SERVICER......................................... 17
John Deere Receivables, Inc.............................................. 17
Deere Receivables Corporation............................................ 18
Deere & Company.......................................................... 18
John Deere Capital Corporation........................................... 19
DESCRIPTION OF THE NOTES................................................... 19
General.................................................................. 19
Principal and Interest on the Notes...................................... 20
Revolving Period and Related Matters..................................... 21
The Indenture............................................................ 21
DESCRIPTION OF THE CERTIFICATES............................................ 24
General.................................................................. 24
Distributions of Principal and Interest.................................. 24
CERTAIN INFORMATION REGARDING THE SECURITIES............................... 25
Fixed Rate Securities.................................................... 25
Floating Rate Securities................................................. 25
Indexed Securities....................................................... 25
Book-Entry Registration.................................................. 26
Definitive Notes......................................................... 29
Reports to Securityholders............................................... 29
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS....................... 30
Sale and Assignment of Receivables....................................... 30
Accounts................................................................. 31
Servicing Procedures..................................................... 32
Payments on Receivables.................................................. 33
Servicing Compensation................................................... 33
Distributions............................................................ 33
Credit and Cash Flow Enhancement......................................... 34
Reserve Account.......................................................... 35
Net Deposits............................................................. 35
Early Amortization Events................................................ 35
Statements to Indenture Trustees and Trust............................... 35
Evidence as to Compliance................................................ 36
Certain Matters Regarding the Servicer................................... 36
Servicer Default......................................................... 36
Rights upon Servicer Default............................................. 37
Waiver of Past Defaults.................................................. 37
Amendment................................................................ 37
Payment of Notes......................................................... 38
Termination.............................................................. 38
Administration Agreement................................................. 39
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES................................... 39
Security Interest in Equipment........................................... 39
Repossession............................................................. 40
Notice of Sale; Redemption Rights........................................ 41
Deficiency Judgments and Excess Proceeds................................. 41
Other.................................................................... 41
CERTAIN TAX CONSIDERATIONS................................................. 42
ERISA CONSIDERATIONS....................................................... 42
PLAN OF DISTRIBUTION....................................................... 42
LEGAL OPINIONS............................................................. 43
INDEX OF TERMS............................................................. 44
</TABLE>
3
<PAGE>
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". In the event that Securities are not issued by a Trust but are instead
issued by DRC, the terms of the Securities will be described in the relevant
prospectus supplement. See "Certain Tax Considerations"
Issuer....................... With respect to each series of Securities,
the Trust to be formed pursuant to a trust
agreement (a "Trust Agreement") between the
Seller and the Owner Trustee for such Trust
(the "Trust" or the "Issuer").
Seller....................... John Deere Receivables, Inc. (the "Seller").
Servicer..................... John Deere Capital Corporation (the
"Servicer" or "JDCC"). The Servicer will
designate Deere Credit Services, Inc.
("Deere Credit Services"), an indirect
wholly-owned subsidiary of Deere & Company,
as its agent to service the Receivables (in
such capacity, the "Sub-Servicer") at the
Servicer's expense.
Indenture Trustee............ With respect to each series of Securities,
the Indenture Trustee specified in the
related Prospectus Supplement.
Owner Trustee................ With respect to each series of Securities,
the Owner Trustee specified in the related
Prospectus Supplement.
The Notes.................... Each series of Securities will include one or
more classes of Notes, which will be issued
pursuant to an indenture between the related
Trust and the Indenture Trustee (as amended
and supplemented from time to time, an
"Indenture").
Unless otherwise specified in the related
Prospectus Supplement, Notes will be
available for purchase in denominations of
$1,000 and integral multiples thereof in
book-entry form only. Unless otherwise
specified in the related Prospectus
Supplement, holders of Notes (the
"Noteholders") will not be entitled to
receive Definitive Notes except in the event
that Definitive Notes are issued in the
limited circumstances described herein or in
the related Prospectus Supplement. See
"Certain Information Regarding the
Securities--Definitive Notes".
Unless otherwise specified in the related
Prospectus Supplement, each class of Notes
will have a stated principal amount and will
bear interest at a specified rate or rates
(with respect to each class of Notes, the
"Interest Rate"). Each class of Notes may
have a different Interest Rate, which may be
a fixed, variable or adjustable Interest
Rate, or any combination of the foregoing.
The related Prospectus Supplement will
specify the Interest Rate for each class of
Notes, or the method for determining the
Interest Rate.
4
<PAGE>
With respect to a series that includes two or
more classes of Notes, each class may differ
as to the timing and priority of payments,
seniority, Interest Rate or amount of
payments of principal or interest in respect
of any such class or classes. In addition,
payments of principal or interest in respect
of any such class or classes may or may not
be made upon the occurrence of specified
events or on the basis of collections from
designated portions of the Receivables.
Further, a series may include one or more
classes of Notes ("Strip Notes") entitled to
(i) principal payments with
disproportionate, nominal or no interest
payments or (ii) interest payments with
disproportionate, nominal or no principal
payments.
If the Servicer exercises its option to
purchase the Receivables of a Trust, or, if
not, and if and to the extent provided in
the related Prospectus Supplement,
satisfactory bids for the purchase of such
Receivables are received, in the manner and
on the respective terms and conditions
described under "Description of the Transfer
and Servicing Agreements--Termination", the
outstanding Notes will be redeemed as set
forth in the related Prospectus Supplement.
The Certificates............. Each series of Securities will include one or
more classes of Certificates, which will be
issued pursuant to a Trust Agreement.
Unless otherwise specified in the related
Prospectus Supplement, Certificates will be
available for purchase in denominations of
$100,000 and integral multiples of $100,000
in excess thereof. Unless otherwise
specified in the related Prospectus
Supplement, the Certificates will be issued
in fully registered, certificated form
("Definitive Certificates") to the holders
of Certificates ("Certificateholders" and,
together with the Noteholders, the
"Securityholders") or their nominees.
Unless otherwise specified in the related
Prospectus Supplement, each class of
Certificates will have a stated Certificate
Balance specified in the related Prospectus
Supplement (the "Certificate Balance") and
will accrue interest on such Certificate
Balance at a specified rate (with respect to
each class of Certificates, the "Pass-
Through Rate"). Each class of Certificates
may have a different Pass-Through Rate,
which may be a fixed, variable or adjustable
Pass-Through Rate, or any combination of the
foregoing. The related Prospectus Supplement
will specify the Pass-Through Rate for each
class of Certificates or the method for
determining the Pass-Through Rate.
With respect to a series that includes two or
more classes of Certificates, each class may
differ as to timing and priority of
distributions, seniority, allocations of
losses, Pass-Through Rates or amount of
distributions in respect of principal or
5
<PAGE>
interest. In addition, distributions in
respect of principal or interest in respect
of any such class or classes may or may not
be made upon the occurrence of specified
events or on the basis of collections from
designated portions of the Receivables in
such Trust. Further, a series may include
one or more classes of Certificates ("Strip
Certificates") entitled to (i) distributions
in respect of principal with
disproportionate, nominal or no interest
distributions or (ii) interest distributions
with disproportionate, nominal or no
distributions in respect of principal.
To the extent specified in the related
Prospectus Supplement, distributions in
respect of the Certificates may be
subordinated in priority of payment to
payments on the Notes.
If the Servicer exercises its option to
purchase the Receivables of a Trust, or, if
not, and if and to the extent provided in
the related Prospectus Supplement,
satisfactory bids for the purchase of such
Receivables are received, in the manner and
on the respective terms and conditions
described under "Description of the Transfer
and Servicing Agreements--Termination",
Certificateholders will receive as a
prepayment an amount in respect of the
Certificates as specified in the related
Prospectus Supplement.
Trust Property............... The Trust Property of each Trust will consist
of the property described below:
A. Receivables........... Each Trust will purchase from the Seller a
pool of Receivables. The Receivables will
consist of agricultural and construction
equipment retail installment sale and loan
contracts secured by new and used
agricultural equipment and construction
equipment, including rights to receive
certain payments made with respect to such
Receivables, and security interests in the
equipment financed thereby (the "Financed
Equipment"), the proceeds thereof and the
proceeds of any repossessed Financed
Equipment related to such pool of
Receivables. On or prior to the Closing Date
specified in the related Prospectus
Supplement with respect to a Trust, the
Seller will purchase Receivables having an
aggregate principal balance specified in the
related Prospectus Supplement as of a date
specified therein (the "Cut-off Date"), from
JDCC pursuant to a Purchase Agreement (each,
a "Purchase Agreement"), between JDCC and
the Seller, and the Seller will sell such
Receivables to such Trust pursuant to a Sale
and Servicing Agreement (each, a "Sale and
Servicing Agreement") among the Seller, the
Servicer and such Trust. If so provided in
the related Prospectus Supplement, under
certain circumstances, Receivables may be
added to the related pool of Receivables in
respect of the related Trust.
The Receivables arose from financing provided
in connection with retail sales by dealers
(the "Dealers") of new
6
<PAGE>
and used agricultural equipment and
construction equipment to retail purchasers
(the "Obligors") and are either originated,
or acquired from such Dealers, by Deere &
Company, a Delaware corporation ("Deere"),
and its wholly-owned subsidiaries
(collectively called "John Deere"). The
Receivables will be purchased by JDCC
pursuant to agreements with certain John
Deere companies. The Receivables sold to a
Trust will be selected from the contracts
owned by JDCC based on the criteria
specified in the applicable Purchase
Agreement and described herein or in the
related Prospectus Supplement.
B. Credit and Cash Flow
Enhancement...........
If and to the extent specified in the related
Prospectus Supplement, credit enhancement
with respect to a Trust or any class or
classes of Securities may include any one or
more of the following: subordination of one
or more other classes of Securities, Reserve
Accounts, overcollateralization, letters of
credit, credit or liquidity facilities,
surety bonds, guaranteed investment
contracts, swaps or other interest rate
protection agreements, repurchase
obligations, other agreements with respect
to third party payments or other support,
cash deposits or other arrangements.
Unless otherwise specified in the related
Prospectus Supplement, any form of credit
enhancement will have certain limitations
and exclusions from coverage thereunder
which will be described in the related
Prospectus Supplement.
C. Reserve Account....... If so specified in the related Prospectus
Supplement, a Reserve Account will be
created for each Trust with an initial
deposit by the Seller of cash or Eligible
Investments having a value equal to the
amount specified in the related Prospectus
Supplement. The amount initially deposited
in the Reserve Account is referred to as the
"Reserve Account Initial Deposit". To the
extent specified in the related Prospectus
Supplement, the Reserve Account Initial
Deposit will be augmented on each Payment
Date (as defined in the related Prospectus
Supplement) by the deposit in the Reserve
Account of amounts remaining after making
all other distributions required on such
day. Amounts in the Reserve Account will be
available to cover shortfalls in amounts due
to the holders of those classes of
Securities specified in the related
Prospectus Supplement in the manner and
under the circumstances specified therein.
The related Prospectus Supplement will also
specify to whom and the manner and
circumstances under which amounts on deposit
in the Reserve Account (after giving effect
to all other required distributions to be
made by the applicable Trust) in excess of
the Specified Reserve Account Balance (as
defined in the related Prospectus
Supplement) will be distributed. (See
"Description of the Transfer and Servicing
Agreements--Reserve Account".)
7
<PAGE>
D. Collection Account.... With respect to each Trust, unless the
related Prospectus Supplement provides
otherwise, the Sub-Servicer will be required
to remit collections received with respect
to the Receivables during the collection
period specified in the related Prospectus
Supplement (each, a "Collection Period") to
an account in the name of the applicable
Indenture Trustee (each, a "Collection
Account") within two Business Days of
receipt thereof as described herein and in
the related Prospectus Supplement, except
under certain conditions described herein
and in the related Prospectus Supplement.
Pursuant to the applicable Sale and
Servicing Agreement, the Servicer will have
the revocable power to instruct the
applicable Indenture Trustee to withdraw
funds on deposit in the Collection Account
and to apply such funds on each Payment Date
in the manner specified in the related
Prospectus Supplement.
E. Transfer and
Servicing
Agreements............ With respect to each Trust, the Seller will
purchase the related Receivables described
therein from JDCC pursuant to a Purchase
Agreement and the Seller will sell such
Receivables to the Trust pursuant to a Sale
and Servicing Agreement. In addition, the
Servicer will agree with the Trust to be
responsible for servicing, managing,
maintaining custody of and making
collections on such Receivables. The rights
and benefits of the Seller under such
Purchase Agreement and of such Trust under
the Sale and Servicing Agreement will be
assigned to the Indenture Trustee as
collateral for the Notes of the related
series. The obligations of the Seller and
the Servicer under such Transfer and
Servicing Agreements include those specified
below and in the related Prospectus
Supplement.
Unless otherwise provided in the related
Prospectus Supplement, the Seller will be
obligated to repurchase any Receivable if
the interest of the applicable Trust therein
is materially adversely affected by a breach
of any representation or warranty made by
the Seller or JDCC with respect to such
Receivable, if the breach has not been cured
following the discovery by or notice to the
Seller of the breach. JDCC will be obligated
to repurchase the Receivable from the Seller
pursuant to the related Purchase Agreement
contemporaneously with the Seller's
repurchase from the applicable Trust. The
obligation of the Seller to repurchase any
Receivable with respect to which JDCC has
breached a representation or warranty is
subject to JDCC's repurchase of such
Receivable.
Unless otherwise provided in the related
Prospectus Supplement, consistent with its
normal procedures, the Sub-Servicer may, in
its discretion, arrange with the Obligor on
a Receivable to extend or modify the payment
schedule. Some of such arrangements may
result in the Servicer purchasing the
Receivable for the Purchase Amount.
8
<PAGE>
Unless otherwise specified in the related
Prospectus Supplement, the Servicer shall be
entitled to receive a fee for servicing the
Receivables of each Trust equal to a
specified percentage of the aggregate
principal balance of such Receivables, as
set forth in the related Prospectus
Supplement. See "Description of the Transfer
and Servicing Agreements--Servicing
Compensation" herein and in the related
Prospectus Supplement.
Additional Receivables,
Revolving Period,
Etc..................... To the extent specified in the related
Prospectus Supplement, the relevant Trust
may purchase, under certain circumstances,
additional Receivables from the Seller
during the Revolving Period. The "Revolving
Period" for such Trust will be the period
beginning on the related Cut-Off Date and
ending on the earlier of (a) the
commencement of an "Early Amortization
Period" (as specified in such Prospectus
Supplement) and (b) the date specified as
the "Scheduled Revolving Period Termination
Date" in the related Prospectus Supplement.
See the related Prospectus Supplement for a
discussion of certain events that might lead
to the early termination of the Revolving
Period and, in certain limited
circumstances, the recommencement of the
Revolving Period. Unless otherwise provided
in the related Prospectus Supplement, no
payments of principal will be made on the
Notes and no amounts will be set aside for
such purpose prior to the Wind Down Period
or the Early Amortization Period (in each
case, as more fully described in the related
Prospectus Supplement).
