As filed with the Securities and Exchange Commission on May 17, 2002
Registration No. 333-87562
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
AMENDMENT NO. 1
to
FORM S-3
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
-----------------
John Deere Receivables, Inc.
and
Deere Receivables Corporation
(Exact name of Registrants as specified in their charters)
NEVADA 36-3837230
(State or other (I.R.S.
jurisdiction of Employer Identification
incorporation or No.)
organization)
Suite 600
First Interstate Bank Building
1 East First Street
Reno, Nevada 89501
775-786-5914
(Address, including zip code, and telephone number, including area code, of
Registrants' principal executive offices)
Michael A. Harring
Deere & Company
One John Deere Place
Moline, Illinois 61265-8098
309-765-5799
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
COPIES TO:
Jonathan Jewett
Gary Barnett Renwick D. Martin
Shearman & Sterling Sidley Austin Brown &
Wood LLP
599 Lexington Avenue 875 Third Avenue
New York, New York 10022 New York, New York 10022
-----------------
Approximate date of commencement of proposed sale to the public: From time
to time after this registration statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities being offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, check the following
box and list the registration statement number of the earlier effective
registration statement for the same offering. [_]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act of 1933, please check the following box. [_]
CALCULATION OF REGISTRATION FEE
================================================================================
Proposed Proposed
Maximum Maximum
Title of Each Class of Securities Amount to be Offering Price Aggregate Amount of
to be Registered (1) Registered per Unit Offering Price (2) Registration Fee (3)
- -------------------------------------------------------------------------------------------------------
Asset Backed Securities..... $3,491,258,717 100% $3,491,258,717 $321,196
- -------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1)The Asset Backed Securities may be issued either by a trust established by
John Deere Receivables, Inc. or by Deere Receivables Corporation.
(2)Estimated solely for the purpose of computing the registration fee.
(3)Of this amount, (i) $92 was previously paid and (ii) $169,399 of the
remainder is offset under Rule 457(p) under the Securities Act of 1933 by
filings fees in this amount previously paid by John Deere Receivables, Inc.
and Deere Receivables Corporation in connection with unsold securities
previously registered under Registration Statement No. 33-99294 and
deregistered hereby. Accordingly, $151,705 is paid herewith.
Each registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrants
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the commission, acting pursuant to said section 8(a),
may determine.
Information in this prospectus supplement is not complete and may be changed.
We may not sell these securities until the registration statement filed with
the Securities and Exchange Commission is effective. This prospectus supplement
is not an offer to sell these securities and it is not soliciting an offer to
buy these securities in any state where the offer or sale is not permitted.
Subject to Completion
May 17, 2002
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED , 2002
$ .
John Deere Owner Trust 200X
$ . Class A-1 . % Asset Backed Notes
$ . Class A-2 . % Asset Backed Notes
$ . Class A-3 . % Asset Backed Notes
$ . Class A-4 . % Asset Backed Notes
John Deere Receivables, Inc., Seller
John Deere Capital Corporation, Servicer
The class A 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 class A notes involves risks. See "Risk Factors" on page
S-8 of this prospectus supplement and on page 14 of the related prospectus.
Underwriting
Discounts and Proceeds to
Price Commissions Seller Final Payment Date
------- ------------- ------------ ------------------
Class A-1 Notes . % . % . %
Class A-2 Notes . % . % . %
Class A-3 Notes . % . % . %
Class A-4 Notes . % . % . %
Total.......... $ . $ . $ .
Delivery of the class A notes in book-entry form only will be made on or
about __________, 200X.
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.
The date of this prospectus supplement is ____________, 200X
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 class A notes in two separate
documents that provide varying levels of detail:
(A) this prospectus supplement, which describes the specific terms of the
class A notes, and
(B) the prospectus, which provides general information, some of which may
not apply to the class A notes.
If the terms of the class A 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 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 beginning 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" on page 51 in the prospectus.
Dealer Prospectus Delivery Obligation
Until ____________, 200X, 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
class A 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 SEC 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 SEC.
S-2
TABLE OF CONTENTS
Page
----
SUMMARY OF TERMS....................................... S-5
OFFERED SECURITIES.................................. S-5
Issuer.......................................... S-5
Seller.......................................... S-5
Servicer........................................ S-5
Indenture Trustee............................... S-5
Owner Trustee................................... S-5
Closing Date.................................... S-5
Payment Dates................................... S-5
Interest Payments............................... S-5
Principal Payments.............................. S-5
Final Payment Dates............................. S-6
Optional Redemption............................. S-6
Priority of Payments............................ S-6
Certificates.................................... S-6
TRUST PROPERTY...................................... S-6
Receivables..................................... S-7
CREDIT ENHANCEMENT.................................. S-7
Subordination of Certificates................... S-7
Reserve Account................................. S-7
TAX STATUS.......................................... S-7
ERISA CONSIDERATIONS................................ S-7
LEGAL INVESTMENT.................................... S-7
RATING OF THE SECURITIES............................ S-7
RISK FACTORS........................................... S-8
THE TRUST.............................................. S-11
General......................................... S-11
Capitalization of the Trust..................... S-12
The Owner Trustee............................... S-12
THE RECEIVABLES POOL................................... S-12
Delinquencies; Repossessions and Net Losses..... S-16
MATURITY AND PREPAYMENT CONSIDERATIONS................. S-17
Weighted Average Lives.......................... S-18
THE SELLER AND THE SERVICER............................ S-21
John Deere Receivables, Inc..................... S-21
John Deere Capital Corporation.................. S-21
DESCRIPTION OF THE NOTES............................... S-21
General......................................... S-21
Payments on the Notes........................... S-21
Optional Redemption............................. 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 and Certificates................ S-25
S-3
Page
----
FEDERAL INCOME TAX CONSIDERATIONS....................... S-27
Tax Classification of the Trust.................. S-27
Tax Considerations for Noteholders............... S-27
CERTAIN IOWA TAX CONSIDERATIONS......................... S-30
Notes............................................ S-31
The Trust........................................ S-31
ERISA CONSIDERATIONS.................................... S-31
UNDERWRITING............................................ S-33
LEGAL OPINIONS.......................................... S-34
INDEX OF TERMS.......................................... S-35
S-4
SUMMARY OF TERMS
The following summary is a short, concise description of the main terms of
the class A notes. For this reason, the summary does not purport to be
complete and does not contain all the information that is important to you.
To fully understand the offering of the class A notes, you will need to read
this prospectus supplement and the prospectus in their entirety. You will
find a detailed description of the terms of the class A notes following this
summary and in the prospectus.
OFFERED SECURITIES
Class Aggregate
of Principal Interest
Notes Amount Rate
-------------------------
A-1 $ . . %
A-2 $ . . %
A-3 $ . . %
A-4 $ . . %
The class A notes will be book-entry securities clearing through The
Depository Trust Company (in the United States) or Clearstream, Luxembourg or
Euroclear (in Europe) in minimum denominations of $1,000 and integral multiples
of $1,000. See "Certain Information Regarding the Securities--Book-Entry
Registration" in the prospectus.
Issuer
John Deere Owner Trust 200X (the "trust").
Seller
John Deere Receivables, Inc. (the "seller")
Servicer
John Deere Capital Corporation ( "JDCC" or the "servicer").
Indenture Trustee
. (the "indenture trustee").
Owner Trustee
. (the "owner trustee").
Closing Date
__________, 200X.
Payment Dates
Payments on the class A notes will be made on the . day of each calendar
month (or, if not a business day, the next business day), beginning __________,
200X.
Interest Payments
The interest rate for each class of class A notes is specified above.
Interest on the A-1 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-2
notes, A-3 notes and A-4 notes will be calculated on the basis of a 360-day
year of twelve 30-day months.
Principal Payments
The amount of principal payable on the class A notes on each payment date
will generally be equal to the reduction in the note value of the receivables
during a collection period less the amount allocable to payments on the
certificates. The note value of the receivables is the present value of the
unpaid scheduled payments on the receivables, discounted at the weighted
average interest rate of the receivables as of __________, 200X, which is the
cut-off date, adjusted to reflect a monthly yield. Amounts allocated to payment
of the principal of the class A notes will be applied in the following order of
priority:
first, to payment in full of the A-1 notes;
second, to payment in full of the A-2 notes;
third, to payment in full of the A-3 notes; and
fourth, to payment in full of the A-4 notes.
See "Description of the Notes" and "Description of the Transfer and
Servicing Agreements--Distributions" for additional detail on 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.
S-5
Final Payment Dates
The principal amount of each class of class A notes, to the extent not
previously repaid, will be payable in full on the payment date in the month
specified below:
Class of Notes Final Payment Date
- -------------- ------------------------
A-1 .
A-2 .
A-3 .
A-4 .
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 . % of the initial principal balance of the receivables. If the
servicer exercises this right, the class A 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. principal on the class A notes;
5. amount, if any, required to be deposited into the reserve account;
6. principal on the certificates; and
7. remaining amounts, if any, to the seller.
See ''Description of the Notes" and "Description of the Transfer and
Servicing Agreements--Distributions" for additional details, including the
amount of principal to be distributed, the priority of payments of principal on
the class A notes and special priority rules that apply under certain
circumstances.
Certificates
On the closing date, the trust will issue certificates in an aggregate
principal amount of $ . (equal to approximately . % of the initial note
value). [The seller will retain the entire principal amount of the
certificates.] The certificates will not bear interest. So long as the A-1
notes are outstanding, principal payments on the certificates on any payment
date will not exceed the lesser of the unscheduled principal payments received
on the receivables during the related collection period or the amount necessary
to reduce the outstanding principal amount of the certificates to . % of the
outstanding note value. After payment in full of the A-1 notes, principal
payments in excess of the unscheduled principal payments may be made on the
certificates as more fully described under "Description of the Transfer and
Servicing Agreements--Distributions". However, no distributions will be made on
the certificates on a payment date until all amounts payable on the class A
notes on that payment date have been paid and all amounts, if any, required to
be deposited into the reserve account have been made. Furthermore, if any class
A note is outstanding, distributions of principal on the certificates will not
be made to the extent the distribution would reduce the outstanding principal
balance of the certificates to an amount less than . % of the initial note
value of the receivables. The certificates are not being offered hereby.
TRUST PROPERTY
The trust will own only the following property:
... the receivables and all monies due under the receivables on and after the
cut-off date;
... the rights of the seller under the purchase agreement;
... 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;
... the reserve account;
... 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-6
Receivables
The receivables will consist of [agricultural, construction, forestry, and
commercial and consumer equipment] retail installment sale and loan contracts
secured by new and used [agricultural equipment, construction and forestry
equipment and commercial and consumer equipment], the security interests in the
equipment financed thereby and the proceeds thereof. See "The Receivables Pool"
for additional information regarding the receivables. On or prior to the
closing date, the trust will purchase receivables having an aggregate principal
balance plus accrued interest of approximately $ . as of __________, 200X.
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 $ . (equal
to approximately . % of the initial note value). The certificates will serve
as credit enhancement for the class A notes because no distributions will be
made on the certificates on a payment date until all amounts payable on the
class A notes on that payment date have been paid and all amounts, if any,
required to be deposited into the reserve account have been made.
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 class A notes.
... On the closing date, $ . (equal to . % 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
. % of the initial note value. However, the required reserve fund amount
will not be greater than the outstanding principal balance of the class A
notes.
... On each payment date, any collections on the receivables that remain after
all payments having priority in payment 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
and Certificates" 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 class A 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.
RATING OF THE SECURITIES
It is a condition to the issuance of the class A 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 these ratings will not be lowered or withdrawn by a rating
agency if, in the opinion of the rating agency, circumstances so warrant. See
"Risk Factors--Ratings of the Notes" in this prospectus supplement.
S-7
RISK FACTORS
You should consider the following risk factors and those in the prospectus
under the heading "Risk Factors" in deciding whether to purchase the class A
notes.
Limited Ability to Resell
Notes..................... There is currently no secondary market for the
class A notes. The underwriters currently intend
to make a market in the class A notes, but they
are not required to do so and they may stop
making a market at any time. 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.
The Trust's Only Sources
of Funds Are the
Receivables and the
Reserve Account........... The trust's only sources of funds for making
payments on the class A notes are collections on
the receivables and funds in the reserve account.
The class A notes are not guaranteed or otherwise
insured by the seller, JDCC, Deere & Company
("Deere"), any of their affiliates or any other
entity.
Losses on the Receivables
May Cause Losses on the
Notes..................... Delinquencies, repossessions and net losses on
all equipment receivables are affected by
economic conditions generally.
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.
Delinquencies, repossessions and net losses on
construction equipment receivables may be
affected by:
. the level of housing starts; and
. the level of nonresidential construction.
Delinquencies, repossessions and net losses on
forestry equipment receivables may be affected by:
. changes in demand for forestry products; and
. prices for pulp and lumber.
Delinquencies, repossessions and net losses on
commercial and consumer equipment receivables may
be affected by:
. the level of consumers' income; and
. the severity and timing of weather patterns.
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 class A notes, the class A noteholders
will incur losses on their class A notes. If an
event of default occurs in respect of the class A
notes, the receivables may be sold to repay the
notes.
S-8
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 JDCC's prior
experience or that new factors will not
materially affect this experience in the future.
The Notes May Suffer
Losses if the Interests of
Other Persons in the
Receivables Are Superior
to the Trust Interest..... To facilitate servicing and to minimize
administrative burden and expense, the servicer
will be appointed as 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, if any, 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 case of consumer
equipment receivables, the trust's security
interest in the financed equipment is based on
the automatically perfected purchase money
security interest transferred from JDCC and the
seller. Except in limited circumstances, no
financing statements are filed with respect to
consumer equipment receivables.
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. In the absence of financing statements
being filed with respect to consumer equipment
receivables, a purchaser of the consumer
equipment from the obligor may take the equipment
free of the trust's security interest if the
purchaser, without knowledge of the trust's
security interest, buys the equipment for value
and primarily for the buyer's personal, family or
household purposes. 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 class A notes.
The Proceeds from the Sale
of Any Receivable May Not
Cover the Principal and
Interest Payments on the
Class A Notes............. The net proceeds of any sale of the receivables
or the related financed equipment following an
event of default may not cover the principal and
interest due on the class A notes. In addition,
until the final payment date for a class of class
A notes, the amount of principal required to be
paid on the class A notes of that class is
limited to the amount available for the payment.
Consequently, the failure to pay principal on a
class of class A notes will not be an event of
default until the final payment date for that
class of class A notes.
S-9
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 class A
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
the rating does not comment as to market price or
suitability for a particular investor.
The ratings of the class A notes address the
likelihood of the timely payment of interest on
and the ultimate repayment of principal of the
class A 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 class A notes would be
adversely affected. In that event, no person or
entity will be obligated to provide any
additional credit enhancement. The rating of the
class A notes is based primarily on the credit
quality of the receivables, the subordination
provided by the certificates and the availability
of funds in the reserve account.
Delays in Processing
Payments or Distributions
on the Class A Notes Could
Occur if JDCC Ceases to
Act as Servicer or
Deere Credit Services
Ceases to Act as
Sub-Servicer.............. 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 class A noteholders.
JDCC or the Seller May
Have to Repurchase
Receivables............... JDCC will make representations and warranties
with respect to the characteristics of the
receivables in the pool. In certain
circumstances, JDCC and the seller may be
obligated to repurchase these receivables if
these representations and warranties have been
breached. In general, the repurchase obligation
will constitute the sole remedy available to
noteholders, the indenture trustee or the owner
trustee in respect of the trust for any uncured
breach. See "Description of the Transfer and
Servicing Agreements--Sale and Assignment of
Receivables" in this prospectus supplement.
