<PAGE>
Rule No. 424(b)(1)
File No. 333-32263
PROSPECTUS
$897,395,285.54
CHASE MANHATTAN RV OWNER TRUST 1997-A
$852,500,000.00 ASSET BACKED NOTES
$ 44,895,285.54 ASSET BACKED CERTIFICATES
CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION
THE CHASE MANHATTAN BANK
SELLERS
THE CIT GROUP/SALES FINANCING, INC.
SERVICER
Chase Manhattan RV Owner Trust 1997-A (the 'TRUST' or the 'ISSUER'), created
pursuant to an Amended and Restated Trust Agreement, to be dated as of September
1, 1997, among Chase Manhattan Bank USA, National Association, a national
banking association
(continued on following page)
THE NOTES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES REPRESENT BENEFICIAL
INTERESTS IN, THE TRUST ONLY AND DO NOT REPRESENT OBLIGATIONS OF OR INTERESTS IN
CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION, THE CHASE MANHATTAN BANK, THE
CIT GROUP/SALES FINANCING, INC. OR ANY OF THEIR RESPECTIVE AFFILIATES. NONE OF
THE NOTES OR CERTIFICATES IS A DEPOSIT AND NONE OF THE NOTES OR CERTIFICATES IS
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (THE 'FDIC'). THE
RECEIVABLES ARE NOT INSURED OR GUARANTEED BY THE FDIC OR ANY OTHER GOVERNMENTAL
AGENCY.
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. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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PROSPECTIVE INVESTORS SHOULD CONSIDER, AMONG OTHER THINGS, THE INFORMATION SET
FORTH UNDER THE HEADING 'RISK FACTORS' COMMENCING ON PAGE 12 HEREIN.
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<TABLE>
<CAPTION>
AGGREGATE UNDERWRITING
PRINCIPAL INTEREST FINAL SCHEDULED PRICE TO DISCOUNT AND PROCEEDS TO
AMOUNT RATE(1) DISTRIBUTION DATE PUBLIC(2) COMMISSION SELLERS(3)
<S> <C> <C> <C> <C> <C> <C>
CLASS A-1 NOTES $ 59,500,000.00 5.598% OCTOBER 15, 1998 100.000000% 0.1350% 99.865000%
CLASS A-2 NOTES $119,000,000.00 5.852% AUGUST 15, 2000 100.000000% 0.1500% 99.850000%
CLASS A-3 NOTES $113,000,000.00 5.919% FEBRUARY 15, 2002 100.000000% 0.1750% 99.825000%
CLASS A-4 NOTES $ 73,000,000.00 6.020% DECEMBER 16, 2002 100.000000% 0.2000% 99.800000%
CLASS A-5 NOTES $132,000,000.00 6.050% NOVEMBER 15, 2004 100.000000% 0.2250% 99.775000%
CLASS A-6 NOTES $ 88,000,000.00 6.130% DECEMBER 15, 2005 100.000000% 0.2500% 99.750000%
CLASS A-7 NOTES $ 57,000,000.00 6.140% OCTOBER 16, 2006 100.000000% 0.2750% 99.725000%
CLASS A-8 NOTES $ 85,000,000.00 6.230% DECEMBER 17, 2007 99.984375% 0.3000% 99.684375%
CLASS A-9 NOTES $ 61,000,000.00 6.320% DECEMBER 15, 2008 99.984375% 0.3250% 99.659375%
CLASS A-10 NOTES $ 65,000,000.00 6.370% MARCH 15, 2010 100.000000% 0.4000% 99.600000%
CERTIFICATES $ 44,895,285.54 6.540% AUGUST 15, 2017 99.984375% 0.5000% 99.484375%
TOTAL $897,395,285.54 $897,365,458.15 $2,214,051.43 $895,151,406.72
</TABLE>
(1) Certificate Rate, in the case of the Certificates.
(2) Plus accrued interest, if any, from the Closing Date.
(3) Before deduction of expenses estimated at $852,000.
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This Prospectus may be used by Chase Securities Inc., an affiliate of each of
the Sellers and a subsidiary of The Chase Manhattan Corporation (the
'CORPORATION'), in connection with offers and sales related to market-making
transactions in the Securities. Chase Securities Inc. may act as principal or
agent in such transactions. Such sales will be made at prices related to
prevailing market prices at the time of sale.
The Securities are being offered by the Underwriters, subject to prior sale,
when, as and if issued to and accepted by the Underwriters, subject to approval
of certain legal matters by counsel for the Underwriters. The Underwriters
reserve the right to reject orders in whole or in part. It is expected that the
Notes and the Certificates will be delivered in book-entry form, on or about
September 25, 1997 (the 'CLOSING DATE') through the facilities of, in the case
of the Notes, The Depository Trust Company ('DTC'), Cedel Bank, societe anonyme
('CEDEL') or the Euroclear System ('EUROCLEAR') and, in the case of the
Certificates, DTC, in each case against payment therefor in immediately
available funds.
Underwriters of the Notes
CHASE SECURITIES INC.
BEAR, STEARNS & CO. INC.
MERRILL LYNCH & CO.
SALOMON BROTHERS INC
Underwriter of the Certificates
CHASE SECURITIES INC.
THE DATE OF THIS PROSPECTUS IS SEPTEMBER 22, 1997.
<PAGE>
(continued from preceding page)
('CHASE USA'), The Chase Manhattan Bank, a New York banking corporation
('CHASE,' and together with Chase USA, the 'SELLERS'), and Wilmington Trust
Company, as Owner Trustee ('OWNER TRUSTEE'), will issue $59,500,000 aggregate
principal amount of Class A-1 5.598% Asset Backed Notes (the 'CLASS A-1 NOTES'),
$119,000,000 aggregate principal amount of Class A-2 5.852% Asset Backed Notes
(the 'CLASS A-2 NOTES'), $113,000,000 aggregate principal amount of Class A-3
5.919% Asset Backed Notes (the 'CLASS A-3 NOTES'), $73,000,000 aggregate
principal amount of Class A-4 6.020% Asset Backed Notes (the 'CLASS A-4 NOTES'),
$132,000,000 aggregate principal amount of Class A-5 6.050% Asset Backed Notes
(the 'CLASS A-5 NOTES'), $88,000,000 aggregate principal amount of Class A-6
6.130% Asset Backed Notes (the 'CLASS A-6 NOTES'), $57,000,000 aggregate
principal amount of Class A-7 6.140% Asset Backed Notes (the 'CLASS A-7 NOTES'),
$85,000,000 aggregate principal amount of Class A-8 6.230% Asset Backed Notes
(the 'CLASS A-8 NOTES'), $61,000,000 aggregate principal amount of Class A-9
6.320% Asset Backed Notes (the 'CLASS A-9 NOTES') and $65,000,000 aggregate
principal amount of Class A-10 6.370% Asset Backed Notes (the 'CLASS A-10 NOTES'
and, together with the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class
A-4 Notes, Class A-5 Notes, Class A-6 Notes, Class A-7 Notes, Class A-8 Notes
and Class A-9 Notes, the 'NOTES') pursuant to an indenture (as amended and
supplemented from time to time, the 'INDENTURE') to be dated as of September 1,
1997, between the Trust and Norwest Bank Minnesota, National Association, as
indenture trustee (the 'INDENTURE TRUSTEE'). The Trust will also issue
$44,895,285.54 aggregate principal amount of 6.540% Asset Backed Certificates
(the 'CERTIFICATES' and, together with the Notes, the 'SECURITIES'). The assets
of the Trust will consist of a pool of retail installment sales contracts and
purchase money notes and other notes secured by new and used recreational
vehicles, certain monies received or due thereunder on and after September 1,
1997 (the 'CUTOFF DATE'), security interests in the recreational vehicles
financed thereby, amounts on deposit in the Collection Account, the Note
Distribution Account, the Certificate Distribution Account, the Paid-Ahead
Account and the Reserve Account and proceeds from claims and other rights to
payment on certain insurance policies, all as more fully described herein. The
Notes will be secured by the assets of the Trust pursuant to the Indenture.
Interest on each class of Notes will accrue at the applicable fixed per
annum interest rate specified above. Interest on the Notes will generally be
payable on the 15th day of each month (each, a 'DISTRIBUTION DATE'), commencing
October 15, 1997. Principal of the Notes will be payable on each Distribution
Date to the extent described herein, except that no principal will be paid on
any class of Notes until all the Notes with preceding class designations have
been paid in full.
The Certificates will represent fractional undivided interests in the
assets of the Trust. Interest, to the extent of the Certificate Rate, will be
generally distributed to the Certificateholders (as defined herein) on each
Distribution Date. Principal, to the extent described herein, will be
distributed to the Certificateholders on each Distribution Date commencing with
the Distribution Date on which the Notes have been paid in full. Distributions
of interest on and principal of the Certificates will be subordinated in
priority to payments due on the Notes to the extent described herein.
Each class of Notes will be payable in full on the Final Scheduled
Distribution Date with respect to such class specified above. The final
scheduled Distribution Date with respect to the Certificates will be the August
2017 Distribution Date. Investors should be aware that payment in full of a
class of Notes or the Certificates could occur earlier than such dates as
described herein. In addition, the Certificates will be subject to prepayment in
whole, but not in part, on any Distribution Date on which The CIT Group/Sales
Financing, Inc. ('CITSF'), in its capacity as servicer (in such capacity, the
'SERVICER'), exercises its option to purchase the Receivables. The Servicer may
purchase all the Receivables on any Distribution Date following the last day of
a Collection Period on which the Pool Balance (as defined herein) shall have
declined to 5% or less of the Cutoff Date Pool Balance (as defined herein).
The Securities initially will be represented by Notes and Certificates
registered in the name of Cede & Co. ('CEDE'), the nominee of DTC. The interests
of beneficial owners of the Securities will be
ii
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represented by book entries on the records of DTC and participating members
thereof (the 'PARTICIPANTS'). Definitive Notes or Definitive Certificates (each
as defined herein) will be available only under the limited circumstances
described herein.
