424B5 1 d424b5.htm PROSPECTUS SUPPLEMENT 424(B)(5) Prospectus Supplement 424(b)(5)
Table of Contents

Filed Pursuant to Rule 424(b)(5)
Registration Nos. 333-130966
333-130966-03

PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JUNE 12, 2006

 

$643,870,000

 

John Deere Owner Trust 2008

Issuing Entity

 

Aggregate Principal Amount

       

Class of Notes

$197,800,000

     

Class A-1       2.74080% Asset Backed Notes

$194,800,000

     

Class A-2       3.63% Asset Backed Notes

$151,270,000

     

Class A-3       4.18% Asset Backed Notes

$100,000,000

     

Class A-4       4.89% Asset Backed Notes

 

John Deere Receivables, Inc., Seller and Depositor

John Deere Capital Corporation, Sponsor and Servicer

 

The notes represent obligations of the issuing entity only and do not represent obligations of or interests in John Deere Receivables, Inc., John Deere Capital Corporation, Deere & Company or any of their affiliates.

 

The trust will own receivables consisting of agricultural and construction equipment retail installment sale and loan contracts secured by new and used agricultural, construction and forestry equipment.

 

Investing in the notes involves risks. See “Risk Factors” on page S-11 of this prospectus supplement and on page 10 of the related prospectus.

 

    Price  

Underwriting
    Discounts and    
Commissions

          Proceeds to        
Depositor
 

    Final Payment Date     

Class A-1 Notes

  100.000000%   0.070%   99.930000%   May 8, 2009    

Class A-2 Notes

  99.988685%   0.100%   99.888685%   March 15, 2011    

Class A-3 Notes

  99.992565%   0.150%   99.842565%   June 15, 2012    

Class A-4 Notes

  99.972528%   0.200%   99.772528%   March 16, 2015    

Total

  $643,809,239   $760,165   $643,049,074  

 

The trust will pay interest and principal on the notes on the 15th day of each month or, if the 15th day is not a business day, on the next business day. The first distribution date will be May 15, 2008.

 

The issuing entity will have a reserve account in the initial amount of $8,170,985 (equal to 1.25% of the initial note value) that will provide credit enhancement for the notes to the extent described in this prospectus supplement. Additionally, the certificates are subordinated to the notes to the extent described in this prospectus supplement.

 

Delivery of the notes in book-entry form only will be made on or about April 16, 2008.

 

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE ATTACHED PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

Merrill Lynch & Co.   JPMorgan

Banc of America Securities LLC

 

BNP PARIBAS

   

Deutsche Bank Securities

      RBC Capital Markets

 

The date of this prospectus supplement is April 7, 2008.

 

 


Table of Contents

TABLE OF CONTENTS

 

SUMMARY OF TERMS    S-5

OFFERED SECURITIES

   S-5

Issuing Entity

   S-5

Seller and Depositor

   S-5

Sponsor and Servicer

   S-5

Sub-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

Events of Default

   S-6

Servicing Fee

   S-7

Certificates

   S-7

TRUST PROPERTY

   S-7

Receivables

   S-7

Repurchases of Receivables

   S-7

CREDIT ENHANCEMENT

   S-8

Subordination of Certificates

   S-8

Reserve Account

   S-8

TAX STATUS

   S-8

ERISA CONSIDERATIONS

   S-8

LEGAL INVESTMENT

   S-8

RATING OF THE SECURITIES

   S-9
SUMMARY OF THE FLOW OF FUNDS    S-10
RISK FACTORS    S-11
THE TRUST    S-15

General

   S-15

Security Interest in Receivables

   S-15

Capitalization of the Trust

   S-16

The Owner Trustee

   S-16

THE RECEIVABLES POOL

   S-16

JDCC’s Historical Delinquencies; Repossessions and Net Losses

   S-23

Static Pool Information

   S-25
MATURITY AND PREPAYMENT CONSIDERATIONS    S-30

General

   S-30

Weighted Average Lives

   S-30
THE DEPOSITOR, THE SPONSOR AND SERVICER    S-34

John Deere Capital Corporation

   S-34
DESCRIPTION OF THE NOTES    S-35

General

   S-35

Payments of Interest

   S-35

Payments of Principal

   S-35

Optional Redemption

   S-36

Book Entry, Delivery and Form

   S-36

Global Clearance and Settlement Procedures

   S-38

The Indenture Trustee

   S-38
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS    S-39

Sale and Assignment of Receivables

   S-39

Accounts

   S-39

Servicing Compensation

   S-40

Servicing of Defaulted Receivables

   S-40

Optional Purchase

   S-40

 

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Distributions

   S-40

Fee and Expense Table

   S-43

Credit and Cash Flow Enhancement

   S-45

Reserve Account and Certificates

   S-45
RELATED TRANSACTIONS    S-47
LEGAL PROCEEDINGS    S-47
FEDERAL INCOME TAX CONSIDERATIONS    S-47

Tax Classification of the Trust

   S-48

Tax Considerations for Noteholders

   S-48
CERTAIN IOWA TAX CONSIDERATIONS    S-51

Notes

   S-51

The Trust

   S-51
ERISA CONSIDERATIONS    S-52
UNDERWRITING    S-53
LEGAL OPINIONS    S-55
INDEX OF TERMS    S-56

 

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You should rely only on the information contained in this document or on information to which we have referred you. We have not authorized anyone to provide you with different or additional information. This document may only be used where it is legal to sell these securities. The information in this document may only be accurate on the date of this document.

Content of Prospectus Supplement and Prospectus

We provide information to you about the notes in two separate documents that provide varying levels of detail:

(A) this prospectus supplement, which describes the specific terms of the notes, and

(B) the prospectus, which provides general information, some of which may not apply to the notes.

This prospectus supplement may be used to offer and sell the notes and may only be used if accompanied by the prospectus. This prospectus supplement and the prospectus only relate to the 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-2 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-56 in this prospectus supplement and under the caption “Index of Terms” on page 53 in the prospectus.

Dealer Prospectus Delivery Obligation

Until July 7, 2008, 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 their unsold allotments or subscriptions. Such delivery obligations may be satisfied by filing the prospectus supplement and prospectus with the Securities and Exchange Commission (the “SEC”).

REPORTS TO NOTEHOLDERS

Unless and until definitive notes are issued, periodic and annual unaudited reports containing information concerning the receivables will be prepared by the servicer of the receivables and sent on behalf of the trust only to Cede & Co., as nominee of The Depository Trust Company and registered holder of the notes. See “Certain Information Regarding the Securities—Book-Entry Registration” and “—Reports to Securityholders” in the accompanying prospectus. Such reports will not constitute financial statements prepared in accordance with generally accepted accounting principles. The trust will file with the 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.

 

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SUMMARY OF TERMS

The following summary is a short, concise description of the main terms of the notes. To fully understand the offering of the 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 notes following this summary and in the prospectus.

OFFERED SECURITIES

 

Class of Notes

   Aggregate
Principal
Amount
   Interest Rate

A-1

   $ 197,800,000    2.74080%

A-2

   $ 194,800,000    3.63%

A-3

   $ 151,270,000    4.18%

A-4

   $ 100,000,000    4.89%

The 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.

Issuing Entity

John Deere Owner Trust 2008 (the “trust”).

Seller and Depositor

John Deere Receivables, Inc. (the “depositor”).

Sponsor and Servicer

John Deere Capital Corporation (“JDCC” or the “servicer”).

Sub-servicer

The servicer will designate Deere Credit Services, Inc., a Delaware indirect wholly owned subsidiary of Deere & Company, as its agent to service the receivables.

Indenture Trustee

U.S. Bank National Association (the “indenture trustee”).

Owner Trustee

BNYM (Delaware) (the “owner trustee”).

Closing Date

April 16, 2008.

Payment Dates

Payments on the notes will be made on the 15th day of each calendar month (or, if not a business day, the next business day), beginning May 15, 2008.

In addition, if any class A-1 notes remain outstanding after the payment date in April 2009, a special payment date for the payment of interest and principal on the class A-1 notes will occur on May 8, 2009, and will be the final payment date for the class A-1 notes.

Interest Payments

The interest rate for each class of notes is specified above. Interest on the class 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 class A-2 notes, the class A-3 notes and the class A-4 notes will be calculated on the basis of a 360-day year of twelve 30-day months.

Principal Payments

The aggregate amount of principal payable on the notes on each payment date will generally be equal to the reduction in the note value of the receivables during a collection period. The note value of the receivables on any payment date is the present value of the unpaid scheduled payments on the receivables, discounted at 6.957%. The discount rate was established based on, among other things, market interest rates at the time the interest rates on the notes were determined. As of March 23, 2008 (the “cut-off date”), the initial note value is $653,678,817 (the “initial note value”).

Amounts allocated to payment of the principal of the notes will be applied in the following order of priority:

 

 

first, to payment in full of the class A-1 notes;

 

 

second, to payment in full of the class A-2 notes;

 

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third, to payment in full of the class A-3 notes; and

 

 

fourth, to payment in full of the class A-4 notes.

Following an event of default and acceleration of the notes, payments (including payments funded from 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, after payment of fees, ratably to the noteholders first based on the amount of interest due on each note (in the case of payments of interest) and then based on the outstanding principal balance (in the case of payments of principal) until the principal balance of all of the notes is reduced to zero.

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.

Final Payment Dates

The principal amount of each class of notes, to the extent not previously repaid, will be payable in full on the payment date specified below:

 

Class of Notes

  

Final Payment Date

A-1

   May 8, 2009

A-2

   March 15, 2011

A-3

   June 15, 2012

A-4

   March 16, 2015

Optional Redemption

The servicer has the right to purchase the remaining receivables on any payment date when the pool balance of the receivables has become equal to or less than 10% of the pool balance of the receivables as of the cut-off date. If the servicer exercises this right, the notes outstanding at that time will be redeemed in full at a price equal to their unpaid principal balance plus accrued and unpaid interest.

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 and the reserve account will be applied on the next payment date in the following amounts and the following order of priority:

 

1. administration fee to the administrator;

 

2. interest on the notes;

 

3. principal on the notes in the priority described under “Description of the Notes—Payments of Principal”;

 

4. amount, if any, required to be deposited into the reserve account;

 

5. servicing fee to the servicer; provided that if JDCC or an affiliate of JDCC is not the servicer, the servicing fee will be paid prior to any other application of funds on deposit in the collection account;

 

6. any unpaid compensation, fees and indemnification of the indenture trustee to the indenture trustee;

 

7. any unpaid compensation, fees and indemnification of the owner trustee to the owner trustee;

 

8. principal, if any, payable on the certificates; and

 

9. remaining amounts, if any, to the depositor.

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 notes and special priority rules that apply under certain circumstances.

Events of Default

The indenture will provide that if an “Event of Default” occurs and is continuing, then the indenture trustee or the holders of notes representing a majority of the outstanding amount of notes may declare the unpaid principal amount of the notes and any accrued and unpaid interest thereon immediately due and payable. Such “Events of Default” include:

 

(i) default in the payment of interest on any note which continues for a period of five days;

 

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(ii) default in the payment of the principal of or any installment of the principal of any note when due and payable;

 

(iii) default in the observance and performance of certain covenants or representations which default is not cured or otherwise eliminated within a specified grace period; and

 

(iv) the occurrence of certain bankruptcy events with respect to the trust or a substantial part of the trust estate.

Servicing Fee

The servicer will be entitled to receive a servicing fee for each collection period in an amount equal to 1.00% per annum of the pool balance as of the first day of the collection period. So long as JDCC or an affiliate of JDCC is the servicer, the servicing fee will be paid after payments are made to the noteholders and to the reserve account as set forth in this prospectus supplement. If JDCC or an affiliate of JDCC ceases to be the servicer, the servicing fee will be paid prior to any other application of funds on deposit in the collection account. See “Description of the Transfer and Servicing Agreements—Servicing Compensation” in this prospectus supplement.

Certificates

On the closing date, the trust will issue certificates in an aggregate principal amount of $9,808,817 (equal to approximately 1.50% of the initial note value). The depositor will retain the entire principal amount of the certificates. The certificates will not bear interest. No payments on the certificates will be made until the notes have been paid in full. 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 depositor 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;

 

 

rights to proceeds from certain insurance policies covering equipment financed under the receivables or obligors on the receivables; and

 

 

any proceeds of the foregoing.

Receivables

The receivables will consist of agricultural and construction retail installment sale and loan contracts secured by new and used agricultural, construction and forestry 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 $661,633,841 as of the cut-off date.

Repurchases of Receivables

The depositor will be obligated to repurchase any receivable from the trust if:

 

 

the interest of the trust is materially adversely affected by a breach of any representation or warranty made by the depositor or JDCC with respect to the receivable; and

 

 

the breach has not been cured following the discovery by or notice to the depositor of the breach.

JDCC will be obligated to repurchase the receivable from the depositor under the purchase agreement contemporaneously with the depositor’s repurchase from the trust. The obligation of the depositor to repurchase any receivable with respect to which JDCC has breached a representation or warranty is subject to JDCC’s repurchase of the

 

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receivable. 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 breach. See “Description of the Transfer and Servicing Agreements—Sale and Assignment of Receivables” in this prospectus supplement.

In addition, consistent with its normal procedures, the servicer or 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 repurchasing the receivable for the purchase amount.

The depositor may repurchase receivables with an aggregate principal balance of no more than 2% of the initial pool balance as of the cut-off date as described in this prospectus supplement. See “Risk Factors—Potential early payment of notes due to prepayment of receivables” and “Risk Factors—Yield on the securities could be lower than you anticipate” in the prospectus.

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 $9,808,817 (equal to approximately 1.50% of the initial note value). The certificates will serve as credit enhancement for the notes because no distributions will be made on the certificates until all amounts payable on the notes have been paid in full.

Reserve Account

The trust will have a reserve account. Funds in the reserve account will be used to cover shortfalls in required payments on the notes.

 

 

On the closing date, $8,170,985 (equal to 1.25% of the initial note value) will be on deposit in the reserve account.

 

 

As of any payment date, the amount on deposit in the reserve account will be required to equal the lesser of (a) 1.50% of the initial note value and (b) the outstanding principal balance of the notes. However, if

 

  (i) the specified reserve reduction trigger is met on the payment date in April 2010, the percentage in clause (a) above will be reduced to 1.25% on such payment date and shall remain at such percentage for each payment date thereafter unless further reduced on the payment date in October 2010 as provided herein; and/or

 

  (ii) the specified reserve reduction trigger is met on the payment date in October 2010, the percentage in clause (a) above will be reduced to 1.15% on such payment date (regardless of whether the specified reserve reduction trigger was met on the payment date in April 2010) and shall remain at such percentage for each payment date thereafter.

 

 

On each payment date, any collections on the receivables that remain after all payments having priority in payments have been made will be applied, to the extent necessary, to increase the funds in the reserve account to the required amount.

See “Description of the Transfer and Servicing Agreements—Reserve Account and Certificates” for a description of the required amount for the reserve account and the specified reserve reduction trigger.

TAX STATUS

In the opinion of Shearman & Sterling LLP, special federal tax counsel for the trust, the notes will be characterized as debt for federal income tax purposes and the trust will not be characterized as a separate entity that is an association or a publicly traded partnership taxable as a corporation. See “Federal Income Tax Considerations” and “Certain Iowa Tax Considerations” in this prospectus supplement for information regarding the application of federal and certain state tax laws to the notes and the trust.

ERISA CONSIDERATIONS

Subject to the considerations discussed under “ERISA Considerations” in this prospectus supplement and in the prospectus, the notes are eligible for purchase by employee benefit plans.

LEGAL INVESTMENT

The class 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.