S-10
THE TRUST
General
John Deere Owner Trust 200X will be a business trust formed under the laws
of the State of Delaware under a trust agreement between the seller and the
owner trustee for the transactions described in this prospectus supplement.
After its formation, the trust will not engage in any activity other than:
. acquiring, holding and managing the receivables and the other assets of
the trust and proceeds from those assets;
. issuing the class A notes;
. making payments on the class A notes;
. issuing and making payments on the certificates representing beneficial
equity interests in that trust; and
. engaging in other activities that are necessary, suitable or convenient
to accomplish the foregoing or that are incidental thereto or connected
with those activities.
[The Seller will retain the certificates.] The proceeds from the initial
sale of the class A 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 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., an indirect wholly-owned subsidiary of Deere & Company,
as its agent to service the receivables as sub-servicer at the servicer's
expense. See "Description of the Transfer and Servicing Agreements--Servicing
Compensation" in this prospectus supplement. 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, if any, filed to perfect the security
interest in the equipment financed thereby 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. In
the case of consumer equipment receivables, the trust's security interest in
the financed equipment is based on the automatically perfected purchase money
security interest transferred from JDCC and the seller. Except in limited
circumstances, no financing statements are filed with respect to consumer
equipment receivables. In the absence of financing statements being filed with
respect to consumer equipment receivables, a purchaser of the consumer
equipment from the obligor may take the equipment free of the trust's security
interest if the purchaser, without knowledge of the trust's security interest,
buys the equipment for value and primarily for the buyer's personal, family or
household purposes. See "Certain Legal Aspects of the Receivables" in the
prospectus.
If the protection provided to the investment of the class A 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 on the
receivables and the proceeds from the repossession and sale of the financed
equipment that secures defaulted receivables. In that 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
may reduce the proceeds available to make payments on the class A notes. See
"Description of the Transfer and Servicing Agreements--Distributions" and
"--Reserve Account and Certificates" in this prospectus supplement and "Certain
Legal Aspects of the Receivables" in the prospectus.
The trust's principal offices are in . , in care of . , as owner
trustee, at the address listed below under "--The Owner Trustee" in this
prospectus supplement.
S-11
Capitalization of the Trust
The following table illustrates the capitalization of the trust as of the
cut-off date, as if the issuance of the class A notes and the certificates had
taken place on that date:
Class A-1 . % Asset Backed Notes $ .
Class A-2 . % Asset Backed Notes .
Class A-3 . % Asset Backed Notes .
Class A-4 . % Asset Backed Notes .
Certificates....................... .
----
Total........................... $ .
====
The Owner Trustee
. will be the owner trustee under the trust agreement. . is a banking
corporation and its principal offices are located at . . The owner trustee's
liability in connection with the issuance and sale of the class A 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. [The
owner trustee is an affiliate of , one of the underwriters and an
affiliate of , which is one of a number of banks with which Deere and
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 in this prospectus supplement 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 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. John Deere categorizes its
agricultural equipment receivables, construction equipment receivables,
forestry equipment receivables and commercial and consumer equipment
receivables based on the type of equipment comprising the greatest initial
principal balance of the original receivable contract. Based on this system,
the receivables in the pool consist exclusively of . equipment receivables
and . equipment receivables. However, each receivable could be secured by
more than one of the above types of equipment as financed equipment. JDCC
purchases contracts in accordance with its credit standards, which are based
upon:
. the buyer's ability to repay the obligation;
. the buyer's credit history; and
. the buyer's downpayment on the financed equipment.
The sales companies include Deere and John Deere Construction & Forestry
Company. The seller will purchase the receivables from JDCC pursuant to a
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 the cut-off 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 that is a U.S. person;
S-12
. has a fixed interest rate ("APR");
. is secured by a perfected first priority security interest in the
financed equipment;
. has a scheduled maturity not later than . , 200X;
. provides for scheduled payments that 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 cut-off 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 the class A noteholders were used in selecting the receivables.
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 cut-off 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 cut-off date. Totals may not add to 100% due to rounding.
Composition of the Receivables
Weighted Average Weighted Average
APR of Receivables Aggregate Number of Remaining Term Weighted Average Average Balance
(Range) Balance Receivables (Range) Original Term (Range) (Range)
- ------------------ --------- ----------- ----------------- --------------------- ---------------
. % $ . . . months . months $ .
( . % to ( . months)(1) ( . months)(1) ($ . to
. %) $ . )
- --------
(1)Based on scheduled payments and assuming no prepayments.
Distribution of the Receivables by APR
Percent of
Number of Aggregate Aggregate
APR Range Receivables Balance Balance
--------- ----------- --------- ----------
4.00 to 4.99% . $ . . %
5.00 to 5.99. . . .
6.00 to 6.99. . . .
7.00 to 7.99. . . .
8.00 to 8.99. . . .
9.00 to 9.99. . . .
10.00 to 10.99. . . .
11.00 to 11.99. . . .
12.00 to 12.99. . . .
13.00 to 13.99. . . .
14.00 to 14.99. . . .
15.00 to 15.99. . . .
--- ---- ------
Total....... . $ . 100.00%
=== ==== ======
S-13
Distribution of the Receivables by Equipment Type
Percent of
Number of Aggregate Aggregate
Type Receivables Balance Balance
---- ----------- --------- ----------
Agricultural
New................. . $ . . %
Used................ . . .
Construction
New................. . . .
Used................ . . .
Forestry
New................. . . .
Used................ . . .
Commercial and Consumer
New................. . . .
Used................ . . .
--- ---- ------
Total........... . $ . 100.00%
=== ==== ======
Distribution of the Receivables by Payment Frequency
Percent of
Number of Aggregate Aggregate
Frequency Receivables Balance Balance
--------- ----------- --------- ----------
Annual.... . $ . . %
Semiannual . . .
Quarterly. . . .
Monthly... . . .
Other..... . . .
--- ---- ------
Total.. . $ . 100.00%
=== ==== ======
Distribution of the Receivables by Current Balance
Percent of
Number of Aggregate Aggregate
Current Balance Range Receivables Balance Balance
--------------------- ----------- --------- ----------
$ 500 -- $ 10,000. . $ . . %
10,001 -- 20,000. . . .
20,001 -- 30,000. . . .
30,001 -- 40,000. . . .
40,001 -- 50,000. . . .
50,001 -- 60,000. . . .
60,001 -- 70,000. . . .
70,001 -- 80,000. . . .
80,001 -- 90,000. . . .
90,001 -- 100,000. . . .
100,001 -- 200,000. . . .
200,001 and above... . . .
--- ---- ------
Total............. . $ . 100.00%
=== ==== ======
S-14
Geographic Distribution of the Receivables
Percent of
Number of Aggregate Aggregate
State(1) Receivables Balance Balance
-------- ----------- --------- ----------
Alabama....... . $ . . %
Alaska........ . . .
Arizona....... . . .
Arkansas...... . . .
California.... . . .
Colorado...... . . .
Connecticut... . . .
Delaware...... . . .
Florida....... . . .
Georgia....... . . .
Hawaii........ . . .
Idaho......... . . .
Illinois...... . . .
Indiana....... . . .
Iowa.......... . . .
Kansas........ . . .
Kentucky...... . . .
Louisiana..... . . .
Maine......... . . .
Maryland...... . . .
Massachusetts. . . .
Michigan...... . . .
Minnesota..... . . .
Mississippi... . . .
Missouri...... . . .
Montana....... . . .
Nebraska...... . . .
Nevada........ . . .
New Hampshire. . . .
New Jersey.... . . .
New Mexico.... . . .
New York...... . . .
North Carolina . . .
North Dakota.. . . .
Ohio.......... . . .
Oklahoma...... . . .
Oregon........ . . .
Pennsylvania.. . . .
Rhode Island.. . . .
South Carolina . . .
South Dakota.. . . .
Tennessee..... . . .
Texas......... . . .
Utah.......... . . .
Vermont....... . . .
Virginia...... . . .
Washington.... . . .
West Virginia. . . .
Wisconsin..... . . .
Wyoming....... . . .
--- ---- ------
Total...... . $ . 100.00%
=== ==== ======
- --------
(1) Based on billing addresses of obligors.
S-15
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 its entire
portfolio of retail[, agricultural, construction, forestry and commercial and
consumer] 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 in the pool among
[agricultural, construction, forestry and commercial and consumer] equipment
differs from the division in JDCC's entire portfolio. For factors that have
affected JDCC's delinquencies, repossessions and net losses in the past, and
are expected to do so in the future, see "Risk Factors--Losses on the
Receivables May Cause Losses on the Notes".
Delinquency Experience
At October 31, At .
- - -------------------------------------- --------------
1997 1998 1999 2000 2001 2001 2002
- - ------ ------ ------ ------ ------ ------ ------
Number of Contracts
- -------------------
Gross portfolio.......................... . . . . . . .
Period of delinquency....................
31-59 Days............................ . . . . . . .
60+ Days.............................. . . . . . . .
------ ------ ------ ------ ------ ------ ------
Total delinquencies............... . . . . . . .
====== ====== ====== ====== ====== ====== ======
Total delinquencies as a percent of gross
portfolio.............................. . % . % . % . % . % . % . %
Face Amount of Contracts(1):
- ---------------------------- (Dollars in Millions)
Gross portfolio.......................... $ . $ . $ . $ . $ . $ . $ .
Period of delinquency....................
31-59 Days............................ $ . $ . $ . $ . $ . $ . $ .
60+ Days.............................. . . . . . . .
------ ------ ------ ------ ------ ------ ------
Total delinquencies............... $ . $ . $ . $ . $ . $ . $ .
====== ====== ====== ====== ====== ====== ======
Total delinquencies as a percent of gross
portfolio.............................. . % . % . % . % . % . % . %
- --------
(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-16
Credit Loss/Repossession Experience(1)
. Months Ended
Year Ended October 31, . ,
------------------------------------ ----------------
1997 1998 1999 2000 2001 2001(5) 2002(5)
------- ------- ------- ------- ---- ------- -------
(Dollars in Millions)
Total [agricultural, construction,
forestry, commercial and consumer]:
- -----------------------------------
Average gross portfolio
managed during the
period(2)..................... $ . $ . $ . $ . . $ . $ .
Repossessions as a percentage
of average gross portfolio
managed(2).................... . % . % . % . % . . % . %
Net losses as a percentage of
average gross portfolio
managed(3).................... . % . % . % . % . . % . %
Net losses as a percentage of
liquidations(3)(4)............ . % . % . % . % . . % . %
- --------
(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, construction,
forestry, commercial and consumer] equipment retail notes owned by JDCC,
other financial institutions and securitization trusts. All of these retail
notes are serviced by Deere Credit Services.
(3) 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.
(4) Liquidations represent a reduction in the outstanding balances of the
contracts as a result of cash payments and charge-offs.
(5) Rates have been annualized. Annualized rates are not necessarily indicative
of experience for a full year.
MATURITY AND PREPAYMENT CONSIDERATIONS
All the receivables in the pool will be prepayable at any time. Each
prepayment will shorten the weighted average life of the receivables and the
weighted average life of the class A notes. Prepayment includes:
. voluntary prepayments;
. liquidations due to default; and
. receipts of proceeds from insurance policies.
The "weighted average life" of a debt instrument 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 the 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 specific receivables pursuant to the purchase agreement, the seller
is obligated to repurchase specific receivables pursuant to the sale and
servicing agreement, and the servicer is obligated to purchase specific
receivables pursuant to the sales and servicing agreement. See "Description of
the Transfer and Servicing Agreements--Sale and Assignment of Receivables" in
this prospectus supplement and "Description of the Transfer and Servicing
Agreements--Servicing Procedures" in the prospectus. Any reinvestment risks
resulting from a faster or slower incidence of
S-17
prepayment of receivables than is expected by a class A noteholder will be
borne entirely by the class A noteholder. See also "Description of the
Notes--Optional Redemption" 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 cut-off
date. This purchase would result in the redemption of the class A 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 class A
notes under the stated assumptions and is not a prediction of the prepayment
rate that might actually be experienced by the receivables.
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-. and S-. have been prepared on the basis of certain
assumptions, including that:
. all of the receivables have an APR of . %;
. the initial note value is equal to $ . ;
. the receivables prepay in full at the specified monthly CPR, with no
repurchases;
. each scheduled payment on the receivables is made on the last day of
each collection period;
. distributions are made on each payment date in accordance with the
description set forth under "Description of the Transfer and Servicing
Agreements--Distributions"; and
. the closing date is ______ , 200X.
The tables indicate, on the basis of the foregoing assumptions, the weighted
average life of each class of class A notes and the percentage of the initial
principal balance of each class of class A notes that would 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-. and S-.. 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
class A notes.
S-18
Percentage of Initial Principal Amount of the Class A Notes at Various CPR
Percentages
A-1 Notes A-2 Notes
------------------- -------------------
Payment Date 0% 13% 15% 17% 19% 0% 13% 15% 17% 19%
------------ --- --- --- --- --- --- --- --- --- ---
Closing Date.......................... 100 100 100 100 100 100 100 100 100 100
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Weighted average life without optional
redemption (years)(1)................ . . . . . . . . . .
Optional redemption date.............. n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
Weighted average life with optional
redemption (years)(2)................ n/a n/a n/a n/a n/a n/a n/a n/a n/a n/a
- --------
(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 class
A note by the number of years from the date of issuance of the class A note
to the related payment date, (b) adding the results, and (c) dividing the
sum by the related initial principal amount of the class A note.
(2)To the optional redemption date specified in the table, which is the
earliest date on which the optional redemption may be exercised under the
assumptions. See "Description of the Notes--Optional Redemption" in this
prospectus supplement.
This table has been prepared based on the assumptions described on page
S- . (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-19
Percentage of Initial Principal Amount of the Class A Notes at Various CPR
Percentages
A-3 Notes A-4 Notes
------------------- -------------------
Payment Date 0% 13% 15% 17% 19% 0% 13% 15% 17% 19%
- ------------ --- --- --- --- --- --- --- --- --- ---
Closing Date................................................ 100 100 100 100 100 100 100 100 100 100
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Weighted average life without optional redemption (years)(1) . . . . . . . . . .
Optional redemption date.................................... n/a n/a n/a n/a n/a . . . . .
Weighted average life with optional redemption (years)(2)... n/a n/a n/a n/a n/a . . . . .
- --------
(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 class
A note by the number of years from the date of issuance of the class A note
to the related payment date, (b) adding the results, and (c) dividing the
sum by the related initial principal amount of the class A note.
(2)To the optional redemption date specified in the table, which is the
earliest date on which the optional redemption may be exercised under the
assumptions. See "Description of the Notes--Optional Redemption" in this
prospectus supplement.
This table has been prepared based on the assumptions described on page
S- . (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-20
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 , 200X, JDCC and its subsidiaries had . full- and part-time
employees. At that date, receivables and leases administered by JDCC, which
include retail notes sold, were $ . billion. Additional information about
JDCC is set forth under "The Seller, Deere and the Servicer" in the prospectus.
DESCRIPTION OF THE NOTES
General
The class A notes will be issued under the indenture. A copy of the
indenture will be filed with the SEC following the issuance of the securities.