There currently is no secondary market for the Securities and there is no
assurance that one will develop. The Underwriters expect, but are not obligated,
to make a market in the Securities, and there is no assurance that any such
market will develop or continue.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE SECURITIES,
INCLUDING OVER-ALLOTMENT TRANSACTIONS, STABILIZING TRANSACTIONS, SYNDICATE
COVERING TRANSACTIONS AND PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES,
SEE 'UNDERWRITING' HEREIN.
Upon receipt of a request by an investor, or his or her representative,
within the period during which there is a prospectus delivery obligation, the
Underwriters will transmit or cause to be transmitted promptly, without charge
and in addition to any such delivery requirements, a paper copy of this
Prospectus or this Prospectus encoded in an electronic format.
AVAILABLE INFORMATION
The Sellers have filed with the Securities and Exchange Commission (the
'COMMISSION') a Registration Statement (together with all amendments and
exhibits thereto, referred to herein as the 'REGISTRATION STATEMENT') under the
Securities Act of 1933, as amended (the 'SECURITIES ACT'), with respect to the
Securities offered pursuant to this Prospectus. For further information,
reference is made to the Registration Statement and any reports and other
documents incorporated herein by reference as described below under
'Incorporation of Certain Documents by Reference,' which may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549; and at the Commission's regional
offices at Northwestern Atrium Center, 500 West Madison Street, 14th Floor,
Chicago, Illinois 60661 and Seven World Trade Center, New York, New York 10048.
Copies of the Registration Statement may be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Chase Manhattan Bank, on behalf of the Trust, will agree
to file or cause to be filed with the Commission such periodic reports as are
required under the Securities Exchange Act of 1934, as amended (the 'EXCHANGE
ACT'), and the rules and regulations of the Commission thereunder. In addition,
the Commission maintains a public access site on the Internet through the World
Wide Web, at which site reports, information statements and other information,
including all electronic filings, regarding the Sellers may be viewed. The
Internet address of such World Wide Web site is http://www.sec.gov.
REPORTS TO SECURITYHOLDERS
Unless and until Definitive Securities (as defined herein) are issued,
unaudited monthly reports and annual reports containing information concerning
the Trust and prepared by the Servicer will be sent on behalf of the Trust only
to Cede, as the nominee of DTC and the registered holder of the Securities. See
'Certain Information Regarding the Securities--Book-Entry Registration,'
'--Definitive Securities' and '--Reports to Securityholders.' Such reports will
not constitute financial statements prepared in accordance with United States
generally accepted accounting principles or that have been examined and reported
upon by, with an opinion expressed by, an independent public or certified public
accountant. None of the Sellers or the Servicer intends to send any of its
financial reports to Securityholders or to the owners of beneficial interests in
the Securities.
iii
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed on behalf of the Trust with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, subsequent to the date of
this Prospectus and prior to the termination of the offering of the Securities,
shall be deemed to be incorporated by reference herein and to be part hereof.
Any statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document that also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Servicer will provide without charge to each person to whom a copy of
this Prospectus is delivered, on the written or oral request of any such person,
a copy of any or all of the documents incorporated herein by reference, except
the exhibits to such documents (unless such exhibits are specifically
incorporated by reference in such documents). Requests for such copies should be
directed to the Servicer, Attention: Securitization Department. Telephone
requests for such copies should be directed to the Servicer at (201) 740-5408.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain of the matters discussed under the captions 'The Receivables
Pool--Delinquencies and Net Losses' and 'Weighted Average Life of the
Securities--ABS Tables' may constitute forward-looking statements within the
meaning of Section 7A of the Securities Act, and as such may involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Receivables to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements.
iv
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SUMMARY OF TERMS
This Summary of Terms is qualified in its entirety by reference to the
detailed information appearing elsewhere herein. Certain capitalized terms used
in this Summary are defined elsewhere herein on the pages indicated in the
'Index of Terms.'
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Issuer.................................... Chase Manhattan RV Owner Trust 1997-A (the 'TRUST' or the 'ISSUER'),
a Delaware business trust created pursuant to an amended and restated
trust agreement (as amended and supplemented, the 'TRUST AGREEMENT'),
to be dated as of September 1, 1997, among the Sellers and the Owner
Trustee.
Sellers................................... Chase USA and Chase (also referred to herein together as the
'SELLERS' or the 'BANKS'). None of the Sellers or any of their
affiliates has guaranteed, insured or is otherwise obligated with
respect to the Securities. See 'Risk Factors--Limited Assets;
Subordination.'
Servicer.................................. The CIT Group/Sales Financing, Inc., a Delaware corporation ('CITSF,'
or in such capacity, the 'SERVICER'), a wholly-owned subsidiary of
The CIT Group Holdings, Inc., a Delaware corporation ('CIT'). The
Servicer will be responsible for managing, administering, servicing
and making collections on the Receivables and serving as an
administrator of the Trust. Neither CITSF nor any of its affiliates
has guaranteed, insured or is otherwise obligated with respect to the
Securities. CIT is partially owned by the Corporation, the parent of
each of the Sellers. See 'The CIT Group/Sales Financing, Inc.,
Servicer' herein.
Chase RV Finance.......................... Prior to the Servicing Transfer, Chase and Chase USA, each a
wholly-owned subsidiary of the Corporation, together with several of
their affiliates, were engaged in the recreational vehicle financing
and recreational vehicle loan servicing business. As used herein, the
term 'CHASE RV FINANCE' refers to such business of the Sellers, their
respective predecessors and their affiliates, and such term does not
include what was the recreational vehicle financing and recreational
vehicle loan servicing business of The Chase Manhattan Bank, National
Association ('CHASE N.A.') or any of its affiliates prior to the
Chase/Chemical Merger. Prior to the Servicing Transfer, the servicing
of Recreational Vehicle Loans by Chase RV Finance was performed by
Chase Financial Management Corporation ('CFMC'), an Ohio corporation
headquartered in Cleveland, Ohio and a subsidiary of Chase USA.
On June 3, 1997, the right to service or subservice the Recreational
Vehicle Loans and certain other loans then serviced by CFMC was sold
to CITSF (such transaction, the 'SERVICING TRANSFER'). CITSF began
servicing such Recreational Vehicle Loans and other loans on August
18, 1997. In connection with the Servicing Transfer, CITSF agreed to
serve as Servicer under the Sale and Servicing Agreement. Following
the Servicing Transfer, none of the Sellers and their affiliates
(other than CIT and its affiliates) is financing or
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<S> <C>
servicing Recreational Vehicle Loans. The documents effecting the
Servicing Transfer are referred to herein as the 'SERVICING TRANSFER
AGREEMENTS.'
Indenture Trustee......................... Norwest Bank Minnesota, National Association, a national banking
association, as Indenture Trustee under the Indenture. The Indenture
Trustee's Corporate Trust Office is located at Norwest Center, Sixth
Street and Marquette Avenue, Minneapolis, Minnesota 55479-0070,
telephone (612) 667-8058. The Banks, the Servicer and their
respective affiliates may have normal banking relationships with the
Indenture Trustee and its affiliates.
Owner Trustee............................. Wilmington Trust Company, a Delaware banking corporation, as trustee
under the Trust Agreement (the 'OWNER TRUSTEE'). The Owner Trustee's
Corporate Trust Office is located at Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890-0001, telephone (302)
651-1000. The Banks, the Servicer and their respective affiliates may
have normal banking relationships with the Owner Trustee and its
affiliates.
The Notes................................. Class A-1 5.598% Asset Backed Notes in the aggregate principal amount
of $59,500,000.00.
Class A-2 5.852% Asset Backed Notes in the aggregate principal amount
of $119,000,000.00.
Class A-3 5.919% Asset Backed Notes in the aggregate principal amount
of $113,000,000.00.
Class A-4 6.020% Asset Backed Notes in the aggregate principal amount
of $73,000,000.00.
Class A-5 6.050% Asset Backed Notes in the aggregate principal amount
of $132,000,000.00.
Class A-6 6.130% Asset Backed Notes in the aggregate principal amount
of $88,000,000.00.
Class A-7 6.140% Asset Backed Notes in the aggregate principal amount
of $57,000,000.00.
Class A-8 6.230% Asset Backed Notes in the aggregate principal amount
of $85,000,000.00.
Class A-9 6.320% Asset Backed Notes in the aggregate principal amount
of $61,000,000.00.
Class A-10 6.370% Asset Backed Notes in the aggregate principal
amount of $65,000,000.00.
The Notes will be issued by the Trust pursuant to an Indenture to be
dated as of September 1, 1997 (the 'INDENTURE'), between the Trust
and the Indenture Trustee. The Notes will be secured by the assets of
the Trust.
The Notes will be available for purchase in book-entry form only in
minimum denominations of $1,000 and integral multiples thereof. The
Noteholders will not be entitled to receive Definitive Notes, except
in the limited circumstances described herein. Noteholders may elect
to hold their Notes through DTC (in the United States) or Cedel or
Euroclear (in
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<S> <C>
Europe). All references herein to Noteholders shall reflect the
rights of Noteholders, as such rights may be exercised through DTC
and its Participants (including Cedel and Euroclear), except as
otherwise specified herein. See 'Description of the Notes--General'
and 'Certain Information Regarding the Securities--Book-Entry
Registration' herein.
The Certificates.......................... 6.540% Asset Backed Certificates with an initial Certificate Balance
of $44,895,285.54. The Certificates will represent fractional
undivided interests in the assets of the Trust (subject to the rights
of the Noteholders as described herein) and will be issued pursuant
to the Trust Agreement.
\
The Certificates will be available for purchase in minimum
denominations of $1,000 and integral multiples thereof. The
Certificateholders will not be entitled to receive Definitive
Certificates, except in the limited circumstances described herein.
All references herein to Certificateholders shall reflect the rights
of Certificateholders, as such rights may be exercised through DTC
and its Participants, except as otherwise specified herein. See
'Description of the Certificates--General' and 'Certain Information
Regarding the Securities--Book-Entry Registration' herein.