 

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RATING OF THE SECURITIES

It is a condition to the issuance of the notes that the class A-1 notes be rated in the highest short-term rating category and that the class A-2 notes, class A-3 notes and class A-4 notes be rated in the highest long-term rating category, in each case by at least two nationally recognized rating agencies, which may be Standard & Poor’s Rating Services, a division of the McGraw Hill Companies Inc., Moody’s Investors Service, Inc. or Fitch Ratings. 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. JDCC has requested that each rating agency maintain ongoing surveillance of its ratings assigned to the notes in accordance with the rating agency’s policy, but we cannot assure you that a rating agency will continue its surveillance of the ratings assigned to the notes. See “Risk Factors—Ratings of the Notes” in this prospectus supplement.

 

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SUMMARY OF THE FLOW OF FUNDS

The following diagram summarizes the flow of funds relating to the transaction contemplated in this prospectus supplement. Carefully read this prospectus supplement and the accompanying prospectus for a complete description of the flow of funds.

LOGO

 

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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 notes.

 

Limited Ability to Resell Notes

There is currently no secondary market for the notes. The underwriters currently intend to make a market in the 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 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 notes are collections on the receivables and funds in the reserve account. The notes are not guaranteed or otherwise insured by the depositor, 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 receivables are affected by economic conditions generally. Adverse economic conditions affecting any state or region could increase delinquency, credit loss or repossession experience of the receivables originated in that state or region.

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.

The recent downturn in the U.S. housing market and related market dislocation may contribute to decrease one or more of these levels or otherwise affect delinquencies, repossessions and net losses. If losses are incurred on the receivables and the funds in the reserve account are not sufficient to cover the resulting shortfalls in payments due on the notes, the noteholders will incur losses on their notes. If an event of default occurs in respect of the notes, the receivables may be sold to repay the notes.

 

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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’s 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 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. The trust’s not having first priority perfected security interests or perfected purchase money security interests in some of the financed equipment securing the receivables may affect the trust’s ability to realize on the collateral securing those receivables, and thus may reduce the proceeds available to make payments on the notes.

 

The Proceeds from the Sale of Any Receivable May Not Cover the Principal and Interest Payments on the 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 notes. In addition, until the final payment date for a class of notes, the amount of principal required to be paid on the notes of that class is limited to the amount available for the payment. Consequently, the failure to pay principal on a class of notes will not be an event of default until the final payment date for that class of notes.

 

Ratings of the Notes May Be Lowered or Withdrawn, Which Would Adversely Affect the Value of the Affected Notes

It is a condition to the issuance of the notes that the class A-1 notes be rated in the highest short-term rating category and that the class A-2 notes, class A-3 notes and class 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.

 

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The ratings of the notes address the likelihood of the timely payment of interest on and the ultimate repayment of principal of the notes pursuant to their terms. There is no assurance that a rating will remain for any given period of time or that a rating will not be lowered or withdrawn entirely by a rating agency if in its judgment circumstances in the future so warrant.

If a rating is subsequently lowered or withdrawn, the value of the affected notes would be adversely affected. In that event, no person or entity will be obligated to provide any additional credit enhancement. The rating of the notes is based primarily on the credit quality of the receivables, the subordination provided by the certificates and the availability of funds in the reserve account.

 

Delays in Processing Payments or Distributions on the 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 noteholders.

 

JDCC or the Depositor 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 depositor 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.

 

Optional Purchase Right of the Depositor Could Create Reinvestment Risk and Affect the Yield of the Notes

The exercise by the depositor of its optional right to purchase receivables with an aggregate principal balance of no more than 2% of the initial pool balance as of the cut-off date as described in this prospectus supplement could affect the weighted average lives of the notes and the yield to maturity. See “Risk Factors—Potential early payment of notes due to prepayment of receivables” and “Risk Factors—Yield on the securities could be lower than you anticipate” in the prospectus.

 

Bankruptcy or Insolvency of JDCC Could Result in Delays or Reductions in Payments on the Notes

As described herein, JDCC will transfer the receivables to the depositor in a transaction that is intended to be treated as a “true” or legal sale under applicable law. However, the transfer of the receivables by the depositor to the trust will be treated as a secured financing rather than as a sale for accounting purposes. Therefore, since the depositor is consolidated with JDCC for financial reporting purposes, the receivables and

 

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income therefrom will be reflected as such in the consolidated financial statements of JDCC. As described under “Risk Factors—Bankruptcy of JDCC could result in delays or reductions in payments on the securities” in the prospectus, the depositor has taken steps in structuring the sale of the receivables to the trust so that the voluntary or involuntary application for relief by JDCC under the U.S. Bankruptcy Code or other insolvency laws will not result in the consolidation of the assets and liabilities of the depositor with those of JDCC in an insolvency proceeding. Notwithstanding the foregoing, it is possible that a court in an insolvency proceeding involving JDCC could determine to disregard the true sale of the receivables or, at a minimum, reexamine the facts and circumstances relating to such sale in an effort to nullify such sale and deem the receivables to continue to be part of JDCC’s consolidated assets for bankruptcy purposes. Any such action could result in the trust’s no longer having sole and exclusive right to the receivables and proceeds thereof or in delays in, or reductions of, amounts available to make payments on the notes.

 

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THE TRUST

General

The issuing entity, John Deere Owner Trust 2008, will be a statutory trust formed under the laws of the State of Delaware under a trust agreement between the depositor 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 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 that are incidental thereto or connected with those activities.

The depositor will retain the certificates. The issuance of the certificates and the proceeds from the initial sale of the notes will be used by the trust to purchase the receivables from the depositor pursuant to the sale and servicing agreement among the trust, the depositor and the servicer. No other expenses incurred in connection with the selection and acquisition of the receivables are payable from the proceeds of the issuance of the notes. The sale of the receivables by the depositor to the trust will be treated as a secured financing rather than a sale for accounting purposes. 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 the administrative burden and expense, the servicer will be appointed custodian for the receivables by the trust, 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. See “Certain Legal Aspects of the Receivables” in the prospectus.

If the protection provided to the investment of the noteholders by the availability of funds in the reserve account is insufficient, the trust must rely solely on payments from or on behalf of the obligors 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 or perfected purchase money 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 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 fiscal year-end is October 31 of each year and its principal offices are in Newark, Delaware, in care of BNYM (Delaware), as owner trustee, at the address listed below under “—The Owner Trustee.”

Security Interest in Receivables

The indenture will create a security interest in the receivables owned by the trust in favor of the indenture trustee on behalf of the noteholders. The trust will perfect such security interest by filing a financing statement under the uniform commercial code with the appropriate authority in the State of Delaware. The trust will be obligated to maintain such perfected security interest.

 

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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 notes and the certificates had taken place on that date:

 

Class A-1   2.74080% Asset Backed Notes    $ 197,800,000
Class A-2   3.63% Asset Backed Notes      194,800,000
Class A-3   4.18% Asset Backed Notes      151,270,000
Class A-4   4.89% Asset Backed Notes      100,000,000
Certificates      9,808,817
        

Total

   $ 653,678,817
        

The Owner Trustee

BNYM (Delaware) will act as owner trustee under the trust agreement.

BNYM (Delaware) is a Delaware banking corporation and an affiliate of The Bank of New York, a New York banking corporation, which provides support services on its behalf in this transaction. Its principal place of business is located at White Clay Center, Route 273, Newark, Delaware 19711, Attention: Corporate Trust Administration. BNYM (Delaware) has acted as owner trustee on numerous asset-backed transactions (with The Bank of New York providing administrative support), including the structure of the transaction referred to herein. While the structure of each transaction may differ, BNYM (Delaware) and The Bank of New York on its behalf are experienced in administering transactions of this kind. BNYM (Delaware) acted as owner trustee for John Deere Owner Trust 2007.

The owner trustee’s liability in connection with the issuance and sale of the notes and the certificates is limited solely to the express obligations of the owner trustee set forth in the trust agreement and the sale and servicing agreement. The depositor shall pay the fees of the owner trustee and shall reimburse it for certain liabilities and expenses. In the ordinary course of its business, the owner trustee and its affiliates have engaged and may in the future engage in commercial banking, trustee or financial advisory transactions with the depositor, the servicer and their affiliates. The Bank of New York serves as the transfer agent and registrar for shares of the parent of the servicer. Additionally, The Bank of New York has served as indenture trustee in connection with the issuance of other asset-backed securities involving the depositor, the servicer and their affiliates. The Bank of New York is currently the trustee for John Deere Capital Corporation’s medium term note and Euro medium term note programs, as well as trustee for Deere & Company’s medium term note and subordinated debt programs.

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. The receivables consist of agricultural and construction equipment retail installment sale and loan contracts secured by new and used agricultural, construction and forestry equipment. John Deere categorizes its agricultural, construction and forestry equipment receivables based on the type or use 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 agricultural equipment receivables and construction 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 include the following criteria:

 

   

the buyer’s ability to repay the obligation;

 

   

the buyer’s credit history; and

 

   

the buyer’s downpayment on the financed equipment.

 

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The sales companies include Deere and John Deere Construction & Forestry Company. The depositor 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 has a mailing address in the United States;

 

   

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 March 23, 2014;

 

   

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.

No single obligor on the receivables accounted for more than 1% of the receivables. 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 having filed for bankruptcy. No selection procedures believed by JDCC or the depositor to be adverse to the 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 agricultural retail installment and loan contracts that may be part of this receivables pool are normally financed up to 90% of the dealer invoice price of the financed equipment. In certain circumstances up to 115% of the dealer invoice price of the equipment may be financed.

The financed equipment securing a receivable of an obligor held by the trust may also secure, through cross-collateralization provisions, other receivables of the same obligor originated by Deere, John Deere Construction & Forestry Company or certain affiliates, which may consist of equipment retail installment contracts or other receivables such as revolving loans, and which receivables, if equipment retail installment contracts, may or may not be included in the trust. In addition, equipment retail installment contracts relating to an obligor which may not be included in the trust may provide that a default under such equipment retail installment contract could cause a default of other equipment retail installment contracts of the same obligor which may be included in the trust. Under the purchase agreement, JDCC will represent, subject to certain limitations, that each of the trust’s receivables is secured by a perfected purchase money security interest in the related financed equipment. A perfected purchase money security interest in the financed equipment would be senior to any security interest in such financed equipment arising under any such cross-collateralization provisions included in any other equipment retail installment contract not included in the trust.

As of the cut-off date, 888 of the receivables, having an aggregate balance of $41,163,705 have been more than 30 days past due at least once since their origination, of which 174 receivables, having an aggregate balance of $7,060,271, have been more than 60 days past due at least once since their origination. As of the cut-off date, none of the receivables has been more than 90 days past due since their origination. The aggregate balance of the receivables has been calculated as the sum of the principal balances of the receivables plus accrued interest thereon as of the cut-off date.

The composition of the receivables and the distribution of the receivables by APR, equipment type, payment frequency, current principal balance plus accrued interest, and the geographic distribution, all as of the cut-off date, are

 

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set forth in the following tables. None of the receivables are more than 30 days past due. 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 APR of
Receivables
(Range)

  Aggregate
Balance
  Number of
Receivables
  Weighted Average
Remaining Term
(Range)
  Weighted Average
Original Term
(Range)
  Average
Balance (Range)
6.444%

(4.751% to
16.769%)

  $661,633,840.60   12,757   44.16 months
(4 to 72 months)
(1)
  55.26 months

(12 to 72 months)(1)(2)

  $51,864.38
($539.89 to
$1,310,011.31)

 

(1) Based on scheduled payments and assuming no prepayments.
(2) The original term on receivables is calculated from the date interest on a receivable begins to accrue, rather than the date of origination, through the maturity of the receivable.

 

Average Original Balance
(Range)
  Total
Accrued Interest
  Weighted Average
Credit Scores of
Obligors(1)
(Range of Credit Scores)
$67,505.20

($1,590.00 to $1,399,917.85)

  $11,465,641.99   731

(425 to 843)

 

(1) Credit scores relate to the FICO score of the obligors, which is a credit score derived from a scoring system created by the Fair Isaac Company. A FICO score is used to evaluate creditworthiness on the basis of, among other things, information that a credit bureau keeps about the applicant for credit and the debt service-to-income ratio of the applicant. The highest FICO score a person can receive is 850 and the lowest 300. 14.8% of the total amount of principal outstanding in the pool did not contain a FICO credit score and thus was excluded from the calculation.

 

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Distribution of the Receivables by APR

 

APR Range

   Number of
Receivables
   Aggregate
Balance
   Percent of
Aggregate
Balance
 

  4.50% to   4.99%

   1,173    $ 53,454,873.43    8.08 %

  5.00% to   5.49%

   1,794      94,971,870.38    14.35  

  5.50% to   5.99%

   2,897      142,669,739.99    21.56  

  6.00% to   6.49%

   2,071      88,663,052.25    13.40  

  6.50% to   6.99%

   1,900      124,305,718.29    18.79  

  7.00% to   7.49%

   1,024      55,650,927.12    8.41  

  7.50% to   7.99%

   772      56,656,023.54    8.56  

  8.00% to   8.49%

   886      34,093,169.19    5.15  

  8.50% to   8.99%

   60      3,375,449.30    0.51  

  9.00% to   9.49%

   98      4,196,553.78    0.63  

  9.50% to   9.99%

   33      1,275,765.74    0.19  

10.00% to 10.49%

   4      243,605.56    0.04  

10.50% to 10.99%

   11      677,079.28    0.10  

11.00% to 11.49%

   16      588,561.52    0.09  

11.50% to 11.99%

   7      436,852.47    0.07  

12.00% to 12.49%

   2      104,754.81    0.02  

12.50% and above

   9      269,843.95    0.04  
                  

Total

   12,757    $ 661,633,840.60    100.00 %
                  

Distribution of the Receivables by Equipment Type

 

Type(1)

   Number of
Receivables
   Aggregate
Balance
   Percent of
Aggregate
Balance
 

Agricultural

        

New

   3,341    $ 180,584,450.33    27.29 %

Used

   6,176      252,712,068.16    38.20  

Construction

        

New

   2,824      206,122,982.67    31.15  

Used

   416      22,214,339.44    3.36  

Total

   12,757    $ 661,633,840.60    100.00 %

 

(1) John Deere categorizes its receivables based on the type or use of equipment comprising the greatest initial principal balance of the original receivable contract.