Because this section is a summary, it does not describe every aspect of the
class A notes and the indenture under which they will be issued. We urge you to
read the indenture because it, and not this description, defines your rights as
a holder of class A notes. The following summary supplements, and to the extent
inconsistent therewith replaces, the description of the general terms and
provisions of the class A notes of any given series and the related indenture
set forth in the prospectus. . , a . banking corporation, will be the
indenture trustee under the indenture.
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 class A 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; and
(ii) 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;
(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.
The per annum interest rate (the "interest rate") for each class of class A
notes is as follows:
Class A-1 notes . %
Class A-2 notes . %
Class A-3 notes . %
Class A-4 notes . %
A "payment date" will be the 15th day of each month or, if any of those
dates is not a business day, the next succeeding business day, commencing
________, 200X. Interest on the A-1 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 will be calculated on the basis of the actual number of days
occurring in the period for which interest is payable divided by 360. Interest
on the A-2 notes, A-3 notes and A-4 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.
S-21
Interest accrued as of any payment date but not paid on that payment date
will be due on the next payment date together with interest on the unpaid
amount at the related interest rate. Interest payments on the class A notes
will generally be derived from:
. the total distribution amount remaining after the payment of the
servicing fee and the administration fee and
. amounts in the reserve account.
See "Description of the Transfer and Servicing Agreements--Distributions" and
"Reserve Account and Certificates". If the available funds in the note
distribution account and the reserve account are not sufficient to pay the
amount of interest payable on the class A notes on any payment date, each class
A noteholder will receive its ratable share (based upon the total amount of
interest due on its class A note) of the amount available to be distributed in
respect of interest on the class A notes.
The principal amount of each class of class A notes, to the extent not
previously paid, will be payable in full on the payment date in the month
specified below:
Class of Notes Final Payment Date
-------------- ------------------
A-1........................................ .
A-2........................................ .
A-3........................................ .
A-4........................................ .
Following an event of default and acceleration of the class A notes (or if
any class of class A notes remains outstanding, on or after the final payment
date for that class), payments (including such amounts representing any
unscheduled principal payments and 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 based on the
amount of interest due on each class A note (in the case of payments of
interest) and the outstanding principal balance (in the case of payments of
principal) until the principal balance of all of the class A 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 cut-off date. If the servicer exercises this right, the class A 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
In connection with the issuance by the trust of the class A notes, the
parties indicated below will enter into the following agreements, which are
collectively called the "transfer and servicing agreements":
. the sale and servicing agreement under which the trust is purchasing
receivables from the seller and the servicer is undertaking to service
or cause the sub-servicer to service the receivables;
. the purchase agreement under which the seller is purchasing those
receivables from JDCC;
. the administration agreement under which JDCC, as administrator, will
undertake certain administrative duties with respect to the trust; and
. the trust agreement under which the trust will be created and the
related certificates will be issued.
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Because this section is a summary, it does not describe every aspect of the
transfer and servicing agreements. We urge you to read the transfer and
servicing agreements because they, and not this description, define your rights
as a holder of class A notes. We will file a copy of each of the transfer and
servicing agreements with the SEC after the issuance of the class A notes. See
"Where You Can Find More Information" in the prospectus for information on how
to obtain copies 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.
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 the 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 class A
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 1.00% per annum of the aggregate
principal balance of the receivables as of the first day of the collection
period. The servicing fee will be paid prior to any payment to the class A
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:
. any receivables for which a purchase amount has been included in the
total distribution amount in a prior collection period, and
. any liquidated receivable after the reassignment of such liquidated
receivable by the trust to the seller.
A "liquidated receivable" means a defaulted receivable in respect of which
the financed equipment has been sold or otherwise disposed of and "liquidation
proceeds" means all proceeds of a liquidated receivable, 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 receivable.
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Deposits to the Distribution Accounts. On the second business day prior to
each payment date, the servicer will 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:
. to the servicer, the servicing fee and all unpaid servicing fees from
prior collection periods;
. to the administrator, the administration fee and all unpaid
administration fees from prior collection periods;
. to the note distribution account, accrued and unpaid interest on the
class A notes;
. to the note distribution account, the class A monthly principal
distributable amount;
. to the reserve account, the amount, if any, required to be deposited
into the reserve account;
. to the certificate distribution account, the certificate monthly
principal distributable amount; and
. any remaining amounts to the trust for distribution to the seller.
The "class A monthly principal distributable amount" for any payment date
will be the principal distributable amount less 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 "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 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:
. prior to repossession of the financed equipment securing the defaulted
receivable, the scheduled payments on the receivable will be computed
based on the amounts that would have been the scheduled payments had
such default not occurred;
. 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 the defaulted receivable
will be added to the note value, but there will be deemed to be no
scheduled payments due on such defaulted receivable; and
. after liquidation of the defaulted receivable there shall be deemed to
be no scheduled payments due on the 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.
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The "effective yield" is . %, which is the weighted average APR of the
receivables as of the cut-off date adjusted to reflect a monthly yield.
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; provided, further, that if any class A
note is outstanding, the certificate monthly principal distributable amount
shall not exceed the amount of principal that, if distributed on the
certificates, would reduce the outstanding principal amount of the certificates
to an amount equal to . % of the initial note value.
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 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.
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 "initial note value" is $ . .
The "certificate percentage" is . %.
Reserve Account and Certificates
While the A-1 notes are outstanding, principal payments on the certificates
on any payment date will not exceed the lesser of the amount of unscheduled
principal payments on the receivables during the related collection period or
the amount necessary to reduce the outstanding principal amount of the
certificates to . % of the outstanding note value. After the A-1 notes have
been paid in full, the principal distributable amount will be allocated between
the remaining class A notes and the certificates such that the resulting
principal balance of the certificates does not exceed . % of the note value
of the outstanding receivables; provided, that if any class A note is
outstanding, the principal distributed on the certificates will not exceed the
amount that would reduce the outstanding principal amount of the certificates
to an amount equal to . % of the initial note value. The certificateholder
will not receive any distributions on any payment date until all amounts
payable on the class A notes on that payment date have been paid and all
amounts, if any, required to be deposited in the reserve account have been
made. 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 class A notes.
The protection against losses on the receivables afforded to the class A
noteholders will be effected both by the 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 $ .
(equal to . % of the initial note value), and will be augmented on each
payment date, by deposit therein of the amount specified in the fifth bullet
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.
The "specified reserve account balance" with respect to any payment date,
means . % of the initial note value provided that the specified reserve
account balance shall not exceed the outstanding principal amount of the class
A 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 class A notes,
the specified reserve account balance shall be zero.
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Amounts held from time to time in the reserve account will continue to be
held for the benefit of class A 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 class A 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 class A 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 class A notes and the owner trustee receives an opinion of counsel
that confirms in writing that the reduction or modification will not change the
tax classification of the class A notes as indebtedness.
The subordination of the certificates 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.
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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, tax-exempt organizations, partnerships or
other pass-through or hybrid entities, persons holding the class A notes as
part of a hedging, straddle or conversion transaction or who have a functional
currency other than the United States dollar and, except as discussed below,
foreign persons). 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.
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
for 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 United States federal income tax purposes unless the entity elects to
be classified as an association. Thus, since the seller retains 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 class A
noteholders will agree by their purchase of the class A notes, to treat the
class A notes as indebtedness for United States 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.
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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 class A noteholder as ordinary income when
received or accrued in accordance with such class A 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 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 and in
determining whether a debt instrument is a short-term note, its maturity date
is the last possible date that the instrument could be outstanding under its
terms. 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
S-28
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 unless a holder
elects to include market discount in its income currently. 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 class 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
class A 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
class A noteholder in income with respect to the class A note and decreased by
the amount of bond premium (if any) previously amortized and by the amount of
principal payments previously received by such class A 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
class A noteholder acquired the class A note at a discount. Capital losses
generally may be used only to offset capital gains.
Foreign Holders. If interest paid (or accrued) to a class A noteholder who
is a nonresident alien individual, foreign corporation or other non-United
States person (a "foreign person") is not effectively connected with the
conduct of a trade or business in 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 so long
as 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 United
States 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, address, tax identification number and
other required information. The statement may be made on IRS Form 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 United States 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 on behalf of a
foreign person through a securities clearing organization or certain other
financial institutions, the organization or institution must submit a statement
signed by an authorized representative to the withholding agent certifying that
an IRS Form W-8BEN or substitute form has been received from the foreign person
who is the beneficial owner of the class A note and such statement must be
accompanied by a copy of the IRS Form W-8BEN or substitute form provided by the
foreign person that owns the class A note. Additional IRS certification
provisions apply in the case of partnerships and certain other intermediaries.
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%, except where the foreign person can claim the
benefits of an applicable tax treaty to reduce or eliminate such tax and
complies with IRS certification requirements.
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 a foreign person who is an
individual, 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.
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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 (and, if a tax treaty applies, is attributable to
a United States permanent establishment), then the foreign person (although
exempt from the withholding tax previously discussed if the holder complies
with IRS certification requirements by submitting a properly completed IRS Form
W-8ECI) will be subject to United States federal income tax on the interest,
gain or income at regular federal income tax rates in the same manner as if it
were a United States person. 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 "backup" withholding and
information reporting requirements may apply to certain payments of principal,
premium, if any, and interest (including original issue discount) on a class A
note and to certain payments of proceeds of the sale or retirement of a class A
note. The trust, its agent or any paying agent, as the case may be, will be
required to withhold tax from any payment that is subject to backup withholding
at a rate of 30% (subject to periodic reductions through 2006) of such payment
if the holder fails to furnish his taxpayer identification number (social
security number or employer identification number), to certify that such holder
is not subject to backup withholding, or to otherwise comply with the
applicable requirements of the backup withholding rules. Certain holders
(including, among others, corporations) are not subject to the backup
withholding and reporting requirements.
Backup withholding and information reporting generally will not apply to
payments made by the trust or its agent (in its capacity as such) to a holder
of a class A note who has provided the required certification under penalties
of perjury on IRS Form W-8BEN that it is a foreign person or has otherwise
established an exemption (provided that neither the trust nor such agent has
actual knowledge or reason to know that the holder is a United States person or
that the conditions of any other exemption are not in fact satisfied). However,
the trust and other payors are required to report payments of interest on the
class A notes on IRS Form 1042-S even if the payments are not otherwise subject
to information reporting requirements.
If you fail to establish an exemption and the broker does not possess
adequate documentation of your status as a foreign person, the payments may be
subject to information reporting and backup withholding. Any amounts withheld
under the backup withholding rules from a payment to a holder may be claimed as
a credit against such holder's United States federal income tax liability
provided that the required information is furnished to the IRS.
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 class A notes recharacterized as equity). Alternatively, in
the more likely 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 United States tax and United States tax return filing and withholding
requirements and individual holders might be subject to certain limitations on
their ability to deduct their share of trust expenses. The trust agreement and
related documents provide that, in the event one or more of the class A notes
are not treated as debt, then the class A 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
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("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 class A notes will be treated as debt for federal income tax
purposes, the class A notes will be treated as debt for Iowa income tax
purposes. Accordingly, class A noteholders not otherwise subject to taxation in
Iowa should not become subject to taxation in Iowa solely because of a holder's
ownership of class A notes. However, a class 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 class A noteholder's ownership or disposition of
class A 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.
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 class A notes in all of the state
taxing jurisdictions in which they are already subject to tax. Class A
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 CLASS 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 "special
ERISA 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 special ERISA 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.
S-31
ERISA 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 an ERISA 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
ERISA 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 ERISA 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-32
UNDERWRITING
Under the terms and subject to the conditions set forth in an underwriting
agreement dated ________, 200X, the seller has agreed to cause the trust to
sell to the underwriters named below, for whom . is acting as
representative, the following respective principal amounts of the class A notes:
Principal Amount Principal Amount Principal Amount Principal Amount
Underwriters of A-1 Notes of A-2 Notes of A-3 Notes of A-4 Notes
- ------------ ------------------ ---------------- ---------------- ----------------
$ . $ . $ . $ .
. . . .
. . . .
. . . .
. . . .
------------------ ------------ ----------- -----------
$ . $ . $ . $ .
================== ============ =========== ===========
The underwriting agreement provides that the underwriters are obligated to
purchase all of the class A notes if any are purchased. The underwriting
agreement also 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
. % per A-1 note, . % per A-2 note, . % per A-3 note and . % per
A-4 note. The underwriters and selling group members may allow a discount not
in excess of . % per A-1 note, . % per A-2 note, . % per A-3 note and
. % 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 $ . . The underwriters have agreed with the seller to pay
certain expenses incurred in connection with the issuance and distribution of
the class A 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.
Until the distribution of the class A notes is completed, rules of the SEC
may limit the ability of the underwriters and certain selling group members to
bid for and purchase the class A notes. As an exception to these rules, the
underwriters are permitted to engage in certain transactions that stabilize the
price of the class A notes. Such transactions consist of bids or purchases for
the purpose of pegging, fixing or maintaining the price of the class A notes.
The underwriters may create a short position in the class A notes by selling
more class A notes than are set forth on the cover page of this prospectus
supplement. The underwriters may reduce that short position by purchasing the
class A notes in the open market.
S-33
In general, purchases of a class A note for the purpose of stabilization or
to reduce a short position could cause the price of the class A note to be
higher than it might be in the absence of such purchases.
Neither the seller nor any of the underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the prices of the class A notes. In addition,
neither the seller nor any of the underwriters makes any representation that
the underwriters will engage in such transactions or that such transactions,
once commenced, will not be discontinued without notice.
In the ordinary course of their respective businesses, the underwriters and
their affiliates have engaged, and may in the future engage, in commercial
banking and/or investment banking transactions with the servicer and its
affiliates. They have received customary fees and commissions for these
transactions. [Disclose affiliations]
LEGAL OPINIONS
In addition to the legal opinions described in the prospectus, certain legal
matters relating to the class A 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 Sidley Austin 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-34
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.
Page
----
APR................................................ S-13
certificate adjusted principal distributable amount S-25
certificate monthly principal distributable amount. S-25
certificate percentage............................. S-25
certificate principal carryover shortfall.......... S-25
class A monthly principal distributable amount..... S-24
Code............................................... S-27
collection period.................................. S-23
CPR................................................ S-18
Deere.............................................. S-8
determination date................................. S-23
effective yield.................................... S-25
ERISA.............................................. S-31
ERISA plan......................................... S-31
federal tax counsel................................ S-27
financed equipment................................. S-9
foreign person..................................... S-29
IDOR............................................... S-31
indenture trustee.................................. S-5
initial note value................................. S-25
interest rate...................................... S-21
IRS................................................ S-27
JDCC............................................... S-5
liquidation proceeds............................... S-23
liquidated receivable.............................. S-23
note value......................................... S-24
OID................................................ S-28
OID regulations.................................... S-28
owner trustee...................................... S-5
payment date....................................... S-21
principal carryover shortfall...................... S-24
principal distributable amount..................... S-24
principal distribution amount...................... S-24
seller............................................. S-5
servicer........................................... S-5
short-term note.................................... S-28
special ERISA plan................................. S-31
specified reserve account balance.................. S-25
total distribution amount.......................... S-23
transfer and servicing agreements.................. S-22
trust.............................................. S-5
weighted average life.............................. S-17
S-35
Information in this prospectus is not complete and may be changed. We may not
sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Subject to Completion
May 17, 2002
John Deere Owner Trusts
John Deere Receivables, Inc., Seller
John Deere Capital Corporation, Servicer
- ----------------------------------------------------------
By this prospectus, we offer up to
$3,491,258,717 of -
Asset Backed Notes
Asset Backed Certificates
-------------------------
You should pay special attention to the "Risk Factors" section starting on
page 14 of this prospectus and in the related prospectus supplement.