No beneficial interest in a Certificate may be held directly or
indirectly by a Foreign Investor. Each purchaser of Certificates and
its assignees will be deemed to represent (i) that the beneficial
owners of such Certificates are not Foreign Investors, and (ii) that
it is not a Plan and that no Plan Assets of any Plan were used to
acquire the Certificates.
The rights of Certificateholders to receive distributions with
respect to the Certificates will be subordinated to the rights of the
Noteholders to receive interest on and principal of the Notes in the
manner described herein.
The Trust................................. The Trust is a business trust created under the laws of Delaware
pursuant to the Trust Agreement. The activities of the Trust are
limited by the terms of the Trust Agreement to acquiring, owning and
managing the Receivables, issuing and making payments on the
Securities and other activities related thereto. The assets of the
Trust will include (i) the Receivables, including (A) with respect to
Simple Interest Receivables, certain monies received thereunder on or
after the Cutoff Date, and (B) with respect to Precomputed
Receivables, certain monies due thereunder on or after the Cutoff
Date, (ii) such amounts as from time to time may be held in one or
more Trust Accounts established and maintained pursuant to the Sale
and Servicing Agreement, as described herein, (iii) security
interests in the Financed Vehicles, (iv) proceeds from the exercise
of any Seller's recourse rights against Dealers, (v) proceeds from
claims and other rights to payment on certain insurance policies, and
(vi) any and all proceeds of the foregoing.
The Receivables........................... The Receivables are retail installment sales contracts and purchase
money notes and other notes secured by new and
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<S> <C>
used recreational vehicles (the 'FINANCED VEHICLES'). On the Closing
Date, the Sellers will transfer the Receivables to the Trust in
exchange for the Securities pursuant to a Sale and Servicing
Agreement to be dated as of September 1, 1997 (as amended and
supplemented from time to time, the 'SALE AND SERVICING AGREEMENT'),
among the Trust, the Sellers and the Servicer. Chase will transfer
Receivables to the Trust having an aggregate Principal Balance of
$782,259,686.73 as of the Cutoff Date, and Chase USA will transfer
Receivables to the Trust having an aggregate Principal Balance of
$115,135,598.81 as of the Cutoff Date. See 'Description of the
Transfer and Servicing Agreements' herein.
The Receivables consist of all of the Recreational Vehicle Loans
owned by the Sellers which met the criteria stated herein as of the
Cutoff Date. No Receivable has a scheduled maturity that, after
giving prospective effect to any permitted extensions or deferrals,
would be later than July 31, 2017 (the 'FINAL SCHEDULED MATURITY
DATE'). As of the Cutoff Date, the weighted average remaining
maturity of the Receivables was approximately 130.42 months and the
weighted average original maturity of the Receivables was
approximately 169.06 months.
The aggregate Principal Balance of the Receivables as of the Cutoff
Date (the 'CUTOFF DATE POOL BALANCE') was $897,395,285.54, and the
aggregate Principal Balance of the Receivables as of each of their
respective origination dates (the 'ORIGINAL POOL BALANCE') was
$1,112,869,763.05.
The 'POOL BALANCE' as of any date will equal the aggregate Principal
Balance of the Receivables as of the close of business on such date.
Terms of the Notes........................ The principal terms of the Notes are described below:
Distribution Dates. Payments of interest on and principal of the
Notes will be made on the 15th day of each month or, if any such day
is not a Business Day, on the next succeeding Business Day,
commencing October 15, 1997. Payments will be made to holders of
record of the Notes (the 'NOTEHOLDERS') as of the day immediately
preceding such Distribution Date or, if Definitive Notes are issued,
as of the last day of the preceding calendar month (each, a 'RECORD
DATE'). A 'BUSINESS DAY' is a day on which banks located in New York,
New York, Oklahoma City, Oklahoma, Wilmington, Delaware, and
Minneapolis, Minnesota are open for the purpose of conducting a
commercial banking business.
Interest Rates. Each class of Notes will bear interest at the fixed
rate per annum specified for such class on the cover page hereof. The
interest rate for each class of Notes is referred to herein as an
'INTEREST RATE.'
Interest. Interest on the outstanding principal amount of each class
of Notes will accrue at the applicable Interest Rate from and
including the Closing Date (in the case of the first
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Distribution Date) or from and including the most recent Distribution
Date on which interest has been paid to but excluding the following
Distribution Date (each, an 'INTEREST ACCRUAL PERIOD'). On each
Distribution Date, the Indenture Trustee will distribute pro rata to
the Noteholders of each class accrued interest at the applicable
Interest Rate on the outstanding principal balance generally to the
extent of the Available Amount after the Servicer has been paid the
Servicer Payment. See 'Description of the Transfer and Servicing
Agreements--Distributions' herein. Interest on the the Class A-1
Notes will be calculated on the basis of a 360-day year based on the
actual number of days elapsed during the related Interest Accrual
Period, and interest on the other classes of Notes will be calculated
on the basis of a 360-day year consisting of twelve 30-day months.
Interest on the Notes of any class for any Distribution Date due but
not paid on such Distribution Date will be due on the next
Distribution Date in addition to an amount equal to interest on such
amount at the applicable Interest Rate (to the extent lawful). See
'Description of the Notes--Payments of Interest' and 'Description of
the Transfer and Servicing Agreements-- Distributions' herein.
Principal. Principal of the Notes will be payable on each
Distribution Date in an amount equal to the Noteholders' Principal
Distributable Amount for such Distribution Date, to the extent of the
Available Amount remaining after the Servicer has been paid the
Servicer Payment, the Noteholders' Interest Distributable Amount has
been deposited into the Note Distribution Account and the
Certificateholders' Interest Distributable Amount has been deposited
into the Certificate Distribution Account. The Noteholders' Principal
Distributable Amount for a Distribution Date will equal 100% of the
Principal Distributable Amount for such Distribution Date until the
Notes have been paid in full and will be calculated by the Servicer
in the manner described under 'Description of the Transfer and
Servicing Agreements--Distributions.'
No principal payments will be made on any class of Notes until all
Notes with preceding class designations have been paid in full. For
example, no principal payments will be made on the Class A-2 Notes
until the Class A-1 Notes have been paid in full, and no principal
payments will be made on the Class A-3 Notes until the Class A-2
Notes have been paid in full.
No principal will be distributed to the Certificateholders until the
Notes have been paid in full.
The outstanding principal amount of each class of Notes, to the
extent not previously paid, will be payable on the Distribution Date
specified for such class on the cover page hereof (each, a 'NOTE
FINAL SCHEDULED DISTRIBUTION DATE') from funds available therefor as
described herein.
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Terms of the Certificates................. The principal terms of the Certificates are described below:
Distribution Dates. Distributions with respect to the Certificates
will be made on each Distribution Date, commencing October 15, 1997.
Distributions will be made to holders of record of the Certificates
(the 'CERTIFICATEHOLDERS' and, together with the Noteholders, the
'SECURITYHOLDERS') as of the related Record Date.
Certificate Rate. 6.540% per annum (the 'CERTIFICATE RATE').
Interest. Interest in respect of a Distribution Date will accrue
during the related Interest Accrual Period. On each Distribution
Date, the Owner Trustee will distribute pro rata to
Certificateholders accrued interest at the Certificate Rate on the
outstanding Certificate Balance generally to the extent of the
Available Amount remaining after the Servicer has been paid the
Servicer Payment and the Noteholders' Interest Distributable Amount
has been deposited into the Note Distribution Account. Interest will
be calculated on the basis of a 360-day year consisting of twelve
30-day months. Distributions of interest on the Certificates are
subordinated to payment of interest on the Notes. If an Event of
Default occurs and the Notes are accelerated, Certificateholders will
not be entitled to receive any distributions of interest or principal
until the Notes have been paid in full. See 'Description of the
Notes--the Indenture' herein. Interest on the Certificates for any
Distribution Date due but not paid on such Distribution Date will be
due on the next Distribution Date in addition to an amount equal to
interest on such amount at the Certificate Rate (to the extent
lawful).
Principal. No distributions of principal of the Certificates will be
made until the Notes have been paid in full. On each Distribution
Date commencing on the Distribution Date on which the Notes are paid
in full, principal of the Certificates will be payable in an amount
generally equal to the Certificateholders' Principal Distributable
Amount for such Distribution Date, to the extent of the Available
Amount remaining after the Servicer has been paid the Servicer
Payment, interest and principal have been paid in respect of the
Notes and interest has been paid in respect of the Certificates. The
Certificateholders' Principal Distributable Amount for each
Distribution Date generally will equal 100% of the Principal
Distributable Amount (after payment of any outstanding Notes in full)
and will be calculated by the Servicer in the manner described under
'Description of the Transfer and Servicing Agreements--Distributions'
herein.
The outstanding principal amount, if any, of the Certificates is
expected to be paid in full on the August 2017 Distribution Date (the
'CERTIFICATE FINAL SCHEDULED DISTRIBUTION DATE').
Optional Prepayment. After the Notes have been paid in full, the
Certificates will be prepaid on any Distribution Date on which the
Servicer exercises its option to purchase the
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Receivables, and the Certificates will be retired. Such prepayment
may occur on any Distribution Date following the last day of any
Collection Period as of which the Pool Balance declines to 5% or less
of the Cutoff Date Pool Balance. See 'Description of the
Certificates--Optional Prepayment' herein.
Limited Rights. If an Event of Default occurs under the Indenture,
except as described herein, the Certificateholders will not have any
right to direct or to consent to any remedies therefor exercisable by
the Indenture Trustee, including the sale of the Receivables, until
the Notes have been paid in full, and if an Event of Servicing
Termination occurs, the Certificateholders will not have any right to
direct or consent to removal of the Servicer or the waiver of such
Event of Servicing Termination until the Notes have been paid in
full. See 'Risk Factors--Rights of Noteholders and
Certificateholders' and 'Description of the Transfer and Servicing
Agreements--Rights Upon Event of Servicing Termination' and '--Waiver
of Past Defaults' herein.