 

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Distribution of the Receivables by Payment Frequency

 

Frequency

   Number of
Receivables
   Aggregate
Balance
   Percent of
Aggregate
Balance
 

Annual

   6,965    $ 350,910,989.42    53.04 %

Semiannual

   296      14,642,536.67    2.21  

Quarterly

   105      5,890,060.83    0.89  

Monthly

   5,185      273,902,741.14    41.40  

Other

   206      16,287,512.54    2.46  
                  

Total

   12,757    $ 661,633,840.60    100.00 %
                  

Distribution of the Receivables by Current Balance

 

Current Balance Range

   Number of
Receivables
   Aggregate
Balance
   Percent of
Aggregate
Balance
 

$          500.00 – $   10,000.00

   1,511    $ 9,548,802.20    1.44 %

       10,000.01 –      20,000.00

   2,491      36,585,187.76    5.53  

       20,000.01 –      30,000.00

   1,763      43,438,154.43    6.57  

       30,000.01 –      40,000.00

   1,391      48,425,273.99    7.32  

       40,000.01 –      50,000.00

   1,034      46,337,031.45    7.00  

       50,000.01 –    100,000.00

   2,790      197,117,636.19    29.79  

     100,000.01 –    200,000.00

   1,509      201,143,596.72    30.40  

     200,000.01 –    300,000.00

   200      47,480,296.19    7.18  

     300,000.01 –    400,000.00

   43      14,816,043.98    2.24  

     400,000.01 –    500,000.00

   8      3,477,117.51    0.53  

     500,000.01 – 1,000,000.00

   13      8,346,743.57    1.26  

$1,000,000.01 and above

   4      4,917,956.61    0.74  
                  

Total

   12,757    $ 661,633,840.60    100.00 %
                  

 

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Geographic Distribution of the Receivables

 

State(1)

   Number of
Receivables
   Aggregate
Balance
   Percent of
Aggregate
Balance
 

Alabama

   280    $ 13,571,610.60    2.05 %

Alaska

   16      970,748.61    0.15  

Arizona

   85      6,784,171.67    1.03  

Arkansas

   340      14,532,830.94    2.20  

California

   510      31,739,000.18    4.80  

Colorado

   258      15,240,295.56    2.30  

Connecticut

   52      2,677,084.91    0.40  

Delaware

   63      3,852,135.48    0.58  

District of Columbia

   1      39,922.74    0.01  

Florida

   315      16,723,138.37    2.53  

Georgia

   369      19,395,259.87    2.93  

Hawaii

   11      1,249,298.49    0.19  

Idaho

   183      12,156,513.33    1.84  

Illinois

   853      42,524,440.75    6.43  

Indiana

   317      18,670,999.11    2.82  

Iowa

   780      35,823,549.78    5.41  

Kansas

   433      27,306,938.44    4.13  

Kentucky

   425      20,797,652.83    3.14  

Louisiana

   316      18,670,025.77    2.82  

Maine

   54      2,687,684.56    0.41  

Maryland

   110      6,081,567.34    0.92  

Massachusetts

   68      2,203,235.28    0.33  

Michigan

   245      10,623,497.60    1.61  

Minnesota

   434      18,174,434.32    2.75  

Mississippi

   274      14,001,117.90    2.12  

Missouri

   269      12,541,897.90    1.90  

Montana

   189      9,139,227.53    1.38  

Nebraska

   206      7,919,761.66    1.20  

Nevada

   49      3,258,149.71    0.49  

New Hampshire

   46      2,048,475.77    0.31  

New Jersey

   99      4,391,828.66    0.66  

New Mexico

   134      8,952,315.13    1.35  

New York

   241      9,219,451.68    1.39  

North Carolina

   388      22,237,670.23    3.36  

North Dakota

   308      18,453,961.27    2.79  

Ohio

   303      14,491,800.29    2.19  

Oklahoma

   227      12,078,410.73    1.83  

Oregon

   181      10,191,131.97    1.54  

Pennsylvania

   292      13,316,283.87    2.01  

Rhode Island

   30      1,825,284.52    0.28  

South Carolina

   169      7,968,004.10    1.20  

South Dakota

   327      16,904,605.74    2.55  

Tennessee

   228      10,106,129.73    1.53  

Texas

   1,360      71,394,723.13    10.79  

Utah

   43      2,315,219.17    0.35  

Vermont

   55      2,602,325.63    0.39  

Virginia

   214      11,739,403.79    1.77  

Washington

   206      14,351,910.33    2.17  

West Virginia

   89      4,667,156.21    0.71  

Wisconsin

   243      9,448,614.58    1.43  

Wyoming

   69      3,572,942.84    0.54  
                  

Total

   12,757    $ 661,633,840.60    100.00 %
                  

 

(1) Based on billing addresses of obligors.

 

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Original Scheduled Payments

 

Distribution Date

   Gross
Scheduled
Payments(1)
  

Distribution Date

   Gross
Scheduled
Payments(1)

Closing Date

   Not Applicable   

May 2011

   $ 12,075,513

May 2008

   $19,226,460   

June 2011

     8,475,872

June 2008

   17,341,861   

July 2011

     8,839,718

July 2008

   17,485,536   

August 2011

     8,180,876

August 2008

   16,929,206   

September 2011

     8,125,563

September 2008

   16,619,164   

October 2011

     9,258,999

October 2008

   17,920,280   

November 2011

     9,022,227

November 2008

   18,140,523   

December 2011

     9,046,539

December 2008

   18,750,377   

January 2012

     10,888,863

January 2009

   21,515,139   

February 2012

     11,766,801

February 2009

   22,659,960   

March 2012

     8,029,882

March 2009

   17,736,281   

April 2012

     9,686,732

April 2009

   19,324,624   

May 2012

     8,581,338

May 2009

   18,078,766   

June 2012

     5,319,768

June 2009

   14,581,108   

July 2012

     4,917,720

July 2009

   14,368,038   

August 2012

     4,887,932

August 2009

   13,730,874   

September 2012

     4,665,215

September 2009

   13,506,578   

October 2012

     5,724,528

October 2009

   14,597,323   

November 2012

     5,219,191

November 2009

   14,567,807   

December 2012

     5,424,178

December 2009

   15,271,313   

January 2013

     5,969,157

January 2010

   17,995,922   

February 2013

     7,145,180

February 2010

   19,357,088   

March 2013

     3,547,376

March 2010

   15,078,409   

April 2013

     2,741,688

April 2010

   16,874,799   

May 2013

     1,121,954

May 2010

   15,424,460   

June 2013

     604,909

June 2010

   12,077,206   

July 2013

     504,469

July 2010

   12,091,864   

August 2013

     828,694

August 2010

   11,460,537   

September 2013

     510,376

September 2010

   11,117,351   

October 2013

     666,951

October 2010

   12,073,349   

November 2013

     572,877

November 2010

   11,740,574   

December 2013

     360,824

December 2010

   12,237,332   

January 2014

     657,111

January 2011

   14,690,335   

February 2014

     763,741

February 2011

   16,038,952   

March 2014

     285,128

March 2011

   11,747,357   

April 2014

     64,560

April 2011

   13,440,598      

 

(1) This table presents scheduled payments on the receivables as of the cut-off date and does not reflect prepayments that may occur. The actual performance of the receivables may differ from this table. See “Maturity and Prepayment Considerations” in this prospectus supplement for a discussion of various factors affecting the rate of prepayments of the receivables.

 

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JDCC’s Historical 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 and forestry 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 and forestry 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” in this prospectus supplement.

Delinquency Experience

 

     At October 31,     At January 31,  
     2003     2004     2005     2006     2007     2007     2008  

Number of Contracts

              

Gross Portfolio

     254,159       273,768       282,963       288,686       281,668       283,960       276,870  

Period of Delinquency

              

31-59 Days

     2,933       3,002       3,025       3,401       3,268       3,961       3,645  

60+ Days

     4,293       3,830       3,291       3,949       4,522       4,654       5,163  
                                                        

Total Delinquencies

     7,226       6,832       6,316       7,350       7,790       8,615       8,808  
                                                        

Total Delinquencies as a Percent of Gross Portfolio

     2.84 %     2.50 %     2.23 %     2.55 %     2.77 %     3.03 %     3.18 %
     (Dollars in Millions)  

Face Amount of Contracts(1)

  

Gross Portfolio

   $ 7,036.9     $ 8,037.2     $ 9,233.2     $ 10,035.4     $ 10,270.9     $ 9,878.6     $ 10,030.3  

Period of Delinquency

              

31-59 Days

   $ 89.6     $ 93.9     $ 98.3     $ 135.5     $ 144.1     $ 160.4     $ 152.9  

60+ Days

     125.5       102.3       95.3       130.3       179.2       169.4       224.4  
                                                        

Total Delinquencies

   $ 215.1     $ 196.2     $ 193.6     $ 265.8     $ 323.3     $ 329.8     $ 377.3  
                                                        

Total Delinquencies as a Percent of Gross Portfolio

     3.06 %     2.44 %     2.10 %     2.65 %     3.15 %     3.34 %     3.76 %

 

(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. A monthly payment is delinquent if the obligor pays less than 90% of the scheduled payment by the due date. A payment other than a monthly payment is delinquent if either: (a) the obligor pays less than 97% of the scheduled payment by the due date, or (b) the unpaid remaining balance of such scheduled payment is more than $600.

 

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Credit Loss/Repossession Experience(1)

 

     Year Ended October 31,     Three Months Ended
January 31,
 
     2003     2004     2005     2006     2007     2007(5)     2008(5)  
     (Dollars in Millions)  

Total Agricultural, Construction and Forestry

              

Average Gross Portfolio Managed During the Period(2)

   $ 6,797.5     $ 7,537.1     $ 8,635.2     $ 9,634.3     $ 10,153.2     $ 9,957.0     $ 10,150.6  

Repossessions as a Percentage of Average Gross Portfolio Managed(2)

     1.22 %     0.72 %     0.46 %     0.50 %     0.63 %     0.39 %     0.53 %

Net Losses as a Percentage of Average Gross Portfolio Managed(3)

     0.38 %     0.17 %     0.08 %     0.07 %     0.12 %     0.09 %     0.11 %

Net Losses as a Percentage of Liquidations(3),(4)

     0.71 %     0.34 %     0.17 %     0.15 %     0.23 %     0.15 %     0.17 %

 

(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 and forestry 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 and liquidated, or uncollectible and written off, 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 for January 31, 2007 and January 31, 2008. Annualized rates are not necessarily indicative of the experience for a full year.

 

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Static Pool Information

Set forth below is certain static pool information regarding cumulative net losses, delinquencies and prepayment history for JDCC’s prior securitized pools of retail agricultural, construction and forestry equipment receivables in the past seven years.

John Deere Capital Corporation

Cumulative Net Losses(1)

As of January 2008

 

Month

  JDOT 2001   JDOT 2003   JDOT 2004   JDOT 2005   JDOT 2006  

JDOT 2007

1   0.00%   0.00%   0.00%   0.00%   0.00%   0.00%
2   0.00%   0.00%   0.00%   0.00%   0.00%   0.00%
3   0.00%   0.00%   0.00%   0.00%   0.00%   0.00%
4   0.00%   0.00%   0.00%   0.00%   0.00%   0.00%
5   0.00%   0.00%   0.00%   0.01%   0.01%   0.03%
6   0.02%   0.00%   0.00%   0.01%   0.01%   0.05%
7   0.03%   0.01%   0.00%   0.02%   0.03%   0.08%
8   0.04%   0.01%   0.01%   0.03%   0.04%   0.12%
9   0.05%   0.03%   0.01%   0.05%   0.06%   0.14%
10   0.07%   0.04%   0.01%   0.07%   0.13%   0.18%
11   0.09%   0.04%   0.02%   0.07%   0.15%  
12   0.10%   0.04%   0.02%   0.08%   0.20%  
13   0.14%   0.05%   0.03%   0.10%   0.21%  
14   0.15%   0.06%   0.03%   0.10%   0.23%  
15   0.19%   0.06%   0.04%   0.12%   0.25%  
16   0.20%   0.06%   0.04%   0.14%   0.28%  
17   0.24%   0.07%   0.04%   0.15%   0.30%  
18   0.27%   0.08%   0.05%   0.13%   0.32%  
19   0.30%   0.09%   0.06%   0.14%   0.34%  
20   0.34%   0.09%   0.07%   0.16%   0.36%  
21   0.37%   0.10%   0.08%   0.16%    
22   0.37%   0.11%   0.08%   0.17%    
23   0.40%   0.11%   0.09%   0.18%    
24   0.42%   0.12%   0.09%   0.19%    
25   0.43%   0.12%   0.09%   0.19%    
26   0.45%   0.12%   0.10%   0.20%    
27   0.46%   0.12%   0.10%   0.22%    
28   0.47%   0.13%   0.10%   0.24%    
29   0.48%   0.14%   0.10%   0.25%    
30   0.49%   0.14%   0.11%   0.26%    
31   0.52%   0.14%   0.11%   0.26%    
32   0.52%   0.14%   0.11%   0.28%    
33   0.52%   0.14%   0.11%   0.28%    
34   0.52%   0.15%   0.11%      
35   0.53%   0.15%   0.11%      
36   0.53%   0.15%   0.12%      
37   0.54%   0.15%   0.12%      
38   0.54%   0.16%   0.12%      
39     0.17%   0.12%      
40     0.17%   0.13%      
41     0.17%   0.13%      
42     0.17%   0.13%      
43     0.17%   0.13%      
44       0.13%      
45       0.14%      
46       0.14%      

 

(1) The monthly cumulative net loss percent is calculated by dividing the cumulative realized losses by the original pool balance. Starting with JDOT 2005, the realized loss definition was changed to recognize an estimated loss on any receivable that is 180 days or more past due. This estimate is adjusted to actual loss at the time the receivable is liquidated.

 

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John Deere Capital Corporation

60+ Day Delinquent—Delinquent Payments as a Percent of Ending Pool Balance(1)(2)(3)

As of January 2008

 

Month

  JDOT 2001   JDOT 2003   JDOT 2004   JDOT 2005   JDOT 2006   JDOT 2007
1   0.00%   0.00%   0.00%   0.00%   0.00%   0.00%
2   0.05%   0.07%   0.04%   0.02%   0.03%   0.04%
3   0.11%   0.09%   0.09%   0.06%   0.04%   0.13%
4   0.15%   0.11%   0.11%   0.07%   0.04%   0.14%
5   0.22%   0.14%   0.09%   0.07%   0.06%   0.13%
6   0.20%   0.17%   0.10%   0.07%   0.09%   0.16%
7   0.19%   0.18%   0.10%   0.08%   0.14%   0.17%
8   0.27%   0.22%   0.12%   0.10%   0.16%   0.33%
9   0.33%   0.25%   0.13%   0.10%   0.21%   0.40%
10   0.29%   0.23%   0.17%   0.13%   0.25%   0.40%
11   0.37%   0.25%   0.20%   0.14%   0.22%  
12   0.38%   0.24%   0.20%   0.13%   0.28%  
13   0.38%   0.22%   0.17%   0.15%   0.35%  
14   0.46%   0.28%   0.17%   0.19%   0.33%  
15   0.52%   0.30%   0.24%   0.18%   0.32%  
16   0.66%   0.23%   0.19%   0.16%   0.30%  
17   0.81%   0.29%   0.22%   0.21%   0.29%  
18   0.78%   0.35%   0.20%   0.20%   0.35%  
19   0.79%   0.38%   0.18%   0.25%   0.37%  
20   0.85%   0.43%   0.19%   0.29%   0.36%  
21   0.92%   0.47%   0.24%   0.31%    
22   0.90%   0.37%   0.30%   0.37%    
23   1.00%   0.38%   0.38%   0.45%    
24   1.05%   0.42%   0.38%   0.46%    
25   0.84%   0.35%   0.35%   0.45%    
26   0.88%   0.42%   0.35%   0.50%    
27   1.02%   0.45%   0.46%   0.52%    
28   1.08%   0.45%   0.42%   0.51%    
29   1.11%   0.56%   0.41%   0.51%    
30   1.10%   0.68%   0.41%   0.50%    
31   1.12%   0.80%   0.40%   0.55%    
32   1.33%   0.95%   0.46%   0.66%    
33   1.38%   0.87%   0.50%   0.72%    
34   1.58%   0.80%   0.64%      
35   1.84%   0.85%   0.92%      
36   2.13%   1.00%   1.07%      
37   1.92%   1.01%   1.01%      
38   2.10%   1.13%   0.90%      
39     1.03%   1.12%      
40     1.09%   1.08%      
41     1.22%   1.13%      
42     1.48%   1.15%      
43     1.65%   1.11%      
44       1.22%      
45       1.44%      
46       1.68%      

 

(1) The period of delinquency is based on the number of days payments are contractually past due. A monthly payment is delinquent if the obligor pays less than 90% of the scheduled payment by the due date. A payment other than a monthly payment is delinquent if either: (a) the obligor pays less than 97% of the scheduled payment by the due date or (b) the unpaid remaining balance of such scheduled payment is more than $600.
(2) The monthly delinquency percent is calculated by dividing the scheduled payments 60 days or more past due by the month end pool balance. Starting with JDOT 2005, the pool balance is adjusted to reflect the write-down amount, if any, with respect to any receivable that is 180 days or more past due.
(3) The monthly delinquency percent in this table is calculated differently from the information presented under “JDCC’s Historical Delinquencies; Repossession and Net Losses—Delinquency Experience” and “—60+ Day Delinquent—Remaining Scheduled Payments as a Percent of Ending Pool Balance” and differs from the definition of “average delinquency ratio” under the sale and servicing agreement in that the numerator used in this table includes only the amount of the scheduled payment that is 60 days or more past due, rather than the aggregate amount of all scheduled payments to be paid in respect of receivables 60 days or more past due.