-------------------------
We will provide the specific terms of these securities in supplements to this
prospectus. You should read this prospectus and the supplements carefully
before you invest.
Neither the Securities and Exchange Commission nor any
state securities commission has approved or
disapproved of 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 17, 2002
WHERE YOU CAN FIND MORE INFORMATION
Deere & Company ("Deere" and, with its wholly owned subsidiaries, "John
Deere") and John Deere Capital Corporation ("JDCC") are subject to the
information requirements of the Securities Exchange Act of 1934, and in
accordance with the Exchange Act file reports and other information with the
SEC. For further information regarding Deere and JDCC, reference is made to
these reports and other information, which are available as described below.
JDCC, on behalf of the issuers of the securities, will file with the SEC
those periodic reports that are required under the Exchange Act and the rules
and regulations of the SEC thereunder or that are otherwise agreed to by the
SEC.
You may read and copy materials that the issuers, Deere and JDCC file with
the SEC at the following SEC public reference rooms:
450 Fifth Street, N.W. 233 Broadway 500 West Madison Street
Room 1024 New York, New York 10279 Suite 1400
Washington, D.C. 20549 Chicago, Illinois 60661
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. SEC filings are also available to the public on the SEC's
internet website at http://www.sec.gov.
We have filed with the SEC a registration statement on Form S-3 that
registers the securities we are offering by this prospectus. The registration
statement, including the attached exhibits and schedules, contains additional
relevant information about us and the securities offered. The rules and
regulations of the SEC allow us to omit certain information included in the
registration statement from this prospectus.
The SEC allows us to "incorporate by reference" information into this
prospectus that we have filed with it. This means that we can disclose
important information to you by referring you to another document filed
separately with the SEC. The information incorporated by reference is
considered to be part of this prospectus, except for any information that is
superseded by information that is included directly in this document or
incorporated by reference in documents subsequently filed with the SEC.
All documents subsequently filed by JDCC, on behalf of an issuer, under
section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
prospectus and before the termination of any offering of securities issued by
that issuer will be considered incorporated by reference and a part of this
prospectus from the date the documents are filed.
Upon your written or oral request, JDCC will provide you, without charge,
with all documents incorporated by reference in this prospectus. These requests
should be directed to: John Deere Capital Corporation, 1 East First Street,
Suite 600, Reno, Nevada 89501, Attention: Manager (775) 786-5527.
-----------------
In this prospectus, "we" refers to the various issuers of the securities
offered by this prospectus, which in a particular case will be the trust
identified in the related prospectus supplement or, if so stated in the
prospectus supplement, Deere Receivables Corporation ("DRC").
2
Until 90 days after the date of any prospectus supplement, all dealers that
effect transactions in the notes or the certificates offered by that prospectus
supplement, 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 dealer's obligation to deliver a prospectus supplement and a
prospectus when acting as an underwriter and with respect to a dealer's unsold
allotments or subscriptions.
If you have received an electronic prospectus supplement and prospectus from
an underwriter 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 you a paper copy
of the prospectus supplement and prospectus upon receipt of a request by you or
your representative.
3
TABLE OF CONTENTS
Page
----
Where You Can Find More Information. 2
Summary of Terms.................... 5
Risk Factors........................ 14
The Trusts.......................... 17
The Trust Property.................. 18
The Receivables Pool................ 19
Pool Factors and Trading Information 21
Use of Proceeds..................... 21
The Seller, Deere and the Servicer.. 21
Description of the Notes............ 23
Page
----
Description of the Certificates............. 29
Certain Information Regarding the Securities 30
Description of the Transfer and Servicing
Agreements................................ 35
Certain Legal Aspects of the Receivables.... 45
Certain Tax Considerations.................. 49
Erisa Considerations........................ 49
Plan of Distribution........................ 49
Legal Opinions.............................. 50
Index of Terms.............................. 51
4
SUMMARY OF TERMS
The following summary does not purport to be complete and does not contain
all of the information that may be important to you. This summary highlights
selected information from this prospectus to help you understand the
securities. To fully understand the offering of the securities, you will need
to read both this prospectus and the related prospectus supplement in their
entirety. Some of the terms used in this summary are defined in other parts of
this prospectus; see "Index of Terms". If the securities are issued by Deere
Receivables Corporation instead of a trust, then you will be able to find a
description of the securities in the related prospectus supplement. See
"Certain Tax Considerations".
Issuer...................... The trust to be formed for each series of
securities under a trust agreement between the
seller and the owner trustee for the trust.
Seller...................... John Deere Receivables, Inc.
Servicer.................... John Deere Capital Corporation, also referred to
as JDCC.
Sub-servicer................ The servicer will designate Deere Credit
Services, Inc., an indirect wholly owned
subsidiary of Deere & Company, as its agent to
service the receivables.
Indenture Trustee........... The Bank of New York or another indenture trustee
specified in the related prospectus supplement
for each series of securities.
Owner Trustee............... The owner trustee specified in the related
prospectus supplement for each series of
securities.
The Notes................... Each series of securities will include one or
more classes of notes. The notes will be issued
under an indenture between the related trust and
the indenture trustee. The notes in each series
will represent indebtedness of the trust.
. The notes will be available for purchase in
book-entry form only, in denominations of
$1,000 and integral multiples of $1,000, unless
otherwise specified in the related prospectus
supplement.
. The price, amounts and specific terms of the
notes will be determined at the time of sale.
. Noteholders will receive definitive notes only
if definitive notes are issued in the limited
circumstances described in this prospectus or
in the related prospectus supplement. See
"Certain Information Regarding the
Securities--Definitive Notes".
Principal and Interest on the Notes
Each class of notes will have:
. a stated principal amount; and
. a specified interest rate or rates or method
for determining the interest rate or rates.
5
A Series May Include Multiple Classes of Notes
with Different Characteristics
Each series may include more than one class of
notes. In these cases, the characteristics of the
notes may differ from one class to another. Some
of these characteristics are:
. the rate at which interest accrues;
. whether the interest rate is fixed, variable or
adjustable, or any combination of the foregoing;
. timing and priority of interest payments;
. amount of payments of interest and principal;
. priority of interest and principal relative to
other classes;
. whether or not distributions of principal and
interest will be delayed or not made at all
upon the occurrence of specified events; and
. whether payments of principal and interest may
or may not be made on the basis of collections
from designated portions of the pool of
receivables.
Strip Notes May Be Issued
A series may include one or more classes of notes
entitled to:
. principal payments with disproportionate,
nominal or no interest payments; or
. interest payments with disproportionate,
nominal or no principal payments.
If the servicer exercises its option to purchase
the receivables of a trust or, if it does not,
and if satisfactory bids for the purchase of
those receivables are received, in the manner
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 may include one or more
classes of certificates, which will be issued
under the trust agreement between the seller and
the owner trustee. The certificates in each
series will represent fractional undivided
interests in the related trust.
. Certificates will be available for purchase in
denominations of $100,000 and integral
multiples of $100,000, unless otherwise
specified in the related prospectus supplement.
. The price, amounts and specific terms of the
certificates will be determined at the time of
sale.
6
. Certificateholders or their nominees will
receive fully registered definitive
certificates, unless otherwise specified in the
related prospectus supplement.
Certificate Balance and Interest on Certificates
Each class of certificates will, unless otherwise
specified in the related prospectus supplement:
. have a stated certificate balance; and
. accrue interest at a specified pass-through
rate.
A Series May Include Multiple Classes of
Certificates with Different Characteristics
Each series of securities may include more than
one class of certificates. In these cases, the
characteristics of the certificates may differ
from one class to another. Some of these
characteristics are:
. pass-through rate;
. whether the pass-through rate is fixed,
variable or adjustable, or any combination of
the foregoing;
. timing and priority of distributions;
. amount of distributions of principal or
interest;
. priority of interest and principal relative to
other classes;
. whether or not distributions of principal and
interest will be delayed or not made at all
upon the occurrence of the specified events;
. whether payments of principal and interest may
or may not be made on the basis of collections
from designated portions of the pool of
receivables; and
. allocations of losses on the receivables.
Strip Certificates May Be Issued
A series may include one or more classes of
certificates entitled to:
. distributions in respect of principal with
disproportionate, nominal or no interest
distributions; or
. 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 it does not
receive satisfactory bids for the purchase of
7
those receivables, in the manner 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, construction, forestry, commercial
and/or consumer equipment retail installment sale
and loan contracts secured by new and used
agricultural, construction, forestry, commercial
and/or consumer equipment, including:
. rights to receive certain payments made with
respect to the receivables; and
. security interests in the equipment financed,
the proceeds thereof and the proceeds of any
repossessed financed equipment related to the
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
specified cut-off date, from JDCC under a
purchase agreement (each, a "purchase
agreement"), between JDCC and the seller.
The seller will sell the receivables to the trust
under a sale and servicing agreement among the
seller, the servicer and the trust. If so
provided in the related prospectus supplement,
receivables may be added to the pool of
receivables.
The receivables in each pool will arise from
financing offered by JDCC in connection with
retail sales by John Deere dealers of new and
used agricultural, construction, forestry,
commercial and consumer equipment to retail
purchasers (the "obligors"). The receivables are
acquired by JDCC from Deere & Company and John
Deere Construction and Forestry Company
(collectively, the "sales companies"). In turn,
the sales companies either originate the
receivables in the ordinary course of business in
connection with retail sales by the sellers or,
in limited instances, acquire the receivables
from the dealers in the ordinary course of
business.
The receivables are purchased by JDCC under
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 in this prospectus or in
the related prospectus supplement.
8
B. Credit and Cash
Flow Enhancement... The related prospectus supplement will specify
the credit enhancement, if any, for the trust or
any class or classes of securities. Credit and
cash flow enhancement may consist of one or more
of the following:
. subordination of one or more 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, which will be described
in the related prospectus supplement.
C. Reserve Account..... If specified in the related prospectus
supplement, a reserve account will be created for
each trust, with the seller making a reserve
account initial deposit of cash or eligible
investments having a value equal to the amount
specified in the related prospectus supplement.
The reserve account will be available to cover
shortfalls in the payments due to the holders of
those classes of securities specified in the
related prospectus supplement. The related
prospectus supplement may also specify:
. the extent to which the reserve account initial
deposit may be augmented on each payment date
by deposits of amounts remaining after making
all required distributions on that payment
date; and
. when and to whom any amount will be distributed
if the balance exceeds the specified reserve
account balance.
(See "Description of the Transfer and Servicing
Agreements--Reserve Account".)
D. Collection Account.. For each trust, unless the related prospectus
supplement otherwise provides:
9
. the sub-servicer will be required to remit
collections received on the receivables during
the collection period specified in the related
prospectus supplement to a collection account
in the name of the applicable indenture trustee
within two business days of receipt except
under certain conditions described in this
prospectus and in the related prospectus
supplement;
. the servicer will have the revocable power,
under the applicable sale and servicing
agreement, to instruct the applicable indenture
trustee to withdraw funds on deposit in the
collection account and apply the funds on each
payment date as specified in the related
prospectus supplement.
E. Transfer and Servicing
Agreements......... With respect to each trust, the seller will
purchase the related receivables from JDCC under
a purchase agreement and the seller will sell
these receivables to the trust under 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 the receivables. The rights
and benefits of the seller under the purchase
agreement and of the 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 the 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 is
materially adversely affected by a breach of
any representation or warranty made by the
seller or JDCC with respect to the receivable;
and
. 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 under 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 the 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.
Unless otherwise specified in the related
prospectus supplement, the servicer will be
entitled to receive a fee for servicing the
receivables of each trust equal to a specified
percentage of the aggregate principal
10
balance of the receivables, as set forth in the
related prospectus supplement. See "Description
of the Transfer and Servicing
Agreements--Servicing Compensation" in this
prospectus 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 a revolving
period. The "revolving period" for the trust will
be the period beginning on the related cut-off
date and ending on the earlier of:
. the commencement of an "early amortization
period" (as specified in the related prospectus
supplement); and
. 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 the trust will begin on
the day following the related scheduled revolving
period termination date and will continue until
the earlier of:
. the commencement of an early amortization
period; and
. the date on which all related securities have
been paid in full with respect to the 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 these
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 begin upon the
occurrence of an "early amortization event" (as
described in the related prospectus supplement)
and will end on the earliest of:
. the payment in full of the outstanding
principal balance of the notes and the
certificate balance;
. the termination of the relevant trust; and
. the recommencement, if any, of the revolving
period.
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With respect to the 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. 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 the 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 priority perfected
security interest in the name of JDCC in the
financed equipment securing the receivable does
not exist as of the date the receivable is
purchased by the trust if:
. this breach materially adversely affects the
interest of the trust in the receivable; and
. this failure or breach is not 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 this breach, and JDCC
will be obligated to purchase the receivable
from the seller contemporaneously with the
seller's purchase from the trust.
To the extent the security interest is perfected,
the trust will have a prior claim over subsequent
purchasers of the financed equipment and holders
of subsequently perfected security interests.
However, as against mechanics' liens on 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 the financed
equipment after the date the relevant receivable
was purchased by the trust.
Tax Considerations.......... We expect that the prospectus supplement for each
series of notes and for each series of
certificates will summarize the federal income
tax considerations relevant to the purchase,
ownership and disposition of the notes and
certificates. We also expect that the prospectus
supplement will contain information with respect
to the tax laws of the State of Iowa.
12
ERISA Considerations........ We expect that the prospectus supplement will
summarize:
. considerations under the Employee Retirement
Income Security Act of 1974, as amended, or
ERISA, relevant to the purchase of the notes by
employee benefit plans; and
. considerations under ERISA relevant to the
purchase of the certificates by employee
benefit plans and individual retirement
accounts.
See "ERISA Considerations" in this prospectus and
in the related prospectus supplement.
13
RISK FACTORS
You should consider the following risk factors in deciding whether to
purchase any of the securities.
The notes may suffer losses because the trust's only sources of funds are the
receivables, the reserve accounts and any related credit enhancement.
For each trust, the only sources of funds will be the related receivables
and, to the extent provided in the related prospectus supplement, the related
reserve account and any 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 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, securityholders
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 and any
other credit enhancement, all as specified in the related prospectus supplement.
The notes may suffer losses if the interests of other persons in the
receivables are superior to the trusts interests.
In connection with the sale of the receivables to an issuer, security
interests in financed equipment securing the receivables will be assigned by
JDCC to the seller and by the seller to the applicable issuer. Unless otherwise
provided in the related prospectus supplement, the seller will be obligated to
repurchase any receivable, (and JDCC will be obligated to purchase the
receivable from the seller contemporaneously with the seller's repurchase from
the issuer) sold to the related issuer as to which a perfected security
interest in the name of JDCC in the financed equipment securing the receivable
does not exist as of the date the applicable issuer purchased that receivable
if:
. the failure to have a perfected security interest materially adversely
affects the interest of the issuer in the receivable; and
. the failure has not 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 the breach.
If the security interest in the financed equipment is not perfected, the
right of the seller, the issuer and the indenture trustee to enforce that
security interest to obtain payment on the related receivable may be impaired.
To the extent the security interest in the financed equipment is perfected, the
issuer will have a prior claim over subsequent purchasers of the 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, the issuer could lose the priority
of its security interest or its security interest in the 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 the
issuer's losing the priority of its security interest or its security interest
in the financed equipment after the date the issuer purchased the receivable.
In some states the trust may not have a perfected security interest in the
financed equipment securing the receivables.