Unless an Early Amortization Period has
commenced, the "Wind Down Period" with
respect to such Trust will begin on the day
following the related Scheduled Revolving
Period Termination Date and will continue
until the earlier of (a) the commencement of
an Early Amortization Period and (b) the
date on which all related Securities have
been paid in full with respect to such
Trust. During the Wind Down Period, certain
amounts (to the extent specified in the
related Prospectus Supplement) will be set
aside for payments of principal on the Notes
and for distributions with respect to the
Certificate Balance, and such payments and
distributions will be made, to the extent
described in the related Prospectus
Supplement.
To the extent specified in the related
Prospectus Supplement with respect to a
Trust, an Early Amortization Period will
commence upon the occurrence of an "Early
Amortization Event" (as described in the
related Prospectus Supplement) and will end
on the earliest of (a) the payment in full
of the outstanding principal balance of the
Notes and the Certificate Balance, (b) the
termination of the relevant Trust, and (c)
the recommencement, if any, of the Revolving
Period.
9
<PAGE>
With respect to such Trust, when an Early
Amortization Period begins, the Revolving
Period and any then occurring Wind Down
Period will terminate and certain amounts
(to the extent described in the related
Prospectus Supplement) will thereafter be
paid to the holders of the related
Securities to the extent described in the
related Prospectus Supplement. If an Early
Amortization Period commences during the
Wind Down Period, amounts if any, on deposit
in the Note Distribution Account will be
paid to the related holders to the extent,
and at the times, described in the related
Prospectus Supplement.
Certain Legal Aspects of
the Receivables;
Repurchase
Obligations.............
In connection with the sale of the
Receivables to a Trust, security interests
in the Financed Equipment securing the
related Receivables will be assigned by JDCC
to the Seller and by the Seller to such
Trust. Unless otherwise specified in the
related Prospectus Supplement, the Seller
will be obligated to repurchase any
Receivable sold to a Trust (subject to
JDCC's repurchase thereof) as to which a
first perfected security interest in the
name of JDCC in the Financed Equipment
securing such Receivable shall not exist as
of the date such Receivable is purchased by
such Trust if (i) such breach shall
materially adversely affect the interest of
such Trust in such Receivable and (ii) such
failure or breach shall not have been cured
by the last day of the second (or, if the
Seller elects, the first) month following
the discovery by or notice to the Seller of
such breach, and JDCC will be obligated to
purchase such Receivable from the Seller
contemporaneously with the Seller's purchase
from such Trust. To the extent the security
interest is perfected, the Trust will have a
prior claim over subsequent purchasers of
such Financed Equipment and holders of
subsequently perfected security interests.
However, as against liens for repairs
("Mechanics' Liens") of a piece of Financed
Equipment or for taxes unpaid by an Obligor
under a Receivable, or through fraud or
negligence, a Trust could lose the priority
of its security interest or its security
interest in the relevant Financed Equipment.
Neither the Seller nor the Servicer will
have any obligation to repurchase a
Receivable as to which any of the
aforementioned occurrences result in a
Trust's losing the priority of its security
interest or its security interest in such
Financed Equipment after the date the
relevant Receivable was purchased by such
Trust.
Tax Considerations....... Unless otherwise specified in the related
Prospectus Supplement, the Prospectus
Supplement for each series of Notes and for
each series of Certificates will summarize,
subject to the limitations stated therein,
federal income tax considerations relevant
to the purchase, ownership and disposition
of such Notes and Certificates. Information
will also be provided with respect to the
tax laws of the State of Iowa in the related
Prospectus Supplement.
10
<PAGE>
ERISA Considerations..... Unless otherwise specified in the related
Prospectus Supplement, the Prospectus
Supplement for each series of Notes 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 Notes by employee benefit
plans and the Prospectus Supplement for each
series of Certificates will summarize,
subject to the limitations discussed
therein, considerations under ERISA relevant
to the purchase of such Certificates by
employee benefit plans and individual
retirement accounts. See "ERISA
Considerations" herein and in the Prospectus
Supplement.
11
<PAGE>
RISK FACTORS
Certain Legal Aspects. In connection with the sale of the Receivables to an
Issuer, security interests in Financed Equipment securing such Receivables will
be assigned by JDCC to the Seller and by the Seller to such Issuer. Unless
otherwise provided in the related Prospectus Supplement, the Seller will be
obligated to repurchase any Receivable (subject to JDCC's repurchase thereof)
sold to such Issuer as to which a perfected security interest in the name of
JDCC in the Financed Equipment securing such Receivable shall not exist as of
the date such Issuer purchased such Receivable if (i) the failure to have such
perfected security interest shall materially adversely affect the interest of
such Issuer in such Receivable and (ii) such failure shall not have been cured
by the last day of the second (or, if the Seller elects, the first) month
following the discovery by or notice to the Seller of such breach, and JDCC
will be obligated to purchase such Receivable from the Seller contemporaneously
with the Seller's repurchase from such Issuer. To the extent the security
interest is perfected, such Issuer will have a prior claim over subsequent
purchasers of such Financed Equipment and holders of subsequently perfected
security interests. However, as against Mechanics' Liens or liens for taxes
unpaid by an Obligor under a Receivable, or through fraud or negligence, such
Issuer could lose the priority of its security interest or its security
interest in such Financed Equipment. Neither the Seller nor the Servicer will
have any obligation to repurchase a Receivable as to which any of the
aforementioned occurrences result in such Issuer's losing the priority of its
security interest or its security interest in such Financed Equipment after the
date such Issuer purchased such Receivable. Federal and state laws impose
requirements upon creditors in connection with extensions of retail credit and
collections and certain of these laws make an assignee of such a contract
liable to the obligor thereon for any violation by the lender. Unless otherwise
provided in the related Prospectus Supplement, the Seller will be obligated to
repurchase any Receivable (subject to JDCC's repurchase thereof) which fails to
comply with such requirements, and JDCC will be obligated to repurchase such
Receivable from the Seller contemporaneously with the Seller's repurchase from
such Trust or other Issuer.
The Seller has taken steps in structuring the transactions contemplated
hereby that are intended to ensure that the voluntary or involuntary
application for relief by JDCC under the United States Bankruptcy Code or
similar applicable state laws ("Insolvency Laws") will not result in
consolidation of the assets and liabilities of the Seller with those of JDCC.
These steps include the creation of the Seller as a separate, limited-purpose
subsidiary pursuant to a certificate of incorporation containing certain
limitations (including restrictions on the nature of the Seller's business and
a restriction on the Seller'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 the Seller would not result in a court concluding that the assets
and liabilities of the Seller should be consolidated with those of JDCC in a
proceeding under any Insolvency Law.
JDCC will warrant to the Seller in each Purchase Agreement that the sale of
the related Receivables by it to the Seller is a valid sale of such Receivables
to the Seller. In addition, JDCC and the Seller will treat the transactions
described herein as a sale of the Receivables to the Seller and the Seller will
take all actions that are required to perfect the Seller's ownership interest
in the Receivables. Notwithstanding the foregoing, if JDCC were to become a
debtor in a bankruptcy case and a creditor or trustee-in- bankruptcy of such
debtor or such debtor itself were to take the position that a sale of
Receivables to the Seller should be recharacterized as a pledge of such
Receivables to secure a borrowing of such debtor, then delays in payments of
collections of Receivables to the Seller could occur or (should the court rule
in favor of any such trustee, debtor or creditor) reductions in the amount of
such payments could result. If any transfer of Receivables to the Seller is
recharacterized as a pledge, a tax or government lien on the property of JDCC
arising before the transfer of a Receivable to the Seller may have priority
over the Seller's interest in such Receivable. If the transactions contemplated
herein are treated as a sale, the Receivables would not be part of JDCC's
bankruptcy estate and would not be available to JDCC's creditors.
In addition, while JDCC is the Servicer, cash collections held by JDCC may,
subject to certain conditions, be commingled and used for the benefit of JDCC
prior to each Payment Date and, in the event of the bankruptcy of JDCC, an
Issuer may not have a perfected interest in such collections.
12
<PAGE>
The U.S. Court of Appeals for the Tenth Circuit in its decision in Octagon
Gas Systems, Inc. v. Rimmer (In re Meridian Reserve, Inc.) (decided May 27,
1993) concluded (noting that its position is in contrast to that taken by
another court) that a purchased royalty interest in a natural gas system was an
account and that under Article 9 of the Uniform Commercial Code (the "UCC"),
such an account, although sold by the debtor prior to the filing for
bankruptcy, remained property of the debtor's bankruptcy estate. Following this
decision, the Permanent Editorial Board for the UCC published an official
Commentary specifically adopting a contrary position. Such Commentaries are not
binding on any court. JDCC will warrant in the Purchase Agreement that the sale
of Receivables to the Seller is a valid sale of the Receivables.
Issuer's Relationship to the Seller and John Deere Capital Corporation,
Financial Condition of Deere & Company. None of the Seller, JDCC or Deere is
generally obligated to make any payments in respect of the Notes, the
Certificates or the Receivables of a specific Issuer, as the case may be. If
JDCC were to cease acting as Servicer or if Deere Credit Services were to cease
acting as Sub-Servicer, delays in processing payments on the Receivables and
information in respect thereof could occur and result in delays in payments to
the Securityholders.
In connection with the sale of Receivables by JDCC to the Seller, JDCC will
make representations and warranties with respect to the characteristics of such
Receivables. In certain circumstances, JDCC and the Seller will be required to
purchase Receivables with respect to which such representations and warranties
have been breached. See "Description of the Transfer and Servicing Agreements--
Sale and Assignment of Receivables".
The related Prospectus Supplement may set forth certain information regarding
the Issuer, the Seller, JDCC and Deere. In addition, Deere and JDCC are subject
to the information requirements of the Exchange Act and in accordance therewith
file reports and other information with the Commission. For further information
regarding Deere and JDCC, reference is made to such reports and other
information which are available as described under "Available Information".
Subordination; Limited Assets. To the extent specified in the related
Prospectus Supplement, distributions of interest and principal on the
Certificates of a series will be subordinated in priority of payment to
interest and principal due on the Notes of such series. Moreover, each Issuer
will not have, nor is it permitted or expected to have, any significant assets
or sources of funds other than the Receivables and, to the extent provided in
the related Prospectus Supplement, the related Reserve Account and any other
credit enhancement. The Notes of any series will represent obligations solely
of the related Issuer and the Certificates of any series will represent
interests solely in the related Trust, and neither the Notes nor the
Certificates of any such series will be insured or guaranteed by Deere, JDCC,
the Seller, the Servicer, the Sub-Servicer, the applicable Owner Trustee, if
any, or any other person or entity. Consequently, holders of the Securities of
any series must rely for repayment upon payments on the Receivables and, if and
to the extent available, amounts on deposit in the Reserve Account, if any, and
any other credit enhancement, all as specified in the related Prospectus
Supplement.
Maturity and Prepayment Considerations. All the Receivables are prepayable at
any time. Each prepayment will shorten the weighted average remaining term of
the Receivables and the weighted average life of the related Notes and
Certificates. (For this purpose the term "prepayments" includes voluntary
prepayments and liquidations due to default, as well as receipts of proceeds
from insurance policies.) The rate of prepayments on the Receivables may be
influenced by a variety of economic, financial, climatic and other factors. In
particular, the amount of prepayments on agricultural equipment retail
installment sale and loan contracts has historically tended to increase during
periods in which farmers have strong cash flows. In addition, under certain
circumstances JDCC will be obligated to repurchase Receivables pursuant to a
Purchase Agreement, and the Seller will be obligated to repurchase Receivables
pursuant to a Sale and Servicing Agreement, as a result of breaches of
representations and warranties, and under certain circumstances, the Servicer
will be obligated to purchase Receivables pursuant to a Sale and Servicing
Agreement as a result of breaches of certain covenants. Consistent with its
normal procedures, the Sub-Servicer may, in its discretion
13
<PAGE>
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 as described in the
related Prospectus Supplement will result in the Servicer purchasing the
Receivable for the Purchase Amount. See "Description of the Transfer and
Servicing Agreements--Sale and Assignment of Receivables" and "--Servicing
Procedures". Any reinvestment risks resulting from a faster or slower incidence
of prepayment of Receivables will be borne entirely by the Securityholders of
the related series of Securities. See also "Description of the Transfer and
Servicing Agreements--Termination" regarding the Servicer's option to purchase
the Receivables and "Description of the Transfer and Servicing Agreements--
Insolvency Event" regarding the sale of the Receivables if an Insolvency Event
with respect to the Seller occurs.
Holders of Notes and Certificates should consider, in the case of Securities
purchased at a discount, the risk that a slower than anticipated rate of
principal payments on the Receivables could result in an actual yield that is
less than the anticipated yield and, in the case of any Securities purchased at
a premium, the risk that a faster than anticipated rate of principal payments
on the Receivables could result in an actual yield that is less than the
anticipated yield.
Risk of Commingling. The Servicer will deposit all payments on Receivables
(from whatever source) and all proceeds of Receivables collected during each
Collection Period into the Collection Account within two Business Days of
receipt thereof. However, in the event that JDCC satisfies certain requirements
for monthly or less frequent remittances as described herein and in the
Prospectus Supplement, then so long as JDCC is the Servicer and provided that
(i) there exists no Servicer Default and (ii) each other condition to making
monthly or less frequent deposits as may be specified by the Rating Agencies is
satisfied, the Servicer will not be required to deposit such amounts into the
Collection Account until on or before the Business Day preceding the Payment
Date. Pending deposit into the Collection Account, collections may be invested
by the Servicer at its own risk and for its own benefit, and will not be
segregated from Funds of the Servicer. If the Servicer were unable to remit
such funds, Securityholders might incur a loss.
Book-Entry Registration. Each class of the Notes of a given series will be
initially represented by one or more certificates registered in the name of
Cede & Co. ("Cede"), or any other nominee for The Depository Trust Company
("DTC") set forth in the related Prospectus Supplement, and will not be
registered in the names of the Noteholders of such series or their nominees.
Because of this, unless and until Definitive Notes for such series are issued,
such Noteholders will not be recognized by the applicable Indenture Trustee as
"Noteholders" (as that term is used in the related Indenture). Hence, until
such time, Noteholders of such series will only be able to exercise the rights
of Noteholders indirectly through DTC, Cedelbank or The Euroclear System (the
"Euroclear Operator" and "Euroclear") and their participating organizations.
See "Certain Information Regarding the Securities--Book-Entry Registration" and
"Definitive Notes". Unless otherwise provided in the relevant prospectus
supplement, the Certificates will be issued in fully registered, certificated
form to the holders of Certificates or their nominees.
THE TRUSTS
With respect to each series of Securities, other than those issued by DRC,
the Seller will establish a separate Trust pursuant to the related Trust
Agreement for the transactions described herein and in the related Prospectus
Supplement. After its formation, each Trust will not engage in any activity
other than (i) acquiring, holding and managing the Receivables purchased
pursuant to the related Sale and Servicing Agreement and the other assets of
such Trust and proceeds therefrom, (ii) issuing the Notes of the related
series, (iii) making payments on such Notes, (iv) issuing and making payments
on the Certificates representing beneficial equity interests in such Trust and
(v) engaging in other activities that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected therewith.