 

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John Deere Capital Corporation

60+ Day Delinquent—Remaining Scheduled Payments as a Percent of Ending Pool Balance(1)(2)(3)

As of January 2008

 

Month

  JDOT 2004   JDOT 2005   JDOT 2006   JDOT 2007
1   0.00%   0.00%   0.03%   0.01%
2   0.32%   0.42%   0.31%   0.65%
3   0.67%   0.79%   0.54%   1.28%
4   0.86%   0.89%   0.96%   1.57%
5   0.95%   0.97%   0.86%   1.86%
6   1.08%   1.09%   1.40%   2.08%
7   1.14%   1.18%   1.89%   2.31%
8   1.16%   1.14%   2.28%   3.39%
9   1.41%   1.31%   2.60%   3.92%
10   1.51%   1.39%   2.57%   4.26%
11   1.73%   1.53%   2.39%  
12   1.62%   1.34%   3.00%  
13   1.36%   1.34%   3.44%  
14   1.17%   1.66%   3.47%  
15   1.54%   1.48%   3.30%  
16   1.19%   1.67%   3.19%  
17   1.38%   2.24%   3.09%  
18   1.35%   2.09%   3.76%  
19   1.12%   2.13%   3.81%  
20   1.20%   2.41%   3.68%  
21   1.58%   2.58%    
22   1.79%   2.95%    
23   2.07%   3.14%    
24   2.06%   2.96%    
25   1.97%   2.98%    
26   1.81%   3.29%    
27   2.09%   3.48%    
28   1.90%   3.44%    
29   2.09%   3.30%    
30   2.12%   3.24%    
31   1.92%   3.40%    
32   2.20%   3.72%    
33   2.26%   3.81%    
34   2.89%      
35   3.53%      
36   4.11%      
37   3.56%      
38   3.02%      
39   3.26%      
40   3.04%      
41   3.12%      
42   3.26%      
43   2.88%      
44   3.32%      
45   3.72%      
46   4.01%      

 

(1) The period of delinquency is based on the number of days payments are contractually past due. A monthly payment is delinquent if the obligor pays less than 90% of the scheduled payment by the due date. A payment other than a monthly payment is delinquent if either: (a) the obligor pays less than 97% of the scheduled payment by the due date or (b) the unpaid remaining balance of such scheduled payment is more than $600.
(2) The monthly delinquency percent is calculated by dividing the aggregate amount of all scheduled payments to be paid on each contract 60 days or more past due by the month end pool balance. Starting with JDOT 2005, the pool balance is adjusted to reflect the write-down amount, if any, with respect to any receivable that is 180 days or more past due.
(3) The monthly delinquency percent in this table is calculated differently from the information presented under “—60+ Day Delinquent—Delinquent Payments as a Percent of Ending Pool Balance” in that the numerator used in this table includes the aggregate amount of all scheduled payments to be paid in respect of receivables 60 days or more past due rather than only the amount of the scheduled payment that is 60 days or more past due.

 

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John Deere Capital Corporation

Cumulative Prepayment History(1)

As of January 2008

 

Month

  JDOT 2001   JDOT 2003   JDOT 2004   JDOT 2005   JDOT 2006   JDOT 2007
1   15.61%   12.73%   15.26%   12.35%   10.16%   23.68%
2   13.60%   10.32%   10.35%   11.38%   12.71%   19.46%
3   15.05%   11.96%   8.85%   12.41%   11.69%   17.47%
4   18.04%   13.18%   10.25%   10.79%   11.00%   18.05%
5   18.19%   12.23%   9.86%   10.42%   12.44%   18.31%
6   18.01%   11.36%   8.99%   11.05%   11.93%   17.05%
7   19.16%   13.31%   10.17%   10.77%   11.14%   18.52%
8   18.59%   13.63%   9.68%   10.62%   14.46%   17.90%
9   17.70%   13.78%   9.36%   12.28%   15.77%   17.58%
10   18.31%   15.02%   10.55%   12.56%   16.37%   20.06%
11   17.68%   14.90%   10.63%   12.43%   18.82%  
12   17.34%   14.67%   10.68%   13.01%   18.64%  
13   17.88%   14.88%   11.10%   12.64%   18.36%  
14   17.33%   14.74%   10.93%   12.26%   18.61%  
15   16.73%   14.52%   10.86%   12.38%   18.44%  
16   17.19%   14.87%   11.34%   12.07%   18.00%  
17   17.33%   14.65%   11.12%   11.91%   18.20%  
18   17.39%   14.15%   10.83%   12.52%   17.97%  
19   18.36%   14.74%   11.33%   12.21%   17.63%  
20   18.46%   14.68%   11.13%   12.10%   18.16%  
21   18.22%   14.69%   10.83%   12.73%    
22   18.76%   15.11%   11.36%   12.84%    
23   18.60%   14.84%   11.24%   12.86%    
24   18.86%   14.64%   11.38%   13.22%    
25   19.49%   14.90%   11.67%   13.09%    
26   19.02%   14.73%   11.58%   12.98%    
27   18.53%   14.35%   11.39%   13.25%    
28   18.93%   14.68%   11.60%   12.87%    
29   18.84%   14.49%   11.53%   12.72%    
30   18.55%   14.11%   11.36%   13.14%    
31   19.08%   14.59%   11.80%   13.06%    
32   18.87%   14.48%   11.60%   12.90%    
33   18.67%   14.47%   11.40%   13.30%    
34   19.11%   14.76%   11.65%      
35   18.95%   14.39%   11.49%      
36   18.58%   14.14%   11.37%      
37   18.99%   14.23%   11.61%      
38   18.64%   14.10%   11.50%      
39     13.92%   11.43%      
40     14.20%   11.82%      
41     13.99%   11.72%      
42     13.47%   11.51%      
43     13.75%   11.90%      
44       11.56%      
45       11.37%      
46       11.69%      

 

(1) The formula for calculating the percentages shown above is the percentage equivalent of 1 minus an amount equal to a fraction with the numerator equal to the actual pool balance at the end of such month and the denominator equal to the scheduled pool balance at the end of such month calculated using the initial cash flows at the cut-off date, raised to the power of a fraction with a numerator equal to 12 and a denominator equal to the number of months elapsed since the cut-off date to the end of such month.

 

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The following table sets forth a summary of certain information relating to the original characteristics of JDCC’s prior securitized pools of retail agricultural and construction equipment receivables in the past seven years. Totals may not add to 100% due to rounding.

 

     Characteristics of Prior Securitized Pools  
     JDOT 2001     JDOT 2003     JDOT 2004     JDOT 2005     JDOT 2006     JDOT 2007  

Total Agricultural and Construction

                                    

Total Number of Pool Assets

     36,344       26,996       22,592       20,175       16,884       19,937  

Aggregate Balance as of Original Pool Cut-Off Date (dollars in millions)

   $ 934     $ 761     $ 758     $ 758     $ 811     $ 1,017  

Average Balance

   $ 25,692     $ 28,186     $ 33,553     $ 37,580     $ 48,035     $ 51,031  

Range of Balances

   $ 517 – $1,213,067     $ 502 – $1,426,794     $ 519 – $1,986,194     $ 522 – $1,060,055     $ 575 – $1,696,225     $ 543 – $2,125,093  

Weighted Average Interest Rate

     7.754 %     6.207 %     4.792 %     5.853 %     7.266 %     7.492 %

Weighted Average Original Term (months)(1)

     52.80       55.77       55.79       56.87       57.27       55.98  

Weighted Average Remaining Term (months)

     39.54       44.53       45.90       49.89       52.54       50.13  

Weighted Average Credit Score of Obligors(2)

     712       714       719       719       718       720  

Range of Credit Scores of Obligors(2)

     458 – 834       400 – 844       473 – 843       444 – 834       452 – 833       432 – 843  

% without FICO (% of aggregate balance as of original pool cut-off date)

     14.13 %     8.55 %     8.82 %     6.75 %     9.30 %     13.20 %

Agricultural (% of aggregate balance as of original pool cut-off date)

     57.34 %     65.34 %     65.29 %     65.28 %     65.37 %     65.47 %

New (% of aggregate balance as of original pool cut-off date)

     32.96 %     32.57 %     26.80 %     31.19 %     31.89 %     34.53 %

Used (% of aggregate balance as of original pool cut-off date)

     24.38 %     32.77 %     38.49 %     34.09 %     33.48 %     30.94 %

Construction (% of aggregate balance as of original pool cut-off date)

     42.66 %     34.66 %     34.71 %     34.72 %     34.63 %     34.53 %

New (% of aggregate balance as of original pool cut-off date)

     34.92 %     25.86 %     30.04 %     23.04 %     25.62 %     29.99 %

Used (% of aggregate balance as of original pool cut-off date)

     7.74 %     8.79 %     4.67 %     11.68 %     9.00 %     4.54 %

State Concentration (top 5 states) (% of aggregate balance as of original pool cut-off date)

     Texas – 8.18 %     Texas – 8.02 %     Texas – 7.95 %     Texas – 8.50 %     Texas – 9.76 %     Texas – 10.21 %
     California – 4.64 %     Georgia – 4.09 %     Georgia – 5.39 %     Georgia – 4.85 %     Georgia – 5.22 %     Georgia – 5.34 %
     Georgia – 4.30 %     Illinois – 3.86 %     Illinois – 5.01 %     Arkansas – 4.14 %     Kansas – 3.88 %     Arkansas – 4.06 %
     Florida – 4.04 %     California – 3.85 %     Iowa – 4.30 %     Florida – 4.02 %     California – 3.73 %     Kansas – 4.01 %
     No. Carolina – 3.82 %     Florida – 3.76 %     California – 4.22 %     Virginia – 3.66 %     Missouri – 3.66 %     Missouri – 3.81 %

Payment Frequency (% of aggregate balance as of original pool cut-off date)

            

Annual

     39.77 %     46.89 %     49.27 %     48.94 %     53.46 %     54.41 %

Semiannual

     2.05 %     2.39 %     2.37 %     2.16 %     2.42 %     2.47 %

Quarterly

     0.69 %     0.67 %     0.73 %     0.60 %     0.89 %     0.57 %

Monthly

     55.21 %     48.48 %     46.15 %     46.89 %     40.94 %     39.85 %

Other

     2.28 %     1.57 %     1.47 %     1.41 %     2.29 %     2.69 %

 

(1) The original term on receivables is calculated from the date interest on a receivable begins to accrue, rather than the date of origination, through the maturity of the receivable.
(2) Credit scores relate to the FICO score of the obligors, which is a credit score derived from a scoring system created by the Fair Isaac Corporation. A FICO score is used to evaluate creditworthiness on the basis of, among other things, information that a credit bureau keeps about the applicant for credit and the debt service-to-income ratio of the applicant. The highest FICO score a person can receive is 850 and the lowest 300.

 

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Table of Contents

This static pool data is not deemed part of this prospectus supplement or the registration statement of which this prospectus supplement is a part to the extent that the static pool data relates to prior securitized pools that were established before January 1, 2006. We cannot assure you that the prepayment, loss or delinquency experience of the receivables sold to the trust will be comparable to the historical prepayment, loss or delinquency experience of any of the securitized pools sponsored by JDCC. In this regard, you should note how the characteristics of the receivables in those securitized pools differ from the characteristics of the trust’s receivables. Such differences, along with the varying economic conditions applicable to those securitized pools, may make it unlikely that the trust’s receivables will perform in the same way that any of those pools has performed. Information regarding prior securitization transactions sponsored by JDCC contained on the John Deere website is not incorporated by reference in, and should not be considered part of, this prospectus supplement or the accompanying prospectus.

MATURITY AND PREPAYMENT CONSIDERATIONS

General

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 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 depositor 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 sale 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. Additionally, the depositor has a separate optional purchase right to purchase receivables with an aggregate principal balance of no more than 2% of the initial pool balance as of the cut-off date. See “Description of the Transfer and Servicing Agreements—Optional Purchase.” Any reinvestment risks resulting from a faster or slower incidence of prepayment of receivables than is expected by a noteholder will be borne entirely by the noteholder. See also “Description of the Notes—Optional Redemption” regarding the servicer’s option to purchase the receivables when the pool balance is 10% or less of the pool balance as of the cut-off date. This purchase would result in the redemption of the notes that are outstanding.

Weighted Average Lives

The following information is given solely to illustrate the effect of prepayments of the receivables on the weighted average lives of the 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 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-32 and S-33 have been prepared on the basis of certain assumptions, including that:

 

   

all of the receivables have an APR of 6.957%;

 

   

the initial note value is equal to $653,678,817;

 

S-30


Table of Contents
   

the notes are issued in the initial principal amounts set forth on the cover of this prospectus supplement;

 

   

the interest rates borne by the various classes of notes are: 2.74080% for the class A-1 notes, 3.63% for the class A-2 notes, 4.18% for the class A-3 notes and 4.89% for the class A-4 notes;

 

   

the class A-1 notes accrue interest on an actual/360 day count convention and the class A-2 notes, the class A-3 notes and the class A-4 notes accrue interest on a 30/360 day count convention;

 

   

the receivables prepay in full at the specified monthly CPR, with no repurchases or optional purchases, and no optional redemption unless specified;

 

   

each scheduled payment on the receivables is made on the last day of each collection period;

 

 

 

distributions are made on each payment date (assuming each payment date occurs on the 15th day of each month) in accordance with the description set forth under “Description of the Transfer and Servicing Agreements—Distributions” without giving effect to the final payment date of any class of notes; and

 

   

the closing date is April 16, 2008.

The tables indicate, on the basis of the foregoing assumptions, the weighted average life of each class of notes and the percentage of the initial principal balance of each class of 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-32 and S-33. The assumptions used are hypothetical and have been provided only to give a general sense of how the principal cash flows might behave under varying prepayment scenarios. For example, it is highly unlikely that the receivables will prepay at a constant CPR until maturity or that all of the receivables will prepay at the same CPR. Moreover, the diverse terms of receivables could produce slower or faster principal distributions than indicated in the tables at the various CPRs specified. Any difference between such assumptions and the actual characteristics and performance of the receivables will affect the percentages of initial balances outstanding over time and the weighted average lives of the notes.