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 the receivables to reflect the sale and
assignment of receivables to the 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, in some states a trust may not have
perfected security interests in the financed equipment securing receivables
originated. See "Certain Legal Aspects of the Receivables".
14
If the protection provided to the investment of the noteholders of a given
series by the subordination of the certificates of that series and by the
availability of the funds in the reserve account, if any, or any other credit
enhancement for that series or the protection provided to certificateholders of
that series by the reserve account or other credit enhancement is insufficient,
the related trust must rely solely on the payments from the obligors on the
receivables, and the proceeds from the repossession and sale of financed
equipment that secures defaulted receivables. In that event, certain factors,
such as the trust's not having first perfected security interests in some of
the financed equipment, may affect the trust's ability to realize on the
collateral securing the receivables, and 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".
Bankruptcy of JDCC could result in delays or reductions in payments on the
securities.
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 U.S. Bankruptcy Code or other
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 the seller's 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 those
receivables to the seller. In addition, JDCC and the seller will treat the
transactions described in this prospectus 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 the debtor or the
debtor itself were to take the position that a sale of receivables to the
seller should be recharacterized as a pledge of those receivables to secure a
borrowing of the debtor, then delays in payments of collections of receivables
to the seller could occur, or should the court rule in favor of the creditor,
trustee or debtor, reductions in the amount of the 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 the
receivable. If the transactions contemplated in this prospectus 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 these collections.
Delays in processing payments or distributions on the securities could occur
if JDCC ceases to act as servicer or Deere Credit Services ceases to act as
sub-servicer.
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
15
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.
JDCC or the seller may have to repurchase receivables.
JDCC will make representations and warranties with respect to the
characteristics of the relevant receivables. In certain circumstances, JDCC and
the seller may be obligated to repurchase these receivables if these
representations and warranties have been breached. In general, the repurchase
obligation will constitute the sole remedy available to noteholders,
certificateholders, the indenture trustee or the owner trustee in respect of
the trust for any uncured breach.
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 a contract liable to the obligor of the contract 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, that fails to comply with these requirements, and JDCC will
be obligated to repurchase that receivable from the seller contemporaneously
with the seller's repurchase from the related trust or other issuer.
Consistent with its normal procedures, the servicer or 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 these 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".
Subordination may cause the certificates and some classes of notes to bear
additional credit risk.
The rights of the holders of any class of notes to receive payments of
interest and principal may be subordinated to one or more other classes of
notes. Similarly, the rights of the holders of any class of certificates to
receive payments of interest and principal may be subordinated to one or more
other classes of certificates. Holders of subordinated classes of notes or
certificates will bear more credit risk than the more senior classes. In
addition, to the extent specified in the related prospectus supplement, the
rights of the holders of any class of certificates to receive payments of
interest and principal will be subordinated in priority of payment to payments
of principal and interest on the notes of the particular series.
Subordination may take the following forms:
. interest payments on any date on which interest is due will first be
allocated to the more senior classes;
. principal payments on the subordinated classes might not begin until
principal of the more senior classes is repaid in full;
. subordinated classes bear the first risk of losses; and
. if the indenture trustee had to sell receivables, the net proceeds of that
sale may be allocated first to pay principal and interest on the more
senior classes.
The timing and priority of payment, seniority, allocations of losses and
method of determining payments on the respective classes of notes and
certificates of any trust will be described in the related prospectus
supplement.
Potential early payment of notes due to prepayment of receivables.
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. Prepayment includes:
16
. voluntary prepayments;
. liquidations due to default; and
. 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 receivables has historically tended to
increase during periods in which farmers have strong cash flows.
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. Also, see "Description of the Transfer and
Servicing Agreements-Sale and Assignment of Receivables" and "--Servicing
Procedures" regarding JDCC's obligation to repurchase the receivables under
certain circumstances, "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.
Yield on the securities could be lower than you anticipate.
Noteholders and certificateholders 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.
JDCC may commingle collections on the receivables with its own funds and
invest the collections for its own benefit.
The servicer will deposit all payments on receivables and all proceeds of
receivables collected during each collection period into the collection account
within two business days of receipt thereof. However, if JDCC satisfies certain
requirements for monthly or less frequent remittances as described in this
prospectus and in the related prospectus supplement, then so long as JDCC is
the servicer and provided that:
. there exists no servicer default; and
. each other condition to making monthly or less frequent deposits that 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 these funds,
securityholders might incur a loss.
THE TRUSTS
With respect to each series of securities, other than those issued by Deere
Receivables Corporation, the seller will establish a separate trust pursuant to
a trust agreement for the transactions described in this prospectus and in the
related prospectus supplement. After its formation, each trust will not engage
in any activity other than:
. acquiring, holding and managing the receivables purchased pursuant to the
related sale and servicing agreement and the other assets of the trust and
proceeds from those assets;
17
. issuing notes;
. making payments on the notes;
. issuing and making payments on the certificates representing beneficial
equity interests in that trust; and
. engaging in other activities that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected with those
activities.
Upon the issuance of the notes and the certificates of a given series, the
trust will use the proceeds to purchase receivables from the seller pursuant to
the related sale and servicing agreement. The servicer will initially service
the receivables and will be compensated for acting as the servicer. See
"Description of the Transfer and Servicing Agreements--Servicing Compensation".
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 securities is limited solely to the express obligations of that
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:
. a pool of receivables;
. all monies, including accrued interest, due under the receivables on or
after the applicable cut-off date;
. amounts that 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 in this prospectus and in the
related prospectus supplement;
. security interests in the equipment financed under the receivables in the
pool;
. the right to proceeds from insurance policies covering equipment financed
under the receivables or the obligors on the receivables;
. proceeds of any repossessed equipment;
. rights of the seller under the related purchase agreement with JDCC; and
. interest earned on short-term investments made by the trust.
The receivables in each pool will arise from financing proposed by JDCC in
connection with retail sales by John Deere dealers of new and used
agricultural, construction, forestry, commercial and consumer equipment to
retail purchasers (the "obligors"). The receivables are acquired by JDCC from
Deere and John Deere Construction and Forestry Company (the sales companies).
In turn, the sales companies either originate the receivables in the ordinary
course of business in connection with retail sales by the sellers or, in
limited instances, acquire the receivables from the dealers in the ordinary
course of business.
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 that trust. Unless otherwise
specified in the related
18
prospectus supplement, the related reserve account, if any, will 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 to designate from time to time additional receivables to be included
in the related pool of receivables.
THE RECEIVABLES POOL
Underwriting Criteria for Receivables
Each pool of receivables will consist of receivables purchased by JDCC from
the sales companies as described above. JDCC purchases and enters into
contracts in accordance with its credit standards, which are based upon:
. the buyer's ability to repay the obligation;
. the buyer's credit history; and
. the buyer's down payment on the financed equipment.
Selection Criteria for Receivables
The receivables will be selected from JDCC's portfolio in accordance with
several criteria. As of the applicable cut-off date and except as described
under "Certain Legal Aspects of the Receivables", each receivable must meet the
following criteria. It:
. will have originated in the United States;
. has an obligor that is a United States person;
. is secured by a perfected first priority security interest in the related
financed equipment;
. provides for scheduled payments that 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 the receivable;
. has an outstanding principal balance of at least $500;
. will not be more than 89 days past due as of the applicable cut-off date;
and
. will satisfy 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 JDCC 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 receivables.
Composition of the Receivables Pools
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 the receivables; and
. the distribution of the receivables by equipment type, payment frequency
and current principal balance as of the applicable cut-off date.
19
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,
construction, forestry, commercial and consumer equipment receivables will be
set forth in each prospectus supplement. Delinquencies, repossessions and net
losses on agricultural, construction, forestry, commercial and consumer
equipment receivables are affected by economic conditions generally.
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.
Delinquencies, repossessions and net losses on construction equipment
receivables may be affected by:
. the level of housing starts; and
. the level of nonresidential construction.
Delinquencies, repossessions and net losses on forestry equipment
receivables may be affected by:
. changes in demand for forestry products; and
. prices for pulp and lumber.
Delinquencies, repossessions and net losses on commercial and consumer
equipment receivables may be affected by:
. the level of consumers' income; and
. the severity and timing of weather patterns.
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 that new factors will not materially affect this experience in
the future.
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. Prepayments include:
. voluntary prepayments;
. liquidations due to default; and
. 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.
20
The related prospectus supplement may 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 that class of notes, indicating the remaining outstanding principal
balance of that class of notes as of the applicable payment date, as a fraction
of the initial outstanding principal balance of the class.
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 that class of certificates indicating the remaining certificate
balance of that class of certificates as of the applicable payment date, as a
fraction of the initial certificate balance of the class.
Each note pool factor and certificate pool factor will be initially
1.0000000, and after that 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. A noteholder's portion of the
aggregate outstanding principal balance of a class of notes is the product of:
. the original denomination of such noteholder's note; and
. the applicable note pool factor.
A certificateholder's portion of the aggregate outstanding certificate
balance for a class of certificates is the product of:
. the original denomination of the certificateholder's certificate; and
. the applicable certificate pool factor.
If so provided in the related prospectus supplement with respect to a trust,
pursuant to the applicable indenture, the noteholders of record will receive
reports on or about each payment date concerning the payments received on the
receivables, the pool balance, each note pool factor and various other items of
information.
If so provided in the related prospectus supplement with respect to a trust,
the 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.
John Deere Receivables, Inc. (JDRI or the seller) is a wholly owned
subsidiary of JDCC. JDRI was incorporated in the State of Nevada on July 15,
1992 and is organized for the limited purpose of purchasing retail
21
receivables, transferring those receivables to third parties and performing any
activities incidental to, and necessary or convenient for, the accomplishment
of those purposes. The principal executive offices of JDRI are located at First
Interstate Bank Bldg., 1 East First Street, Reno, Nevada 89501, and its
telephone number is (775) 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
affirmative vote of all of the seller's 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 "Risk Factors--Bankruptcy of JDCC could result in delays or reductions
in payments on the securities".
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
in this prospectus 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. See
"Risk Factors--Bankruptcy of JDCC could result in delays or reductions in
payments on the securities".
Deere Receivables Corporation
Deere Receivables Corporation (DRC) is a wholly owned subsidiary of JDCC
that 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 those receivables to third parties or holding those
receivables and selling securities to the public and performing any activities
incidental to, or necessary or convenient for, the accomplishment of these
purposes. DRC is intended to comply with certain requirements for the
securitization of debt obligations, under 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 four major business segments:
. the 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
agricultural management technology.
. the commercial and consumer equipment segment manufactures and distributes
equipment for commercial and residential uses, including small tractors
for lawn, garden, commercial and utility
22
purposes; riding and walk-behind mowers; golf course equipment;
snowblowers; utility vehicles; landscape and irrigation equipment; and
other outdoor power products.
. the construction and forestry segment manufactures and distributes a broad
range of machines used in construction, earthmoving, material handling and
timber harvesting-including backhoe loaders; crawler dozers and loaders;
four-wheel drive loaders; excavators; motor graders; articulated dump
trucks; forklifts; landscape loaders; skid steer loaders; and log
skidders, feller bunchers, loaders, forwarders, harvesters and related
attachments.
. the credit segment primarily finances sales and leases by John Deere
dealers of new and used agricultural, commercial and consumer, and
construction and forestry equipment. In addition, it provides wholesale
financing to dealers of the foregoing equipment, provides operating loans
and finances retail revolving charge accounts.
The products produced by the equipment segments are marketed primarily
through retail dealer networks and major retail outlets.
John Deere Capital Corporation
The principal business of JDCC and its subsidiaries is providing and
administering financing for retail purchases of new and used equipment
manufactured by Deere & Company's agricultural equipment, commercial and
consumer equipment, and construction and forestry divisions. JDCC and its
subsidiaries purchase retail installment sales and loan contracts from John
Deere. John Deere acquires these retail notes through John Deere retail
dealers. JDCC and its subsidiaries also purchase and finance certain
agricultural, construction, forestry, commercial and consumer retail notes
unrelated to John Deere.
JDCC and its subsidiaries also lease equipment to retail customers, finance
and service revolving charge accounts and operating loans acquired from and
offered through merchants or farm input providers in the agricultural,
construction and forestry, commercial and consumer markets, as well as insured
international export financing products, and provide wholesale financing for
inventories of John Deere engines and John Deere agricultural, John Deere
commercial and consumer, and John Deere construction and forestry equipment
owned by dealers of those products. In addition, JDCC and its subsidiaries
purchase certain wholesale receivables from John Deere and administers those
receivables.
John Deere Credit Company, a wholly owned finance holding subsidiary of
Deere, is the parent of JDCC.
JDCC's executive offices are located at 1 East First Street, Suite 600,
Reno, Nevada 89501. Its telephone number is (775) 786-5527.
DESCRIPTION OF THE NOTES
General
One or more classes of notes of a given series may be issued under an
indenture by each trust, as set forth in the applicable prospectus supplement.
This section summarizes certain terms of the notes that are common to all
classes and series of notes. Most of the financial terms and other specific
terms of any class or series of notes that we offer will be described in a
prospectus supplement to be attached to the front of this prospectus. Since the
terms of specific notes may differ from the general information we have
provided below, you should rely on information in the prospectus supplement
that contradicts different information below.
As required by federal law for all bonds and notes of companies that are
publicly offered, the notes are governed by a document called an "indenture".
We will enter into a separate indenture for the notes of each separate series.
An indenture is a contract between the issuer and a financial institution
acting as trustee on your
23
behalf. The trustee has two main roles. First, the trustee can enforce your
rights against us if we default. There are some limitations on the extent to
which the trustee acts on your behalf, described below. Second, the trustee
performs certain administrative duties for us.
Because this section is a summary, it does not describe every aspect of the
notes of a given class or series and the indentures under which they will be
issued. We urge you to read the indenture that is applicable to you because it,
and not this description, defines your rights as a holder of notes. We have
filed the form of the indenture as an exhibit to the registration statement
that we have filed with the SEC. See "Where You Can Find More Information" on
page 2 for information on how to obtain a copy of the indenture.
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".
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 $1,000 and integral multiples
thereof, in book-entry form only. Accordingly, DTC's nominee 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 in this prospectus
or in the related prospectus supplement, no noteholder will be entitled to
receive a physical certificate representing a note.
All references in this prospectus and in the related prospectus supplement
to actions by noteholders refer to actions taken by DTC upon instructions from
its participating organizations (the "participants"), and all references in
this prospectus and in the related prospectus supplement to distributions,
notices, reports and statements to noteholders refer to distributions, notices,
reports and statements to DTC or its nominee, as the registered holder of the
notes 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 rights of noteholders of any class to receive payments of principal and
interest may be senior or subordinate to the rights of noteholders of any other
class or classes of the series. Unless otherwise provided in the related
prospectus supplement, payments of interest on the notes of a series will be
made prior to payments of principal on the notes. To the extent provided in the
related prospectus supplement, a series may include one or more classes of
strip notes entitled to:
. principal payments with disproportionate, nominal or no interest payments;
or
. 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 that 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.
24
To the extent specified in any prospectus supplement, one or more classes of
notes of a given series may have fixed principal payment schedules. Holders of
those notes would be entitled to receive as payments of principal on any given
payment date the applicable amounts set forth on the schedule with respect to
those 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 these
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 that class of
noteholders, of the aggregate amount available to be distributed in respect of
interest on the notes of that series. See "Description of the Transfer and
Servicing Agreements--Distributions" and "--Credit and Cash Flow Enhancement".
In the case of a series of notes that 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 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
the same class.