Upon the issuance of the Notes and the Certificates of a given series, the
related Trust will use the proceeds from such issuance to purchase Receivables
from the Seller pursuant to the related Sale and Servicing Agreement. The
Servicer will initially service the Receivables pursuant to the applicable Sale
and Servicing
14
<PAGE>
Agreement, and will be compensated for acting as the Servicer. See "Description
of the Transfer and Servicing Agreements--Servicing Compensation". To
facilitate servicing and to minimize administrative burden and expense, the
Servicer will be appointed custodian for the related Receivables by each Owner
Trustee, but will not stamp such Receivables to reflect the sale and assignment
of such Receivables to the related Trust, nor amend the financing statements
filed to perfect the security interest in the Financed Equipment or the related
certificates of title, if applicable, of the Financed Equipment. In the absence
of amendments to the certificates of title, a Trust may not have perfected
security interests in such Financed Equipment securing such Receivables
originated in some states. See "Certain Legal Aspects of the Receivables".
If the protection provided to the investment of the Noteholders of a given
series by the subordination of the Certificates of such series and by the
availability of the funds in the Reserve Account, if any, or any other credit
enhancement for such series or the protection provided to Certificateholders of
such series by such Reserve Account or other credit enhancement is
insufficient, the related Trust must rely solely on the payments from the
Obligors on the related Receivables, and the proceeds from the repossession and
sale of Financed Equipment which secure defaulted Receivables. In such event,
certain factors, such as the Trust's not having first perfected security
interests in some of the Financed Equipment, may affect such Trust's ability to
realize on the collateral securing such Receivables, and thus may reduce the
proceeds to be distributed to the holders of the Securities of such series. See
"Description of the Transfer and Servicing Agreements--Distributions" and
"Description of the Transfer and Servicing Agreements--Reserve Account" and
"Certain Legal Aspects of the Receivables".
The principal offices of each Trust and the related Owner Trustee will be
specified in the related Prospectus Supplement.
The Owner Trustee
The Owner Trustee for each Trust will be specified in the related Prospectus
Supplement. An Owner Trustee's liability in connection with the issuance and
sale of the related Securities is limited solely to the express obligations of
such Owner Trustee set forth in the related Trust Agreement and the related
Sale and Servicing Agreement.
THE TRUST PROPERTY
The property of each Trust will include (i) a pool of Receivables, (ii) all
monies (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 Sale and Servicing Agreement, as described below and in the related
Prospectus Supplement, (iv) the security interests in the Financed Equipment
relating to such pool of Receivables, (v) the right to proceeds from claims on
physical damage, credit life and disability insurance policies, if any,
covering such Financed Equipment or the related Obligors, as the case may be,
(vi) the proceeds of any repossessed Financed Equipment related to such pool of
Receivables, (vii) the rights of the Seller under the related Purchase
Agreement and (viii) interest earned on short-term investments made by such
Trust. The Receivables will be either originated by the Dealers and purchased
by the Sales Companies pursuant to agreements with the Dealers ("Dealer
Agreements") or originated by the Sales Companies in connection with retail
sales by the Dealers, in each case for subsequent sale to JDCC. The "Sales
Companies" include Deere and John Deere Construction Equipment Company. Each
pool of Receivables will continue to be serviced by the Servicer and evidence
direct or indirect financing made available by JDCC to the Obligors. On or
before the applicable Closing Date in respect of a Trust, JDCC will sell the
Receivables to the Seller for sale to such Trust. Unless otherwise specified in
the related Prospectus Supplement, the related Reserve Account, if any, shall
be maintained with the applicable Indenture Trustee for the benefit of the
Noteholders and the Certificateholders of the related series.
If so specified in the Related Prospectus Supplement, the Seller will have
the right (subject to certain limitations) to designate from time to time
additional Receivables to be included in the related pool of Receivables.
15
<PAGE>
THE RECEIVABLES POOL
Each pool of Receivables will consist of Receivables purchased by the
Servicer from the Sales Companies which either originated such Receivables in
the ordinary course of business in connection with retail sales by the Dealers
or, in limited instances, acquired such Receivables from the Dealers in the
ordinary course of business. The Servicer purchases contracts in accordance
with its credit standards which are based upon the buyer's ability to repay the
obligation, credit history and the down payment on the Financed Equipment.
The Receivables will be selected from JDCC's portfolio by several criteria,
including, as of the applicable Cut-off Date in respect of a pool of
Receivables, the following (unless otherwise provided in the related Prospectus
Supplement): except as described under "Certain Legal Aspects of the
Receivables", each Receivable was originated in the United States, has an
Obligor which is a United States person, is secured by a perfected first
priority security interest in the related Financed Equipment, provides for
scheduled payments which fully amortize the amount financed (assuming, in the
case of variable rate receivables, that the variable rate calculated at the
time of origination remains in effect without change throughout the term of
such Receivable), has an outstanding principal balance of at least $500, is not
more than 89 days past due as of the applicable Cut-off Date and satisfies any
other criteria set forth in the related Prospectus Supplement. As of the
applicable Cut-off Date, no Obligor on any Receivable will be noted in the
related records of the Servicer or the Sub-Servicer as being the subject of a
bankruptcy proceeding. No selection procedures believed by JDCC or the Seller
to be adverse to the Securityholders of any series will be used in selecting
the related Receivables.
Information with respect to each pool of Receivables will be set forth in the
related Prospectus Supplement, including, 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 concerning JDCC's experience in the United States
pertaining to delinquencies and repossessions on JDCC's retail agricultural and
construction equipment receivables will be set forth in each Prospectus
Supplement. Delinquencies, repossessions and net losses on agricultural and
construction equipment receivables are affected by economic conditions
generally. In addition, delinquencies, repossessions and net losses on
agricultural equipment receivables may be affected by commodity market prices,
weather conditions such as flood, drought and early frost, and the level of
farmers' income, while delinquencies, repossessions and net losses on
construction equipment receivables may be affected by the level of housing
starts and non-residential construction. Generally, when an account becomes 120
days delinquent, accrual of finance income is suspended, the collateral is
repossessed or the account is designated for litigation. There can be no
assurance that the delinquency, repossession and net loss experience on the
Receivables will be comparable to prior experience or to such information.
Maturity and Prepayment Considerations
All the Receivables will be prepayable at any time. Each prepayment will
shorten the weighted average life of the Receivables and the weighted average
life of the related Securities. (For this purpose the term "prepayments"
includes voluntary prepayments, liquidations due to default, as well as
receipts of proceeds from insurance policies.) The rate of prepayments on the
Receivables may be influenced by a variety of economic, financial, climatic and
other factors. In addition, under certain circumstances, JDCC will be obligated
to repurchase Receivables pursuant to the applicable Purchase Agreement, and
the Seller will be obligated to repurchase Receivables pursuant to the
applicable Sale and Servicing Agreement, as a result of breaches of
representations and warranties. See "Description of the Transfer and Servicing
Agreements--Sale and Assignment of Receivables" and "--Servicing Procedures".
Any reinvestment risks resulting from a faster or slower incidence of
prepayment of Receivables will be borne entirely by the related
Securityholders. See also "Description of the Transfer and Servicing
Agreements--Termination" regarding the Servicer's option to purchase the
Receivables from a particular Trust.
16
<PAGE>
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.
POOL FACTORS AND TRADING INFORMATION
The "Note Pool Factor" for each class of Notes will be a seven-digit decimal
which the Servicer will compute prior to each distribution with respect to such
class of Notes indicating the remaining outstanding principal balance of such
class of Notes as of the applicable Payment Date, as a fraction of the initial
outstanding principal balance of such class of Notes. The "Certificate Pool
Factor" for each class of Certificates will be a seven-digit decimal which the
Servicer will compute prior to each distribution with respect to such class of
Certificates indicating the remaining Certificate Balance of such class of
Certificates as of the applicable Payment Date, as a fraction of the initial
Certificate Balance of such class. Each Note Pool Factor and Certificate Pool
Factor will be initially 1.0000000, and thereafter will decline to reflect
reductions in the outstanding principal balance of the applicable class of
Notes or the Certificate Balance of the applicable class of Certificates, as
the case may be. A Noteholder's portion of the aggregate outstanding principal
balance of the related class of Notes is the product of (i) the original
denomination of such Noteholder's Note and (ii) the applicable Note Pool
Factor. A Certificateholder's portion of the aggregate outstanding Certificate
Balance for the related class of Certificates is the product of (i) the
original denomination of the Certificateholder's Certificate and (ii) the
applicable Certificate Pool Factor.
If so provided in the related Prospectus Supplement with respect to each
Trust, pursuant to the applicable Indenture, the related Noteholders 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 Note Pool Factor and
various other items of information. Unless otherwise provided in the related
Prospectus Supplement with respect to each Trust, the related
Certificateholders of record will receive reports on or about each Payment Date
concerning the payments received on the Receivables, the related Pool Balance,
each Certificate 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. See "Certain Information Regarding the Securities--Reports to
Securityholders".
USE OF PROCEEDS
Unless otherwise provided in the related Prospectus Supplement, the proceeds
from the sale of the Securities of a given series will be applied by the
related Trust to the purchase of the Receivables.
THE SELLER, DEERE AND THE SERVICER
John Deere Receivables, Inc.
The Seller is a wholly-owned subsidiary of JDCC. The Seller was incorporated
in the State of Nevada on July 15, 1992. The Seller is organized for the
limited purpose of purchasing wholesale and retail receivables from JDCC and
transferring such receivables to third parties and any activities incidental to
and necessary or convenient for the accomplishment of such purposes. The
principal executive offices of the Seller are located at First Interstate Bank
Bldg., 1 East First Street, Reno, Nevada 89501, and its telephone number is
(702) 786-5914.
The Seller has taken steps in structuring the transactions contemplated
hereby that are intended to ensure that the voluntary or involuntary
application for relief by JDCC under any Insolvency Law will not result in
consolidation of the assets and liabilities of the Seller with those of JDCC.
These steps include the creation of the Seller as a separate, limited-purpose
subsidiary pursuant to a certificate of incorporation containing certain
limitations (including restrictions on the nature of the Seller's business and
a restriction on the Seller's ability to commence a voluntary case or
proceeding under any Insolvency Law without the prior unanimous
17
<PAGE>
affirmative vote of all of its directors). However, there can be no assurance
that the activities of the Seller would not result in a court's concluding that
the assets and liabilities of the Seller should be consolidated with those of
JDCC in a proceeding under any Insolvency Law. See "Special Considerations--
Certain Legal Aspects".
In addition, with respect to each Trust, the Owner Trustee, the Indenture
Trustee, all Noteholders and all Certificateholders will covenant that they
will not at any time institute against the Seller any bankruptcy,
reorganization or other proceeding under any federal or state bankruptcy or
similar law.
JDCC will warrant to the Seller in each Purchase Agreement that the sale of
the Receivables by it to the Seller is a valid sale of the Receivables to the
Seller. In addition, JDCC and the Seller will treat the transactions described
herein and in the related Prospectus Supplement as a sale of the Receivables to
the Seller and the Seller will take all actions that are required to perfect
the Seller's ownership interest in the Receivables. Notwithstanding the
foregoing, if JDCC were to become a debtor in a bankruptcy case and a creditor
or trustee-in-bankruptcy of such debtor or such debtor itself were to take the
position that the sale of Receivables to the Seller should be recharacterized
as a pledge of such Receivables to secure a borrowing of such debtor, then
delays in payments of collections of Receivables to the Seller could occur or
(should the court rule in favor of any such trustee, debtor or creditor)
reductions in the amount of such payments could result. If the transfer of
Receivables to the Seller is recharacterized as a pledge, a tax or government
lien on the property of JDCC arising before the transfer of Receivables to the
Seller may have priority over the Seller's interest in such Receivables. If the
transactions contemplated herein are treated as a sale, the Receivables would
not be part of JDCC's bankruptcy estate and would not be available to JDCC's
creditors.
Deere Receivables Corporation
Deere Receivables Corporation ("DRC") is a wholly-owned subsidiary of JDCC.
DRC was incorporated in the State of Nevada on March 5, 1996. DRC is organized
for the limited purpose of purchasing wholesale and retail receivables from
JDCC and transferring such receivables to third parties or holding such
receivables and selling securities to the public and any activities incidental
to, or necessary or convenient for, the accomplishment of such purposes. DRC is
intended to comply with certain requirements for the securitization of debt
obligations pursuant to certain provisions of the Internal Revenue Code of
1986, as amended. If an election is made for DRC to issue a particular series
of Securities, the tax consequences to holders will be discussed in the
applicable Prospectus Supplement. The principal executive offices of DRC are
located at 1 East First Street, Suite 600, Reno, Nevada 89501.
Deere & Company
John Deere's operations are categorized into six business segments:
John Deere's worldwide agricultural equipment segment manufactures and
distributes a full line of farm equipment--including tractors; combine,
cotton and sugarcane harvesters; tillage, seeding and soil preparation
machinery; sprayers; hay and forage equipment; materials handling
equipment; and integrated precision farming technology.
John Deere's worldwide construction equipment segment manufactures and
distributes a broad range of machines used in construction, earthmoving and
forestry--including backhoe loaders; crawler dozers and loaders; four-wheel
drive loaders; excavators; scrapers; motor graders; log skidders; and
forestry harvesters. This segment also includes the manufacture and
distribution of engines and drivetrain components for the original
equipment manufacturers (OEM) market.
John Deere's worldwide commercial and consumer equipment segment
manufactures and distributes equipment for commercial and residential
uses--including small tractors for lawn, garden, commercial and utility
purposes; riding and walk-behind mowers; golf course equipment;
snowblowers; handheld products such as chain saws, string trimmers and leaf
blowers; skid-steer loaders; utility vehicles; and other outdoor power
products.
The products produced by the equipment segments are marketed primarily
through independent retail dealer networks and major retail outlets.
18
<PAGE>
The credit segment, which mainly operates in the United States and
Canada, primarily finances sales and leases by John Deere dealers of new
and used equipment and sales by non-Deere dealers of recreational products.
In addition, it provides wholesale financing to dealers of the foregoing
equipment and finances retail revolving charge accounts.
The insurance segment issues policies in the United States primarily for:
general and specialized lines of commercial property and casualty
insurance; group accident and health insurance for employees of
participating John Deere dealers; and disability insurance for employees of
John Deere.
The health care segment provides health management programs and related
administrative services in the United States to John Deere and commercial
clients.
John Deere Capital Corporation
The principal business of JDCC and its subsidiaries (collectively called the
"Company") is providing and administering financing for retail purchases of new
and used equipment manufactured by Deere & Company's agricultural, construction
and commercial and consumer equipment divisions. The Company purchases retail
installment sales and loan contracts ("Retail Notes") from John Deere. John
Deere acquires these Retail Notes through independent John Deere retail
dealers. The Company also purchases and finances certain agricultural,
construction, and lawn and grounds care retail notes unrelated to John Deere.