 

S-31


Table of Contents

Percentage of Initial Principal Amount of the Notes at Various CPR Percentages

 

     Class A-1 Notes    Class A-2 Notes

Payment Date

   0%    10%    12%    16%    18%    20%    0%    10%    12%    16%    18%    20%

Closing Date

   100    100    100    100    100    100    100    100    100    100    100    100

May 2008

   92    89    89    88    87    86    100    100    100    100    100    100

June 2008

   85    80    79    76    75    74    100    100    100    100    100    100

July 2008

   78    70    69    65    63    62    100    100    100    100    100    100

August 2008

   72    61    59    54    52    50    100    100    100    100    100    100

September 2008

   65    52    50    44    41    39    100    100    100    100    100    100

October 2008

   58    43    40    33    30    27    100    100    100    100    100    100

November 2008

   50    33    30    23    19    16    100    100    100    100    100    100

December 2008

   42    24    20    12    8    4    100    100    100    100    100    100

January 2009

   33    13    9    1    0    0    100    100    100    100    96    92

February 2009

   23    2    0    0    0    0    100    100    97    88    84    80

March 2009

   15    0    0    0    0    0    100    93    88    79    74    69

April 2009

   7    0    0    0    0    0    100    83    78    69    64    59

May 2009

   0    0    0    0    0    0    99    74    69    59    54    49

June 2009

   0    0    0    0    0    0    93    67    62    51    46    41

July 2009

   0    0    0    0    0    0    87    60    54    44    39    33

August 2009

   0    0    0    0    0    0    81    53    48    37    31    26

September 2009

   0    0    0    0    0    0    76    47    41    30    24    19

October 2009

   0    0    0    0    0    0    69    40    34    23    17    12

November 2009

   0    0    0    0    0    0    63    33    27    16    10    4

December 2009

   0    0    0    0    0    0    56    26    20    8    3    0

January 2010

   0    0    0    0    0    0    48    18    12    *    0    0

February 2010

   0    0    0    0    0    0    39    9    3    0    0    0

March 2010

   0    0    0    0    0    0    33    2    0    0    0    0

April 2010

   0    0    0    0    0    0    25    0    0    0    0    0

May 2010

   0    0    0    0    0    0    18    0    0    0    0    0

June 2010

   0    0    0    0    0    0    13    0    0    0    0    0

July 2010

   0    0    0    0    0    0    7    0    0    0    0    0

August 2010

   0    0    0    0    0    0    2    0    0    0    0    0

September 2010

   0    0    0    0    0    0    0    0    0    0    0    0

October 2010

   0    0    0    0    0    0    0    0    0    0    0    0

November 2010

   0    0    0    0    0    0    0    0    0    0    0    0

December 2010

   0    0    0    0    0    0    0    0    0    0    0    0

January 2011

   0    0    0    0    0    0    0    0    0    0    0    0

February 2011

   0    0    0    0    0    0    0    0    0    0    0    0

March 2011

   0    0    0    0    0    0    0    0    0    0    0    0

April 2011

   0    0    0    0    0    0    0    0    0    0    0    0

May 2011

   0    0    0    0    0    0    0    0    0    0    0    0

June 2011

   0    0    0    0    0    0    0    0    0    0    0    0

July 2011

   0    0    0    0    0    0    0    0    0    0    0    0

August 2011

   0    0    0    0    0    0    0    0    0    0    0    0

September 2011

   0    0    0    0    0    0    0    0    0    0    0    0

October 2011

   0    0    0    0    0    0    0    0    0    0    0    0

November 2011

   0    0    0    0    0    0    0    0    0    0    0    0

December 2011

   0    0    0    0    0    0    0    0    0    0    0    0

January 2012

   0    0    0    0    0    0    0    0    0    0    0    0

February 2012

   0    0    0    0    0    0    0    0    0    0    0    0

March 2012

   0    0    0    0    0    0    0    0    0    0    0    0

April 2012

   0    0    0    0    0    0    0    0    0    0    0    0

May 2012

   0    0    0    0    0    0    0    0    0    0    0    0

June 2012

   0    0    0    0    0    0    0    0    0    0    0    0

July 2012

   0    0    0    0    0    0    0    0    0    0    0    0

August 2012

   0    0    0    0    0    0    0    0    0    0    0    0

September 2012

   0    0    0    0    0    0    0    0    0    0    0    0

October 2012

   0    0    0    0    0    0    0    0    0    0    0    0

November 2012

   0    0    0    0    0    0    0    0    0    0    0    0

December 2012

   0    0    0    0    0    0    0    0    0    0    0    0

January 2013

   0    0    0    0    0    0    0    0    0    0    0    0

February 2013

   0    0    0    0    0    0    0    0    0    0    0    0

March 2013

   0    0    0    0    0    0    0    0    0    0    0    0

Weighted average life without optional redemption (years)(1)

   0.60    0.47    0.45    0.41    0.39    0.38    1.76    1.42    1.36    1.25    1.20    1.15

Optional redemption date

   n/a    n/a    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)(1)(2)

   n/a    n/a    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 a class A-1 note or a class A-2 note is determined by: (a) multiplying the amount of each principal payment on the applicable note by the number of years from the date of issuance of the note to the related payment date, (b) adding the results, and (c) dividing the sum by the related initial principal amount of the note.
(2) To the optional redemption date specified in the table, which is based on the earliest date on which the note value is equal to or less than 10% of the initial note value under the assumptions (rather than on the basis of the principal balance of the receivables as required under the sale and servicing agreement). See “Description of the Notes — Optional Redemption” in this prospectus supplement.
* Indicates a number that is greater than 0% but less than 0.5%.

This table has been prepared based on the assumptions described on pages S-30 and S-31 (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.

 

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Table of Contents

Percentage of Initial Principal Amount of the Notes at Various CPR Percentages

 

Payment Date

   Class A-3 Notes    Class A-4 Notes
   0%    10%    12%    16%    18%    20%    0%    10%    12%    16%    18%    20%

Closing Date

   100    100    100    100    100    100    100    100    100    100    100    100

May 2008

   100    100    100    100    100    100    100    100    100    100    100    100

June 2008

   100    100    100    100    100    100    100    100    100    100    100    100

July 2008

   100    100    100    100    100    100    100    100    100    100    100    100

August 2008

   100    100    100    100    100    100    100    100    100    100    100    100

September 2008

   100    100    100    100    100    100    100    100    100    100    100    100

October 2008

   100    100    100    100    100    100    100    100    100    100    100    100

November 2008

   100    100    100    100    100    100    100    100    100    100    100    100

December 2008

   100    100    100    100    100    100    100    100    100    100    100    100

January 2009

   100    100    100    100    100    100    100    100    100    100    100    100

February 2009

   100    100    100    100    100    100    100    100    100    100    100    100

March 2009

   100    100    100    100    100    100    100    100    100    100    100    100

April 2009

   100    100    100    100    100    100    100    100    100    100    100    100

May 2009

   100    100    100    100    100    100    100    100    100    100    100    100

June 2009

   100    100    100    100    100    100    100    100    100    100    100    100

July 2009

   100    100    100    100    100    100    100    100    100    100    100    100

August 2009

   100    100    100    100    100    100    100    100    100    100    100    100

September 2009

   100    100    100    100    100    100    100    100    100    100    100    100

October 2009

   100    100    100    100    100    100    100    100    100    100    100    100

November 2009

   100    100    100    100    100    100    100    100    100    100    100    100

December 2009

   100    100    100    100    100    96    100    100    100    100    100    100

January 2010

   100    100    100    100    93    86    100    100    100    100    100    100

February 2010

   100    100    100    90    83    76    100    100    100    100    100    100

March 2010

   100    100    95    81    74    67    100    100    100    100    100    100

April 2010

   100    93    86    72    65    58    100    100    100    100    100    100

May 2010

   100    85    77    64    57    50    100    100    100    100    100    100

June 2010

   100    78    71    57    50    44    100    100    100    100    100    100

July 2010

   100    71    64    50    44    38    100    100    100    100    100    100

August 2010

   100    65    58    44    38    32    100    100    100    100    100    100

September 2010

   97    59    52    38    32    26    100    100    100    100    100    100

October 2010

   90    52    45    32    26    20    100    100    100    100    100    100

November 2010

   83    46    39    26    20    15    100    100    100    100    100    100

December 2010

   76    39    33    20    15    9    100    100    100    100    100    100

January 2011

   67    32    25    14    8    3    100    100    100    100    100    100

February 2011

   57    23    18    6    1    0    100    100    100    100    100    94

March 2011

   50    17    12    1    0    0    100    100    100    100    94    87

April 2011

   42    11    5    0    0    0    100    100    100    93    86    79

May 2011

   34    5    0    0    0    0    100    100    99    85    78    72

June 2011

   29    *    0    0    0    0    100    100    93    79    72    66

July 2011

   24    0    0    0    0    0    100    94    87    73    67    61

August 2011

   19    0    0    0    0    0    100    88    81    68    62    56

September 2011

   14    0    0    0    0    0    100    82    75    63    57    52

October 2011

   9    0    0    0    0    0    100    75    69    57    52    47

November 2011

   3    0    0    0    0    0    100    69    63    52    47    42

December 2011

   0    0    0    0    0    0    97    63    57    46    42    37

January 2012

   0    0    0    0    0    0    86    55    50    40    36    32

February 2012

   0    0    0    0    0    0    75    47    42    34    30    26

March 2012

   0    0    0    0    0    0    68    41    37    29    26    23

April 2012

   0    0    0    0    0    0    58    35    31    24    21    18

May 2012

   0    0    0    0    0    0    50    29    26    20    17    14

June 2012

   0    0    0    0    0    0    45    26    23    17    14    12

July 2012

   0    0    0    0    0    0    41    22    20    14    12    10

August 2012

   0    0    0    0    0    0    36    19    17    12    10    8

September 2012

   0    0    0    0    0    0    32    16    14    9    7    6

October 2012

   0    0    0    0    0    0    26    13    10    7    5    3

November 2012

   0    0    0    0    0    0    21    9    7    4    3    1

December 2012

   0    0    0    0    0    0    16    6    4    2    *    0

January 2013

   0    0    0    0    0    0    10    2    1    0    0    0

February 2013

   0    0    0    0    0    0    3    0    0    0    0    0

March 2013

   0    0    0    0    0    0    0    0    0    0    0    0

Weighted average life without optional redemption (years)(1)

   2.99    2.56    2.48    2.33    2.25    2.18    4.22    3.91    3.84    3.69    3.61    3.53

Optional redemption date

   n/a    n/a    n/a    n/a    n/a    n/a    5/12    1/12    1/12    11/11    10/11    9/11

Weighted average life with optional redemption (years)(1)(2)

   n/a    n/a    n/a    n/a    n/a    n/a    3.98    3.64    3.60    3.43    3.34    3.26

 

(1) The weighted average life of a class A-3 note or a class A-4 note is determined by: (a) multiplying the amount of each principal payment on the applicable note by the number of years from the date of issuance of the note to the related payment date, (b) adding the results, and (c) dividing the sum by the related initial principal amount of the note.
(2) To the optional redemption date specified in the table, which is based on the earliest date on which the note value is equal to or less than 10% of the initial note value under the assumptions (rather than on the basis of the principal balance of the receivables as required under the sale and servicing agreement). See “Description of the Notes—Optional Redemption” in this prospectus supplement.
* Indicates a number that is greater than 0% but less than 0.5%.

This table has been prepared based on the assumptions described on pages S-30 and S-31 (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.

 

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Table of Contents

THE DEPOSITOR, THE SPONSOR AND SERVICER

For a general discussion of the depositor, Deere & Company and JDCC, see “The Depositor, Deere and JDCC” in the accompanying prospectus.

John Deere Capital Corporation

At January 31, 2008, JDCC and its subsidiaries had 1,533 and 39 full- and part-time employees, respectively. At that date, receivables and leases administered by JDCC, which include retail notes sold, were $18,571.3 million. The sponsor has significant securitization experience and has sponsored various securitizations of assets similar to the receivables held by the trust in registered, U.S. transactions. JDCC was the sole sponsor of each of these transactions. No securitizations sponsored or serviced by JDCC have defaulted or experienced an early amortization triggering event. The following table sets forth the aggregate principal amount of the notes and certificates issued in the public securitizations sponsored by JDCC:

 

John Deere Owner Trust

   Aggregate Principal Amount
(Notes and Certificates)

2007

   $ 1,016,079,095

2006

   $ 802,510,248

2005

   $ 751,775,240

2004

   $ 756,988,476

2003

   $ 757,696,670

2001

   $ 931,575,802

1999-A

   $ 805,741,832

1995-A

   $ 750,353,833

1994-A

   $ 500,077,200

1993-A

   $ 600,098,154

1993-B

   $ 600,245,250

1992-A

   $ 500,136,353
      

Total:

   $ 8,773,278,153

The following table sets forth the growth of the portfolio of retail installment contracts serviced by JDCC since 2001:

 

     2001    2002    2003    2004    2005    2006    2007
     (Dollars in Millions)
Retail installment contracts    $6,979.5    $7,777.5    $8,666.8    $9,898.0    $10,913.1    $11,623.5    $12,062.4

 

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Table of Contents

DESCRIPTION OF THE NOTES

General

The notes will be issued under the indenture. A copy of the indenture will be filed with the SEC following the issuance of the notes. Because this section is a summary, it does not describe every aspect of the 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 notes. The following summary supplements, and to the extent inconsistent therewith replaces, the description of the general terms and provisions of the notes of any given series and the related indenture set forth in the prospectus.

Payments of Interest

The notes are fixed rate notes. The per annum interest rate (the “interest rate”) for each class of notes is as follows:

 

Class of Notes

   Interest Rate  

A-1

   2.74080 %

A-2

   3.63 %

A-3

   4.18 %

A-4

   4.89 %

A “payment date” will be the 15 th day of each month or, if any of those dates is not a business day, the next succeeding business day, commencing May 15, 2008. In addition, if any class A-1 notes remain outstanding after the payment date in April 2009, a special payment date for the payment of interest and principal on the class A-1 notes will occur on May 8, 2009, and will be the final payment date for the class A-1 notes. Interest on the class 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 and 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 class A-2 notes, the class A-3 notes and the class 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.

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 notes will generally be derived from:

 

   

the total distribution amount remaining after the payment of the administration fee and, if JDCC or an affiliate of JDCC is not the servicer, the servicing 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 notes on any payment date, each noteholder will receive its ratable share (based upon the total amount of interest due on its note) of the amount available to be distributed in respect of interest on the notes.

Payments of Principal

Principal payments will be made to the noteholders on each payment date, and if necessary, to the noteholders of the class A-1 notes on the special payment date on May 8, 2009, in an amount equal to the note monthly principal distributable amount until the balance of the notes is reduced to zero.

 

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Table of Contents

On each payment date, the note monthly principal distributable amount will be applied in the following order of priority:

 

   

first, to payment in full of the class A-1 notes;

 

   

second, to payment in full of the class A-2 notes;

 

   

third, to payment in full of the class A-3 notes; and

 

   

fourth, to payment in full of the class A-4 notes.

The note monthly principal distributable amount is described under “Description of the Transfer and Servicing Agreements—Distributions.” No principal will be paid on any payment date on the class A-2 notes until the class A-1 notes have been paid in full, no principal will be paid on any payment date on the class A-3 notes until the class A-2 notes have been paid in full and no principal will be paid on any payment date on the class A-4 notes until the class A-3 notes have been paid in full. See “Description of the Transfer and Servicing Agreements Distributions” for additional details on such distributions.

The principal amount of each class of notes, to the extent not previously paid, will be payable in full on the payment date in the month specified below:

 

Class of Notes

  

Final Payment Date

A-1

   May 8, 2009

A-2

   March 15, 2011

A-3

   June 15, 2012

A-4

   March 16, 2015

Following an event of default and acceleration of the notes, payments (including payments funded out of 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, after payment of fees, ratably to the noteholders first based on the amount of interest due on each note (in the case of payments of interest) and then based on the outstanding principal balance (in the case of payments of principal) until the principal balance of all of the notes is reduced to zero.

Optional Redemption

The servicer has the right to purchase the remaining receivables on a payment date when the pool balance becomes equal to or less than 10% of the pool balance as of the cut-off date. If the servicer exercises this right, the notes outstanding at that time will be redeemed in full at a price equal to their unpaid principal balance plus accrued and unpaid interest. If the servicer elects to exercise its right to purchase the receivables as described above, the servicer shall furnish notice of such election to the indenture trustee not later than 25 days prior to the redemption date and the servicer shall deposit with the indenture trustee in the note distribution account the redemption price of the notes to be redeemed whereupon all such notes shall be due and payable on the redemption date. Notice of redemption shall be given by the indenture trustee by first class mail, postage prepaid, mailed not less than five days prior to the applicable redemption date to each noteholder, as of the close of business on the record date preceding the applicable redemption date, at such noteholder’s address appearing in the register. The notice will identify the payment date on which the redemption will occur, the redemption price, the place where notes are to be surrendered for payment, and the CUSIP numbers of the affected notes.