Reserve Account........................... The Sellers will establish a reserve account (the 'RESERVE ACCOUNT')
in the name of the Indenture Trustee on behalf of the Noteholders and
the Certificateholders to be pledged by the Trust to the Indenture
Trustee as collateral for the Notes. The Reserve Account will be
funded with an initial deposit by the Sellers of cash or certain
investments having a value of $13,460,929.28 (1.5% of the Cutoff Date
Pool Balance) (the 'RESERVE ACCOUNT INITIAL DEPOSIT'). In addition,
on each Distribution Date, any remaining Available Amount with
respect to the preceding calendar month (the 'COLLECTION PERIOD' with
respect to such Distribution Date) after payment of the Servicing
Payment to the Servicer and deposits into the Note Distribution
Account and the Certificate Distribution Account have been made will
be deposited into the Reserve Account. On each Distribution Date, any
amounts on deposit in the Reserve Account in excess of the Specified
Reserve Account Balance will be distributed to the Sellers in
accordance with the Sale and Servicing Agreement.
On or prior to each Deposit Date, the Owner Trustee will withdraw
funds from the Reserve Account, to the extent of the funds therein,
to the extent (x) the amounts required to be distributed to the
Servicer, the Noteholders and the Certificateholders on the related
Distribution Date exceeds (y) the Available Amount for such
Distribution Date. Amounts so withdrawn will be deposited into the
Collection Account. If the amount in the Reserve Account is reduced
to zero and, in the case of the Noteholders, to the extent the
subordination of amounts distributable to Certificateholders is
insufficient, Noteholders and Certificateholders will bear the credit
and other risks associated with ownership of the Receivables,
including the risk that the Trust may not have a perfected security
interest in the Financed Vehicles. See 'Description of the Transfer
and Servicing Agreements--Subordination of the
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Certificates; Reserve Account' and 'Certain Legal Aspects of the
Receivables' herein.
Specified Reserve Account
Balance................................. On any Distribution Date, the specified reserve account balance (the
'SPECIFIED RESERVE ACCOUNT BALANCE') will equal 2.00% (3.00% under
certain circumstances described herein) of the Pool Balance as of the
related Settlement Date, but in no event will be less than the lesser
of (i) $8,973,952.86 (1.00% of the Cutoff Date Pool Balance) and (ii)
such Pool Balance. The Specified Reserve Account Balance with respect
to any Distribution Date may be reduced to a lesser amount as
determined by the Sellers, provided that such reduction does not
adversely affect the rating by a Rating Agency of any class of Notes
or the Certificates.
Monthly Advances.......................... With respect to each Receivable as to which there has been a Payment
Shortfall during the related Collection Period (other than a Payment
Shortfall arising from a Receivable which has been prepaid in full or
which has been subject to a Relief Act Reduction during the related
Collection Period), on each Deposit Date the Servicer will be
obligated to advance funds in the amount of such Payment Shortfall
(each, a 'MONTHLY ADVANCE'), but only to the extent that the
Servicer, in its good faith judgment, expects to recover such Monthly
Advance from subsequent payments on such Receivable made by or on
behalf of the obligor thereunder (the 'OBLIGOR') (but only to the
extent of expected interest collections in the case of a Simple
Interest Receivable) or from Net Liquidation Proceeds or insurance
proceeds with respect to such Receivable. The Servicer shall be
reimbursed for any Monthly Advance from subsequent collections with
respect to such Receivable. If the Servicer determines in its good
faith judgment that an unreimbursed Monthly Advance will not
ultimately be recoverable from subsequent collections or that the
related Receivable will be sold pursuant to the Sale and Servicing
Agreement, the Servicer shall be reimbursed for such Monthly Advance
from collections on all Receivables in accordance with the priority
of distributions described herein. In determining whether a Monthly
Advance is or will be nonrecoverable, the Servicer need not take into
account any amounts it might receive in a deficiency judgment against
an Obligor. The Servicer will not make a Monthly Advance in respect
of (i) the principal component of any scheduled payment on a Simple
Interest Receivable or (ii) a Payment Shortfall arising from a
Receivable which has been prepaid in full or which has been subject
to a Relief Act Reduction during the related Collection Period. See
'Description of the Transfer and Servicing Agreements--Monthly
Advances' herein.
'PAYMENT SHORTFALL' means (i) with respect to any Simple Interest
Receivable and any Collection Period, the excess of (A) the product
of (1) one-twelfth of the Contract Rate of such Receivable and (2)
the outstanding principal amount of such Receivable as of the related
Settlement Date (or, in the case
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of the first Collection Period, as of the Cutoff Date) over (B) the
amount of interest, if any, collected on such Receivable during the
related Collection Period and (ii) with respect to any Precomputed
Receivable and any Collection Period, the excess of (A) the scheduled
payment due on such Precomputed Receivable during the related
Collection Period over (B) the amount with respect to such payment
collected on such Receivable (including any amounts allocated from
the Paid-Ahead Account with respect to such Collection Period).
Collection Account; Priority of
Payments................................ The Servicer will be required to remit collections (including Net
Liquidation Proceeds) received with respect to the Receivables during
the related Collection Period and any other amounts constituting the
Available Amount to an account in the name of the Indenture Trustee
(the 'COLLECTION ACCOUNT') on each Deposit Date, net of any amounts
due or distributable to the Sellers and the Servicer to the extent
described in 'Description of the Transfer and Servicing
Agreement--Net Deposits' herein (except upon the occurrence of
certain conditions described in 'Description of the Transfer and
Servicing Agreement--Collections' herein). Pursuant to the Sale and
Servicing Agreement, the Servicer will have the revocable power to
instruct the Indenture Trustee or the Paying Agent to withdraw the
Available Amount on deposit in the Collection Account and to apply
such funds on each Distribution Date to the following (in the
priority indicated): (i) the Servicer Payment (if not deducted from
the Servicer's remittance as described herein), (ii) the Noteholders'
Interest Distributable Amount into the Note Distribution Account,
(iii) the Certificateholder's Interest Distributable Amount into the
Certificate Distribution Account (except as described below), (iv)
the Noteholders' Principal Distributable Amount into the Note
Distribution Account and (v) the Certificateholders' Principal
Distributable Amount into the Certificate Distribution Account.
Notwithstanding the foregoing, if an Event of Default occurs and the
maturity of the Notes is accelerated, the Certificateholders will not
be entitled to receive any distributions in respect of the
Certificates until the Notes have been paid in full.
Paid-Ahead Amounts........................ Payments by or on behalf of Obligors on Precomputed Receivables which
do not constitute scheduled payments or full prepayments ('PAID-AHEAD
AMOUNTS') will be retained by the Servicer, will not be deposited
into the Paid-Ahead Account at any time and will not be deposited
into the Collection Account until such time as the paid-ahead payment
falls due (except upon the occurrence of certain events described in
'Description of the Transfer and Servicing Agreement--Collections'
herein). As of the Cutoff Date, the Servicer held $561,500.57 of
Paid-Ahead Amounts on the
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Receivables. See 'Description of the Transfer and Servicing
Agreements--Paid-Ahead Precomputed Receivables' herein.
Servicer Payment.......................... The Servicer will be entitled to receive a servicing fee, payable on
each Distribution Date (the 'SERVICING FEE'), in an amount equal to
the sum of (i) one-twelfth of the product of 0.50% (the 'SERVICING
FEE RATE') and the Pool Balance as of the close of business on the
last day of the second preceding Collection Period (the 'SETTLEMENT
DATE') and (ii) any Administrative Fees paid by the Obligors during
the related Collection Period. The 'SERVICER PAYMENT' with respect to
any Distribution Date will be equal to the sum of the reimbursement
then due to the Servicer for outstanding Monthly Advances and the
Servicing Fee for such Distribution Date (including any unpaid
Servicing Fees for past Distribution Dates). See 'Description of the
Transfer and Servicing Agreements--Servicing Compensation' and '--Net
Deposits' herein.
Administration Agreements................. Each of CITSF and Chase, in its capacity as an administrator of the
Trust (each, an 'ADMINISTRATOR'), will enter into an agreement (each,
an 'ADMINISTRATION AGREEMENT') with the Trust and the Indenture
Trustee. Pursuant to each Administration Agreement, each
Administrator will agree to provide certain notices and to perform
certain other administrative functions required of the Trust pursuant
to the Transfer and Servicing Agreements and specified in such
Administration Agreement as being the responsibility of such
Administrator. See 'Description of the Transfer and Servicing
Agreements--Administration Agreements' herein.
Certain Federal Income Tax
Considerations.......................... Upon issuance of the Securities, Simpson Thacher & Bartlett, special
United States federal income tax counsel to the Sellers, will deliver
its opinion generally to the effect that under current law the Notes
will be characterized as debt, and the Trust will not be
characterized as an association (or a publicly traded partnership)
taxable as a corporation. Each Noteholder, by the acceptance of a
Note, will agree to treat the Notes as indebtedness, and each
Certificateholder, by the acceptance of a Certificate, will agree to
treat the Trust as a partnership in which the Certificateholders are
partners for all United States federal, state and local tax purposes.
Alternative characterizations of the Trust and the Certificates are
possible, but would not result in materially adverse tax consequences
to Certificateholders. See 'Certain Federal Income Tax Consequences'
herein.
Legal Investment.......................... The Class A-1 Notes will be eligible securities for purchase by money
market funds under paragraph (a)(9) of Rule 2a-7 under the Investment
Company Act of 1940, as amended.
ERISA Considerations...................... Subject to the considerations described herein under 'ERISA
Considerations,' the Notes are eligible for purchase with Plan Assets
of any Plan. A fiduciary or other person contemplating purchasing the
Notes on behalf of or with Plan Assets of any
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Plan should carefully review with its legal advisors whether the
purchase or holding of the Notes could give rise to a transaction
prohibited or not otherwise permissible under ERISA or Section 4975
of the Code.