In addition, the Company purchases and finances recreational product retail
notes acquired from independent dealers and marine product mortgage service
companies (recreational product retail notes). The Company also leases
equipment to retail customers, finances and services revolving charge accounts
acquired from and offered through merchants or leading farm input providers in
the agricultural, construction, lawn and grounds care, and yacht markets, and
provides wholesale financing for inventories of recreational vehicles,
manufactured housing units, yachts, John Deere engines, and John Deere
agricultural and John Deere construction equipment owned by dealers of those
products.
A substantial part of the retail sales and leases of John Deere products is
financed by financial institutions outside of the John Deere organization.
John Deere Credit Company, a wholly-owned finance holding subsidiary of
Deere, is the parent of JDCC.
JDCC's executive offices are located at Suite 600, First Interstate Bank
Building, 1 East First Street, Reno, Nevada 89501. Its telephone number is
(702)786-5527.
Deere & Company and the Servicer are each subject to the information
requirements of the Exchange Act and in accordance therewith file reports and
other information with the Commission. For further information, see "Available
Information".
DESCRIPTION OF THE NOTES
General
In the event that Securities are not issued by a Trust but are instead issued
by DRC, the terms of the Securities will be described in the relevant
Prospectus Supplement. See "Certain Tax Considerations" With respect to each
Trust, one or more classes of Notes will be issued pursuant to the terms of an
indenture substantially in the form filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. The following summary does not
purport to be complete and is qualified in its entirety by reference to the
provisions of the applicable Notes and the related Indenture.
Unless otherwise specified in the related Prospectus Supplement, each class
of Notes will initially be represented by one or more Notes, in each case
registered in the name of the nominee of DTC (together with any successor
depository selected by the Trust, the "Depository") except as set forth below.
Unless otherwise specified in the related Prospectus Supplement, the Notes will
be available for purchase in denominations of
19
<PAGE>
$1,000 and integral multiples thereof in book-entry form only. The Seller has
been informed by DTC that DTC's nominee will be Cede, unless another nominee is
specified in the related Prospectus Supplement. Accordingly, Cede is expected
to be the holder of record of the Notes of each class. Unless and until
Definitive Notes are issued under the limited circumstances described herein or
in the related Prospectus Supplement, no Noteholder will be entitled to receive
a physical certificate representing a Note. All references herein and in the
related Prospectus Supplement to actions by Noteholders shall refer to actions
taken by DTC upon instructions from its participating organizations (the
"Participants") and all references herein and in the related Prospectus
Supplement to distributions, notices, reports and statements to Noteholders
shall refer to distributions, notices, reports and statements to DTC or Cede,
as the registered holder of the Notes, as the case may be, for distribution to
Noteholders in accordance with DTC's procedures with respect thereto. See "--
Book-Entry Registration" and "--Definitive Notes" below.
Principal and Interest on the Notes
The timing and priority of payment, seniority, Interest Rate and amount of or
method of determining payments of principal and interest on each class of Notes
of a given series will be described in the related Prospectus Supplement. The
right of holders of any class of Notes to receive payments of principal and
interest may be senior or subordinate to the rights of holders of any other
class or classes of Notes of such series, as described in the related
Prospectus Supplement. Unless otherwise provided in the related Prospectus
Supplement, payments of interest on the Notes of such series will be made prior
to payments of principal thereon. To the extent provided in the related
Prospectus Supplement, a series may include one or more classes of Strip Notes
entitled to (i) principal payments with disproportionate, nominal or no
interest payments or (ii) interest payments with disproportionate, nominal or
no principal payments. Each class of Notes may have a different Interest Rate,
which may be a fixed, variable or adjustable Interest Rate (and which may be
zero for certain classes of Strip Notes), or any combination of the foregoing.
The related Prospectus Supplement will specify the Interest Rate for each class
of Notes of a given series or the method for determining such Interest Rate.
See also "Certain Information Regarding the Securities--Fixed Rate Securities"
and "--Floating Rate Securities". One or more classes of Notes of a series may
be redeemable in whole or in part under the circumstances specified in the
related Prospectus Supplement, including as a result of the Servicer's
exercising its option to purchase the related Receivables.
To the extent specified in any Prospectus Supplement, one or more classes of
Notes of a given series may have fixed principal payment schedules, as set
forth in such Prospectus Supplement; Noteholders of such Notes would be
entitled to receive as payments of principal on any given Payment Date the
applicable amounts set forth on such schedule with respect to such Notes, in
the manner and to the extent set forth in the related Prospectus Supplement.
Unless otherwise specified in the related Prospectus Supplement, payments to
Noteholders of all classes within a series in respect of interest will have the
same priority. Under certain circumstances, the amount available for such
payments could be less than the amount of interest payable on the Notes on any
of the dates specified for payments in the related Prospectus Supplement (each,
a "Payment Date"), in which case each class of Noteholders will receive its
ratable share (based upon the aggregate amount of interest due to such class of
Noteholders) of the aggregate amount available to be distributed in respect of
interest on the Notes of such series. See "Description of the Transfer and
Servicing Agreements--Distributions" and "--Credit and Cash Flow Enhancement".
In the case of a series of Notes which includes two or more classes of Notes,
the sequential order and priority of payment in respect of principal and
interest, and any schedule or formula or other provisions applicable to the
determination thereof, of each such class will be set forth in the related
Prospectus Supplement. Payments in respect of principal and interest of any
class of Notes will be made on a pro rata basis among all the Noteholders of
such class.
20
<PAGE>
Revolving Period and Related Matters
To the extent specified in the related Prospectus Supplement, during the
Revolving Period (if any) with respect to the applicable Trust, no payments of
principal will be made on the Notes and no distributions of Certificate Balance
will be made with respect to the Certificates and no amounts will be set aside
for such purpose. During the Wind Down Period (if any) for such Trust and any
Early Amortization Period, certain amounts (to the extent specified in the
related Prospectus Supplement) will be set aside for payments or principal on
the Notes and distributions with respect to the Certificate Balance, and such
payments and distributions will be made, to the extent described in the related
Prospectus Supplement. If an Early Amortization Period commences during the
Wind Down Period, amounts, if any, on deposit in the Note Distribution Account
will be paid to the related holders to the extent, and at the times, described
in the related Prospectus Supplement.
The Indenture
Modification of Indenture. With respect to each Trust, with the consent of
the holders of a majority of the outstanding Notes of the related series, the
applicable Indenture Trustee and the Trust may execute a supplemental indenture
to add provisions to, or change in any manner or eliminate any provisions of,
the related Indenture with respect to the Notes, or to modify (except as
provided below) in any manner the rights of the related Noteholders.
Unless otherwise specified in the related Prospectus Supplement with respect
to a series of Notes, without the consent of the holder of each such
outstanding Note affected thereby, however, no supplemental indenture shall (i)
change the due date of any installment of principal of, or interest on any such
Note or reduce the principal amount thereof, the interest rate specified
thereon or the redemption price with respect thereto or change any place of
payment where or the coin or currency in which any such Note or any interest
thereon is payable, (ii) impair the right to institute suit for the enforcement
of certain provisions of the related Indenture regarding payment, (iii) reduce
the percentage of the aggregate amount of the outstanding Notes of such series
the consent of the holders of which is required for any such supplemental
indenture or the consent of the holders of which is required for any waiver of
compliance with certain provisions of the related Indenture or of certain
defaults thereunder and their consequences as provided for in such Indenture,
(iv) modify or alter the provisions of the related Indenture regarding the
voting of Notes held by the related Trust, the Seller, an affiliate of either
of them or any obligor on such Notes, (v) reduce the percentage of the
aggregate outstanding amount of such Notes the consent of the holders of which
is required to direct the related Trust to sell or liquidate the Receivables if
the proceeds of such sale would be insufficient to pay the principal amount and
accrued but unpaid interest on the outstanding Notes of such series, (vi)
decrease the percentage of the aggregate principal amount of such Notes
required to amend the sections of the related Indenture which specify the
applicable percentage of aggregate principal amount of the Notes of such series
necessary to amend such Indenture or certain other related agreements or (vii)
permit the creation of any lien ranking prior to or on a parity with the lien
of the related Indenture with respect to any of the collateral for such Notes
or, except as otherwise permitted or contemplated in such Indenture, terminate
the lien of such Indenture on any such collateral or deprive the holder of any
such Note of the security afforded by the lien of such Indenture.
Unless otherwise provided in the related Prospectus Supplement, a Trust and
the applicable Indenture Trustee may also enter into supplemental indentures,
without obtaining the consent of Noteholders of the related series, for the
purpose of, among other things, adding any provisions to or changing in any
manner or eliminating any of the provisions of the related Indenture or of
modifying in any manner the rights of such Noteholders; provided, however, that
such action will not, in the opinion of counsel satisfactory to such Indenture
Trustee, materially and adversely affect the interest of any such Noteholder.
Events of Default; Rights upon Event of Default. With respect to the Notes of
a given series, unless otherwise specified in the related Prospectus
Supplement, an "Event of Default" with respect to such Notes is defined in the
related Indenture as being: (i) a default for five days or more in the payment
of any interest due on any such Note; (ii) a default in the payment of the
principal of or any installment of the principal of any
21
<PAGE>
such Note when the same becomes due and payable; (iii) a default in the
observance or performance of any covenant or agreement of the applicable Trust
made in the related Indenture and the continuation of any such default for a
period of 30 days after notice thereof is given to such Trust by the applicable
Indenture Trustee or to such Trust and applicable Indenture Trustee by the
holders of at least 25% in principal amount of the Notes of such series then
outstanding; (iv) any representation or warranty made by such Trust in such
Indenture or in any certificate delivered pursuant thereto or in connection
therewith having been incorrect in a material respect as of the time made, and
such breach not having been cured within 30 days after notice thereof is given
to such Trust by such Indenture Trustee or to such Trust and such Indenture
Trustee by the holders of at least 25% in principal amount of such Notes of
such series then outstanding or (v) certain events of bankruptcy, insolvency,
receivership or liquidation of such Trust. However, the amount of principal
required to be distributed to the Noteholders of such series under the related
Indenture is generally limited to amounts available therefor in the applicable
Note Distribution Account. Therefore, unless otherwise specified in the related
Prospectus Supplement, the failure to pay principal on a class of Notes
generally will not result in the occurrence of an Event of Default until the
final scheduled payment date for such class of Notes.
If an Event of Default should occur and be continuing with respect to the
Notes of any series, the related Indenture Trustee or holders of a majority in
principal amount of such Notes then outstanding may declare the principal of
such Notes to be immediately due and payable. Such declaration may, under
certain circumstances, be rescinded by the holders of a majority in principal
amount of such Notes then outstanding.
If the Notes of any series have been declared to be due and payable following
an Event of Default with respect thereto, the related Indenture Trustee may, in
its discretion, either sell the related Receivables or elect to have the
related Trust maintain possession of such Receivables and continue to apply
distributions on such Receivables as if there had been no declaration of
acceleration. In addition, such Indenture Trustee is prohibited from selling
the Receivables following an Event of Default, other than a default in the
payment of any principal or a default for five days or more in the payment of
any interest on any Note of such series, unless (i) the holders of all such
outstanding Notes consent to such sale, (ii) the proceeds of such sale are
sufficient to pay in full the principal of and the accrued interest on such
outstanding Notes at the date of such sale, or (iii) such Indenture Trustee
determines that the proceeds of the Receivables would not be sufficient on an
ongoing basis to make all payments on such Notes as such payments would have
become due if such obligations had not been declared due and payable, and such
Indenture Trustee obtains the consent of the holders of 66 2/3% of the
aggregate outstanding amount of such Notes.
Subject to the provisions of the applicable Indenture relating to the duties
of the related Indenture Trustee, in case an Event of Default shall occur and
be continuing with respect to a series of Notes, such Indenture Trustee shall
be under no obligation to exercise any of the rights or powers under such
Indenture at the request or direction of any of the holders of such Notes, if
such Indenture Trustee reasonably believes it will not be adequately
indemnified against the costs, expenses and liabilities which might be incurred
by it in complying with such request. Subject to such provisions for
indemnification and certain limitations contained in the related Indenture, the
holders of a majority in principal amount of the outstanding Notes of a given
series shall have the right to direct the time, method and place of conducting
any proceeding or any remedy available to the applicable Indenture Trustee, and
the holders of a majority in principal amount of such Notes then outstanding
may, in certain cases, waive any default with respect thereto, except a default
in the payment of principal or interest or a default in respect of a covenant
or provision of such Indenture that cannot be modified without the waiver or
consent of all of the holders of such outstanding Notes.
Unless otherwise specified in the related Prospectus Supplement, no holder of
a Note of any series will have the right to institute any proceeding with
respect to the related Indenture, unless (i) such holder previously has given
to the applicable Indenture Trustee written notice of a continuing Event of
Default, (ii) the holders of not less than 25% in principal amount of all such
outstanding Notes have made written request of such Indenture Trustee to
institute such proceeding in its own name as Indenture Trustee, (iii) such
holder or holders have offered such Indenture Trustee reasonable indemnity,
(iv) such Indenture Trustee has for 60 days failed to
22
<PAGE>
institute such proceeding and (v) no direction inconsistent with such written
request has been given to such Indenture Trustee during such 60-day period by
the holders of a majority in principal amount of such outstanding Notes.
In addition, each Indenture Trustee and the related Noteholders will covenant
that they will not at any time institute against the applicable Trust any
bankruptcy, reorganization or other proceeding under any federal or state
bankruptcy or similar law.
With respect to any Trust, neither the related Indenture Trustee nor the
related Owner Trustee in its individual capacity, nor any holder of a
Certificate representing an ownership interest in such Trust, nor any of their
respective owners, beneficiaries, agents, officers, directors, employees,
successors or assigns shall, in the absence of an express agreement to the
contrary, be personally liable for the payment of the principal of or interest
on the related Notes or for the agreements of such Trust contained in the
applicable Indenture.
Certain Covenants. Each Indenture will provide that the related Trust may not
consolidate with or merge into any other entity, unless (i) the entity formed
by or surviving such consolidation or merger is organized under the laws of the
United States, any state or the District of Columbia, (ii) such entity
expressly assumes such Trust's obligation to make due and punctual payments
upon the Notes of the related series and the performance or observance of every
agreement and covenant of such Trust under such Indenture, (iii) no Event of
Default shall have occurred and be continuing immediately after such merger or
consolidation, (iv) such Trust has been advised that the rating of the Notes or
the Certificates of such series then in effect would not be reduced or
withdrawn by the Rating Agencies as a result of such merger or consolidation
and (v) such Trust has received an opinion of counsel to the effect that such
consolidation or merger would have no material adverse tax consequence to such
Trust or to any Noteholder or Certificateholder.