Book Entry, Delivery and Form

The notes will be issued as one or more fully registered global securities which will be deposited with, or on behalf of, DTC, New York, New York and registered in the name of Cede & Co., DTC’s nominee. We will not issue notes in certificated form except under certain limited circumstances described in the accompanying prospectus. Beneficial interests in the global securities will be represented through book-entry accounts of financial

 

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institutions acting on behalf of beneficial owners as direct and indirect participants in DTC (the “DTC participants“). Investors may elect to hold interests in the global securities through DTC (in the United States), Clearstream Banking, société anonyme (“Clearstream Luxembourg“), or Euroclear Bank S.A./N.V., as operator of the Euroclear System (“Euroclear“), if they are participants in those systems, or indirectly through organizations that are participants in those systems.

Clearstream Luxembourg and Euroclear will hold interests on behalf of their participants through customers’ securities accounts in Clearstream Luxembourg’s and Euroclear’s names on the books of their respective depositaries, which in turn will hold these interests in customers’ securities accounts in the depositaries’ names on the books of DTC. At the present time, Citibank, N.A. acts as U.S. depositary for Clearstream Luxembourg, and JPMorgan Chase Bank acts as U.S. depositary for Euroclear (each, a “U.S. depositary“). Beneficial interests in the global securities will be held in denominations of $1,000 and integral multiples thereof. Except as set forth below or in the accompanying prospectus, the global securities may be transferred, in whole but not in part, only to another nominee of DTC or to a successor of DTC or its nominee.

Clearstream Luxembourg has advised us that it is incorporated under the laws of Luxembourg as a professional depositary. Clearstream Luxembourg holds securities for its participating organizations (“Clearstream participants“) and facilitates the clearance and settlement of securities transactions between Clearstream participants through electronic book-entry changes in accounts of Clearstream participants, thereby eliminating the need for physical movement of certificates. Clearstream Luxembourg provides to Clearstream participants, among other things, services for safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Clearstream Luxembourg interfaces with domestic markets in several countries. As a professional depositary, Clearstream Luxembourg is subject to regulation by the Luxembourg Monetary Institute. Clearstream participants are recognized financial institutions around the world, including underwriters, securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations and may include the underwriters in this offering or their affiliates. Indirect access to Clearstream Luxembourg is also available to others, such as banks, brokers, dealers and trust companies that clear through, or maintain a custodial relationship with, a Clearstream participant, either directly or indirectly.

Distributions with respect to notes held beneficially through Clearstream Luxembourg will be credited to cash accounts of Clearstream participants in accordance with its rules and procedures, to the extent received by the U.S. depositary for Clearstream Luxembourg.

Euroclear has advised us that it was created in 1968 to hold securities for participants of Euroclear (“Euroclear participants“) and to clear and settle transactions between Euroclear participants through simultaneous electronic book-entry delivery against payment, thereby eliminating the need for physical movement of certificates and any risk from lack of simultaneous transfers of securities and cash. Euroclear includes various other services, including securities lending and borrowing and interfaces with domestic markets in several countries. Euroclear is operated by Euroclear Bank S.A./N.V., as operator of the Euroclear System (the “Euroclear operator”), under contract with Euroclear Clearance Systems S.C., a Belgian cooperative corporation (the “Cooperative”). All operations are conducted by the Euroclear operator, and all Euroclear securities clearance accounts and Euroclear cash accounts are accounts with the Euroclear operator, not the Cooperative. The Cooperative establishes policy for Euroclear on behalf of Euroclear participants. Euroclear participants include banks (including central banks), securities brokers and dealers and other professional financial intermediaries and may include the underwriters in this offering or their affiliates. Indirect access to Euroclear is also available to other firms that clear through or maintain a custodial relationship with a Euroclear participant, either directly or indirectly.

Securities clearance accounts and cash accounts with the Euroclear operator are governed by the Terms and Conditions Governing Use of Euroclear and the related Operating Procedures of the Euroclear System and applicable Belgian law (the “Terms and Conditions“). The Terms and Conditions govern transfers of securities and cash within Euroclear, withdrawals of securities and cash from Euroclear and receipts of payments with respect to securities in Euroclear. All securities in Euroclear are held on a fungible basis without attribution of specific certificates to specific securities clearance accounts. The Euroclear operator acts under the Terms and Conditions only on behalf of Euroclear participants, and has no record of, or relationship with, persons holding through Euroclear participants.

 

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Distributions with respect to notes held beneficially through Euroclear will be credited to the cash accounts of Euroclear participants in accordance with the Terms and Conditions, to the extent received by the U.S. depositary for Euroclear.

In the event certificated notes are issued in the limited circumstances described in the accompanying prospectus, the holders of certificated notes will be able to receive payments of principal and interest thereon by check mailed to the record holder thereof. Payment of the final installment of principal of a certificated note may be made only against surrender of the relevant note to one of the paying agents.

Global Clearance and Settlement Procedures

Initial settlement for the notes will be made in immediately available funds. Secondary market trading between DTC participants will occur in the ordinary way in accordance with DTC’s rules and will be settled in immediately available funds using DTC’s Same Day Funds Settlement System. Secondary market trading between Clearstream participants and Euroclear participants will occur in the ordinary way in accordance with the applicable rules and operating procedures of Clearstream Luxembourg and Euroclear and will be settled using the procedures applicable to conventional eurobonds in immediately available funds.

Cross-market transfers between persons holding directly or indirectly through DTC, on the one hand, and directly or indirectly through Clearstream participants or Euroclear participants, on the other, will be effected within DTC in accordance with DTC’s rules on behalf of the relevant European international clearing system by its U.S. depositary; however, these cross-market transactions will require delivery of instructions to the relevant European international clearing system by the counterparty in such system in accordance with its rules and procedures and within its established deadlines (European time). The relevant European international clearing system will, if the transaction meets its settlement requirements, deliver instructions to its U.S. depositary to take action to effect final settlement on its behalf by delivering or receiving notes at DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Clearstream participants and Euroclear participants may not deliver instructions directly to their respective U.S. depositaries.

Because of time zone differences, credits of notes received in Clearstream Luxembourg or Euroclear as a result of a transaction with a DTC participant will be made during subsequent securities settlement processing and dated the business day following the DTC settlement date. These credits, or any transactions in the notes settled during such processing, will be reported to the relevant Euroclear participants or Clearstream participants on that business day. Cash received at Clearstream or Euroclear as a result of sales of notes by or through a Clearstream participant or a Euroclear participant to a DTC participant will be received with value on the business day of settlement in DTC but will be available in the relevant Clearstream Luxembourg or Euroclear cash account only as of the business day following settlement at DTC.

Although DTC, Clearstream Luxembourg and Euroclear have agreed to the foregoing procedures in order to facilitate transfers of securities among participants of DTC, Clearstream Luxembourg and Euroclear, they are under no obligation to perform or continue to perform such procedures and they may discontinue the procedures at any time.

The Indenture Trustee

U.S. Bank National Association (“U.S. Bank“) will act as indenture trustee, registrar and paying agent under the indenture. U.S. Bank is a national banking association and a wholly-owned subsidiary of U.S. Bancorp, which is currently ranked as the sixth largest bank holding company in the United States with total assets exceeding $238 billion as of December 31, 2007. As of December 31, 2007, U.S. Bancorp served approximately 14.2 million customers, operated 2,518 branch offices in 24 states and had over 50,000 employees. A network of specialized U.S. Bancorp offices across the nation, inside and outside its 24-state footprint, provides a comprehensive line of banking, brokerage, insurance, investment, mortgage, trust and payment services products to consumers, businesses, governments and institutions.

U.S. Bank has one of the largest corporate trust businesses in the country with offices in 46 U.S. cities. The indenture will be administered from U.S. Bank’s corporate trust office located at 209 South LaSalle Street, Suite 300, Chicago, Illinois 60604.

 

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U.S. Bank has provided corporate trust services since 1924. As of December 31, 2007, U.S. Bank was acting as trustee with respect to over 85,000 issuances of securities with an aggregate outstanding principal balance of over $2.4 trillion. This portfolio includes corporate and municipal bonds, mortgage-backed and asset-backed securities and collateralized debt obligations.

The indenture trustee shall make each monthly statement available to the noteholders via the indenture trustee’s internet website. Assistance in using the indenture trustee’s website may be obtained by calling the indenture trustee’s bondholder services group and noteholders with questions may direct them to the indenture trustee’s bondholder services group at (800) 934-6802.

As of December 31, 2007, U.S. Bank (and its affiliate U.S. Bank Trust National Association) was acting as indenture trustee, registrar and paying agent on 76 issuances of equipment lease-backed securities with an outstanding aggregate principal balance of approximately $4,071,200,000.

U.S. Bank National Association 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.

DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS

In connection with the issuance by the trust of the 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 depositor and the servicer is undertaking to service or cause the sub-servicer to service the receivables;

 

   

the purchase agreement under which the depositor 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.

The following, together with other information included elsewhere in this prospectus supplement and in the accompanying prospectus, summarizes the material terms of the transfer and servicing agreements, forms of which have been filed as exhibits to the registration statement. We will file copies of the transfer and servicing agreements with the SEC following the issuance of the notes. The following summary does not purport to be complete and is subject to, and qualified by reference to, the provisions of the transfer and servicing agreements. The following summary supplements, and to the extent inconsistent with, replaces the description of the general terms and provisions of the transfer and servicing agreements 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 depositor pursuant to the purchase agreement and from the depositor 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 noteholders.

 

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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 pool balance as of the first day of the collection period. So long as JDCC or an affiliate of JDCC is the servicer, the servicing fee will be paid after payments are made to the noteholders and to the reserve account as set forth in this prospectus supplement. If JDCC or an affiliate of JDCC ceases to be the servicer, the servicing fee will be paid prior to any other application of funds on deposit in the collection account. See “Distributions—Deposits to the Distribution Accounts” in this prospectus supplement and “Description of the Transfer and Servicing Agreements—Servicing Compensation” in the prospectus.

Servicing of Defaulted Receivables

The transfer and servicing agreements provide that the servicer is to exercise discretion, consistent with its customary servicing procedures and the terms of the transfer and servicing agreements, in servicing defaulted receivables so as to maximize the trust’s collection of defaulted receivables. The transfer and servicing agreements provide the servicer with broad discretion to choose to sell, or not to sell, any of the trust’s defaulted receivables.

Optional Purchase

As of the last day of any collection period, the depositor has an option to repurchase any receivable for the purchase amount of the receivable; provided, however, the aggregate principal balance of the receivables repurchased by the depositor pursuant to this optional right may not exceed 2% of the initial pool balance as of the cut-off date.

Distributions

Deposits to Collection Account. By the second 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 depositor (including through the optional purchase right) 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 prior to the business day 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 and purchase amounts) in respect of the receivables during the related collection period plus net investment earnings on short-term investments of amounts on deposit in the trust’s accounts since the preceding payment date. 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 depositor.

A “liquidated receivable” means a defaulted receivable in respect of which the financed equipment has been sold or otherwise disposed of or which the servicer has determined to charge-off without realizing on the financed equipment 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.

Amounts distributed on the May 8, 2009 special payment date to the class A-1 notes will not be available for distribution on the May 15, 2009 payment date.

Deposits to the Distribution Accounts. On or before 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

 

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administrator or for deposit in the applicable trust account on the following payment date. Except to the extent, if at all, covered under the annual accountants attestation report described under “Description of the Transfer and Servicing Agreements—Evidence as to Compliance” in the prospectus, there will not be any independent verification of the servicer’s determination of these amounts.

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 administrator, the administration fee and all unpaid administration fees from prior collection periods;

 

   

to the note distribution account, accrued and unpaid interest on the notes;

 

   

to the note distribution account, the note monthly principal distributable amount;

 

   

to the reserve account, the amount, if any, required to be deposited into the reserve account;

 

   

to the servicer, the servicing fee and all unpaid servicing fees from prior collection periods; provided that if JDCC or an affiliate of JDCC is not the servicer, the servicing fee will be paid prior to any other application of funds on deposit in the collection account;

 

   

to the indenture trustee, any unpaid compensation, fees and indemnification due to the indenture trustee;

 

   

to the owner trustee, any unpaid compensation, fees and indemnification due to the owner trustee;

 

   

after the outstanding principal amount of the notes has been reduced to zero, to the certificate distribution account, the certificate monthly principal distributable amount; and

 

   

any remaining amounts to the reserve account for distribution to the depositor.

Payments on the Notes. On each payment date, all amounts on deposit in the note distribution account (other than investment earnings, if any, on amounts in the note distribution account) will be distributed to the noteholders in the following order of priority:

 

  (i) accrued and unpaid interest on the outstanding principal balance of each class of notes at the applicable interest rate;

 

  (ii) the note monthly principal distributable amount in the following order of priority:

 

  (a) to the class A-1 noteholders until the principal balance of the class A-1 notes is reduced to zero;

 

  (b) to the class A-2 noteholders until the principal balance of the class A-2 notes is reduced to zero;

 

  (c) to the class A-3 noteholders until the principal balance of the class A-3 notes is reduced to zero; and

 

  (d) to the class A-4 noteholders until the principal balance of the class A-4 notes is reduced to zero.

The “note monthly principal distributable amount“ for any payment date will be the principal distributable amount; provided, that the note monthly principal distributable amount shall not exceed the aggregate outstanding principal balance of the notes and provided further that on the final payment date for each class of notes, the note monthly principal distributable amount will at least equal the outstanding principal balance of such notes.

 

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The “principal distributable amount“ for any payment date will be the sum of (i) the current principal distribution amount and (ii) the principal carryover shortfall. The “current principal distribution amount“ for any 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 any 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 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 6.957%. For purposes of calculating the note value, in the case of a defaulted receivable:

 

   

prior to the time at which such defaulted receivable becomes a repossessed receivable or a 180-day 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;

 

   

at the earlier of the time such defaulted receivable becomes a repossessed receivable or a 180-day receivable, the amount added to the note value with respect to such receivable will be the estimated realizable value of such receivable, as determined by the servicer in accordance with its normal servicing procedures; and

 

   

for any liquidated receivable, there shall be deemed to be no scheduled payments due on the receivable.

A “180-day receivable“ with respect to any collection period will be any receivable as to which a scheduled payment is 180 days or more delinquent by the last day of the collection period and which has not become a liquidated receivable or a repossessed receivable; provided that a receivable shall cease to be a 180-day receivable if the servicer subsequently receives payment in full of each scheduled payment that was previously 180-days or more delinquent.

A monthly payment is considered delinquent in accordance with the servicer’s normal procedures, which are currently if the obligor pays less than 90% of the scheduled payment by the due date. A payment other than a monthly payment is considered delinquent if either: (a) the obligor pays less than 97% of the scheduled payment by the due date, or (b) the unpaid remaining balance of such scheduled payment is more than $600. The servicer’s procedures may change subject to the sale and servicing agreement.

A “repossessed receivable“ with respect to any collection period will be any receivable as to which the financed equipment securing the defaulted receivable has been repossessed by the last day of the collection period.

The “certificate monthly principal distributable amount“ for any payment date will be (a) zero on any payment date on which the outstanding principal amount of the notes has not been reduced to zero after taking into account distributions on such payment date and (b) on each payment date on and after the payment date on which the outstanding principal amount of the notes is reduced to zero, an amount equal to the principal distributable amount minus the principal payment, if any, on the notes on such payment date.

Following an event of default and acceleration of the notes, payments (including payments funded from 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, after payment of fees, ratably to the noteholders first based on the amount of interest due on each note (in the case of payments of interest) and then based on the outstanding principal balance (in the case of payments of principal) until the principal balance of all of the notes is reduced to zero.