The Certificates may not be acquired by or on behalf of a Plan or
with Plan Assets. By its acceptance of a Certificate, each
Certificateholder will be deemed to have represented and warranted
that it is not subject to the foregoing limitations. The restrictions
contained in the foregoing representation and warranty shall not
apply to the acquisition or holding of Certificates with assets of
the general account of an insurance company to the extent that the
acquisition or holding, respectively, of such Certificates (i) is and
will be permissible under Section 401(c) of ERISA and final
regulations thereunder or another exemption under ERISA and (ii) does
not and will not result in the contemplated operations of the Trust
being treated as non-exempt prohibited transactions. Persons
contemplating acquiring the Certificates should consult their counsel
to determine whether they are purchasing on behalf of, or with Plan
Assets of, any Plan. See 'ERISA Considerations' herein for additional
information, including special considerations for purchasers using
assets of an insurance company general account.
Ratings of the Notes...................... It is a condition to the issuance of the Securities that (i) the
Class A-1 Notes be rated in the highest short-term rating category
and (ii) the Notes of each other class be rated in the highest
long-term rating category, in each case by Moody's Investors Service,
a division of Dun & Bradstreet ('MOODY'S'), Standard & Poor's Ratings
Services, a division of the McGraw-Hill Companies ('STANDARD &
POOR'S') and Duff & Phelps Credit Rating Company ('DUFF & PHELPS,'
and together with Moody's and Standard & Poor's, the 'RATING
AGENCIES'). There can be no assurance that any rating will not be
lowered or withdrawn by the related Rating Agency if, in its
judgment, circumstances in the future so warrant. See 'Risk
Factors--Ratings of the Securities' herein.
Rating of the Certificates................ It is a condition to the issuance of the Securities that the
Certificates be rated at least in the 'A' category, or its
equivalent, by at least one Rating Agency. There can be no assurance
that any rating will not be lowered or withdrawn by the related
Rating Agency if, in its judgment, circumstances in the future so
warrant. See 'Risk Factors--Ratings of the Securities' herein.
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RISK FACTORS
Investors should consider, among other things, the following risk factors
in connection with any purchase of the Securities.
LIMITED LIQUIDITY
There is currently no secondary market for the Securities offered hereby.
The Underwriters currently intend to make a market in the Securities, but are
not under any obligation to do so. There can be no assurance that a secondary
market will develop or, if a secondary market does develop, that it will provide
the Securityholders with liquidity of investment or that it will continue for
the life of the Securities.
TRUST'S RELATIONSHIP TO THE SELLERS AND THE SERVICER
The Notes represent obligations of, and the Certificates represent
beneficial interests in, the Trust only and do not represent obligations of, or
interests in, either Seller, the Servicer or any of their respective Affiliates.
None of the Sellers or the Servicer is generally obligated to make any payments
in respect of the Securities or the Receivables. See 'Description of the
Transfer and Servicing Agreements--Sale and Assignment of Receivables' herein.
SERVICING
In connection with the Servicing Transfer, the right to service or
subservice the Receivables and all other Recreational Vehicle Loans then
serviced by CFMC was sold to CITSF. CITSF began servicing the Receivables on
August 18, 1997. The Sellers and their affiliates (other than CIT and its
affiliates) are no longer financing or servicing Recreational Vehicle Loans.
Although steps were taken and will continue to be taken to ensure an orderly and
efficient transfer of the servicing of the Receivables to CITSF, the Sellers
anticipate a temporary increase in the number of delinquent Receivables during
the first few months following such transfer.
The Sale and Servicing Agreement provides that if, at the end of any
calendar year or, in the case of 1997, the last four months of 1997, Aggregate
Losses on the Receivables exceed 0.80% of the average of the month-end principal
balances of the Receivables for each month in such calendar year or, in the case
of 1997, partial calendar year, the Servicer may be replaced at the direction of
the Sellers as described herein. There can be no assurance that the replacement
of CITSF as Servicer would not adversely affect the performance of the
Receivables or result in delays in payments on the Securities. See 'Description
of the Transfer and Servicing Agreements--Certain Matters Regarding the
Servicer' herein.
The Servicing Transfer Agreements set forth certain requirements and
restrictions with respect to CITSF's activities as Servicer, including a
restriction on CITSF's ability to make any changes to the servicing policies and
procedures applicable to the Receivables that would have a material effect on
the collectibility of the Receivables without CFMC's consent. These requirements
and restrictions could result in the Servicer's servicing the Receivables from
time to time in accordance with policies and procedures which are materially
different than those it follows with respect to its own serviced portfolio of
recreational vehicle loans at such time. There can be no assurance that such
requirements and restrictions will not adversely affect the performance of the
Receivables. See 'Description of the Transfer and Servicing
Agreements--Servicing and Insurance Procedures' herein.
LIMITED ASSETS; SUBORDINATION
The Trust will not have, nor is it permitted or expected to have, any
significant assets or sources of funds other than the Receivables and the
amounts on deposit in the Reserve Account. Noteholders and Certificateholders
generally must rely for repayment upon payments on the Receivables and, if and
to the extent available on each Distribution Date to cover shortfalls in
distributions of interest and principal on the Notes and the Certificates,
amounts on deposit in the Reserve Account. However, funds deposited in the
Reserve Account are limited in amount, and the amount required to be maintained
on deposit therein will be reduced as the Pool Balance declines. If the amount
on deposit in the Reserve Account is exhausted, and, in the case of the
Noteholders, to the extent the
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subordination of amounts distributable to Certificateholders is insufficient,
the Trust will depend solely on current distributions on the Receivables to make
payments on the Notes and the Certificates. The Securities will not be insured
or guaranteed by the Sellers, the Servicer, the Owner Trustee, the Indenture
Trustee or any affiliate thereof.
Distributions of principal of the Certificates will be subordinated in
priority of payment to payments of interest and principal due on the Notes. The
Certificateholders will not receive any distributions of interest with respect
to an Interest Accrual Period until the full amount of interest due on the Notes
with respect to such Interest Accrual Period has been deposited in the Note
Distribution Account, and if an Event of Default occurs and the Notes are
accelerated, the Certificateholders will not receive any distributions of
interest with respect to an Interest Accrual Period until the Notes are paid in
full. The Certificateholders will not receive any distributions of principal
until the Distribution Date on which the Notes are paid in full. See
'Description of the Transfer and Servicing Agreements--Distributions' herein.
RATINGS OF THE SECURITIES
It is a condition to the issuance of the Securities that (i) the Class A-1
Notes be rated in the highest short-term rating category by each Rating Agency,
(ii) the Notes of each other class be rated in the highest long-term rating
category by each Rating Agency and (iii) the Certificates be rated at least in
the 'A' category, or its equivalent, by at least one Rating Agency. A rating is
not a recommendation to purchase, hold or sell the Securities, inasmuch as such
rating does not comment as to market price or suitability for a particular
investor. The ratings of the Securities address the likelihood of the timely
payment of interest on and ultimate payment of principal of the Securities
pursuant to their terms. There can be 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 the related Rating Agency if in its judgment circumstances in the
future so warrant.
CERTAIN LEGAL ASPECTS
Security Interest in Financed Vehicles. Perfection of security interests
in the Financed Vehicles and enforcement of rights to realize upon the value of
the Financed Vehicles as collateral for the Receivables are subject to a number
of state laws, including the Uniform Commercial Code as adopted in each state
and certificate of title statutes. In connection with the sale of the
Receivables to the Trust, each Seller will assign its security interest in each
individual Financed Vehicle to the Trust. However, due to administrative burden
and expense, none of the Sellers, the Servicer or the Owner Trustee will amend
the certificates of title or UCC-1 financing statements, if any, with respect to
the Financed Vehicles to identify the Trust or the Indenture Trustee as the new
secured party. In addition, the certificates of title and the UCC-1 financing
statements with respect to the Financed Vehicles relating to those Receivables
not originated by either Seller have not been and will not be amended to reflect
any interim transfers of ownership of the security interests in such Financed
Vehicles. See 'The Receivables Pool--Chase RV Finance' herein. In a majority of
states, the assignment of a Receivable together with the related security
interest is an effective conveyance of such security interest without amendment
of any lien noted on the related certificate of title or of any UCC-1 financing
statements, and the new owner of the Receivable succeeds to the original secured
party's rights in the related Financed Vehicle as against creditors of the
Obligor. In certain states, in the absence of such amendment and delivery or
execution and filing of transfer instruments with the appropriate governmental
authorities to reflect the successive assignments of the security interest in
such Financed Vehicle, the related Seller (if not secured party of record), the
Trust and/or the Indenture Trustee may not have a perfected security interest in
such Financed Vehicle.
Each Seller will be obligated to repurchase any Receivable sold by it to
the Trust as to which such Seller has represented that the originator of such
Receivable has a first perfected security interest in the Financed Vehicle
securing such Receivable, if a breach of such representation shall materially
adversely affect the interest of the Securityholders in such Receivable and if a
breach of such representation shall not have been cured. If the Trust does not
have a perfected security interest in a Financed Vehicle, the only recourse of
the Trust with respect to third parties would be against the
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related Obligor on an unsecured basis or (if the related originator did not have
a perfected security interest in such Financed Vehicle) against the related
Seller pursuant to its repurchase obligation.
If the Trust does not have a perfected security interest in a Financed
Vehicle, its ability to realize on such Financed Vehicle in the event of a
default may be adversely affected. To the extent the security interest is
perfected, the Trust will have a prior claim over subsequent purchasers of such
Financed Vehicle and holders of subsequently perfected security interests in
such Financed Vehicle. However, under the laws of many states, certain
possessory liens for repairs and storage, as well as certain rights in favor of
federal and state governmental authorities arising from the use of a motor
vehicle in connection with illegal activities, may take priority even over a
perfected security interest. Certain federal tax liens may have priority over
the lien of a secured party. In addition, through fraud or negligence, the Trust
could lose its security interest or the priority of its security interest in a
Financed Vehicle. None of the Sellers or the Servicer will have an obligation to
repurchase a Receivable as to which any of the aforementioned occurrences result
in the Trust's losing the priority of its security interest or its security
interest in such Financed Vehicle after the date such security interest was
conveyed to the Trust (other than through fraud or negligence of a Seller or the
Servicer). See 'Certain Legal Aspects of the Receivables--Security Interests
in the Financed Vehicles' herein.