Each Trust will not, among other things, (i) except as expressly permitted by
the applicable Indenture, the related Transfer and Servicing Agreements or
certain related documents with respect to such Trust (collectively, the
"Related Documents"), sell, transfer, exchange or otherwise dispose of any of
the assets of such Trust, (ii) claim any credit on or make any deduction from
the principal and interest payable in respect of the Notes of the related
series (other than amounts withheld under the Internal Revenue Code or
applicable state law) or assert any claim against any present or former holder
of such Notes because of the payment of taxes levied or assessed upon such
Trust, (iii) dissolve or liquidate in whole or in part or (iv) (x) permit the
validity or effectiveness of the related Indenture to be impaired or permit any
person to be released from any covenants or obligations with respect to such
Notes under such Indenture except as may be expressly permitted thereby or (y)
permit any lien, charge, excise, claim, security interest, mortgage or other
encumbrance to be created on or extend to or otherwise arise upon or burden the
assets of such Trust or any part thereof, or any interest therein or the
proceeds thereof except as may be created by the terms of such Indenture.
No Trust may engage in any activity other than as specified herein or in the
related Prospectus Supplement.
No Trust will incur, assume or guarantee any indebtedness other than
indebtedness incurred pursuant to the related Notes and the related Indenture
or otherwise in accordance with the Related Documents.
List of Noteholders. With respect to a Trust, three or more holders of the
Notes of any series (each of whom has owned a Note of such series for at least
six months) may, by written request to the applicable Indenture Trustee, obtain
access to the list of all Noteholders of such series maintained by the
applicable Indenture Trustee for the purpose of communicating with other
Noteholders of such series with respect to their rights under the related
Indenture or such Notes. Such Indenture Trustee may elect not to afford the
requesting Noteholders access to the list of such Noteholders if it agrees to
mail the desired communication or proxy, on behalf and at the expense of the
requesting Noteholders, to all Noteholders of such series of record.
Annual Compliance Statement. Each Trust will be required to file annually
with the applicable Indenture Trustee a written statement as to the fulfillment
of its obligations under the related Indenture.
23
<PAGE>
Indenture Trustee's Annual Report. If required by law, the Indenture Trustee
for each Trust will be required to mail each year to all related Noteholders a
brief report relating to its eligibility and qualification to continue as the
Indenture Trustee under the related Indenture, any amounts advanced by it under
the related Indenture, the amount, interest rate and maturity date of certain
indebtedness owing by such Trust to such Indenture Trustee in its individual
capacity, the property and funds physically held by such Indenture Trustee as
such and any action taken by it that materially affects the related Notes and
that has not been previously reported.
Satisfaction and Discharge of Indenture. An Indenture will be discharged with
respect to the collateral securing the related Notes upon the delivery to the
applicable Indenture Trustee for cancellation of all such Notes or, with
certain limitations, upon deposit with such Indenture Trustee of funds
sufficient for the payment in full of all of such Notes.
The Indenture Trustee. The Indenture Trustee for a series of Notes will be
specified in the related Prospectus Supplement. The Indenture Trustee for any
series may resign at any time, in which event the Trust will be obligated to
appoint a successor trustee for such series. The Trust may also remove any such
Indenture Trustee if such Indenture Trustee ceases to be eligible to continue
as such under the related Indenture or if such Indenture Trustee becomes
insolvent. In such circumstances, the Trust will be obligated to appoint a
successor indenture trustee for the applicable series of Notes. Any resignation
or removal of the Indenture Trustee and appointment of a successor indenture
trustee for any series of Notes does not become effective until acceptance of
the appointment by the successor indenture trustee for such series.
DESCRIPTION OF THE CERTIFICATES
General
With respect to each Trust, one or more classes of Certificates of a given
series will be issued pursuant to the terms of a Trust Agreement. The
Prospectus Supplement for a series will state whether the Certificates of that
series are being offered thereby. The following summary does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
all the provisions of the applicable Certificates and the related Trust
Agreement.
Unless otherwise specified in the related Prospectus Supplement, each class
of Certificates will initially be issued in fully registered certificated form.
The Certificates will be available for purchase in denominations of $100,000
and integral multiples of $100,000 in excess thereof.
Distributions of Principal and Interest
The timing and priority of distributions, seniority, allocations of losses,
Pass-Through Rate and amount of or method of determining distributions with
respect to principal and interest of each class of Certificates of a given
series will be described in the related Prospectus Supplement. Distributions of
interest on such Certificates will be made on the Payment Dates specified in
the related Prospectus Supplement and will be made prior to distributions with
respect to principal of such Certificates. To the extent provided in the
related Prospectus Supplement, a series may include one or more classes of
Strip Certificates entitled to (i) distributions in respect of principal with
disproportionate, nominal or no interest distributions or (ii) interest
distributions with disproportionate, nominal or no distributions in respect of
principal. Each class of Certificates may have a different Pass-Through Rate,
which may be a fixed, variable or adjustable Pass-Through Rate (and which may
be zero for certain classes of Strip Certificates), or any combination of the
foregoing. The related Prospectus Supplement will specify the Pass-Through Rate
for each class of Certificates of a given series or the method for determining
such Pass-Through Rate. See also "Certain Information Regarding the
Securities--Fixed Rate Securities" and "--Floating Rate Securities". Unless
otherwise provided in the related Prospectus Supplement, distributions in
respect of the Certificates of a given series may be subordinate to payments in
respect of the Notes of such series as more fully described in the related
Prospectus Supplement. Distributions in respect of interest on and principal of
any class of Certificates will be made on a pro rata basis among all the
Certificateholders of such class.
24
<PAGE>
In the case of a series of Certificates which includes two or more classes of
Certificates, the timing, sequential order, priority of payment or amount of
distributions in respect of interest and principal, and any schedule or formula
or other provisions applicable to the determination thereof, of each such class
shall be as set forth in the related Prospectus Supplement.
List of Certificateholders. Three or more Certificateholders of a Class of
Certificates or one or more holders of Certificates evidencing not less than
25% of the Certificate Balance of a Class of Certificates may, by written
request to the applicable Owner Trustee, obtain access to the list of all
Certificateholders of such Class for the purpose of communicating with such
other Certificateholders with respect to their rights under the related Trust
Agreement or under such Certificates.
Reports to Certificateholders. On each Payment Date, the applicable Owner
Trustee will provide to Certificateholders of record of the related series as
of the related Record Date the statement described under "Certain Information
Regarding the Securities--Reports to Securityholders".
CERTAIN INFORMATION REGARDING THE SECURITIES
Fixed Rate Securities
Each class of Securities (other than certain classes of Strip Notes or Strip
Certificates) may bear interest at a fixed rate per annum ("Fixed Rate
Securities") or at a variable or adjustable rate per annum ("Floating Rate
Securities"), as more fully described below and in the applicable Prospectus
Supplement. Each class of Fixed Rate Securities will bear interest at the
applicable per annum Interest Rate or Pass-Through Rate, as the case may be,
specified in the applicable Prospectus Supplement. Unless otherwise set forth
in the applicable Prospectus Supplement, interest on each class of Fixed Rate
Securities will be computed on the basis of a 360-day year of twelve 30-day
months. See "Description of the Notes--Principal and Interest on the Notes" and
"Description of the Certificates--Distributions of Principal and Interest".
Floating Rate Securities
Each class of Floating Rate Securities will initially bear interest for each
applicable Payment Date at a rate per annum determined by reference to an
interest rate basis (the "Base Rate"), plus or minus the Spread, if any, or
multiplied by the Spread Multiplier, if any, in each case as specified in the
related Prospectus Supplement. The "Spread" is the number of basis points (one
basis point equals one one-hundredth of a percentage point) that may be
specified in the applicable Prospectus Supplement as being applicable to such
class, and the "Spread Multiplier" is the percentage that may be specified in
the applicable Prospectus Supplement as being applicable to such class.
The applicable Prospectus Supplement will designate a Base Rate for a given
Floating Rate Security based on LIBOR, commercial paper rates, federal funds
rates, U.S. Government treasury securities rates, negotiable certificates of
deposit rates or another rate as set forth in such Prospectus Supplement.
As specified in the applicable Prospectus Supplement, Floating Rate
Securities of a given class may also have either or both of the following (in
each case expressed as a rate per annum): (i) a maximum limitation, or ceiling,
on the rate at which interest may accrue during any interest period and (ii) a
minimum limitation, or floor, on the rate at which interest may accrue during
any interest period. In addition to any maximum interest rate that may be
applicable to any class of Floating Rate Securities, the interest rate
applicable to any class of Floating Rate Securities will in no event be higher
than the maximum rate permitted by applicable law, as the same may be modified
by United States law of general application.
Indexed Securities
To the extent so specified in any Prospectus Supplement, any class of
Securities of a given series may consist of Securities ("Indexed Securities")
in which the principal amount payable at the final scheduled
25
<PAGE>
Payment Date for such class (the "Indexed Principal Amount") is determined by
reference to a measure (the "Index") which will be related to (i) the
difference in the rate of exchange between United States dollars and a currency
or composite currency (the "Indexed Currency") specified in the applicable
Prospectus Supplement (such Indexed Securities, "Currency Indexed Securities");
(ii) the difference in the price of a specified commodity (the "Indexed
Commodity") on specified dates (such Indexed Securities, "Commodity Indexed
Securities"); (iii) the difference in the level of a specified stock index (the
"Stock Index"), which may be based on U.S. or foreign stocks, on specified
dates (such Indexed Securities, "Stock Indexed Securities"); or (iv) such other
objective price or economic measures as are described in the applicable
Prospectus Supplement. The manner of determining the Indexed Principal Amount
of an Indexed Security and historical and other information concerning the
Indexed Currency, the Indexed Commodity, the Stock Index or other price or
economic measures used in such determination will be set forth in the
applicable Prospectus Supplement, together with information concerning tax
consequences to the holders of such Indexed Securities.
If the determination of the Indexed Principal Amount of an Indexed Security
is based on an Index calculated or announced by a third party and such third
party either suspends the calculation or announcement of such Index or changes
the basis upon which such Index is calculated (other than changes consistent
with policies in effect at the time such Indexed Security was issued and
permitted changes described in the applicable Prospectus Supplement), then such
Index shall be calculated for purposes of such Indexed Security by an
independent calculation agent named in the applicable Prospectus Supplement on
the same basis, and subject to the same conditions and controls, as applied to
the original third party. If for any reason such Index cannot be calculated on
the same basis and subject to the same conditions and controls as would have
been applied to the original third party, then the Indexed Principal Amount of
such Indexed Security shall be calculated in the manner set forth in the
applicable Prospectus Supplement. Any determination of such independent
calculation agent shall, in the absence of manifest error, be binding on all
parties.
Unless otherwise specified in the applicable Prospectus Supplement, interest
on an Indexed Security will be payable based on the amount designated in the
applicable Prospectus Supplement as the "Face Amount" of such Indexed Security.
The applicable Prospectus Supplement will describe whether the principal amount
of the related Indexed Security, if any, that would be payable upon redemption
or repayment prior to the applicable final scheduled Payment Date will be the
Face Amount of such Indexed Security, the Indexed Principal Amount of such
Indexed Security at the time of redemption or repayment or another amount
described in such Prospectus Supplement.
Book-Entry Registration
Unless otherwise specified in the related Prospectus Supplement, Noteholders
of a given series may hold their Notes through DTC (in the United States) or
Cedelbank 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 Notes in respect of a given
series. Cedelbank and Euroclear will hold omnibus positions on behalf of the
Cedelbank Participants and the Euroclear Participants, respectively, through
customers' securities accounts in Cedelbank'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 certificates.
Participants include securities brokers and dealers, banks, trust companies and
clearing corporations. Indirect access to the
26
<PAGE>
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 Cedelbank 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 Cedelbank 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. Cedelbank Participants and Euroclear
Participants may not deliver instructions directly to the Depositaries.
Because of time-zone differences, credits of securities in Cedelbank 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
Cedelbank Participant or Euroclear Participant on such business day. Cash
received in Cedelbank or Euroclear as a result of sales of securities by or
through a Cedelbank 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 Cedelbank or Euroclear cash account only as of the business day
following settlement in DTC.
The Noteholders 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, Notes of such series may do so only through Participants
and Indirect Participants. In addition, Noteholders of a given series will
receive all distributions of principal and interest from the applicable
Indenture Trustee through the Participants who in turn will receive them from
DTC. Under a book-entry format, Noteholders of a given series may experience
some delay in their receipt of payments, since such payments will be forwarded
by the applicable Indenture 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 Noteholders. It is anticipated that the only
"Noteholder" in respect of any series will be Cede, as nominee of DTC.
Noteholders of a given series will not be recognized by the applicable
Indenture Trustee as Noteholders of such series, as such term is used in the
related Indenture, and such Noteholders will be permitted to exercise the
rights of Noteholders 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
Notes of a given series among Participants on whose behalf it acts with respect
to such Notes and to receive and transmit distributions of principal of, and
interest on, such Notes. Participants and Indirect Participants with which the
Noteholders of a given series have accounts with respect to such Notes
similarly are required to make book-entry transfers and receive and transmit
such payments on behalf of their respective Noteholders of such series.
Accordingly, although such Noteholders will not possess Notes, the Rules
provide a mechanism by which Participants will receive payments and will be
able to transfer their interests.
Because DTC can only act on behalf of Participants, who in turn act on behalf
of Indirect Participants and certain banks, the ability of a Noteholder of a
given series to pledge Notes of such series to persons or entities that do not
participate in the DTC system, or to otherwise act with respect to such Notes,
may be limited due to the lack of a physical certificate for such Notes.
27
<PAGE>
DTC will advise the Administrator in respect of each Trust that it will take
any action permitted to be taken by a Noteholder of the related series under
the related Indenture only at the direction of one or more Participants to
whose accounts with DTC the Notes 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.
Cedelbank is incorporated under the laws of Luxembourg as a bank. Cedelbank
holds securities for its participating organizations ("Cedelbank Participants")
and facilitates the clearance and settlement of securities transactions between
Cedelbank Participants through electronic book-entry changes in accounts of
Cedelbank Participants, thereby eliminating the need for physical movement of
certificates. Transactions may be settled in Cedelbank in any of 28 currencies,
including United States dollars. Cedelbank provides to its Cedelbank
Participants, among other things, services for safekeeping, administration,
clearance and settlement of internationally traded securities and securities
lending and borrowing. Cedelbank interfaces with domestic markets in several
countries. As a professional depository, Cedelbank is subject to regulation by
the Luxembourg Monetary Institute. Cedelbank 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 Cedelbank is also available to others,
such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Cedelbank 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, 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 or relationship with persons holding through Euroclear
Participants.
Except as required by law, neither the Administrator in respect of a Trust
nor the applicable Indenture Trustee will have any liability for any aspect of
the records relating to or payments made on account of beneficial ownership
interests of the related Notes held by Cede, as nominee for DTC, or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
28
<PAGE>
Definitive Notes
Unless otherwise specified in the related Prospectus Supplement, the Notes
will be issued in fully registered, certificated form ("Definitive Notes") to
the Noteholders of a given series or their nominees, rather than to DTC or its
nominee, only if (i) the Administrator in respect of the related Trust advises
the applicable Indenture Trustee in writing that DTC is no longer willing or
able to discharge properly its responsibilities as depository with respect to
such Notes and such Administrator is unable to locate a qualified successor,
(ii) such Administrator, 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 Servicer Default under the related Sale and
Servicing Agreement, Noteholders representing at least a majority of the
outstanding principal amount of such Notes advise the applicable Indenture
Trustee through DTC in writing that the continuation of a book-entry system
through DTC (or a successor thereto) is no longer in such Noteholders' best
interest.