 

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Fee and Expense Table

Fees and Expenses Payable Out of Cash Flows(1)

 

Fee or
Expense

  

Amount of Fee or
Expense(2)

  

Party
Receiving Fee or
Expense
Amount

  

General Purpose
of Fee or Expense

  

Source of Funds
to Pay Fee or
Expense(3)

  

Distribution
Priority(4)

Servicing fee

   Accrues at a rate of 1.00% per annum of the pool balance of the receivables as of the first day of the collection period.    Servicer    Provide for a servicer as required       Bullet point 5; provided that if JDCC or an affiliate is not the servicer, the servicing fee will be paid prior to any other application of funds in the collection account

Administration fee

   $100 per month.    Administrator    Provide for trust administrator       Bullet point 1

Servicer’s liquidation expenses

   These expenses will fluctuate from time to time depending on the related expenses actually incurred and noteholders will not be notified of (or asked to approve) the increase or decrease in each expense from time to time, other than to the extent such information is disclosed in the monthly report.    Servicer    To cover expenses incurred by the servicer in the process of converting financed equipment into cash proceeds    From amounts received with respect to liquidated receivables    Out of collections prior to deposit into collection account

Owner trustee fees and expenses

   Owner trustee fee: $2,500 per annum.(5) Owner trustee expenses: these expenses will fluctuate from time to time depending on the related expenses actually incurred, and noteholders will not be notified of (or asked to approve) the increase or decrease in each expense from time to time, other than to the extent such information is disclosed in the monthly report.    Owner trustee    To cover expenses of trustee    The depositor is obligated to pay these amounts    Bullet point 7 (to the extent not paid by the servicer)

Indenture trustee fees and expenses

   Indenture trustee fee: $6,000 per annum.(6) Indenture trustee expenses: these expenses will fluctuate from time to time depending on the related expenses actually incurred, and noteholders will not be notified of (or asked to approve) the increase or decrease in each expense from time to time, other than to the extent such information is disclosed in the monthly report.    Indenture trustee    To cover expenses of indenture trustee    The trust will, or will cause the servicer to, pay these amounts    Bullet point 6 (to the extent not paid by the servicer)

 

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(1)

The amount, priority and other terms of these fees and expenses may be changed by amendment to the related transaction agreements, as described in “Description of the Transfer and Servicing Agreements—Amendments” and “Description of the Notes—The Indenture” in the accompanying prospectus.

(2)

Unless otherwise provided in this chart, payments will be made with respect to these fees and expenses as provided under “Description of the Transfer and Servicing Agreements—Distributions”; provided however, that the owner trustee fee and indenture trustee fees and expenses will be paid to the owner trustee as agreed with the depositor, in the case of the owner trustee fee, or with the trust or the servicer, in the case of the indenture trustee fee.

(3)

If different from other fees or expenses that are to be paid from the pre-event of default waterfall under “Description of the Transfer and Servicing Agreements—Distributions” or if such fees or expenses are to be paid from a specified portion of cash flows.

(4)

The distribution priority in this table is for distributions prior to an event of default and the references are to bullet points in the waterfall of payments and deposits prior to each payment date as set forth under “Description of the Transfer and Servicing Agreements—Distributions—Deposits to the Distribution Accounts” in this prospectus supplement.

(5)

The depositor will reimburse the owner trustee at closing for certain expenses incurred by the owner trustee in connection with the preparation of documents relating to the transaction, including certain legal fees.

(6)

The servicer will reimburse the indenture trustee at closing for certain expenses incurred by the indenture trustee in connection with the preparation of the documents relating to the transaction, including certain legal fees.

 

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Credit and Cash Flow Enhancement

Reserve Account and Certificates

The protection against losses on the receivables afforded to the noteholders will be effected both by the subordination of the certificates and by the establishment of the reserve account. The certificateholder will not receive any distributions until the payment date on which the notes have been paid in full.

The reserve account will be created with the initial deposit by the depositor on the closing date of $8,170,985 (equal to 1.25% of the initial note value), and will be augmented on each payment date, by deposit therein of the amount specified in the fourth bullet point under “—Distributions—Deposits to the Distribution Accounts” above.

The “specified reserve account balance” for the reserve account on any payment date means the lesser of (a) 1.50% of the initial note value (or $9,805,182) and (b) the outstanding principal amount of the notes immediately preceding such payment date less the note monthly principal distributable amount to be deposited in the note distribution account on such payment date. However, if

 

   

the specified reserve reduction trigger is met on the payment date in April 2010, the percentage in clause (a) will be reduced to 1.25% on such payment date and shall remain at such percentage for each payment date thereafter unless further reduced on the payment date in October 2010 as provided herein; and/or

 

   

the specified reserve reduction trigger is met on the payment date in October 2010, the percentage in clause (a) will be reduced to 1.15% on such payment date (regardless of whether the specified reserve reduction trigger was met on the payment date in April 2010) and shall remain at such percentage for each payment date thereafter.

Upon payment of all of the interest and principal due on the notes, the specified reserve account balance shall be zero. On each payment date, amounts on deposit in the reserve account will be released to the depositor to the extent that the amount on deposit in the reserve account exceeds the specified reserve account balance.

The “specified reserve reduction trigger” for the payment date in April 2010 or October 2010, will be met if the average delinquency ratio test and the cumulative net loss ratio test for such payment date are met.

The “average delinquency ratio test” for the payment date occurring in a month specified below will be met if the average delinquency ratio for such payment date is less than the percentage specified opposite such payment date:

 

Payment Date

   Percentage  

April 2010

   3.50 %

October 2010

   4.50 %

The “average delinquency ratio” on any payment date will be the average of the delinquency ratios for the preceding three collection periods. The “delinquency ratio“ for any collection period means the ratio, expressed as a percentage, of (a) the aggregate amount of all scheduled payments in respect of receivables 60 days or more delinquent (other than purchased receivables and liquidated receivables) as of the end of such collection period, determined in accordance with the servicer’s normal practices, to (b) the pool balance as of the last day of such collection period.

 

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The “cumulative net loss ratio test“ for the payment date occurring in a month specified below will be met if the cumulative net loss ratio for such payment date is less than the percentage specified opposite such payment date:

 

Payment Date

   Percentage  

April 2010

   0.55 %

October 2010

   0.65 %

The “cumulative net loss ratio” on any payment date will be the ratio, expressed as a percentage, of (a) the aggregate realized losses on the receivables since the cut-off date through the last day of the related collection period, to (b) the initial pool balance as of the cut-off date.

The “realized losses” for any collection period will be the sum of (a) for each receivable that became a liquidated receivable during such collection period, the difference between (i) and (ii) where (i) is the principal balance plus accrued and unpaid interest on such receivable less the write down amount for such receivable (if such receivable was a 180-day receivable or repossessed receivable at the time of liquidation), if any, and (ii) is the liquidation proceeds received with respect to such receivable during such collection period, (b) with respect to any receivable that became a 180-day receivable or a repossessed receivable during such collection period, the write down amount, if any, for that receivable and (c) with respect to each other 180-day receivable or repossessed receivable, the amount of the adjustment, if any, to the write down amount for such receivable for the related collection period.

The “write down amount” for any collection period for any 180-day receivable or repossessed receivable will be the excess of (a) the principal balance plus accrued and unpaid interest on such receivable as of the last day of the collection period during which the receivable became a 180-day receivable or repossessed receivable, as applicable, over (b) the estimated realizable value of the receivable, as determined by the servicer in accordance with its normal servicing procedures for the related collection period, which write down amount may be adjusted to zero by the servicer in accordance with its normal servicing procedures if the receivable has ceased to be a 180-day receivable as provided in the definition of “180-day receivable.”

The “pool balance” as of the close of business on the last day of a collection period will be the aggregate principal balance of the receivables (excluding purchased receivables and liquidated receivables) less the aggregate write down amount as of the last day of such collection period.

A “purchased receivable” means a receivable purchased by the depositor or the servicer from the trust as required or permitted by the sale and servicing agreement. See “Description of the Transfer and Servicing Agreements—Sale and Assignment of Receivables” in the prospectus.

Amounts held from time to time in the reserve account will continue to be held for the benefit of noteholders. Funds will be withdrawn from cash in the reserve account to the extent that the total distribution amount (after the payment of the administration fee and, if JDCC or an affiliate of JDCC is not the servicer, the servicing fee) with respect to any collection period is less than the amount of principal and interest payable on the notes on the related payment date and will be deposited in the note distribution account.

The specified reserve account balance may be reduced, or the definition otherwise modified, without the consent of the noteholders; provided that the rating agencies confirm in writing that such reduction or modification will not result in a reduction or withdrawal of the then current rating of any class of the notes and the owner trustee receives an opinion of counsel that confirms in writing that the reduction or modification will not change the federal income tax classification of the 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 noteholders of the full amount of principal and interest due to them and to decrease the likelihood that the 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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RELATED TRANSACTIONS

There are no business relationships, agreements, arrangements, transactions, or understanding between related transaction parties entered into outside the ordinary course of business or on terms other than would be obtained in an arm’s length transaction with an unrelated third party, other than those related to the transactions described in this prospectus supplement and the prospectus.

LEGAL PROCEEDINGS

There are no legal proceedings pending, or any proceedings known to be contemplated by governmental authorities, against JDCC, the depositor, the sub-servicer, the indenture trustee, the owner trustee or the trust, or any property thereof, that is material to the holders of notes.

FEDERAL INCOME TAX CONSIDERATIONS

The following is a summary of material United States federal income tax considerations relevant to the purchase, ownership and disposition of the notes. This summary does not purport to deal with all aspects of federal income taxation that may be relevant to holders of the 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 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 notes. The information below is directed to investors that will hold the 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 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 LLP, 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 and thus the IRS may disagree with all or a part of the discussion below.

Unless otherwise specified, the following summary deals only with the material federal income tax considerations relevant to a noteholder that is a United States person. For these purposes, a United States person is a beneficial owner of the notes that is: (i) an individual citizen or resident of the United States, (ii) a corporation (or entity treated as a corporation for United States federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia, (iii) an estate the income of which is subject to United States federal income taxation regardless of its source, or (iv) a trust with respect to which a court within the United States is able to exercise primary supervision over its administration and one or more United States persons have the authority to control all of its substantial decisions (and certain other trusts as provided by U.S. Treasury regulations).

If a partnership (including for this purpose any entity treated as a partnership for United States federal income tax purposes) is a beneficial owner of one or more of the notes, the treatment of a partner in the partnership will generally depend on the status of the partner and upon the activities of the partnership. A holder of notes that is a partnership and the partners in such partnership should consult their tax advisors.

 

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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 entity that is an 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 depositor retains the certificates and so long as the notes are respected as indebtedness, the trust will be disregarded as an entity separate from the depositor for those purposes because the depositor 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. Moreover, there are no cases or IRS rulings on similar transactions involving both debt and certificate interests issued by a trust with terms similar to those of the notes and the certificates. As a result, the IRS may disagree with all or a part of the discussion below. 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 notes unless recharacterized as equity. Any such corporate income tax could materially reduce the amount of cash available to make payments on the notes.

Tax Considerations for Noteholders

Treatment of Notes as Indebtedness. The depositor will agree, and the noteholders will agree by their purchase of the notes, to treat the notes as indebtedness for United States federal income tax purposes. Federal tax counsel will advise the trust that, based upon the terms of the notes and the documents and transactions relating thereto as described in the prospectus and this prospectus supplement, the 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 notes would be treated as debt for federal income tax purposes.

Interest Income on the Notes. Subject to the discussion below and except with respect to short-term notes (as defined below), stated interest on the notes will be taxable to a noteholder as ordinary income when received or accrued in accordance with such noteholder’s method of tax accounting. Under Treasury regulations relating to the tax treatment of debt instruments issued with original issue discount (the “OID regulations“), a note will be treated as issued with original issue discount (“OID“) if the excess of the stated redemption price at maturity of the note over the issue price of the 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 note multiplied by its weighted average maturity. Generally, the issue price of a note is the first price at which a substantial amount of the notes comprising the issue of which that 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 note is the sum of all payments provided by the 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 depositor will take the position that, except with respect to short-term notes, stated interest on the notes represents qualified stated interest and is not included in the stated redemption price at maturity of the 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 notes because of limitations on the monthly payment of interest as a result of insufficient funds is remote.

 

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It is expected that, except as described below, the notes will not be issued with OID if, as anticipated, the 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 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 note.

If one or more of the classes of notes are issued with OID in excess of a de minimis amount, a holder of such a note (including a cash basis holder) generally would be required to include the OID on the 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 note that has a fixed maturity date of not more than one year from the issue date of such 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 note with a fixed maturity date of more than one year from its issue date at a market discount (generally, at a cost less than its remaining principal amount or remaining stated redemption price at maturity) that exceeds a statutorily defined de minimis amount will be subject to the “market discount” rules of the Code. These rules provide, in part, that gain on the sale or other disposition of a debt instrument with a term of more than one year and partial principal payments on such a debt instrument are treated as ordinary income to the extent of accrued market discount not previously included in income. The market discount rules also provide for deferral of interest deductions with respect to debt incurred to purchase or carry a note that has market discount unless a holder elects to include market discount in its income currently. A holder who purchases a note at a premium (generally, at a cost in excess of its remaining principal or remaining stated redemption price at maturity) may elect to amortize such premium as an offset to interest income under the premium amortization rules of the Code.

Sale or Other Disposition. If a noteholder sells a 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 note. The adjusted tax basis of a note to a particular noteholder will equal the holder’s cost for the note, increased by any market discount or original issue discount previously included by such noteholder in income with respect to the note and decreased by the amount of bond premium (if any) previously amortized and by the amount of principal payments previously received by such noteholder with respect to such note. Any such gain or loss will be capital gain or loss if the note was held as a capital asset, except for gain attributable to accrued interest or accrued market discount not previously included in income. Further, in the case of notes that are short-term notes, a portion of the gain recognized on the sale may also be treated as ordinary income if the noteholder acquired the note at a discount. Capital losses generally may be used only to offset capital gains.

Foreign Holders. If interest paid (or accrued) to a noteholder who is a nonresident alien 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 depositor or a “controlled foreign corporation” with respect to which the trust or the depositor is a “related person” within the meaning of the

 

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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 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 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 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 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 note. Additional IRS certification provisions apply in the case of partnerships and certain other intermediaries. If interest on 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 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.

If the interest, gain or income on 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 note and to certain payments of proceeds of the sale or retirement of 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 the applicable rate (generally 28%) 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 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 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.

 

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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 notes did not represent debt for federal income tax purposes, these notes might be treated as equity interests in the trust. If so treated, the trust might be treated as a publicly traded partnership taxable as a corporation with its income subject to corporate tax and other potentially adverse tax consequences (and the publicly traded partnership taxable as a corporation would not be able to reduce its taxable income by deductions for interest expense on notes recharacterized as equity). Alternatively, 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 notes as equity interests in such a partnership could have adverse tax consequences to certain holders of the notes. For example, income to certain tax-exempt entities (including pension funds) would be “unrelated business taxable income,” income to foreign holders 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 notes are not treated as debt, then the noteholders, depositor 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 LLP 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 (“IDOR“). Thus, the opinion of counsel is based upon present provisions of Iowa statutes and the regulations promulgated thereunder, all of which are subject to change (which change may be retroactive) and further interpretation by the IDOR. No ruling on any of the issues discussed below will be sought from the IDOR.

Notes

Assuming the notes will be treated as debt for federal income tax purposes, the notes will be treated as debt for Iowa income tax purposes. Accordingly, noteholders not otherwise subject to taxation in Iowa should not become subject to taxation in Iowa solely because of a holder’s ownership of notes. However, a noteholder already subject to Iowa’s individual or corporate income tax could be required to pay additional Iowa tax as a result of the noteholder’s ownership or disposition of notes.