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 that purpose.
During the wind down period, if any, for the trust and any early
amortization period, certain amounts will be set aside for payments of
principal on the notes and distributions with respect to the certificate
balance, and these 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 the consent of the holders of a majority of the outstanding notes of
all classes of the series issued by a particular trust, 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 noteholders.
Unless otherwise specified in the related prospectus supplement with respect
to a series of notes, without the consent of the holder of each outstanding
note affected thereby, no supplemental indenture may:
. change the due date of any installment of principal of, or interest on,
any note or reduce the principal amount of the note, the interest rate of
the note or the redemption price with respect to the note or change any
place of payment where or the coin or currency in which any note or any
interest on the note is payable;
. impair the right to institute suit for the enforcement of certain
provisions of the indenture regarding payment;
25
. reduce the percentage of the aggregate amount of the outstanding notes of
the series the consent of the holders of which is required for any
supplemental indenture or the consent of the holders of which is required
for any waiver of compliance with certain provisions of the indenture or
of certain defaults under the indenture and their consequences as provided
for in the indenture;
. modify or alter the provisions of the indenture regarding the voting of
notes held by the related trust, the seller, an affiliate of either of
them or any obligor on the notes;
. reduce the percentage of the aggregate outstanding amount of those notes
the consent of the holders of which is required to direct the trust to
sell or liquidate the receivables if the proceeds of that sale would be
insufficient to pay the principal amount and accrued but unpaid interest
on the outstanding notes;
. decrease the percentage of the aggregate principal amount of those notes
required to amend the sections of the indenture which specify the
applicable percentage of aggregate principal amount of the notes of that
series necessary to amend the indenture or certain other related
agreements; or
. permit the creation of any lien ranking prior to or on a parity with the
lien of the indenture with respect to any of the collateral for the notes
or, except as otherwise permitted or contemplated in the indenture,
terminate the lien of the indenture on any collateral or deprive the
holder of any note of the security afforded by the lien of the 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 indenture or of modifying in
any manner the rights of the noteholders; provided, however, that such action
will not, in the opinion of counsel satisfactory to the indenture trustee,
materially and adversely affect the interest of any 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 the
notes is defined in the related indenture as being:
. a default for five days or more in the payment of any interest due on any
note;
. a default in the payment of the principal of or any installment of the
principal of any note when the same becomes due and payable;
. a default in the observance or performance of any covenant or agreement of
the trust made in the indenture and the continuation of that default for a
period of 30 days after notice of a default is given to the trust by the
indenture trustee or to the trust and indenture trustee by the holders of
at least 25% in principal amount of the notes of that series then
outstanding;
. any representation or warranty made by the trust in the indenture or in
any certificate delivered pursuant to the indenture or in connection with
the indenture having been incorrect in a material respect as of the time
made, and that breach not having been cured within 30 days after notice of
the breach is given to the trust by the indenture trustee or to the trust
and the indenture trustee by the holders of at least 25% in principal
amount of those notes of the series then outstanding; or
. certain events of bankruptcy, insolvency, receivership or liquidation of
the trust.
However, the amount of principal required to be distributed to the
noteholders of a series under an 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 that class of
notes.
26
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 those notes then outstanding may declare the principal of
the notes to be immediately due and payable. That declaration may, under
certain circumstances, be rescinded by the holders of a majority in principal
amount of those 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 receivables or elect to have
the trust maintain possession of the receivables and continue to apply
distributions on the receivables as if there had been no declaration of
acceleration. In addition, that 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 the series, unless:
. the holders of all outstanding notes consent to the sale,
. the proceeds of the sale are sufficient to pay in full the principal of
and the accrued interest on the outstanding notes at the date of the sale,
or
. the indenture trustee determines that the proceeds of the receivables
would not be sufficient on an ongoing basis to make all payments on the
notes as those payments would have become due if the obligations had not
been declared due and payable, and the indenture trustee obtains the
consent of the holders of 66 2/3% of the aggregate outstanding amount of
the notes.
Subject to the provisions of the applicable indenture relating to the duties
of the indenture trustee, in case an event of default occurs and is continuing
with respect to a series of notes, the indenture trustee will be under no
obligation to exercise any of the rights or powers under the indenture at the
request or direction of any of the noteholders, if the indenture trustee
reasonably believes it will not be adequately indemnified against the costs,
expenses and liabilities that might be incurred by it in complying with the
request.
Subject to the provisions for indemnification and certain limitations
contained in the related indenture, the holders of a majority in principal
amount of the outstanding notes of a given series will have the right to direct
the time, method and place of conducting any proceeding or any remedy available
to the indenture trustee, and the holders of a majority in principal amount of
those 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 the indenture that cannot be
modified without the waiver or consent of all of the holders of the 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 indenture, unless:
. the holder previously has given to the indenture trustee written notice of
a continuing event of default;
. the holders of not less than 25% in principal amount of all the
outstanding notes have made written request of the indenture trustee to
institute the proceeding in its own name as indenture trustee;
. the holder or holders have offered the indenture trustee reasonable
indemnity;
. the indenture trustee has for 60 days failed to institute the proceeding;
and
. no direction inconsistent with the written request has been given to the
indenture trustee during this 60-day period by the holders of a majority
in principal amount of the 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 indenture trustee nor the related
owner trustee in its individual capacity, nor any holder of a certificate
representing an ownership interest in the trust, nor any of their respective
27
owners, beneficiaries, agents, officers, directors, employees, successors or
assigns will, 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 the 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:
. the entity formed by or surviving the consolidation or merger is organized
under the laws of the United States, any state thereof or the District of
Columbia;
. the surviving entity expressly assumes the trust's obligation to make due
and punctual payments upon the related notes and the performance or
observance of every agreement and covenant of the trust under the related
indenture;
. no event of default has occurred and is continuing immediately after the
merger or consolidation;
. the trust has been advised that the rating of the related notes or
certificates then in effect would not be reduced or withdrawn by the
rating agencies as a result of the merger or consolidation; and
. the trust has received an opinion of counsel to the effect that the
consolidation or merger would have no material adverse tax consequence to
the trust or to any noteholder or certificateholder.
Each trust will not, among other things:
. except as expressly permitted by the applicable indenture, the related
transfer and servicing agreements or certain related documents with
respect to the trust (collectively, the "related documents"), sell,
transfer, exchange or otherwise dispose of any of the assets of the trust;
. claim any credit on or make any deduction from the principal and interest
payable in respect of the notes of the related series, other than amounts
withheld under the Internal Revenue Code, or applicable state law, or
assert any claim against any present or former noteholder because of the
payment of taxes levied or assessed upon the trust;
. dissolve or liquidate in whole or in part;
. 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 the notes under the indenture except as may be
expressly permitted by the indenture; or
. permit any lien, charge, excise, claim, security interest, mortgage or
other encumbrance to be created on or extend to or otherwise arise upon or
burden the assets of the trust or any part of the trust, or any interest
therein or the proceeds thereof except as may be created by the terms of
the indenture.
No trust may engage in any activity other than as specified in this
prospectus or in the related prospectus supplement. No trust will incur, assume
or guarantee any indebtedness other than indebtedness incurred under 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 class
each of whom has owned a note of the series for at least six months may, by
written request to the applicable indenture trustee, obtain access to the list
of all noteholders of the series maintained by the indenture trustee for the
purpose of communicating with other noteholders of that series with respect to
their rights under the indenture or the notes. The indenture trustee may elect
not to afford the requesting noteholders access to the list of those
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 the
series of record.
28
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
indenture.
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
indenture, any amounts advanced by it under the indenture, the amount, interest
rate and maturity date of certain indebtedness owing by the trust to the
indenture trustee in its individual capacity, the property and funds physically
held by the indenture trustee in its capacity as indenture trustee and any
action taken by it that materially affects the 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
the indenture trustee of funds sufficient for the payment in full of all of the
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 the series. The trust may also remove the indenture trustee if the
indenture trustee ceases to be eligible to continue as indenture trustee under
the related indenture or if the indenture trustee becomes insolvent. In these
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 the series.
DESCRIPTION OF THE CERTIFICATES
General
One or more classes of certificates of a given series may be issued by each
trust under its trust agreement. The prospectus supplement for a series will
state whether the certificates of that series are being offered thereby.
This section summarizes certain terms of the certificates that are common to
all classes and series of certificates. Most of the financial terms and other
specific terms of any class or series of certificates that we offer will be
described in a prospectus supplement to be attached to the front of this
prospectus. Since the terms of specific certificates may differ from the
general information we have provided below, you should rely on information in
the prospectus supplement that contradicts different information below.
Because this section is a summary, it does not describe every aspect of the
certificates of a given class or series and the trust agreement under which
they will be issued. We urge you to read the trust agreement that is applicable
to you because it, and not this description, defines your rights as a holder of
certificates. We have filed the form of the trust agreement as an exhibit to
the registration statement that we have filed with the SEC. See "Where You Can
Find More Information" on page 2 for information on how to obtain a copy of the
trust agreement.
29
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 the 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 the certificates. To the extent provided in the related
prospectus supplement, a series may include one or more classes of strip
certificates entitled to:
. distributions in respect of principal with disproportionate, nominal or no
interest distributions; or
. 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, 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 that
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 that series.
In the case of a series of certificates that 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 class will
be set forth in the related prospectus supplement. Distributions in respect of
principal and interest of any class of certificates will be made on a pro rata
basis among all the certificateholders of the same class.
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 that class for
the purpose of communicating with the other certificateholders with respect to
their rights under the related trust agreement or under the 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
30
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, 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 or 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 that
class, and the spread multiplier is the percentage that may be specified in the
applicable prospectus supplement as being applicable to that class.
The applicable prospectus supplement will designate a base rate for a given
class of floating rate securities 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 that 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:
. a maximum limitation, or ceiling, on the rate at which interest may accrue
during any interest period; and
. 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 that law may be modified by U.S. law of general
application.
Indexed Securities
To the extent specified in any prospectus supplement, any class of
securities of a given series may consist of securities, referred to as indexed
securities, in which the principal amount payable at the final scheduled
payment date for that class, referred to as the indexed principal amount, is
determined by reference to a measure, or index, which will be related to:
. the difference in the rate of exchange between U.S. dollars and a currency
or composite currency (the "indexed currency") specified in the applicable
prospectus supplement (those indexed securities, "currency indexed
securities");
. the difference in the price of a specified commodity (the "indexed
commodity") on specified dates (those indexed securities, "commodity
indexed securities");
. the difference in the level of a specified stock index, which may be based
on U.S. or foreign stocks, on specified dates (those indexed securities,
"stock indexed securities"); or
. 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 the determination will be set forth in the applicable prospectus supplement,
together with information concerning the tax consequences to the holders of
those indexed securities.
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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 the index or changes
the basis upon which that index is calculated, other than changes consistent
with policies in effect at the time the indexed security was issued and
permitted changes described in the applicable prospectus supplement, then that
index will be calculated for purposes of the 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 that 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 the indexed security
will be calculated in the manner set forth in the applicable prospectus
supplement. Any determination of the independent calculation agent will, 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 that 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 that indexed security, the indexed principal amount of that
indexed security at the time of redemption or repayment or another amount
described in the prospectus supplement.
Book-Entry Registration
Book-Entry Holders. We will issue notes of a given series in book-entry
form only, unless we specify otherwise in the applicable prospectus supplement.
This means the notes will be represented by one or more global securities
registered in the name of a depositary that will hold them on behalf of
financial institutions that participate in the depositary's book-entry system.
These participating institutions, in turn, hold beneficial interests in the
notes held by the depositary or its nominee. These institutions may hold these
interests on behalf of themselves or customers.
Under each indenture, only the person in whose name a note is registered is
recognized as the holder of that note. Consequently, for notes issued in
book-entry form, we will recognize only the depositary as the holder of the
notes and we will make all payments on the notes to the depositary. The
depositary will then pass along the payments it receives to its participants,
which in turn will pass the payments along to their customers who are the
beneficial owners. The depositary and its participants do so under agreements
they have made with one another or with their customers; they are not obligated
to do so under the terms of the notes.
As a result, investors will not own notes directly. Instead, they will own
beneficial interests in a global security, through a bank, broker or other
financial institution that participates in the depositary's book-entry system
or holds an interest through a participant. As long as the notes are
represented by one or more global securities, investors will be indirect
holders, and not holders, of the notes.
Special Considerations for Book-Entry Holders. If you hold notes through a
bank, broker or other financial institution, we urge you to check with that
institution to find out:
. how it handles securities payments and notices,
. whether it imposes fees or charges,
. how it would handle a request for the holders' consent, if ever required,
. whether and how you can instruct it to send you notes registered in your
own name so you can be a holder, if that is permitted in the future for a
particular series of notes,
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. how it would exercise rights under the notes if there were a default or
other event triggering the need for holders to act to protect their
interests, and
. how the depositary's rules and procedures will affect these matters.
What Is a Global Security? As noted above, we usually will issue notes as
registered securities in book-entry form only. A global security represents one
or any other number of individual notes. Generally, all notes represented by
the same global securities will have the same terms.
Each note issued in book-entry form will be represented by a global security
that we deposit with and register in the name of a financial institution or its
nominee that we select. The financial institution that we select for this
purpose is called the depositary. Unless we specify otherwise in the applicable
prospectus supplement, The Depository Trust Company, New York, New York, known
as DTC, will be the depositary for all notes issued in book-entry form.
A global security may not be transferred to or registered in the name of
anyone other than the depositary or its nominee, unless special termination
situations arise. We describe those situations below under "Definitive Notes".
As a result of these arrangements, the depositary, or its nominee, will be the
sole registered owner and holder of all notes represented by a global security,
and investors will be permitted to own only beneficial interests in a global
security. Beneficial interests must be held by means of an account with a
broker, bank or other financial institution that in turn has an account with
the depositary or with another institution that has an account with the
depositary. Thus, an investor whose security is represented by a global
security will not be a holder of the notes, but only an indirect holder of a
beneficial interest in the global security.
Special Considerations for Global Securities. As an indirect holder, an
investor's rights relating to a global security will be governed by the account
rules of the investor's financial institution and of the depositary, as well as
general laws relating to securities transfers. The depositary that holds the
global security will be considered the holder of the notes represented by the
global security.
If notes are issued only in the form of a global security, an investor
should be aware of the following:
. An investor cannot cause the notes to be registered in his or her name,
and cannot obtain certificates for his or her interest in the notes except
in the special situations we describe below.
. An investor will be an indirect holder and must look to his or her own
broker, bank or other financial institution for payments on the notes and
protection of his or her legal rights relating to the notes, as we
describe above.
. An investor may not be able to sell interests in the notes to some
insurance companies and other institutions that are required by law to own
their securities in non-book-entry form.
. An investor may not be able to pledge his or her interest in a global
security in circumstances where certificates representing the notes must
be delivered to the lender or other beneficiary of the pledge in order for
the pledge to be effective.
. The depositary's policies, which may change from time to time, will govern
payments, transfers, exchanges and other matters relating to an investor's
interest in a global security. We and the indenture trustee have no
responsibility for any aspect of the depositary's actions or for its
records of ownership interests in a global security. We and the indenture
trustee also do not supervise the depositary in any way.
. DTC requires that those who purchase and sell interests in a global
security deposited in its book-entry system use immediately available
funds. Your broker, bank or other financial institution may also require
you to use immediately available funds when purchasing or selling
interests in a global security.