Upon the occurrence of any event described in the immediately preceding
paragraph, the applicable Indenture Trustee will be required to notify all such
Noteholders through Participants of the availability of Definitive Notes. Upon
surrender by DTC of the definitive certificates representing such Notes and
receipt of instructions for re-registration, the applicable Indenture Trustee
will reissue such Notes as Definitive Notes to such Noteholders.
Distributions of principal of, and interest on, such Notes will thereafter be
made by the applicable Indenture Trustee in accordance with the procedures set
forth in the related Indenture directly to holders of Definitive Notes in whose
names the Definitive Notes were registered at the close of business on the
applicable Record Date specified for such Notes 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
Indenture Trustee. The final payment on any such Note, however, will be made
only upon presentation and surrender of such Note at the office or agency
specified in the notice of final distribution to the applicable Noteholders.
Definitive Notes in respect of a given series of Notes will be transferable
and exchangeable at the offices of the applicable Indenture Trustee or of a
certificate registrar named in a notice delivered to holders of such Definitive
Notes. No service charge will be imposed for any registration of transfer or
exchange, but the applicable Indenture 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, either the Servicer or the Sub-Servicer will provide to the
related Indenture Trustee a statement (which such Indenture Trustee shall
forward to the Noteholders of record) and to the related Owner Trustee a
statement (which such Owner Trustee shall forward to the related
Certificateholders), in each case setting forth the following information as to
such Notes and Certificates with respect to such Payment Date or the related
Collection Period:
(i) the amount of the distribution allocable to principal of each class of
such Notes and to the Certificate Balance of each class of such Certificates;
(ii) the amount of the distribution allocable to interest and the Interest
Rate or Pass-Through Rate on or with respect to each class of Securities of
such series in each case applicable to distributions made on such Payment Date;
(iii) the Pool Balance, and the Note Value, if applicable, as of the close of
business on the last day of the related Collection Period;
(iv) the aggregate outstanding principal balance and the Note Pool Factor for
each class of such Notes, and the Certificate Balance and the Certificate Pool
Factor for each class of such Certificates, each after giving effect to all
payments reported under (i) above on such date;
29
<PAGE>
(v) the amount of the Servicing Fee paid to the Servicer with respect to the
related Collection Periods;
(vi) the amount of the Administration Fee paid with respect to the related
Collection Period;
(vii) the amount of the aggregate Purchase Amounts for Receivables that have
been repurchased, if any, for such Collection Period;
(viii) the amount of the aggregate Realized Losses, if any, for such
Collection Period; and
(ix) the balance of the Reserve Account, if any, on such Payment Date, after
giving effect to changes therein on such Payment Date, and the Specified
Reserve Account Balance for such Payment Date.
Each amount set forth pursuant to subclauses (i), (ii), (v) and (vii) with
respect to the Notes or the Certificates of any Series will be expressed as a
dollar amount per $1,000 of the initial principal balance of such Notes or the
initial Certificate Balance of such Certificates, as applicable.
Within the prescribed period of time for tax reporting purposes after the end
of each calendar year, the applicable Indenture Trustee will provide to the
Noteholders a statement containing the amounts described in (i) and (ii) (other
than information relating to the Note Interest Rate and the Pass-Through Rate)
above for that calendar year and any other information required by applicable
tax laws, for the purpose of the Noteholders' preparation of federal income tax
returns. Within the prescribed period of time for tax reporting purposes after
the end of each Trust tax year, the Owner Trustee will provide to the
Certificateholders a statement containing the amounts described in (i), (ii)
(other than information relating to the Note Interest Rate and the Pass-Through
Rate), (v) and (vii) above for that tax year and any other information required
by applicable tax laws for the purposes of the Certificateholders' preparation
of federal income tax returns.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain terms of each Sale and Servicing
Agreement pursuant to which a Trust will purchase Receivables from the Seller
and the Servicer will undertake to service, or cause the Sub-Servicer to
service, such Receivables, each Purchase Agreement pursuant to which the Seller
will purchase Receivables from JDCC, each Administration Agreement pursuant to
which JDCC will undertake certain administrative duties with respect to a Trust
and each Trust Agreement pursuant to which a Trust will be created and the
Certificates in respect of such Trust will be issued (collectively, the
"Transfer and Servicing Agreements"). Forms of the Transfer and Servicing
Agreements have been filed as exhibits to the Registration Statement of which
this 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 Transfer and
Servicing Agreements.
Sale and Assignment of Receivables
On the Closing Date specified with respect to any given Trust in the related
Prospectus Supplement (the "Closing Date"), JDCC will sell and assign to the
Seller, without recourse, its entire interest in the related Receivables,
including its security interests in the related Financed Equipment, pursuant to
a Purchase Agreement. On such Closing Date, the Seller will sell and assign to
the applicable Trust, without recourse, its entire interest in such
Receivables, including its security interests in the related Financed
Equipment, pursuant to a Sale and Servicing Agreement. Each Receivable will be
identified in a schedule appearing as an exhibit to such Sale and Servicing
Agreement. The applicable Owner Trustee, on behalf of such Trust, will,
concurrently with such sale and assignment, execute, authenticate and deliver
the related Notes and the Certificates. Unless otherwise provided in the
related Prospectus Supplement, the proceeds received from the sale of the Notes
and the Certificates of a given series will be applied to the purchase of the
related Receivables from the Seller.
To the extent specified in the related Prospectus Supplement, JDCC will have
the right under the Purchase Agreement (subject to certain limitations) to sell
additional Receivables to the Seller. Unless otherwise specified in the related
Prospectus Supplement, the addition of any such Receivables to the related pool
of
30
<PAGE>
Receivables will be subject to the following conditions, among others: (a) each
such additional Receivable must satisfy the eligibility criteria set forth in
the related Prospectus Supplement; (b) JDCC must represent and warrant that the
inclusion of such additional Receivables in the related pool of Receivables
will not cause an Early Amortization Event (as defined in the related
Prospectus Supplement) to occur; and (c) unless otherwise set forth in the
related Prospectus Supplement, each Rating Agency must have provided written
confirmation that such addition will not result in a reduction or withdrawal of
the rating of any outstanding related Securities. On the applicable purchase
date (as specified in the related Prospectus Supplement) for any additional
Receivable, all such additional Receivables will be sold by JDCC to the Seller
and will be transferred by the Seller to the related Trust.
In each Purchase Agreement, JDCC will represent and warrant to the Seller,
among other things, that (i) the information provided with respect to the
related Receivables is correct in all material respects; (ii) the Obligor on
each related Receivable is required to maintain physical damage insurance
covering the Financed Equipment in accordance with JDCC's normal requirements;
(iii) at the applicable Closing Date (or, if so specified in the related
Prospectus Supplement, the applicable purchase date), the related Receivables
are free and clear of all security interests, liens, charges and encumbrances
and no offsets, defenses, or counterclaims have been asserted or threatened;
(iv) at the applicable Closing Date (or, if so specified in the related
Prospectus Supplement, the applicable purchase date), each of the related
Receivables is secured by a first perfected security interest in the Financed
Equipment in favor of JDCC; and (v) each Receivable, at the time it was
originated, complied and, at the applicable Closing Date (or, if so specified
in the related Prospectus Supplement, the applicable purchase date), complies
in all material respects with applicable federal and state laws. Unless
otherwise provided in the related Prospectus Supplement, as of the last day of
the second (or, if the Seller elects, the first) month following the discovery
by or notice to the Seller of a breach of any such representation or warranty
that materially and adversely affects the interests of a Trust in a Receivable,
unless the breach is cured, the Seller will repurchase such Receivable from
such Trust, and JDCC will repurchase the Receivable from the Seller, at a price
equal to the unpaid principal balance owed by the Obligor plus interest thereon
at the respective Receivable Rate to the last day of the month of repurchase
(the "Purchase Amount"). The obligation of the Seller to repurchase any
Receivable with respect to which any such representation or warranty has been
breached is subject to JDCC's repurchase of such Receivable. Unless otherwise
specified in the related Prospectus Supplement, the repurchase obligation will
constitute the sole remedy available to the Noteholders, the Indenture Trustee,
the Certificateholders or the Owner Trustee in respect of such Trust for any
such uncured breach.
To assure uniform quality in servicing the Receivables and to reduce
administrative costs, the Seller will, pursuant to each Sale and Servicing
Agreement, appoint the Servicer as custodian of the Receivables. JDCC's
accounting records and computer systems will reflect the sale and assignment of
the related Receivables to the Seller and the sale and assignment by the Seller
to the applicable Trust, and UCC financing statements reflecting such sales and
assignments will be filed.
Accounts
With respect to each Trust, the Servicer will establish and maintain with the
applicable Indenture Trustee one or more accounts, in the name of such
Indenture Trustee on behalf of the related Noteholders and the
Certificateholders, 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 Indenture Trustee an account, in the
name of such Indenture Trustee on behalf of such Noteholders, in which amounts
released from the Collection Account and the Reserve Account or other credit
enhancement, if any, for distribution to such Noteholders will be deposited and
from which all distributions to such Noteholders will be made (the "Note
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 Note
Distribution Account, any Reserve Account and other accounts identified as such
in the related Prospectus Supplement (collectively, the "Trust
31
<PAGE>
Accounts") shall be invested as provided in the related Sale and Servicing
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 Seller or its affiliates or trusts
originated by the Seller 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 next distribution. 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 Noteholders or
Certificateholders could result, which could, in turn, increase the average
life of the Notes or the Certificates 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 and the Certificate Distribution Account 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 Owner 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.
With respect to each Trust, the Servicer will also establish and maintain
with the applicable Owner Trustee an account, in the name of such Owner
Trustee, on behalf of the related Certificateholders, in which amounts released
from the related Collection Account and the related Reserve Account for
distribution to such Certificateholders will be deposited and from which all
distributions to such Certificateholders will be made (the "Certificate
Distribution Account").
Servicing Procedures
The Servicer will make, or cause the Sub-Servicer to make, reasonable efforts
to collect all payments due with respect to the Receivables held by any Trust
and, in a manner consistent with the related Sale and Servicing Agreement, will
continue, or cause the Sub-Servicer to continue, such collection procedures as
the Sub-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 Sub-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 maturity date for
a Receivable (as described in the related Prospectus Supplement)) will result
in the Servicer purchasing such Receivable for the Purchase Amount. The
Servicer may sell the Financed Equipment securing the respective Receivable at
a public or private sale, or take any other action permitted by applicable law.
See "Certain Legal Aspects of the Receivables".
32
<PAGE>
Payments on Receivables
With respect to each Trust, the Sub-Servicer will deposit all payments on the
related Receivables (from whatever source) and all proceeds of such Receivables
collected during each collection period specified in the related Prospectus
Supplement (each, a "Collection Period") into the related Collection Account;
provided, however, that when a Receivable becomes a Liquidated Receivable (as
defined below) such Receivable will be reassigned to the Seller and any
proceeds after such date (deficiency proceeds) would not be proceeds of
Receivables in the Trust. "Liquidated Receivables" means defaulted Receivables
in respect of which the Financed Equipment has been sold or otherwise disposed
of. Except under certain conditions described in the related Prospectus
Supplement, the Sub-Servicer will be required to deposit such amounts into the
related Collection Account within two business days of receipt thereof. If
certain rating agency conditions are satisfied, the deposit of collections for
a fiscal month will be made within two business days prior to the 15th day of
the calendar month following such fiscal month (or, if such fiscal month ends
in the early part of a calendar month, the 15th day of such calendar month).
Pending deposit into the related Collection Account, collections may be
invested by the Servicer at its own risk and for its own benefit, and will not
be segregated from funds of the Servicer.
Servicing Compensation
Unless otherwise specified in the Prospectus Supplement with respect to any
Trust, the Servicer will be entitled to receive the Servicing Fee for each
Collection Period in an amount equal to a specified percentage per annum (as
set forth in the related Prospectus Supplement, the "Servicing Fee Rate") of
the Pool Balance as of the first day of such Collection Period. The Servicing
Fee (together with any portion of the Servicing Fee that remains unpaid from
prior Payment Dates) will be paid solely to the extent of the Interest
Distribution Amount (as defined in the related Prospectus Supplement) and,
unless otherwise disclosed in the related Prospectus Supplement, will be paid
prior to the distribution of any portion of the Interest Distribution Amount to
the related Noteholders or the Certificateholders and prior to payment of the
Administration Fee.
The 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 the Sub-Servicer's normal practices and
procedures.
The Servicing Fee will compensate the Servicer for performing, or causing the
Sub-Servicer to perform, 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
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 Servicer for administering, or causing the Sub-Servicer to
administer, the Receivables, accounting, or causing the Sub-Servicer to
account, for collections and furnishing or causing the Sub-Servicer to furnish,
statements to the applicable Owner Trustee and the applicable Indenture Trustee
with respect to distributions. The Servicing Fee also will reimburse the
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 Owner 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.
33
<PAGE>
With respect to each Trust, on each Payment Date collections on the related
Receivables will be transferred from the Collection Account to the Note
Distribution Account and the Certificate Distribution Account for distribution
to Noteholders and Certificateholders to the extent provided in the related
Prospectus Supplement. Credit enhancement, such as a Reserve Account, will 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.
If the related Prospectus Supplement specifies that there is to be a
Revolving Period for a Trust, during such Revolving Period (unless otherwise
provided in the related Prospectus Supplement), no amount will be required to
be set aside to make principal payments on the Notes and distributions of
Certificate Balance on the Certificates. Accordingly, certain amounts (as
specified in the related Prospectus Supplement) will be available for
reinvestment in additional Receivables to be purchased from the Seller and will
be paid to the Seller to the extent so reinvested.
If the related Prospectus Supplement specifies that there is to be an Early
Amortization Period and/or a Wind Down Period for a Trust, during such Early
Amortization Period or such Wind Down Period, certain amounts (as specified in
the related Prospectus Supplement) will be retained by the Trust and not paid
to the Seller to the extent required to be set aside for the purpose of making
payments of principal on the related Notes and distributions with respect to
the Certificate Balance on the related Certificates, all as more fully set
forth in the related Prospectus Supplement. For each Collection Period during
an Early Amortization Period or the Wind Down Period for a Trust, certain
amounts (as specified in the related Prospectus Supplement) will be applied to
make the required deposits into the Note Distribution Account and the
Certificate Distribution Account. The relative priorities of such deposits and
the amounts required to be so deposited for any Distribution Date will be set
forth in the related Prospectus Supplement. During the Wind Down Period for a
Trust, the amount to be applied to payments on the Securities will be limited
as set forth in the related Prospectus Supplement. In general, during an Early
Amortization Period for a Trust, all collections and other available amounts
will be available to make payments on the related Securities.
Payments will be made on the Securities during the Wind Down Period and any
Early Amortization Period to the extent, if any, described in the related
Prospectus Supplement.