The Trust

The activities to be undertaken by the sub-servicer in servicing and collecting the receivables will take place in Iowa. The State of Iowa imposes a state individual income tax and a corporate income tax which is imposed on corporations and other entities doing business in the State of Iowa.

If the arrangement created by the trust is disregarded or treated as a partnership (not taxable as a corporation) for federal income tax purposes, in the opinion of Lane & Waterman LLP, 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 notes in all of the state taxing jurisdictions in which they are already subject to tax. Noteholders are urged to consult their own advisors with respect to state income and franchise taxes.

THE FEDERAL AND STATE INCOME TAX DISCUSSIONS SET FORTH ABOVE ARE INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A NOTEHOLDER’S PARTICULAR TAX SITUATION. PROSPECTIVE PURCHASERS SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF

 

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THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE 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. Any person that exercises any authority or control respecting the management or disposition of the assets of a benefit plan is considered to be a fiduciary of such benefit plan. In addition, ERISA and the Code prohibit an ERISA Plan that is subject to Title I of ERISA or a “plan,” as defined in and subject to Section 4975 of the Code, including an individual retirement account (each, a “Plan“), from engaging in certain transactions with persons that are “parties in interest,” as defined in ERISA, or “disqualified persons,” as defined in the Code, with respect to the Plan, subject to certain exemptions that may be applicable. A violation of these “prohibited transaction” rules may generate excise tax and other liabilities under ERISA and the Code.

Certain employee benefit plans, such as governmental plans, certain church plans and non-United States plans, are not subject to the restrictions of ERISA, and the assets of such employee benefit plans may be invested in the notes without regard to the ERISA considerations described herein. An investment in the notes by such employee benefit plans may, however, be subject to other applicable federal, state and local laws that impose restrictions similar to those of Title I of ERISA or Section 4975 of the Code (“Similar Law“), which should be carefully considered by the fiduciary of any such employee benefit plan before investing in the notes.

Plan fiduciaries must determine whether the acquisition and holding of the notes would result in a prohibited transaction under ERISA or the Code for which no statutory, regulatory or administrative prohibited transaction exemption is available. In making this determination, Plan fiduciaries of prospective purchasers of the notes should determine whether the depositor, the underwriters, the servicer, the indenture trustee, the owner trustee or any of their respective affiliates is a party in interest or a disqualified person with respect to such Plan. In particular, an investment by any Plan for which any of these persons (i) has investment or administrative discretion with respect to the Plan’s assets, (ii) has authority or responsibility to give, or regularly gives, investment advice with respect to the Plan’s assets for a fee, or (iii) is an employer maintaining or contributing to the Plan may constitute a prohibited transaction under ERISA or the Code for which no prohibited transaction exemption is available.

The fiduciary of any Plan considering an investment in the notes should discuss with counsel whether such an investment by the Plan may give rise to a violation of the prohibited transaction provisions of ERISA and the Code.

By its purchase of any note, the purchaser thereof will be deemed to have represented and warranted either that (a) it is not a Plan, an entity whose underlying assets include the assets of any such Plan, a governmental, church or non-United States plan that is subject to any federal, state or local law that is substantially similar to the provisions of Section 406 or Section 4975 of the Code or (b) its purchase and holding of a note will not result in a prohibited transaction under Section 406 of ERISA or Section 4975 of the Code (or, in the case of a governmental, church or non-United States plan, any Similar Law) for which an exemption is not available.

EVERY PLAN, GOVERNMENTAL PLAN, CHURCH PLAN OR NON-UNITED STATES PLAN CONSIDERING THE ACQUISITION OF THE NOTES SHOULD CONSULT WITH ITS COUNSEL WITH RESPECT TO THE POTENTIAL APPLICABILITY OF ERISA, SECTION 4975 OF THE CODE OR ANY SIMILAR LAW RELEVANT TO SUCH INVESTMENT.

 

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UNDERWRITING

Under the terms and subject to the conditions set forth in an underwriting agreement dated April 7, 2008, the depositor has agreed to cause the trust to sell to the underwriters named below, severally and not jointly, for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities Inc. are acting as representatives, the following respective principal amounts of the notes:

 

Underwriters

   Principal
Amount of
Class A-1 Notes
   Principal
Amount of
Class A-2 Notes
   Principal
Amount of
Class A-3 Notes
   Principal
Amount of
Class A-4 Notes

Merrill Lynch, Pierce, Fenner & Smith Incorporated

   $ 81,100,000    $ 79,900,000    $ 62,035,000    $ 41,000,000

J.P. Morgan Securities Inc.

   $ 81,100,000    $ 79,900,000    $ 62,035,000    $ 41,000,000

Banc of America Securities LLC

   $ 8,900,000    $ 8,750,000    $ 6,800,000    $ 4,500,000

BNP Paribas Securities Corp.

   $ 8,900,000    $ 8,750,000    $ 6,800,000    $ 4,500,000

Deutsche Bank Securities Inc.

   $ 8,900,000    $ 8,750,000    $ 6,800,000    $ 4,500,000

RBC Capital Markets Corporation

   $ 8,900,000    $ 8,750,000    $ 6,800,000    $ 4,500,000
                           
   $ 197,800,000    $ 194,800,000    $ 151,270,000    $ 100,000,000
                           

The underwriting agreement provides that the underwriters, severally and not jointly, are obligated to purchase all of the 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 notes may be terminated. The underwriters propose initially to offer the class A-1 notes, the class A-2 notes, the class A-3 notes and the class A-4 notes to the public at the respective prices on the cover page of this prospectus supplement and to selling group members at that price less a concession not in excess of 0.042% per class A-1 note, 0.060% per class A-2 note, 0.090% per class A-3 note and 0.120% per class A-4 note. The underwriters and selling group members may allow a discount not in excess of 0.025% per class A-1 note, 0.036% per class A-2 note, 0.054% per class A-3 note and 0.072% per class 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 depositor estimates that its out of pocket expenses for this offering will be approximately $825,000. The underwriters have agreed with the depositor to pay certain expenses incurred in connection with the issuance and distribution of the notes.

The 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 notes. However, they are not obligated to do so and may discontinue making a secondary market for the notes at any time without notice. No assurance can be given as to how liquid the trading market for the notes will be.

The depositor and JDCC have agreed to indemnify the underwriters against certain liabilities, including 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.

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), each underwriter has represented and agreed with us that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the “Relevant Implementation Date”) it has not made and will not make an offer of notes which are the subject of the offering contemplated by the Prospectus Supplement to the public in that Relevant Member State other than:

 

  (a) to legal entities which are authorised or regulated to operate in the financial markets or, if not so authorised or regulated, whose corporate purpose is solely to invest in securities;

 

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  (b) to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000; and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts;

 

  (c) to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive) subject to obtaining the prior consent of the lead underwriter; or

 

  (d) in any other circumstances falling within Article 3(2) of the Prospectus Directive;

provided that no such offer of notes shall require us or any underwriter to publish a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an “offer of notes to the public” in relation to any notes in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the notes to be offered so as to enable an investor to decide to purchase or subscribe the notes, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

The countries comprising the “European Economic Area“ are the European Union Member States together with Iceland, Liechtenstein and Norway.

This prospectus supplement (accompanied by the prospectus) is for distribution only to persons who (i) have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the “Financial Promotion Order”), (ii) are persons falling within Article 49(2)(a) to (d) (“high net worth companies, unincorporated associations etc”) of the Financial Promotion Order, (iii) are outside the United Kingdom, or (iv) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (the “FSMA“)) in connection with the issue or sale of any notes may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as “relevant persons”). This prospectus supplement (accompanied by the prospectus) is directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this prospectus supplement (accompanied by the prospectus) relates is available only to relevant persons and will be engaged in only with relevant persons.

Each underwriter has represented and agreed that:

 

   

it has communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the FSMA) received by it in connection with the issue or sale of the notes in circumstances in which Section 21(1) of the FSMA does not apply to the trust; and

 

   

it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the notes in, for or otherwise involving the United Kingdom.

Until the distribution of the 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 notes. As an exception to these rules, the underwriters are permitted to engage in certain transactions that stabilize the price of the notes. Such transactions consist of bids or purchases for the purpose of pegging, fixing or maintaining the price of the notes.

The underwriters may create a short position in the notes by selling more notes than are set forth on the cover page of this prospectus supplement. The underwriters may reduce that short position by purchasing the notes in the open market.

 

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In general, purchases of a note for the purpose of stabilization or to reduce a short position could cause the price of the note to be higher than it might be in the absence of such purchases.

Neither the depositor nor any of the underwriters makes any representation or prediction as to the direction or magnitude of any effect that the transactions described above may have on the prices of the notes. In addition, neither the depositor nor any of the underwriters makes any representation that the underwriters will engage in such transactions or that such transactions, once commenced, will not be discontinued without notice.

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. Affiliates of each of the underwriters are parties to a long-term credit agreement which is available to the servicer and its affiliates. The credit agreement is available for any purpose, but is used primarily to support commercial paper issued by the servicer and its affiliates. In addition, affiliates of certain of the underwriters have extended the servicer and its affiliates unsecured lines of credit which may be drawn upon in the ordinary course of business. Aulana L. Peters, a director of Deere & Company, is also a director of Merrill Lynch & Co., Inc., which is an affiliate of Merrill Lynch, Pierce, Fenner & Smith Incorporated. Crandall C. Bowles, a director of Deere & Company is also a director of JPMorgan Chase & Co., which is an affiliate of J.P. Morgan Securities Inc.

LEGAL OPINIONS

In addition to the legal opinions described in the prospectus, certain legal matters relating to the notes and the certificates will be passed upon for the trust, the depositor and the servicer by Shearman & Sterling LLP, New York, New York and by Richards, Layton & Finger, Wilmington, Delaware, and for the underwriters by Sidley Austin LLP, New York, New York. Also, Sidley Austin LLP from time to time renders legal services on matters other than securitization to Deere & Company, which directly or indirectly owns 100% of the voting securities of John Deere Receivables, Inc. and John Deere Capital Corporation. Certain federal income tax and other matters will be passed upon for the trust by Shearman & Sterling LLP, and certain Iowa state income tax and other matters will be passed upon for the trust by Lane & Waterman LLP, Davenport, Iowa.

 

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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

180-day receivable

   S-42

APR

   S-17

average delinquency ratio

   S-45

average delinquency ratio test

   S-45

certificate monthly principal distributable amount

   S-42

Clearstream Luxembourg

   S-37

Clearstream participants

   S-37

Code

   S-47

collection period

   S-40

CPR

   S-30

cumulative net loss ratio

   S-46

cumulative net loss ratio test

   S-46

current principal distribution amount

   S-42

cut-off date

   S-5

Deere

   S-11

delinquency ratio

   S-45

depositor

   S-5

determination date

   S-40

DTC participants

   S-37

ERISA

   S-52

ERISA Plan

   S-52

Euroclear

   S-37

Euroclear participants

   S-37

European Economic Area

   S-54

federal tax counsel

   S-47

financed equipment

   S-12

Financial Promotion Order

   S-54

foreign person

   S-49

FSMA

   S-54

IDOR

   S-51

indenture trustee

   S-5

initial note value

   S-5

interest rate

   S-35

IRS

   S-47

JDCC

   S-5

liquidated receivable

   S-40

liquidation proceeds

   S-40

note monthly principal distributable amount

   S-41

note value

   S-42

OID

   S-48

OID regulations

   S-48

owner trustee

   S-5

payment date

   S-35

Plan

   S-52

pool balance

   S-46

principal carryover shortfall

   S-42

principal distributable amount

   S-42

Prospectus Directive

   S-54

purchased receivable

   S-46

realized losses

   S-46

Relevant Implementation Date

   S-53

Relevant Member State

   S-53

 

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repossessed receivable

   S-42

SEC

   S-4

servicer

   S-5

short-term note

   S-49

Similar Law

   S-52

specified reserve account balance

   S-45

specified reserve reduction trigger

   S-45

Terms and Conditions

   S-37

total distribution amount

   S-40

transfer and servicing agreements

   S-39

trust

   S-5

U.S. Bank

   S-38

U.S. depositary

   S-37

weighted average life

   S-30

write down amount

   S-46

 

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PROSPECTUS

 

John Deere Owner Trusts

John Deere Receivables, Inc., Depositor and Seller

John Deere Capital Corporation, Sponsor and Servicer

 

By this prospectus, we offer up to

$3,000,000,000 of Asset Backed Notes

 

 

 

The trusts:

 

   

may periodically issue asset backed notes in one or more classes; and

 

   

will own:

 

  - a portfolio of receivables consisting 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;

 

  - collections on those receivables;

 

  - security interests in the machinery securing those receivables;

 

  - funds in the accounts of the trust; and

 

  - any credit enhancement obtained for the trust.

 

The notes:

 

   

will evidence either nonrecourse debt obligations of a trust and will be paid only from the assets of that trust;

 

   

will be issued in one or more series with one or more classes;

 

   

may have one or more forms of credit enhancement; and

 

   

will be obligations of the issuing entity only and will not represent obligations of or interests in John Deere Receivables, Inc., John Deere Capital Corporation, Deere & Company or any of their affiliates.

 

 

 

You should pay special attention to the “Risk Factors” section starting on page 10 of this prospectus and in the related prospectus supplement.

 

 

 

This prospectus may be used to offer and sell any series of notes only if accompanied by the prospectus supplement for that series.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus or the related prospectus supplement. Any representation to the contrary is a criminal offense.

 

 

 

The date of this prospectus is June 12, 2006


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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, as amended (the “Exchange Act”), 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, as servicer, 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.

 

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.

 

You may read and copy materials that the issuing entity, John Deere Receivables, Inc. (“JDRI”), Deere and JDCC file with the SEC at the following SEC public reference room:

 

100 F Street NE

Washington, D.C. 20549

 

Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. SEC filings are also available to the public on the SEC’s Internet website at http://www.sec.gov.

 

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 issuing entity, 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 issuing entity 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 trusts issuing the securities offered by this prospectus, which in a particular case will be the trust identified in the related prospectus supplement.

 

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 depositor or the underwriter 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.

 

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TABLE OF CONTENTS

 

    Page

Where You Can Find More Information

  1

Summary of Terms

  3

Risk Factors

  10

The Trusts

  14

The Trust Property

  15

The Receivables Pool

  17

Pool Factors and Trading Information

  23

Use of Proceeds

  23

The Depositor, Deere, JDCC and Deere Credit Services

  23
    Page

Description of the Notes

  26

Certain Information Regarding the Securities

  33

Description of the Transfer and Servicing Agreements

  37

Certain Legal Aspects of the Receivables

  48

Certain Tax Considerations

  51

ERISA Considerations

  51

Plan of Distribution

  51

Legal Opinions

  52

Index of Terms

  53

 

 

 

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.

 

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SUMMARY OF TERMS

 

The following summary 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”. See “Certain Tax Considerations”.

 

Overview of the Transaction

 

LOGO

 

Issuing Entity

The trust to be formed for each series of securities under a trust agreement between the depositor and the owner trustee for the trust.

 

Seller and Depositor

John Deere Receivables, Inc., also referred to as JDRI.

 

Sponsor and Servicer

John Deere Capital Corporation, also referred to as JDCC.

 

Sub-servicer

The servicer will designate Deere Credit Services, Inc., a Delaware 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 notes 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”.

 

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  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.

 

  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.

 

  Optional Prepayment

 

  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.

 

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Certificates

Each trust will also issue certificates representing fractional undivided beneficial equity interests in that trust, which certificates will not be offered pursuant to this prospectus or the related prospectus supplement.

 

Trust Property

The trust property of each trust will consist of the property described below:

 

   

a pool of receivables transferred to the trust;

 

   

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 depositor under the related purchase agreement with JDCC;

 

   

interest earned on short-term investments made by the trust; and

 

   

any proceeds of the foregoing.

 

            A.    Receivables

Each trust will purchase from the depositor 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