Transfer of Receivables to the Trust. Each of the Sellers intends that the
transfer of the Receivables by it to the Trust under the Sale and Servicing
Agreement constitute a sale. In the event that either Seller were to become
insolvent, the Federal Deposit Insurance Act ('FDIA'), as amended by the
Financial Institutions Reform, Recovery and Enforcement Act of 1989 ('FIRREA'),
sets forth certain powers that the FDIC may exercise if it were appointed
receiver of such Seller. To the extent that a Seller has granted a security
interest in the Receivables transferred by it to the Trust and that interest was
validly perfected before such Seller's insolvency and was not taken in
contemplation of insolvency or with the intent to hinder, delay or defraud such
Seller or its creditors, that security interest would not be subject to
avoidance by the FDIC as receiver of such Seller. Positions taken by the FDIC
staff prior to the passage of FIRREA do not suggest that the FDIC, if appointed
receiver of either Seller, would interfere with the timely transfer to the Trust
of payments collected on the Receivables. If, however, the FDIC were to assert a
contrary position, or were to require the Owner Trustee to establish its rights
to those payments by submitting to and completing the administrative claims
procedure established under the FDIA, or the conservator or receiver were to
request a stay of proceedings with respect to such Seller as provided under the
FDIA, delays in payments on the Securities and possible reductions in the amount
of those payments could occur.
GEOGRAPHIC CONCENTRATION OF RECEIVABLES
Based on the Cutoff Date Pool Balance, 28.97%, 9.29% and 6.34% of the
Receivables had Obligors (in the case of Receivables originated without the
involvement of Dealers) or were originated by Dealers (in the case of
Receivables originated with the involvement of Dealers) with mailing addresses
in California, Texas and Florida, respectively. Because of the relative lack of
geographic diversity, losses on the Receivables may be more sensitive to the
economies of such states than would be the case if there were more geographic
diversification. An economic downturn in California, Texas or Florida may have
an adverse effect on the ability of Obligors in such states to meet their
payment obligations under the Receivables.
MATURITY AND PREPAYMENT CONSIDERATIONS
The weighted average life of the Notes and the Certificates will generally
be influenced by the rate at which the principal balances of the Receivables are
paid, which payment may be in the form of scheduled amortization or prepayments.
The Receivables are prepayable by the Obligors at any time. Prepayments may also
result from Receivables becoming Liquidated Receivables. Any reinvestment risks
resulting from a faster or slower incidence of prepayment of the Receivables
will be borne entirely by the Securityholders. See also 'Description of the
Transfer and Servicing Agreements--Termination' regarding the Servicer's option
to purchase the Receivables.
In addition, the Servicer may, on a case-by-case basis, permit extensions
with respect to the Due Dates of payments on Receivables in accordance with the
Servicing Transfer Agreements and the
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Sale and Servicing Agreement. See 'Description of the Transfer and Servicing
Agreements--Servicing and Insurance Procedures' herein. Any such deferrals or
extensions may increase the weighted average life of the Securities. However,
the Servicer will not be permitted to grant any such deferral or extension if as
a result the final scheduled payment on a Receivable would fall after the Final
Scheduled Maturity Date unless the Servicer purchases the affected Receivable.
RISK OF COMMINGLING
Under the Sale and Servicing Agreement, for so long as CITSF is the
Servicer and CITSF satisfies certain requirements for making deposits less than
daily, the Servicer will not be required to deposit payments on and proceeds of
the Receivables collected during each Collection Period into the Collection
Account until the related Deposit Date and will not be required to deposit
Paid-Ahead Amounts into the Paid-Ahead Account or the Collection Account until
such time as the paid-ahead payment falls due. Pending deposit into the
Collection Account, as provided in the Servicing Transfer Agreements,
collections will be transferred by the Servicer to CFMC and held by CFMC until
the Business Day prior to the Deposit Date. The Servicer is required to make
deposits into the Collection Account on the Deposit Date regardless of whether
CFMC returns such funds to the Servicer. If the Servicer were unable to remit
such funds (if, for example, CFMC fails to return such funds to the Servicer
prior to the Deposit Date and the Servicer does not otherwise have funds
available), the Securityholders might incur a loss. The Sellers or the Servicer
may, in order to satisfy the requirements for making deposits less frequently
than daily, obtain a letter of credit or other security for the benefit of the
Trust to secure timely remittances of collections on the Receivables and payment
of the aggregate Repurchase Amount with respect to Receivables repurchased by a
Seller or purchased by the Servicer. See 'Description of the Transfer and
Servicing Agreements--Collections' herein.
INSURANCE
Each Receivable requires the Obligor to obtain fire, theft and collision
insurance or comprehensive and collision insurance with respect to the related
Financed Vehicle. Since Obligors may choose their own insurers to provide the
required coverage, the specific terms and conditions of their policies vary.
Prior to August 18, 1997, in the event an obligor under a Recreational Vehicle
Loan did not maintain the required insurance coverage with respect to the
related financed vehicle and the outstanding balance and months remaining to
maturity on such Recreational Vehicle Loan were greater than $5,000 and 15
months, respectively, CFMC purchased a collateral protection insurance policy on
behalf of such obligor. Although insurance will continue to be required pursuant
to the terms of the Receivables, none of the Sellers or CITSF as Servicer will
be obligated to purchase collateral protection insurance on behalf of any
Obligor, verify if any insurance required under a Receivable is being maintained
by any Obligor or be obligated to pursue any remedies under any Receivable or
applicable law as a result of any failure of an Obligor to maintain any such
insurance. See 'Description of Transfer and Servicing Agreements--Servicing and
Insurance Procedures' herein. As a result of this change in policy, the number
of Financed Vehicles that are not covered by collateral protection insurance may
be greater than that reflected in the historical performance of the Chase RV
Finance Portfolio. The term 'CHASE RV FINANCE PORTFOLIO' refers to the portfolio
of Recreational Vehicle Loans owned and/or serviced by Chase RV Finance prior to
the Servicing Transfer (including the Recreational Vehicle Loans sold pursuant
to prior securitizations which CFMC continued to service prior to the Servicing
Transfer).
RIGHTS OF NOTEHOLDERS AND CERTIFICATEHOLDERS
In general, the Certificateholders may direct the Owner Trustee in the
administration of the Trust. However, because the Trust will pledge the Trust
property to the Indenture Trustee to secure the payment of the Notes, including
in such pledge the rights of the Trust under the Sale and Servicing Agreement,
the Indenture Trustee and not the Certificateholders will have the power to
direct the Owner Trustee to take certain actions in connection with the
administration of the Trust property until the Notes have been paid in full and
the lien of the Indenture has been released. In addition, the Certificateholders
will not be allowed to direct the Owner Trustee to take any action that
conflicts with the provisions of the Sale and Servicing Agreement. The Indenture
will specifically prohibit the Owner
15
<PAGE>
Trustee from taking any action that would impair the Indenture Trustee's
security interest in the Trust property and will require the Owner Trustee to
obtain the consent of the Indenture Trustee or Noteholders representing not less
than a majority of the aggregate principal amount of the Notes then outstanding
before modifying, amending, supplementing, waiving or terminating any provision
of the Sale and Servicing Agreement. Therefore, except as described herein,
until the Notes have been paid in full, the ability to direct the Trust with
respect to certain actions permitted to be taken under the Sale and Servicing
Agreement rests with the Indenture Trustee and the Noteholders.
If an Event of Default under the Indenture occurs and the Notes are
accelerated, the Indenture Trustee will have the right or be required in certain
circumstances to exercise remedies as a secured party, including selling the
Receivables, to pay the principal of, and accrued interest on, the Notes. Upon
the occurrence of an Event of Default, except as described herein, the
Certificateholders will not have any right to direct or to consent to any
actions by the Indenture Trustee until the Noteholders have been paid in full.
There is no assurance that the proceeds of any sale of the Receivables would be
equal to or greater than the aggregate outstanding principal amount of the Notes
and the Certificate Balance plus, in each case, accrued interest thereon.
Because neither interest nor principal is distributed to the Certificateholders
following an Event of Default and acceleration of the Notes until the Notes have
been paid in full, the interests of the Noteholders and the Certificateholders
may conflict, and the exercise by the Indenture Trustee of its right to sell the
Receivables or exercise other remedies may cause the Certificateholders to
suffer a loss of all or part of their investment. See 'Description of the
Notes--The Indenture--Events of Default; Rights upon Event of Default' herein.
In the event that an Event of Servicing Termination occurs, the Indenture
Trustee or Noteholders evidencing not less than a majority of the aggregate
principal amount of the Notes then outstanding, as described under 'Description
of the Transfer and Servicing Agreements--Rights upon an Event of Servicing
Termination' herein, may remove the Servicer without the consent of the Owner
Trustee or any of the Certificateholders. None of the Certificateholders will
have the ability, with certain specified exceptions, to waive defaults by the
Servicer, including defaults that could materially adversely affect the
Certificateholders. See 'Description of the Transfer and Servicing
Agreements--Waiver of Past Defaults' herein.
THE TRUST
GENERAL
The Issuer, Chase Manhattan RV Owner Trust 1997-A, is a business trust
created for the transaction described herein under the laws of the State of
Delaware pursuant to a Certificate of Trust filed with the Secretary of State of
the State of Delaware on July 17, 1997 and the Trust Agreement. The activities
of the Trust are limited by the terms of the Trust Agreement to (i) acquiring,
holding and managing the Receivables and the other assets of the Trust and
proceeds thereof, (ii) issuing the Notes and the Certificates to finance such
assets, (iii) making payments on the Notes and the Certificates issued by it and
(iv) engaging in other activities that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected therewith. The
Trust will not acquire any contracts or assets other than the Trust property
described below and will not have any need for additional capital resources. As
the Trust does not have any operating history and will not engage in any
activity other than acquiring and holding the Receivables, issuing the Notes and
Certificates and making distributions thereon, there has not been included
herein any historical or pro forma financial statements or ratio of earnings to
fixed charges with respect to the Trust. Inasmuch as the Trust has no operating
history, it is not possible to predict the operating performance of the Trust
while the Notes and Certificates are outstanding. While management of each of
the Sellers believes that the loss and delinquency experience contained herein
for recent periods are representative of past performance of Recreational
Vehicle Loans in the Chase RV Finance Portfolio, there is no assurance that such
performance is indicative of the future performance of the Receivables, since
future performance may be impacted by, among other things, general economic
conditions and economic conditions in the geographical areas in which the
Obligors reside including, for example, unemployment rates, the servicing by
CITSF of the Receivables and the lack of force-placed insurance on uninsured
Financed Vehicles.