Credit and Cash Flow Enhancement
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 subordination of one or more classes of Securities,
Reserve Accounts, over-collateralization, letters of credit, credit or
liquidity facilities, surety bonds, guaranteed investment contracts, swaps or
other interest rate protection agreements, 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 a Reserve Account and other forms of credit enhancement for
the benefit of any class or series of Securities is intended to enhance the
likelihood of receipt by the Securityholders of 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. Unless otherwise
specified 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,
34
<PAGE>
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.
Reserve Account
If so provided in the related Prospectus Supplement, pursuant to the related
Sale and Servicing Agreement, the Seller will establish for a series or class
of Securities one or more accounts, as specified in the related Prospectus
Supplement (the "Reserve Account"), which will be maintained with the
applicable Indenture Trustee. Unless otherwise provided in the related
Prospectus Supplement, the Reserve Account will be funded by an initial deposit
by the Seller on the related Closing Date in the amount set forth in the
related Prospectus Supplement. As further described in the related Prospectus
Supplement, the amount on deposit in the Reserve Account may be increased on
each Payment Date thereafter up to the Specified Reserve Account Balance (as
defined in the related Prospectus Supplement) by the deposit therein of the
amount of collections on the related Receivables remaining on each such Payment
Date after the payment of all other required payments and distributions on such
date. The related Prospectus Supplement will describe the circumstances and
manner under which distributions may be made out of the Reserve Account, either
to holders of the Securities covered thereby or to the Seller.
Net Deposits
As an administrative convenience, unless the applicable Prospectus Supplement
provides otherwise, the Servicer is required to remit collections within two
Business Days of their receipt, and the Sub-Servicer will make the deposit of
collections and Purchase Amounts for any Trust for or with respect to the
related Collection Period net of distributions to be made to the Servicer or
the Sub-Servicer with respect to such Collection Period. The Sub-Servicer,
however, will account to the Indenture Trustee, the Owner Trustee, the
Noteholders and the Certificateholders with respect to each Trust as if all
deposits, distributions and transfers were made individually.
Early Amortization Events
The related Prospectus Supplement may set forth various "Early Amortization
Events" with respect to a Trust. Upon the occurrence of any such specified
event, an Early Amortization Event with respect to such Trust will be deemed to
have occurred without any notice or other action on the part of any other
party. The Early Amortization Period will commence as of the day on which the
Early Amortization Event is deemed to occur. During an Early Amortization
Period for such Trust, certain amounts (as specified in the related Prospectus
Supplement) will be allocated to principal payments on the related Notes and
distributions of the Certificate Balance on the related Certificates and will
be paid as set forth in the related Prospectus Supplement. If an Early
Amortization Event commences during the Wind Down Period, amounts, if any, on
deposit in the Note Distribution Account and the Certificate Distribution
Account will be paid to the holders of the Securities on the first Payment Date
for such Early Amortization Period as described in the related Prospectus
Supplement.
So long as the related Scheduled Revolving Period Termination Date has not
occurred, the Revolving Period may recommence following the occurrence of an
Early Amortization Event under certain circumstances as described in the
related Prospectus Supplement.
Statements to Indenture Trustees and Trust
Prior to each Payment Date with respect to each series of Securities, the
Servicer will, or will cause the Sub-Servicer to, provide to the applicable
Indenture Trustee and the applicable Owner Trustee 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
"Certain Information Regarding the Securities--Reports to Securityholders".
35
<PAGE>
Evidence as to Compliance
Each Sale and Servicing Agreement will provide that a firm of independent
public accountants will furnish to the related Trust and the applicable
Indenture Trustee, annually, a statement as to compliance by the Servicer and
the Sub-Servicer during the preceding 12 months ended October 31 (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 Sale and Servicing Agreement will also provide for delivery to the
related Trust and the applicable Indenture Trustee of a certificate signed by
an officer of the Servicer stating that the Servicer either has fulfilled, or
has caused the Sub-Servicer to fulfill, its obligations under such Sale and
Servicing Agreement in all material respects throughout the preceding 12 months
ended October 31 (or, in the case of the first such certificate, the period
from the applicable Closing Date to the following October 31) or, if there has
been a default in the fulfillment of any such obligation in any material
respect, describing each such default. The Servicer also will agree to give
each Indenture Trustee and each Owner Trustee notice of certain Servicer
Defaults under the related Sale and Servicing 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 Owner Trustee.
Certain Matters Regarding the Servicer
Each Sale and Servicing Agreement will provide that JDCC may not resign from
its obligations and duties as Servicer thereunder, except upon determination
that JDCC's performance of such duties is no longer permissible under
applicable law. No such resignation will become effective until the related
Indenture Trustee or a successor servicer has assumed JDCC's servicing
obligations and duties under such Sale and Servicing Agreement.
Each Sale and Servicing Agreement will further provide that neither the
Servicer nor the Sub-Servicer nor any of their respective directors, officers,
employees, or agents shall be under any liability to the related Trust, the
related Noteholders or the related Certificateholders for taking any action or
for refraining from taking any action pursuant to such Sale and Servicing
Agreement, or for errors in judgment; provided, however, that neither the
Servicer nor the Sub-Servicer nor any such person will be protected against any
liability that would otherwise be imposed by reason of willful misfeasance, bad
faith or negligence in the performance of duties or by reason of reckless
disregard of obligations and duties thereunder. In addition, such Sale and
Servicing Agreement will provide that neither the Servicer nor the Sub-Servicer
is under any obligation to appear in, prosecute, or defend any legal action
that is not incidental to its servicing responsibilities under such Sale and
Servicing Agreement and that, in its opinion, may cause it to incur any expense
or liability.
Under the circumstances specified in each Sale and Servicing Agreement, any
entity into which the Servicer may be merged or consolidated, or any entity
resulting from any merger or consolidation to which the Servicer is a party, or
any entity succeeding to the business of the Servicer or, with respect to its
obligations as Servicer, any corporation 50% or more of the voting stock of
which is owned, directly or indirectly, by Deere, which corporation or other
entity in each of the foregoing cases assumes the obligations of the Servicer,
will be the successor of the Servicer under such Sale and Servicing Agreement.
Servicer Default
Except as otherwise provided in the related Prospectus Supplement, "Servicer
Default" under each Sale and Servicing Agreement will consist of (i) any
failure by the Servicer to deliver, or to cause the Sub-Servicer to deliver, to
the applicable Indenture Trustee for deposit in any of the related Trust
Accounts or the related Certificate Distribution Account any required payment
or to direct such Indenture Trustee to make any required distributions
therefrom, which failure continues unremedied for three Business Days after
written notice from
36
<PAGE>
such Indenture Trustee or the applicable Owner Trustee is received by the
Servicer or after discovery by the Servicer; (ii) any failure by the Servicer,
the Sub-Servicer or the Seller, as the case may be, duly to observe or perform
in any material respect any other covenant or agreement in such Sale and
Servicing Agreement, which failure materially and adversely affects the rights
of the related Noteholders or Certificateholders and which continues unremedied
for sixty days after the giving of written notice of such failure (1) to the
Servicer or the Seller, as the case may be, by the applicable Indenture Trustee
or the applicable Owner Trustee or (2) to the Servicer or the Seller, as the
case may be, and to the applicable Indenture Trustee and the applicable Owner
Trustee by holders of the related Notes or Certificates, as applicable,
evidencing not less than 25% in principal amount of such outstanding Notes or
Certificates; and (iii) certain events of insolvency, readjustment of debt,
marshalling of assets and liabilities, or similar proceedings with respect to
the Servicer and certain actions by the Servicer indicating its insolvency,
reorganization pursuant to bankruptcy proceedings, or inability to pay its
obligations (each, an "Insolvency Event").
Rights upon Servicer Default
Unless otherwise provided in the related Prospectus Supplement, as long as a
Servicer Default under a Sale and Servicing Agreement remains unremedied, the
applicable Indenture Trustee or holders of Notes of the related series
evidencing not less than 25% in principal amount of such then outstanding Notes
may terminate all the rights and obligations of the Servicer under such Sale
and Servicing Agreement, whereupon a successor servicer appointed by such
Indenture Trustee or such Indenture Trustee will succeed to all the
responsibilities, duties and liabilities of the Servicer under such Sale and
Servicing 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 Indenture Trustee or such Noteholders from effecting a transfer of
servicing. In the event that the Indenture 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 $50,000,000 and whose
regular business includes the servicing of a similar type of receivables. Such
Indenture 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 Sale and Servicing Agreement.
Waiver of Past Defaults
With respect to each Trust, unless otherwise provided in the related
Prospectus Supplement, the holders of Notes evidencing at least a majority in
principal amount of the then outstanding Notes of the related series (or the
holders of Certificates of such series evidencing not less than a majority of
the outstanding Certificate Balance, in the case of any default which does not
adversely affect the applicable Indenture Trustee or such Noteholders) may, on
behalf of all such Noteholders and Certificateholders, waive any default by the
Servicer in the performance of its obligations under the related Sale and
Servicing Agreement and its consequences, except a default in making, or
causing the Sub-Servicer to make, any required deposits to or payments from any
of the Trust Accounts in accordance with such Sale and Servicing Agreement. No
such waiver shall impair the Noteholders' or the Certificateholders' rights
with respect to subsequent defaults.
Amendment
Unless otherwise provided in the related Prospectus Supplement, each of the
Transfer and Servicing Agreements may be amended by the parties thereto,
without the consent of the related Noteholders or the Certificateholders, for
the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of such Transfer and Servicing Agreements or
of modifying in any manner the rights of such Noteholders or
Certificateholders; provided that such action will not, in the opinion of
counsel satisfactory to the applicable Indenture Trustee, materially and
adversely affect the interests of any such Noteholder or Certificateholder.
Unless otherwise specified in the related Prospectus Supplement, the Transfer
and Servicing Agreements may also be amended by the Seller, the Servicer, the
applicable Trust and the applicable Indenture Trustee with the consent of the
holders of Notes evidencing at least a majority in principal amount of then
37
<PAGE>
outstanding Notes of the related series and the holders of Certificates of such
series evidencing at least a majority of the Certificate Balance for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of such Transfer and Servicing Agreements or of modifying
in any manner the rights of such Noteholders or Certificateholders; 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 Noteholders or the Certificateholders or (ii) reduce the
aforesaid percentage of the Notes and Certificates of such series which are
required to consent to any such amendment, without the consent of the holders
of all the outstanding Notes and Certificates of such series.
Each Trust Agreement will provide that the applicable Owner Trustee does not
have the power to commence a voluntary proceeding in bankruptcy with respect to
the related Trust without the unanimous prior approval of all
Certificateholders (including the Seller, if applicable) of such Trust and the
delivery to such Owner Trustee by each such Certificateholder of a certificate
certifying that such Certificateholder reasonably believes that such Trust is
insolvent.
Payment of Notes
Upon the payment in full of all outstanding Notes of a given series and the
satisfaction and discharge of the related Indenture, the applicable Owner
Trustee will succeed to all the rights of the applicable Indenture Trustee, and
the Certificateholders of such series will succeed to all the rights of the
Noteholders of such series, under the related Sale and Servicing Agreement,
except as otherwise provided therein.
Termination
With respect to each Trust, the obligations of the Servicer, the Sub-
Servicer, the Seller, the applicable Owner Trustee and the applicable Indenture
Trustee pursuant to the related Transfer and Servicing Agreements 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
Noteholders and Certificateholders of the related series of all amounts
required to be paid to them pursuant to such Transfer and Servicing Agreements.
Unless otherwise provided in the related Prospectus Supplement, in order to
avoid excessive administrative expense, the Servicer will be permitted in
respect of the applicable Trust, unless otherwise specified in the related
Prospectus Supplement, at its option to purchase from such Trust, as of the end
of any Collection Period immediately preceding a Payment Date, if the aggregate
principal amount of the related Receivables is less than a specified percentage
of the initial Pool Balance in respect of such Trust, 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 Notes and the Certificates
will be redeemed following such purchase.
If and to the extent provided in the related Prospectus Supplement with
respect to a Trust, the applicable Indenture 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 Indenture Trustee receives satisfactory bids as
described in such Prospectus Supplement, then the Receivables remaining in such
Trust 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.
38
<PAGE>
Administration Agreement
JDCC, in its capacity as administrator (the "Administrator"), will enter into
an agreement (the "Administration Agreement") with each Trust and the
applicable Indenture Trustee pursuant to which the Administrator will agree, to
the extent provided in such Administration Agreement, to provide the notices
and to perform other administrative obligations required by the related
Indenture. Unless otherwise specified in the related Prospectus Supplement, as
compensation for the performance of the Administrator's obligations under the
related Administration Agreement and as reimbursement for its expenses related
thereto, the Administrator will be entitled to a monthly administration fee in
an amount equal to $100 per month, or such other amount as may be set forth in
the related Prospectus Supplement (the "Administration Fee").
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
Security Interest in Equipment
The retail installment sale contracts and the loan contracts constitute
personal property security agreements and include grants of security interests
in the equipment under the applicable UCC. Perfection of security interests in
the equipment is generally governed by the laws of the state in which such
equipment (or the obligor, if the equipment constitutes mobile goods under the
UCC) is located. The UCC generally governs the perfection of such interests.
However, under the laws of certain states and under certain circumstances,
perfection of security interests in agricultural or construction equipment is
generally governed by certificate of title registration laws of the state in
which such equipment is located.
All of such contracts acquired by JDCC name the applicable Sales Company as
obligee or assignee and as the secured party. The Sales Companies are
instructed to take all actions necessary under the laws of the state in which
the financed equipment is located to perfect their security interests in the
financed equipment, including the filing of financing statements in the
appropriate offices and, where applicable, having a notation of its lien
recorded on such equipment's certificate of title. Obligors are not notified of
the sale from the Sales Companies to JDCC. Furthermore, because either the
Servicer or the Sub-Servicer continues to service the contracts, the Obligors
are not notified of the sale from JDCC to the Seller and, in the ordinary
course, no action is taken to record the transfer of the security interest from
JDCC to the Seller by amendment of the financing statements or, if applicable,
the certificates of title for the financed equipment or otherwise. To perfect
its interests in the contracts, JDCC takes possession of the contracts.
With respect to each Trust, pursuant to the related Purchase Agreement, JDCC
will sell and assign its interests in the equipment securing the related
Receivables to the Seller, and pursuant to the related Sale and Servicing
Agreement, the Seller will assign its interests in the equipment securing such
Receivables to such Trust. However, because of the administrative burden and
expense, none of the Seller, the Servicer, the Sub-Servicer or the applicable
Owner Trustee will amend any financing statement or, if applicable, any
certificate of title to identify such Trust as the new secured party on the
financing statement or, if applicable, the certificate of title relating to the
equipment. Also, the Servicer will continue to hold any certificates of title
relating to the equipment in its possession as custodian for such Trust
pursuant to the related Sale and Servicing Agreement. See "Description of the
Transfer and Servicing Agreements--Sale and Assignment of Receivables". There
are certain limited circumstances under the UCC and applicable Federal law in
which prior or subsequent transferees of Receivables held by a Trust could have
an interest in such Receivables with priority over such Trust's interest. A
purchaser of the Receivables who gives new value and takes possession of the
instruments which evidence the Receivables (i.e., the chattel paper) in the
ordinary course of his or her business may, under certain circumstances, have
priority over the interest of such Trust in the Receivables. In addition, while
JDCC is the Servicer, cash collections on the Receivables will, under certain
circumstances, be commingled with the funds of JDCC and, in the event of the
bankruptcy of JDCC, the Trust may not have a perfected interest in such
collections.