. Financial institutions that participate in the depositary's book-entry
system, and through which an investor holds its interest in a global
security, may also have their own policies affecting payments, notices and
other matters relating to the notes. There may be more than one financial
intermediary in the chain of ownership for an investor. We do not monitor
and are not responsible for the actions of any of those intermediaries.
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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:
. the administrator in respect of the related trust advises the indenture
trustee in writing that DTC is no longer willing or able to discharge
properly its responsibilities as depository with respect to the notes and
the administrator is unable to locate a qualified successor, or
. the administrator, at its option, elects to terminate the book-entry
system through DTC or, 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 the 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 the
noteholders' best interest.
Upon the occurrence of any event described in the immediately preceding
paragraph, the indenture trustee will be required to notify all the
noteholders, through participants, of the availability of definitive notes.
Upon surrender by DTC of the definitive certificates representing the notes and
receipt of instructions for re-registration, the indenture trustee will reissue
the notes as definitive notes to the noteholders.
Distributions of principal of, and interest on, the notes will thereafter be
made by the 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 the notes in the related prospectus supplement. These
distributions will be made by check mailed to the address of the holder as it
appears on the register maintained by the indenture trustee. The final payment
on any note, however, will be made only upon presentation and surrender of the
note at the office or agency specified in the notice of final distribution to
the 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 the definitive
notes. No service charge will be imposed for any registration of transfer or
exchange, but the 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 that series, either JDCC or the sub-servicer will provide to the related
indenture trustee a statement, which the indenture trustee will be required to
forward to the noteholders of record, and will provide to the related owner
trustee a statement, which the owner trustee will be required to forward to the
certificateholders, in each case setting forth the following information as to
the notes and certificates with respect to the payment date or the related
collection period:
(i)the amount of the distribution allocable to principal of each class of
notes and to the certificate balance of each class of 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 the series, in each case applicable to distributions made on the
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 notes, and the certificate balance and the certificate
pool factor for each class of certificates, each after giving effect to
all payments reported under (i) above on that date;
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(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 the collection period;
(viii)the amount of the aggregate realized losses, if any, for the collection
period; and
(ix)the balance of the reserve account, if any, on the payment date, after
giving effect to changes in the reserve account on that payment date,
and the specified reserve account balance for the payment date.
Each amount set forth under 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 the notes or the initial
certificate balance of the 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 subclauses (i) and
(ii), other than information relating to the note interest rate and the
pass-through rate, 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
subclauses (i) and (ii), other than information relating to the note interest
rate and the pass-through rate, subclauses (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
In connection with each issuance by a trust of one or more classes of notes
and certificates of a given series, the parties indicated below will enter into
the following agreements, which are collectively called the "transfer and
servicing agreements".
. a sale and servicing agreement under which a trust will purchase
receivables from the seller and the servicer will undertake to service or
cause the sub-servicer to service those receivables;
. a purchase agreement under which the seller will purchase those
receivables from JDCC;
. an administration agreement under which JDCC will undertake certain
administrative duties with respect to that trust; and
. a trust agreement under which that trust will be created and the related
certificates will be issued.
This section summarizes certain terms of the transfer and servicing
agreements that are common to all classes and series of securities. Most of the
financial terms and other specific terms of any class or series of securities
that we offer will be described in a prospectus supplement to be attached to
the front of this prospectus. Since the terms of specific transfer and
servicing agreements may differ from the general information we have provided
below, you should rely on information in the prospectus supplement that
contradicts different information below.
Because this section is a summary, it does not describe every aspect of the
transfer and servicing agreements. We urge you to read the transfer and
servicing agreements that are applicable to you because they, and not this
description, define your rights as a holder of securities. We have filed the
forms of the transfer and servicing agreements as exhibits to the registration
statement that we have filed with the SEC. See "Where You Can Find More
Information" on page 2 for information on how to obtain copies of the transfer
and servicing agreements.
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Sale and Assignment of Receivables
On the closing date specified 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 the
closing date, the seller will sell and assign to the applicable trust, without
recourse, its entire interest in those 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 the sale and servicing agreement.
The applicable owner trustee, on behalf of the trust, will, concurrently
with this sale and assignment, execute, authenticate and deliver the related
notes and the certificates. The proceeds received from the sale of the notes
and the certificates of a given series will be applied to the purchase of the
receivables from the seller.
To the extent specified in the related prospectus supplement, JDCC will have
the right under the purchase agreement to sell additional receivables to the
seller. Unless otherwise specified in the related prospectus supplement, the
addition of any receivable to the related pool of receivables will be subject
to the following conditions, among others:
. each additional receivable must satisfy the eligibility criteria set forth
in the related prospectus supplement;
. JDCC must represent and warrant that the inclusion of the 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
. each rating agency must have provided written confirmation that the
addition will not result in a reduction or withdrawal of the rating of any
outstanding related securities.
On the purchase date for any additional receivable, all of the 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:
. the information provided with respect to the related receivables is
correct in all material respects;
. the obligor on each related receivable is required to maintain physical
damage insurance covering the financed equipment in accordance with JDCC's
normal requirements;
. 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;
. 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 priority perfected security interest in
the financed equipment in favor of JDCC; and
. each receivable, at the time it was originated, complied and, at the
applicable closing date or 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 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 the
receivable from the 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").
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The obligation of the seller to repurchase any receivable with respect to
which any representation or warranty has been breached is subject to JDCC's
repurchase of that 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 that 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 or pledge by
the seller to the applicable trust, and UCC financing statements reflecting
those sales and assignments or pledge 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 the
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 the indenture trustee an account, in the
name of the indenture trustee on behalf of the noteholders, in which amounts
released from the collection account and the reserve account or other credit
enhancement, if any, for distribution to the noteholders will be deposited and
from which all distributions to the 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 accounts") will
be invested as provided in the related sale and servicing agreement in eligible
investments. The
"eligible investments" are generally limited to investments acceptable to the
rating agencies as being consistent with the rating of the 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 the 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 the 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. 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"), will be deposited in the
applicable collection account on each payment date and will 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. An "eligible deposit account" means
either:
. a segregated account with an eligible institution; or
. a segregated trust account with the corporate trust department of a
depository institution organized under the laws of the United States or
any one of the states thereof or the District of Columbia, or any domestic
37
branch of a foreign bank, having corporate trust powers and acting as
trustee for funds deposited in that account, so long as any of the
securities of the depository institution has a credit rating from each
rating agency in one of its generic rating categories that signifies
investment grade.
An "eligible institution" means, with respect to a trust:
. the corporate trust department of the related indenture trustee or the
related owner trustee; or
. a depository institution organized under the laws of the United States or
any one of the states thereof or the District of Columbia, or any domestic
branch of a foreign bank, so long as this depository institution or
domestic branch meets both of the following conditions:
. it, or its parent corporation, has either a long-term unsecured debt
rating acceptable to the rating agencies or a short-term unsecured
debt rating or certificate of deposit rating acceptable to the rating
agencies; and
. its 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 the 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
the certificateholders will be deposited and from which all distributions to
the 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, the same
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 these
arrangements, including 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 that 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".
Payments on Receivables
With respect to each trust, the sub-servicer will deposit all payments on
the related receivables and all proceeds of the 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, that receivable will
be reassigned to the seller and any proceeds after that 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 all of these amounts
into the related collection account within two business days of receipt. 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 that fiscal month (or, if that fiscal month ends
in the early part of a calendar month, the 15th day of the 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.
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Servicing Compensation
Unless otherwise specified in the prospectus supplement with respect to any
trust, the servicer will be entitled to receive its 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 the related 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,
and
. 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 indenture trustee with respect to
distributions.
The servicing fee will also 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
securities entitled thereto will be made by the indenture trustee to the
noteholders and by the owner trustee to the certificateholders of that series.
The timing, calculation, allocation, order, source, priorities of and
requirements for each class of notes and all distributions to each class of
certificates of the given series will be set forth in the related prospectus
supplement.
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.
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Credit enhancement, such as a reserve account, will be available to cover any
shortfalls in the amount available for distribution on that 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, then during this 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 reinvested.
If the related prospectus supplement specifies that there is to be an early
amortization period and/or wind down period for a trust, then during this early
amortization period or this wind down period, certain amounts 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 notes and distributions
with respect to the certificate balance on the certificates, all as more fully
set forth in the related prospectus supplement. For each collection period
during an early amortization period or a 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 these 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 securities.
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.
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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 that 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 on a class or series occur that exceed the amount
covered by any credit enhancement or that are not covered by any credit
enhancement, securityholders of that class or series will bear their allocable
share of deficiencies. In addition, if a form of credit enhancement covers more
than one series of securities, securityholders of one of these series will be
subject to the risk that the 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 (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 specified in the related prospectus
supplement, by the deposit into the reserve account of the amount of
collections on the related receivables remaining on each payment date after the
payment of all other required payments and distributions on that date. The
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 the 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 of these events, an
early amortization event with respect to the 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 start on the day on which the early amortization
event is deemed to occur. During an early amortization period for the 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 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
securityholders on the first payment date for that early amortization period as
described in the 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.
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Statements to Indenture Trustee 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 the series described under
"Certain Information Regarding the Securities--Reports to Securityholders".
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 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 the sale and servicing
agreement in all material respects throughout the preceding 12 months
ended October 31 (or, in the case of the first 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 obligation in any
material respect, describing each of these defaults.
The servicer will also agree to give each indenture trustee and each owner
trustee notice of certain servicer defaults under the related sale and
servicing agreement.
Copies of these 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 its duties is no longer permissible under applicable
law. No resignation will become effective until the related indenture trustee
or a successor servicer has assumed JDCC's servicing obligations and duties
under the applicable 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 will 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 under the 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 its duties or by reason of reckless disregard
of its obligations and duties thereunder. In addition, the 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 the 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
of the following entities that assumes the obligations of the servicer will be
the successor of the servicer under the sale and servicing agreement:
. any entity into which the servicer may be merged or consolidated;
. any entity resulting from any merger or consolidation to which the
servicer is a party;
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. any entity succeeding to the business of the servicer; or
. any corporation 50% or more of the voting stock of which is owned,
directly or indirectly, by Deere.
Servicer Default
Except as otherwise provided in the related prospectus supplement, "servicer
default" under each sale and servicing agreement will consist of any of the
following:
. 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 the indenture trustee to make any required
distributions therefrom, which failure continues unremedied for three
business days after written notice from the indenture trustee or the
applicable owner trustee is received by the servicer or after discovery by
the servicer;
. any failure by the servicer, the sub-servicer or the seller, as the case
may be, to duly observe or perform in any material respect any other
covenant or agreement in the 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 to the servicer or the seller, as
the case may be, by the applicable indenture trustee or the applicable
owner trustee or to the servicer or the seller, as the case may be, and to
the indenture trustee and the owner trustee by holders of the related
notes or certificates, as applicable, evidencing not less than 25% in
principal amount of the outstanding notes or certificates; and
. certain events (referred to as "insolvency 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.
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 noteholders of the related series evidencing
not less than 25% in principal amount of the then outstanding notes may
terminate all the rights and obligations of the servicer under the sale and
servicing agreement, whereupon a successor servicer appointed by the indenture
trustee or the indenture trustee will succeed to all the responsibilities,
duties and liabilities of the servicer under that 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 this appointment has occurred, the bankruptcy
trustee or official may have the power to prevent the applicable indenture
trustee or those noteholders from effecting a transfer of servicing.
In the event that the indenture trustee is unwilling or unable to so act
under one or more indentures, 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. The indenture trustee may make arrangements for compensation to
be paid to the successor servicer, 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 evidencing not less than a majority of the outstanding
certificate balance of the series, in the case of any default that does not
adversely affect the applicable indenture trustee or such noteholders) may,
43
on behalf of all of the 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 the sale and servicing agreement. No
waiver will 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 certificateholders, for the
purposes of:
. adding any provisions to or changing in any manner or eliminating any of
the provisions of that transfer and servicing agreement; or
. modifying in any manner the rights of the related noteholders or
certificateholders;
provided that this action will not, in the opinion of counsel satisfactory to
the applicable indenture trustee, materially and adversely affect the interests
of any related 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 owner trustee and the applicable indenture trustee
with the consent of at least a majority in principal amount of then outstanding
notes of the related series and of at least a majority of the related
certificate balance for the purposes of adding any provisions to or changing in
any manner or eliminating any of the provisions of the transfer and servicing
agreements; or of modifying in any manner the rights of the noteholders or
certificateholders; provided, however, that no amendment may:
. increase or reduce in any manner the amount of, or accelerate or delay the
timing of, collections of payments on the related receivables or
distributions that are required to be made for the benefit of the
noteholders or the certificateholders; or
. reduce the aforesaid percentage of the notes and certificates of the
series that are required to consent to the amendment,
without the consent of the holders of all the outstanding notes and
certificates of the series.
Each trust agreement will provide that its owner trustee does not have the
power to commence a voluntary proceeding in bankruptcy with respect to the
trust without the unanimous prior approval of all certificateholders, including
the seller if applicable, of the trust and the delivery to the owner trustee by
each certificateholder of a certificate certifying that the certificateholder
reasonably believes that the 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 owner trustee will
succeed to all the rights of the indenture trustee, and the certificateholders
of that series will succeed to all the rights of the noteholders of that
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 owner trustee and the indenture trustee under the
related transfer and servicing agreements will terminate upon the earlier to
occur of:
. the maturity or other liquidation of the last receivable and the
disposition of any amounts received upon liquidation of the remaining
receivables; and
44
. the payment to noteholders and certificateholders of the related series of
all amounts required to be paid to them under the transfer and servicing
agreements.
Unless otherwise provided in the related prospectus supplement, in order to
avoid excessive administrative expense, the servicer will be permitted at its
option to purchase from a 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 the trust, all of the remaining receivables at a price
equal to the aggregate of the purchase amounts thereof as of the end of that
collection period. The related notes and the certificates will be redeemed
following this purchase.
If and to the extent provided in the 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 prospectus supplement,
solicit bids for the purchase of the receivables remaining in the trust, in the
manner and subject to the terms and conditions set forth in the prospectus
supplement. If the indenture trustee receives satisfactory bids as described in
the prospectus supplement, then the receivables remaining in the applicable
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 this sale.
The subsequent distribution to the related certificateholders of all amounts
required to be distributed to them under their trust agreement may effect the
prepayment of the certificates of such series.
Administration Agreement
JDCC, in its capacity as administrator, will enter into an agreement (the
"administration agreement") with each trust and the applicable indenture
trustee under which the administrator will agree, to the extent provided in the
administration agreement, to provide the notices and to perform other
administrative obligations required by the indenture. Unless otherwise
specified in the related prospectus supplement, as compensation for the
performance of the administrator's obligations under the administration
agreement and as reimbursement for its expenses related thereto, the
administrator will be entitled to an administration fee in an amount equal to
$100 per month.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
Security Interest in Equipment
The retail installment sale contracts and the loan contracts that compose
the receivables constitute personal property security agreements and include
grants of security interests in the equipment under the applicable Uniform
Commercial Code ("UCC"). Perfection of security interests in the equipment is
generally governed by the laws of the state in which the debtor is located. The
UCC generally defines the location of the debtor as being the state of
residence for individual debtors, the location of the business for an
organization, unless the organization conducts business in multiple locations,
in which case the organization is located at the place of its chief executive
office or the place of its organization for a registered organization. The UCC
generally governs the perfection of these security interests. However, under
the laws of certain states and under certain circumstances, perfection of
security interests in agricultural, construction or forestry equipment is
generally governed by certificate of title registration laws of the state in
which that equipment is located.