16
<PAGE>
The Certificate Balance represents the equity in the Trust. The Notes and
the Certificates will be transferred to the Sellers by the Trust in exchange for
the Receivables pursuant to the Sale and Servicing Agreement.
The Trust property will include a pool (the 'RECEIVABLES POOL') comprised
of retail installment sales contracts and purchase money notes and other notes
secured by Financed Vehicles ('RECREATIONAL VEHICLE LOANS') and, except as
described herein, (i) with respect to Simple Interest Receivables, all monies
received thereunder on and after the Cutoff Date and (ii) with respect to
Precomputed Receivables, all monies due thereunder on or after the Cutoff Date
(including any outstanding Paid-Ahead Amounts) (collectively, the
'RECEIVABLES'). The Trust property will also include: (i) such amounts as from
time to time may be held in one or more Trust Accounts established and
maintained pursuant to the Sale and Servicing Agreement, as described herein;
(ii) security interests in the Financed Vehicles; (iii) proceeds from the
exercise of the Sellers' recourse rights against Dealers (as described herein
under 'The Receivables Pools--Origination of Recreational Vehicle Loans'); and
(iv) proceeds from claims and other rights to payment on theft and physical
damage, credit life and credit disability insurance policies covering the
Financed Vehicles or the Obligors, as the case may be, to the extent that such
insurance policies relate to the Receivables. The Sale and Servicing Agreement
sets forth criteria that must be satisfied by each Receivable. See 'Description
of the Transfer and Servicing Agreements--Sale and Assignment of Receivables'
herein. Each Receivable will be identified in one of the schedules appearing as
exhibits to the Sale and Servicing Agreement. The Trust property will not
include any Administrative Fees incurred by the Obligors prior to August 18,
1997, any forced-placed insurance premiums that are not included in the
Principal Balances of the related Receivables ('EXCLUDED FORCED-PLACED INSURANCE
PREMIUMS') or any scheduled payments due on the Precomputed Receivables prior to
the Cutoff Date ('EXCLUDED PRECOMPUTED AMOUNTS').
If the protection provided to the Noteholders by the subordination of
amounts distributable on the Certificates and the protection provided to the
Securityholders by the Reserve Account is insufficient, the Trust will look only
to the Obligors on the Receivables and the proceeds from the repossession and
sale of Financed Vehicles that secure Liquidated Receivables to make payments on
the Notes and distributions on the Certificates. In such event, certain factors,
such as the Trust's not having a first priority perfected security interest in
some of the Financed Vehicles, may affect the Trust's ability to realize on the
collateral securing the Receivables, and thus may reduce the proceeds to be
distributed to Securityholders with respect to the Securities. See 'Description
of the Transfer and Servicing Agreements--Distributions,' '--Subordination of
the Certificates; Reserve Account' and 'Certain Legal Aspects of the
Receivables' herein.
The Trust's principal offices are in Delaware at the address listed below
under '--The Owner Trustee.'
CAPITALIZATION OF THE TRUST
The following table illustrates the capitalization of the Trust as of the
Cutoff Date, as if the issuance and sale of the Notes and the Certificates had
taken place on such date:
<TABLE>
<S> <C>
Notes................................................ $852,500,000.00
Certificates......................................... 44,895,285.54
---------------
Total........................................... $897,395,285.54
---------------
---------------
</TABLE>
THE OWNER TRUSTEE
Wilmington Trust Company is the Owner Trustee under the Trust Agreement.
Wilmington Trust Company is a Delaware banking corporation and its principal
offices are located at Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-0001. Each Seller, the Servicer and their respective
affiliates may maintain normal commercial banking relations with the Owner
Trustee and its affiliates.
17
<PAGE>
THE RECEIVABLES POOL
GENERAL
The Receivables held by the Trust will consist of all of the Recreational
Vehicle Loans owned by the Sellers meeting several criteria as of the Cutoff
Date, including the criteria stated below. Each Receivable:
(i) is not secured by a Financed Vehicle in repossession status;
(ii) has not been identified on the computer files of the Servicer as
relating to an Obligor who has filed for bankruptcy;
(iii) is not delinquent for 60 or more days; and
(iv) was not originated by Chase N.A. or any of its affiliates prior
to the Chase/Chemical Merger.
Approximately 93.94% of the Cutoff Date Pool Balance were Simple Interest
Receivables and approximately 6.06% of the Cutoff Date Pool Balance were
Precomputed Receivables. Approximately 68.83% of the Cutoff Date Pool Balance
related to New Financed Vehicles and approximately 31.17% of the Cutoff Date
Pool Balance related to Used Financed Vehicles. As used herein, a 'NEW FINANCED
VEHICLE' means a Financed Vehicle the model year of which was the year of
origination of the related Receivable or a later year, and a 'USED FINANCED
VEHICLE' means a Financed Vehicle the model year of which was earlier than the
year of origination of the related Receivable. There can be no assurance that
these definitions accurately identify all Financed Vehicles which were new or
used at the time the related Receivables were originated.
Approximately 28.97%, 9.29% and 6.34% of the Cutoff Date Pool Balance were
Receivables whose Obligors (in the case of Receivables originated without the
involvement of Dealers) or whose Dealers (in the case of Receivables originated
with the involvement of Dealers) had mailing addresses in the States of
California, Texas and Florida, respectively. Approximately 1.38% of the Cutoff
Date Pool Balance were Receivables delinquent between 30 and 59 days as of the
Cutoff Date.
All statistical information with respect to the Receivables set forth in
the following tables is given as of the Cutoff Date.
18
<PAGE>
COMPOSITION OF THE RECEIVABLES
<TABLE>
<CAPTION>
WEIGHTED AVERAGE AVERAGE
CONTRACT RATE CUTOFF DATE CUTOFF DATE ORIGINAL AVERAGE ORIGINAL NUMBER OF
(RANGE) POOL BALANCE PRINCIPAL BALANCE POOL BALANCE PRINCIPAL BALANCE RECEIVABLES
- ----------------------- --------------- ----------------- ----------------- ----------------- -----------
<S> <C> <C> <C> <C> <C>
9.31% $897,395,285.54 $ 31,555.09 $1,112,869,763.05 $ 39,131.82 28,439
(6.5% to 17.9%)
<CAPTION>
WEIGHTED WEIGHTED
AVERAGE AVERAGE
WEIGHTED AVERAGE ORIGINAL TERM REMAINING TERM
CONTRACT RATE (RANGE (RANGE
(RANGE) IN MONTHS) IN MONTHS)
- ----------------------- ------------- --------------
<S> <C> <C>
9.31% 169.06 130.42
(6.5% to 17.9%) (24-240) (1-236)
</TABLE>
DISTRIBUTION BY CONTRACT RATE
<TABLE>
<CAPTION>
PERCENTAGE OF AGGREGATE PERCENTAGE OF
NUMBER OF TOTAL NUMBER OF PRINCIPAL CUTOFF DATE
CONTRACT RATE RANGE RECEIVABLES RECEIVABLES BALANCE POOL BALANCE
- ----------------------------------- ----------- --------------- --------------- -------------
<S> <C> <C> <C> <C>
6.50 to 6.99%.................... 8 0.03% $ 447,481.78 0.05%
7.00 to 7.49%.................... 70 0.25 3,192,322.96 0.36
7.50 to 7.99%.................... 1,300 4.57 68,067,612.34 7.59
8.00 to 8.49%.................... 2,241 7.88 106,496,499.35 11.87
8.50 to 8.99%.................... 5,920 20.82 267,794,077.88 29.84
9.00 to 9.49%.................... 3,017 10.61 112,037,921.88 12.48
9.50 to 9.99%.................... 5,327 18.73 160,868,907.73 17.93
10.00 to 10.49%.................... 1,895 6.66 42,456,733.32 4.73
10.50 to 10.99%.................... 3,329 11.71 60,671,378.73 6.76
11.00 to 11.49%.................... 1,360 4.78 22,357,502.27 2.49
11.50 to 11.99%.................... 1,847 6.49 27,966,257.95 3.12
12.00 to 12.49%.................... 764 2.69 10,744,573.14 1.20
12.50 to 12.99%.................... 906 3.19 10,477,316.42 1.17
13.00 to 13.49%.................... 247 0.87 2,403,433.69 0.27
13.50 to 13.99%.................... 149 0.52 1,117,928.40 0.12
14.00 to 14.49%.................... 34 0.12 213,708.28 0.02
14.50 to 14.99%.................... 15 0.05 51,560.84 0.01
15.00 to 17.99%.................... 10 0.04 30,068.58 0.00
----------- --------------- --------------- -------------
Total(1)...................... 28,439 100.00% $897,395,285.54 100.00%
----------- --------------- --------------- -------------
----------- --------------- --------------- -------------
</TABLE>
- ------------------
(1) Dollar amounts and percentages may not add to the total or to 100.00%,
respectively, due to rounding.