In most states, an assignment such as that under each Purchase Agreement and
each Sale and Servicing Agreement is an effective conveyance of a security
interest without amendment of any lien perfected by a
39
<PAGE>
financing statement relating to the equipment or, if applicable, noted on an
equipment's certificate of title, and the assignee succeeds thereby to the
assignor's rights as secured party. By not identifying a Trust as the secured
party on the financing statement or certificate of title, the security interest
of such Trust in the equipment could be defeated through fraud or negligence.
In the absence of error, fraud or forgery by the equipment owner or the
Servicer or the Sub-Servicer or administrative error by state or local
agencies, the proper initial filing of the financing statement relating to the
equipment or, if applicable, the notation of the relevant Sales Company's lien
on the certificates will be sufficient to protect such Trust against the rights
of subsequent purchasers of the equipment or subsequent lenders who take a
security interest in the equipment securing a Receivable. If there is any
equipment as to which the original secured party failed to obtain and assign to
JDCC a perfected security interest, the security interest of JDCC would be
subordinated to, among others, subsequent purchasers of the equipment and
holders of perfected security interests. Such a failure, however, would
constitute a breach of the warranties of the Servicer under the related
Purchase Agreement and would create an obligation of the Servicer to repurchase
the related Receivables unless the breach is cured. The Seller will assign its
rights pursuant to the related Purchase Agreement to the related Trust. See
"Description of the Transfer and Servicing Agreements--Sale and Assignment of
Receivables".
Under the laws of most states, the perfected security interest in personal
property would continue for four months after such property is moved to a state
other than the state in which a financing statement was filed initially to
perfect the security interest in such property, or, if applicable, in which
such property is initially registered. In the ordinary course of servicing
receivables, the Sub-Servicer takes steps to effect re-perfection upon receipt
of information from an obligor as to the relocation of any movable property.
In states where equipment is subject to certificate of title and registration
laws, to re-register the equipment the secured party which has its lien noted
on the equipment's certificate of title must either surrender the certificate
of title, or, in states where the secured party does not physically hold the
certificate of title, agree in writing to allow the re-registration. The
secured party would therefore have the opportunity to re-perfect its security
interest in the equipment being relocated or re-registered.
Under each Sale and Servicing Agreement, the Servicer is obligated to take,
or to cause the Sub-Servicer to take, appropriate steps, at its own expense, to
maintain perfection of security interests in the equipment and is obligated to
repurchase the related Receivable if it fails to do so.
Under the laws of most states, liens for repairs performed on the equipment
and liens for unpaid taxes take priority over even a perfected security
interest in such goods. Under each Sale and Servicing Agreement, the Servicer
will represent to the related Trust that, as of the date the related
Receivables are sold to such Trust, each security interest in Financed
Equipment is prior to all other present liens upon and security interests in
such Financed Equipment. However, liens for repairs or taxes could arise at any
time during the term of a Receivable. No notice will be given to the Owner
Trustee, the Indenture Trustee, Noteholders or Certificateholders in respect of
a given Trust in the event such a lien arises.
Repossession
In the event of default by obligors, the holder of the retail installment
sale or loan contract has all the remedies of a secured party under the UCC,
except where specifically limited (such as in Louisiana) by other state laws.
Among the UCC remedies, the secured party generally has the right to perform
self-help repossession unless such act would constitute a breach of the peace.
Self-help is the method employed by the Sub-Servicer in most cases and is
accomplished simply by retaking possession of the financed equipment. In the
event of default by the obligor, some jurisdictions require that the obligor be
notified of the default and be given a time period within which he may cure the
default prior to repossession. Generally, the right of reinstatement may be
exercised on a limited number of occasions in any one-year period. In cases
where the obligor objects or raises a defense to repossession, or if otherwise
required by applicable state law, a court order must be obtained from the
appropriate state court, and the equipment must then be repossessed in
accordance with that order.
40
<PAGE>
Notice of Sale; Redemption Rights
The UCC and other state laws generally require the secured party to provide
the obligor with reasonable notice of the date, time and place of any public
sale and/or the date after which any private sale of the collateral may be
held. The obligor generally has the right to redeem the collateral prior to
actual sale by paying the secured party the unpaid principal balance of the
obligation plus reasonable expenses for repossessing, holding and preparing the
collateral for disposition and arranging for its sale, plus, in some
jurisdictions, reasonable attorneys' fees, or, in some states, by payment of
delinquent installments or the unpaid balance.
Deficiency Judgments and Excess Proceeds
The proceeds of resale of the equipment generally will be applied first to
the expenses of resale and repossession and then to the satisfaction of the
indebtedness. While some states impose prohibitions or limitations on
deficiency judgments if the net proceeds from resale do not cover the full
amount of the indebtedness, a deficiency judgment can be sought in those states
that do not prohibit or limit such judgments. 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.
Occasionally, after resale of the equipment and payment of all expenses and
all indebtedness, there is a surplus of funds. In that case, the UCC requires
the lender to remit the surplus to any holder of a lien with respect to the
equipment or if no such lien holder exists or there are remaining funds, the
UCC requires the lender to remit the surplus to the obligor.
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 provided under the 14th Amendment to the Constitution of the United
States. Courts have generally upheld the notice provisions of the UCC and
related laws as reasonable or have found that the repossession and resale by
the creditor do not involve sufficient state action to afford constitutional
protection to consumers.
JDCC will warrant under each Purchase Agreement that each Receivable complies
with all requirements of applicable law in all material respects. Accordingly,
if an Obligor has a claim against the related Trust for violation of any law
and such claim materially and adversely affects such Trust's interest in a
Receivable, such violation would constitute a breach of the warranties of JDCC
under such Purchase Agreement and would create an obligation of JDCC to
repurchase the Receivable unless the breach is cured. See "Description of the
Transfer and Servicing Agreements--Sale and Assignment of Receivables".
Other
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 lender to
realize upon collateral or enforce a deficiency judgment. For example, in a
Chapter 11, 12 or 13 proceeding under the federal bankruptcy law, a court may
prevent a lender from repossessing the equipment, and, as part of the
rehabilitation plan, reduce the amount of the secured indebtedness to the
market value of the equipment 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 change the rate of interest and time
of repayment of the indebtedness.
41
<PAGE>
CERTAIN TAX CONSIDERATIONS
Unless otherwise specified in the related Prospectus Supplement, the
Prospectus Supplement for each series of Notes and for each series of
Certificates will summarize, subject to the limitations stated therein, federal
income tax considerations relevant to the purchase, ownership and disposition
of such Notes and Certificates. Information will also be provided with respect
to the tax laws of the State of Iowa in the related Prospectus Supplement
because the servicing and collecting of the Receivables will take place in
Iowa.
Legislation has been passed and enacted as part of the Seven Year Balanced
Budget Reconciliation Act of 1995 which creates a new type of statutory tax
entity called a financial asset securitization investment trust (a "FASIT")
that is designed to facilitate the securitization of debt obligations. Broadly
speaking, a FASIT will not be taxable under the legislation and instruments
issued thereby will be treated as debt. A Trust for a particular series of
Securities may elect to be treated as a FASIT or similar entity. Alternatively,
DRC could issue a particular series of Notes and elect to be treated as a FASIT
or similar entity. If such an election is made by any Issuer, the tax
consequences to holders will be discussed in the applicable Prospectus
Supplement.
ERISA CONSIDERATIONS
The Prospectus Supplement for each series of Notes will summarize, subject to
the limitations discussed therein, considerations under ERISA relevant to the
purchase of such Notes by employee benefit plans and the Prospectus Supplement
for each series of Certificates will summarize, subject to the limitations
discussed therein, considerations under ERISA relevant to the purchase of such
Certificates by employee benefit plans and individual retirement accounts.
PLAN OF DISTRIBUTION
On the terms and conditions set forth in an underwriting agreement with
respect to the Notes of a given series relating to a Trust and, if applicable,
an underwriting agreement with respect to the Certificates of a given series,
the Seller will agree to cause the related Trust to sell to the underwriters
named therein and in the related Prospectus Supplement and each of such
underwriters will severally agree to purchase, the principal amount of each
class of Notes and, if applicable, Certificates, as the case may be, of the
related series set forth therein and in the related Prospectus Supplement. On
the terms and conditions set forth in an underwriting agreement with respect to
the Notes of a given series relating to DRC (collectively, with the
underwriting agreements referred to in the preceding clause, the "Underwriting
Agreements") DRC will agree to sell to the underwriters named therein and in
the related Prospectus Supplement, and each of such underwriters will severally
agree to purchase the principal amount of each class of Notes of the related
series set forth therein and in the related Prospectus Supplement. In each of
the Underwriting Agreements with respect to any given series of Securities, the
several underwriters will agree, subject to the terms and conditions set forth
therein, to purchase all the Notes and Certificates, as the case may be,
described therein which are offered hereby and by the related Prospectus
Supplement if any of such Notes and Certificates, as the case may be, are
purchased.
Each Prospectus Supplement will either (i) set forth the price at which each
class of Notes and Certificates, as the case may be, being offered thereby will
be offered to the public and any concessions that may be offered to certain
dealers participating in the offering of such Notes and Certificates, as the
case may be, or (ii) specify that the related Notes and Certificates, as the
case may be, are to be resold by the underwriters in negotiated transactions at
varying prices to be determined at the time of such sale. After the initial
public offering of any such Notes and Certificates, as the case may be, such
public offering prices and such concessions may be changed.
Each Underwriting Agreement will provide that the Seller, the Issuer and
JDCC, as the case may be, will indemnify the underwriters against certain civil
liabilities, including liabilities under the Securities Act, or contribute to
payments the several Underwriters may be required to make in respect thereof.
42
<PAGE>
Each Indenture Trustee (on behalf of the related Issuer) may, from time to
time, invest the funds in the related Trust Accounts in Eligible Investments
acquired from the underwriters.
Pursuant to each of the Underwriting Agreements with respect to a given
series of Securities, the closing of the sale of any class of Securities
subject to either thereof will be conditioned on the closing of the sale of all
other such classes subject to either thereof. The place and time of delivery
for the Securities in respect of which this Prospectus is delivered will be set
forth in the related Prospectus Supplement.
LEGAL OPINIONS
Certain legal matters relating to the Securities of any series will be passed
upon for the related Trust, the Seller, the Issuer and the Servicer, as the
case may be, by Shearman & Sterling, New York, New York, and by Richards,
Layton & Finger, Wilmington, Delaware, and for any underwriters by Brown & Wood
LLP, New York, New York. Certain federal income tax and other matters will be
passed upon for the related Trust by Shearman & Sterling, and certain Iowa
state income tax and other matters will be passed upon for the related Trust by
Lane & Waterman, Davenport, Iowa.
43
<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.
<TABLE>
<S> <C>
Administration Agreement.................................................. 39
Administration Fee........................................................ 39
Administrator............................................................. 39
Base Rate................................................................. 25
Cede...................................................................... 14
Cedelbank Participants.................................................... 28
Certificate Balance....................................................... 5
Certificate Distribution Account.......................................... 32
Certificate Pool Factor................................................... 17
Certificateholders........................................................ 5
Certificates.............................................................. 1
Closing Date.............................................................. 30
Collection Account........................................................ 8, 31
Collection Period......................................................... 8, 33
Commission................................................................ 2
Commodity Indexed Securities.............................................. 26
Company................................................................... 19
Cooperative............................................................... 28
Currency Indexed Securities............................................... 26
Cut-off Date.............................................................. 6
Dealer Agreements......................................................... 15
Dealers................................................................... 6
Deere..................................................................... 7
Deere Credit Services..................................................... 4
Definitive Certificates................................................... 5
Definitive Notes.......................................................... 29
Depositaries.............................................................. 26
Depository................................................................ 19
DRC....................................................................... 1, 18
DTC....................................................................... 14
Early Amortization Event.................................................. 9
Early Amortization Period................................................. 9
Eligible Deposit Account.................................................. 32
Eligible Institution...................................................... 32
Eligible Investments...................................................... 32
ERISA..................................................................... 11
Euroclear................................................................. 14
Euroclear Operator........................................................ 14
Euroclear Participants.................................................... 28
Exchange Act.............................................................. 2
FASIT..................................................................... 42
Financed Equipment........................................................ 6
Fixed Rate Securities..................................................... 25
Floating Rate Securities.................................................. 25
Indenture................................................................. 4
Indenture Trustee......................................................... 1
Index..................................................................... 26
</TABLE>
44
<PAGE>
<TABLE>
<S> <C>
Indexed Commodity........................................................ 26
Indexed Currency......................................................... 26
Indexed Principal Amount................................................. 26
Indexed Securities....................................................... 25
Indirect Participants.................................................... 27
Insolvency Event......................................................... 37
Insolvency Laws.......................................................... 12
Interest Rate............................................................ 4
Investment Earnings...................................................... 32
Issuer................................................................... 1, 4
JDCC..................................................................... 4
John Deere............................................................... 7
Liquidated Receivables................................................... 33
Mechanics' Liens......................................................... 10
Note Distribution Account................................................ 31
Note Pool Factor......................................................... 17
Noteholders.............................................................. 4
Notes.................................................................... 1
Obligors................................................................. 7
Owner Trustee............................................................ 1
Participants............................................................. 20
Pass-Through Rate........................................................ 5
Payment Date............................................................. 20
Pool Balance............................................................. 17
Prepayments.............................................................. 13, 16
Prospectus Supplement.................................................... 1
Purchase Agreement....................................................... 6
Purchase Amount.......................................................... 31
Receivables.............................................................. 1
Registration Statement................................................... 2
Related Documents........................................................ 23
Reserve Account.......................................................... 35
Reserve Account Initial Deposit.......................................... 7
Retail Notes............................................................. 19
Revolving Period......................................................... 9
Rules.................................................................... 27
Sale and Servicing Agreement............................................. 6
Sales Companies.......................................................... 15
Securities............................................................... 1
Securities Act........................................................... 2
Securityholders.......................................................... 5
Seller................................................................... 1, 4
Servicer................................................................. 4
Servicer Default......................................................... 36
Servicing Fee Rate....................................................... 33
Spread................................................................... 25
Spread Multiplier........................................................ 25
Stock Index.............................................................. 26
Stock Indexed Securities................................................. 26
Strip Certificates....................................................... 6
Strip Notes.............................................................. 5
Sub-Servicer............................................................. 4
</TABLE>
45
<PAGE>
<TABLE>
<S> <C>
Terms and Conditions...................................................... 28
Transfer and Servicing Agreements......................................... 30
Trust..................................................................... 1, 4
Trust Accounts............................................................ 31-32
Trust Agreement........................................................... 4
UCC....................................................................... 13
Underwriting Agreements................................................... 42
Wind Down Period.......................................................... 9
</TABLE>
46