All of the contracts acquired by JDCC name the applicable Deere sales
company as obligee or assignee and as the secured party. With respect to
agricultural, construction and forestry equipment receivables 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 the equipment's certificate of title.
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Obligors are required to declare whether financed commercial and consumer
equipment will be used primarily for commercial purposes. Financing statements
are filed and, where applicable, notations of liens are recorded on
certificates of title, to perfect the security interests in financed equipment
indicated as primarily for commercial use. With respect to consumer equipment
receivables, the sales companies have a purchase money security interest in the
financed equipment. The purchase money security interests in consumer equipment
are automatically perfected and have a first priority against other lenders and
creditors of the obligor. Except in limited circumstances, no financing
statements are filed and no notations of liens are recorded on titles by the
sales companies for consumer equipment receivables. In the absence of financing
statements being filed with respect to consumer equipment receivables, a
purchaser of the consumer equipment from the obligor may take the equipment
free of the trust's security interest if the purchaser, without knowledge of
the trust's security interest, buys the equipment for value and primarily for
the buyer's personal, family or household purposes.
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. No amendment is required to be filed under the
UCC to maintain perfection of JDCC's interest in the financed equipment. To
perfect its interests in the contracts, JDCC takes possession of the contracts.
With respect to each trust, under the related purchase agreement, JDCC will
sell and assign its interests in the equipment securing the related receivables
to the seller, and under the related sale and servicing agreement, the seller
will assign its interests in the equipment securing the receivables to this
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 the 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 the related trust under 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 those receivables with priority over the related
trust's interest. A purchaser of these receivables who gives new value and
takes possession of the instruments that 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 the 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 these 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 UCC 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 that
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 agricultural,
construction, forestry and commercial equipment or, if applicable, the notation
of the relevant sales company's lien on the certificates will be sufficient to
protect a trust against the rights of subsequent purchasers of the equipment or
subsequent lenders who take a security interest in the equipment securing a
receivable. Except in limited circumstances, no financing statements are filed
and no notations of liens are recorded on titles for consumer equipment
receivables.
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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. This 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 under the related purchase agreement to the 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 the location of the debtor
changes to a state other than the state in which a financing statement was
filed initially to perfect the security interest in the property or, if
applicable, in which the property is initially registered (or 12 months after
the transfer of the property to a new debtor who is located in another state).
In the ordinary course of servicing agricultural, construction, forestry and
commercial equipment receivables, the sub-servicer takes steps to effect
re-perfection upon receipt of information from an obligor as to the relocation
of a debtor or any movable property.
In states where equipment is subject to certificate of title and
registration laws to re-register the equipment, the secured party that 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 will be 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 agricultural,
construction, forestry and commercial equipment securing receivables 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 the 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 the trust, each security interest in financed equipment
is prior to all other present liens upon and security interests in that
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 a lien for repairs or taxes arises.
Repossession
In the event of default by an obligor, 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 the 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 an obligor, some jurisdictions require that the
obligor be notified of the default and be given a time period within which he
or she 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.
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
47
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 other
states. 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 Fourteenth 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 that claim materially and adversely affects the trust's interest
in a receivable, the violation would constitute a breach of the warranties of
JDCC under the related 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".
Bankruptcy Limitations
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a 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.
Consumer Protection Laws
The holder-in-due-course rule of the Federal Trade Commission relates to a
seller of goods who takes back a consumer credit contract and to assignees and
would be applicable to all consumer equipment receivables included in the
receivables owned by the trust. The rule is intended to defeat the ability of
the seller and the
48
related lenders and assignees from transferring the contract free of notice of
claims by the obligor. The effect of the rule is to subject the assignee of the
contract, such as the trust, to all claims and defenses that the obligor could
assert against the seller of the financed consumer equipment. Liability under
the rule is limited to amounts paid under a contract; however, the obligor may
also be able to assert the rule to set off remaining amounts due as a defense
against a claim brought by or on behalf of the trust against the obligor.
Numerous other federal and state consumer protection laws impose requirements
applicable to the origination and lending under consumer credit contracts,
including the Truth in Lending Act, the Federal Trade Commission Act, the Fair
Credit Reporting Act, the Equal Credit Opportunity Act, the Grahm-Leach Bliley
privacy law and the Uniform Consumer Credit Code. In the case of some of these
laws, the failure to comply with their provisions may affect the enforceability
of the related contract.
CERTAIN TAX CONSIDERATIONS
We expect that the prospectus supplement for each series of notes and for
each series of certificates will summarize, subject to the limitations stated
in the prospectus supplement, the federal income tax considerations relevant to
the purchase, ownership and disposition of the 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 was passed and enacted as part of the Seven Year Balanced Budget
Reconciliation Act of 1995 that created a 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
Each prospectus supplement will summarize, subject to the limitations
discussed in the prospectus supplement:
. considerations under ERISA relevant to the purchase of the notes by
employee benefit plans; and
. considerations under ERISA relevant to the purchase of the certificates by
employee benefit plans and individual retirement accounts.
PLAN OF DISTRIBUTION
On the terms and conditions described in an underwriting agreement with
respect to the notes of a given series issued by 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
in the underwriting agreement and in the related prospectus supplement, and
each of the underwriters will severally agree to purchase, the principal amount
of each class of notes and, if applicable, certificates set forth in the
underwriting agreement and in the prospectus supplement.
On the terms and conditions set forth in an underwriting agreement with
respect to the notes of a given series issued by DRC, DRC will agree to sell to
the underwriters named in the underwriting agreement and in the related
prospectus supplement, and each of the underwriters will severally agree to
purchase, the principal amount of each class of notes set forth in the
underwriting agreement and in the prospectus supplement.
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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
described therein that are offered by this prospectus and the related
prospectus supplement if any of the notes and certificates are purchased.
Each prospectus supplement will either
. set forth the price at which each class of notes and certificates being
offered will be offered to the public and any concessions that may be
offered to certain dealers participating in the offering; or
. specify that the notes and certificates 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 notes and certificates, these public
offering prices and concessions may be changed.
Each underwriting agreement will provide that the seller, the issuer and
JDCC will indemnify the underwriters against certain civil liabilities,
including liabilities under the Securities Act, or contribute to payments the
several underwriters may be required to make in respect thereof.
Each indenture trustee may, from time to time, invest the funds in the
related trust accounts in eligible investments acquired from the underwriters.
Under each of the underwriting agreements, the closing of the sale of any
class of securities will be conditioned on the closing of the sale of all other
classes. Each prospectus supplement will describe the expected place and time
of delivery of the securities.
LEGAL OPINIONS
Certain legal matters relating to the securities of each series will be
passed upon for the related trust, the seller, the issuer and the servicer by
Shearman & Sterling, New York, New York and by Richards, Layton & Finger,
Wilmington, Delaware, and for any underwriters by Sidley Austin 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.
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INDEX OF TERMS
Set forth below is a list of the defined terms used in this prospectus and
the pages on which the definitions of such terms may be found herein.
administration agreement................... 45
certificate distribution account........... 38
certificate pool factor.................... 21
closing date............................... 36
collection account......................... 37
collection period.......................... 38
commodity indexed securities............... 31
currency indexed securities................ 31
Deere...................................... 2
definitive notes........................... 34
depository................................. 24
DRC........................................ 2
early amortization event................... 11
early amortization period.................. 11
eligible deposit account................... 37
eligible institution....................... 38
eligible investments....................... 37
event of default........................... 26
FASIT...................................... 49
fixed rate securities...................... 30
floating rate securities................... 30
indenture.................................. 23
indexed commodity.......................... 31
indexed currency........................... 31
insolvency events.......................... 43
investment earnings........................ 37
JDCC....................................... 2
JDRI....................................... 21
John Deere................................. 2
liquidated receivables..................... 38
note distribution account.................. 37
note pool factor........................... 21
obligors................................... 8,18
participants............................... 24
payment date............................... 25
purchase agreement......................... 8
purchase amount............................ 36
related documents.......................... 28
reserve account............................ 41
revolving period........................... 11
sales companies............................ 8
scheduled revolving period termination date 11
servicer default........................... 43
servicing fee rate......................... 39
stock indexed securities................... 31
transfer and servicing agreements.......... 35
trust accounts............................. 37
UCC........................................ 45
wind down period........................... 11
51
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses in connection with the issuance
and distribution of the securities being registered, other than underwriting
discounts and commissions. All of the amounts shown are estimates, except the
SEC registration fee.
SEC registration fee................... $ 321,196
Legal fees and expenses................ 850,000
Accounting fees and expenses........... 300,000
Blue Sky fees and expenses............. 40,000
Rating agency fees..................... 1,000,000
Owner Trustee fees and expenses........ 70,000
Indenture Trustee fees and expenses.... 70,000
Printing and engraving................. 260,000
Miscellaneous.......................... 113,804
----------
Total............................... $3,025,000
==========
Item 15. Indemnification of Directors and Officers
Section 78.7502 of the General Corporation Law of Nevada authorizes the
registrants to indemnify their directors and officers under specified
circumstances. Article Fourteenth of the certificates of incorporation of each
registrant provides in effect that such registrant shall provide certain
indemnification of its directors and officers.
Section 145 of the General Corporation Law of Delaware also authorizes Deere
& Company to indemnify persons who serve as directors or officers of
registrants at the request of Deere & Company under specified circumstances.
Article Seventh of the restated certificate of incorporation of Deere & Company
provides in effect that Deere & Company shall provide certain indemnification
to such persons.
The directors and officers of the registrants are insured, under policies of
insurance maintained by Deere & Company, within the limits and subject to the
limitations of the policies, against certain expenses in connection with the
defense of actions, suits or proceedings, to which they are parties by reason
of being or having been such directors or officers.
The forms of underwriting agreements filed as a part of Exhibit 1 to this
Registration Statement provide for indemnification of directors and officers of
John Deere Receivables, Inc. who sign the Registration Statement and
controlling persons of John Deere Receivables, Inc. by the underwriters, and
for indemnification of each underwriter and its controlling persons by John
Deere Receivables, Inc., against certain liabilities. Similar provisions are
contained in agreements entered into between John Deere Receivables, Inc. and
groups of underwriters on past occasions.
II-1
Items 16. Exhibits
+1.1- Form of Underwriting Agreement for the Notes (incorporated by reference to Exhibit 1.1 to
registration statement on Form S-3 no. 33-66922)
+1.2- Form of Underwriting Agreement for the Certificates (incorporated by reference to Exhibit 1.2 to
registration statement on Form S-3 no. 33-66922)
*3.1- Certificate of Incorporation of John Deere Receivables, Inc.
**3.2- By-Laws of John Deere Receivables, Inc.
+3.3- Certificate of Incorporation of Deere Receivables Corporation (incorporated by reference to
Exhibit 3.4 to registration statement on Form S-3 no. 33-99294)
**3.4- By-Laws of Deere Receivables Corporation
+4.1- Form of Indenture between the Trust and the Indenture Trustee (incorporated by reference to
Exhibit 4.1 to registration statement on Form S-3 no. 33-99294)
+4.2- Form of Floating Rate Asset Backed Note issued by a Trust (included in Exhibit 4.1 hereto)
+4.3- Form of Trust Agreement between John Deere Receivables, Inc. and the Owner Trustee
(incorporated by reference to Exhibit 4.3 to registration statement on Form S-3 no. 33-66922)
+4.4- Form of Certificate of Trust of John Deere Owner Trust (included in Exhibit 4.3 hereto)
+4.5- Form of Indenture between Deere Receivables Corporation and the Trustee (incorporated by
reference to Exhibit 4.4 to registration statement on Form S-3 no. 33-99294)
+4.6- Form of Floating Rate Asset Backed Note issued by Deere Receivables Corporation (included in
Exhibit 4.4 hereto)
**5.1- Opinion of Shearman & Sterling with respect to legality
**5.2- Opinion of Richards, Layton & Finger with respect to legality
**8.1- Opinion of Shearman & Sterling with respect to tax matters
**8.2- Opinion of Lane & Waterman with respect to Iowa tax matters
**23.1- Consent of Shearman & Sterling (included in Exhibits 5.1 and 8.1 hereto)
**23.2- Consent of Richards, Layton & Finger (included in Exhibit 5.2 hereto)
**23.3- Consent of Lane & Waterman (included in Exhibit 8.2 hereto)
**24- Powers of Attorney (included on signature pages)
**25.1- Statement of Eligibility under the Trust Indenture Act of 1939 of the Indenture Trustee for John
Deere Owner Trust (Form T-1)
**25.2- Statement of Eligibility under the Trust Indenture Act of 1939 of the Indenture Trustee for Deere
Receivables Corporation (Form T-1)
+99.1- Form of Sale and Servicing Agreement among John Deere Receivables, Inc., John Deere Capital
Corporation and the Owner Trustee (incorporated by reference to Exhibit 99.1 to registration
statement on Form S-3 no. 33-66922)
+99.2- Form of Purchase Agreement between John Deere Capital Corporation and John Deere
Receivables, Inc. (incorporated by reference to Exhibit 99.2 to registration statement on Form S-3
no. 33-66922)
- --------
* Filed herewith
** Previously filed
+ Incorporated by reference
II-2
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(a)(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i)To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933
(ii)To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in the registration statement;
(iii)To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the registration statement is on form S-3 or form S-8, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to section 13
or 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove form registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
(b) That, for purposes of determining any liability under the Securities Act
of 1933, each filing of the Registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in this Registration statement shall be deemed to be
a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions referred to in item 15 of this
Registration Statement, or otherwise, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issues.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement or amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the County of Rock
Island, State of Illinois, on May 17, 2002.
JOHN DEERE RECEIVABLES, INC.
as originator of the Trust
(Registrant)
By /S/ N.J. JONES
------------------------------------
Name: N.J. Jones
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or amendment has been signed below by the following
persons in the capacities and on the date indicated.
Signature Title Date
--------- ----- ----
/S/ N.J. JONES Director, President, Principal May 17, 2002
------------------ Executive Officer, Principal
N.J. Jones Accounting Officer and Principal
Financial Officer
* Director and Secretary May 17, 2002
------------------
Michael A. Harring
* Director and Vice President May 17, 2002
------------------
D.L. Evans
* Director, Vice President and May 17, 2002
------------------ Treasurer
James R. Jabanoski
------------------ Director and Vice President
John K. Lawson
* Director and Vice President May 17, 2002
------------------
Steven E. Warren
* Director and Senior Vice President May 17, 2002
------------------
Jon D. Volkert
*By: /S/ N.J. JONES
-------------------------
N.J. Jones
Attorney-in-fact
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement or amendment to be signed on its
behalf by the undersigned, thereunto duly authorized, in the County of Rock
Island, state of Illinois, on May 17, 2002.
DEERE RECEIVABLES CORPORATION
(Registrant)
/s/ N.J. JONES
By:
-----------------------------------
N.J. Jones
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or amendment has been signed below by the following
persons in the capacities and on the date indicated.
Signature Title Date
--------- ----- ----
/s/ N.J. JONES Director, President, Principal May 17, 2002
------------------ Executive Officer, Principal
N.J. Jones Accounting Officer and Principal
Financial Officer
* Director, Vice President and May 17, 2002
------------------ Treasurer
James R. Jabanoski
* Director and Vice President May 17, 2002
------------------
Steven E. Warren
* Director and Secretary May 17, 2002
------------------
Michael A. Harring
* Director and Senior Vice President May 17, 2002
------------------
Jon D. Volkert
*By: /S/ N.J. JONES
-------------------------
N.J. Jones
Attorney-in-fact
II-5