19
<PAGE>
GEOGRAPHIC DISTRIBUTION(1)
<TABLE>
<CAPTION>
PERCENTAGE OF AGGREGATE PERCENTAGE OF
NUMBER OF TOTAL NUMBER OF PRINCIPAL CUTOFF DATE
STATE RECEIVABLES RECEIVABLES BALANCE POOL BALANCE
- --------------------------------------------- ----------- --------------- --------------- -------------
<S> <C> <C> <C> <C>
Alabama...................................... 753 2.65% $ 25,688,375.97 2.86%
Alaska....................................... 156 0.55 5,657,193.93 0.63
Arizona...................................... 1,216 4.28 41,359,690.98 4.61
Arkansas..................................... 345 1.21 10,536,753.51 1.17
California................................... 8,479 29.81 259,953,002.48 28.97
Colorado..................................... 689 2.42 22,193,686.34 2.47
Connecticut.................................. 151 0.53 4,837,491.16 0.54
Delaware..................................... 50 0.18 1,254,632.19 0.14
District of Columbia......................... 3 0.01 30,279.55 0.00
Florida...................................... 1,538 5.41 56,934,480.60 6.34
Georgia...................................... 700 2.46 22,901,206.55 2.55
Hawaii....................................... 8 0.03 323,532.61 0.04
Idaho........................................ 79 0.28 3,171,744.81 0.35
Illinois..................................... 484 1.70 16,005,537.87 1.78
Indiana...................................... 105 0.37 4,157,275.70 0.46
Iowa......................................... 292 1.03 9,429,436.46 1.05
Kansas....................................... 147 0.52 4,323,992.50 0.48
Kentucky..................................... 74 0.26 2,165,596.59 0.24
Louisiana.................................... 392 1.38 10,684,332.36 1.19
Maine........................................ 87 0.31 2,640,244.19 0.29
Maryland..................................... 331 1.16 9,476,322.49 1.06
Massachusetts................................ 460 1.62 9,375,603.92 1.04
Michigan..................................... 190 0.67 9,509,775.55 1.06
Minnesota.................................... 314 1.10 10,882,370.82 1.21
Mississippi.................................. 288 1.01 9,772,000.45 1.09
Missouri..................................... 272 0.96 7,617,233.51 0.85
Montana...................................... 66 0.23 2,770,942.46 0.31
North Carolina............................... 1,090 3.83 23,117,366.45 2.58
North Dakota................................. 15 0.05 751,044.08 0.08
Nebraska..................................... 74 0.26 2,453,041.38 0.27
Nevada....................................... 363 1.28 12,287,433.06 1.37
New Hampshire................................ 195 0.69 4,311,822.56 0.48
New Jersey................................... 649 2.28 15,722,671.26 1.75
New Mexico................................... 470 1.65 11,103,826.03 1.24
New York..................................... 969 3.41 23,086,984.70 2.57
Ohio......................................... 286 1.01 13,938,264.69 1.55
Oklahoma..................................... 264 0.93 7,848,589.18 0.87
Oregon....................................... 663 2.33 33,434,224.86 3.73
Pennsylvania................................. 720 2.53 19,492,902.63 2.17
Rhode Island................................. 87 0.31 2,451,104.55 0.27
South Carolina............................... 355 1.25 8,859,341.87 0.99
South Dakota................................. 32 0.11 1,643,951.75 0.18
Tennessee.................................... 373 1.31 13,382,652.31 1.49
Texas........................................ 2,513 8.84 83,378,387.08 9.29
Utah......................................... 135 0.47 6,389,751.83 0.71
Vermont...................................... 42 0.15 897,694.82 0.10
Virginia..................................... 534 1.88 13,693,298.68 1.53
Washington................................... 316 1.11 15,119,060.88 1.68
West Virginia................................ 200 0.70 4,470,769.95 0.50
Wisconsin.................................... 364 1.28 13,694,332.51 1.53
Wyoming...................................... 42 0.15 1,703,447.53 0.19
Other........................................ 19 0.07 510,585.35 0.06
----------- ------- --------------- -------------
Total(2)................................. 28,439 100.00% $897,395,285.54 100.00%
----------- ------- --------------- -------------
----------- ------- --------------- -------------
</TABLE>
- ------------------
(1) Based on the mailing address of the related Obligor (in the case of
Receivables originated without involvement of Dealers) or the Dealer who
originated the Receivable (in the case of Receivables originated with
involvement of Dealers).
(2) Dollar amounts and percentages may not add to the total or to 100.00,
respectively, due to rounding.
20
<PAGE>
DISTRIBUTION BY ORIGINAL TERM(1)
<TABLE>
<CAPTION>
PERCENTAGE OF AGGREGATE PERCENTAGE OF
NUMBER OF TOTAL NUMBER OF PRINCIPAL CUTOFF DATE
ORIGINAL TERM RANGE (MONTHS) RECEIVABLES RECEIVABLES BALANCE POOL BALANCE
- ------------------------------------------- ----------- --------------- --------------- -------------
<S> <C> <C> <C> <C>
13 to 24................................. 3 0.01% $ 39,590.39 0.00%
25 to 36................................. 50 0.18 277,437.99 0.03
37 to 48................................. 151 0.53 705,822.66 0.08
49 to 60................................. 702 2.47 3,963,573.60 0.44
61 to 72................................. 316 1.11 2,097,852.85 0.23
73 to 84................................. 1,111 3.91 9,148,282.39 1.02
85 to 96................................. 1,072 3.77 9,601,599.52 1.07
97 to 108................................. 246 0.87 2,568,114.30 0.29
109 to 120................................. 5,515 19.39 72,229,615.93 8.05
121 to 132................................. 82 0.29 2,328,856.36 0.26
133 to 144................................. 3,400 11.96 66,967,702.21 7.46
145 to 156................................. 115 0.40 4,130,069.13 0.46
157 to 168................................. 149 0.52 7,835,553.43 0.87
169 to 180................................. 15,490 54.47 713,028,405.02 79.46
181 to 240................................. 37 0.13 2,472,809.76 0.28
----------- --------------- --------------- -------------
Total(2).............................. 28,439 100.00% $897,395,285.54 100.00%
----------- --------------- --------------- -------------
----------- --------------- --------------- -------------
</TABLE>
- ------------------
(1) 'Original Term' with respect to any Receivable is such Receivable's original
term as of its date of origination.
(2) Dollar amounts and percentages may not add to the total or to 100.00%,
respectively, due to rounding.
DISTRIBUTION BY REMAINING TERM(1)
<TABLE>
<CAPTION>
PERCENTAGE OF AGGREGATE PERCENTAGE OF
NUMBER OF TOTAL NUMBER OF PRINCIPAL CUTOFF DATE
REMAINING TERM RANGE (MONTHS) RECEIVABLES RECEIVABLES BALANCE POOL BALANCE
- ------------------------------------------- ----------- --------------- --------------- -------------
<S> <C> <C> <C> <C>
0 to 12................................. 796 2.80% $ 1,715,703.65 0.19%
13 to 24................................. 1,092 3.84 5,553,392.15 0.62
25 to 36................................. 1,206 4.24 8,791,129.27 0.98
37 to 48................................. 1,594 5.60 14,797,254.03 1.65
49 to 60................................. 1,523 5.36 17,270,947.69 1.92
61 to 72................................. 1,979 6.96 29,882,124.88 3.33
73 to 84................................. 2,071 7.28 37,985,631.54 4.23
85 to 96................................. 1,664 5.85 36,432,874.64 4.06
97 to 108................................. 2,021 7.11 51,925,787.89 5.79
109 to 120................................. 2,210 7.77 69,089,482.09 7.70
121 to 132................................. 3,090 10.87 116,650,700.00 13.00
133 to 144................................. 3,257 11.45 144,937,513.58 16.15
145 to 156................................. 2,168 7.62 115,926,733.42 12.92
157 to 168................................. 2,511 8.83 160,776,188.46 17.92
169 to 180................................. 1,248 4.39 84,648,225.66 9.43
181 to 240................................. 9 0.03 1,011,596.59 0.11
----------- --------------- --------------- -------------
Total(2).............................. 28,439 100.00% $897,395,285.54 100.00%
----------- --------------- --------------- -------------
----------- --------------- --------------- -------------
</TABLE>
- ------------------
(1) The 'Remaining Term' with respect to any Receivable is such Receivable's
remaining term as of the Cutoff Date.
(2) Dollar amounts and percentages may not add to the total or to 100.00%,
respectively, due to rounding.
21
<PAGE>
DISTRIBUTION BY ORIGINAL PRINCIPAL BALANCE(1)
<TABLE>
<CAPTION>
PERCENTAGE OF AGGREGATE PERCENTAGE OF
ORIGINAL RECEIVABLE PRINCIPAL NUMBER OF TOTAL NUMBER OF PRINCIPAL CUTOFF DATE
BALANCE RANGE (MONTHS) RECEIVABLES RECEIVABLES BALANCE POOL BALANCE
- ------------------------------------------- ----------- --------------- --------------- -------------
<S> <C> <C> <C> <C>
$ 1 to less than $ 10,000............ 1,343 4.72% $ 5,100,459.54 0.57%
$ 10,000 to less than $ 20,000............. 5,937 20.88 52,161,956.57 5.81
$ 20,000 to less than $ 30,000............. 5,055 17.77 91,085,959.86 10.15
$ 30,000 to less than $ 40,000............. 6,043 21.25 163,321,577.86 18.20
$ 40,000 to less than $ 50,000............. 4,162 14.63 150,261,521.36 16.74
$ 50,000 to less than $ 60,000............. 2,415 8.49 110,793,835.92 12.35
$ 60,000 to less than $ 70,000............. 1,103 3.88 61,357,361.39 6.84
$ 70,000 to less than $ 80,000............. 564 1.98 37,190,075.76 4.14
$ 80,000 to less than $ 90,000............. 296 1.04 21,960,033.88 2.45
$ 90,000 to less than $100,000............. 209 0.73 17,534,262.91 1.95
$100,000 to less than $120,000............. 436 1.53 42,366,885.99 4.72
$120,000 to less than $140,000............. 287 1.01 33,334,412.70 3.71
$140,000 to less than $160,000............. 191 0.67 25,636,089.03 2.86
$160,000 to less than $180,000............. 106 0.37 16,122,980.24 1.80
$180,000 to less than $200,000............. 84 0.30 14,103,150.70 1.57
$200,000 to less than $220,000............. 51 0.18 9,601,259.97 1.07
$220,000 to less than $240,000............. 28 0.10 5,714,829.00 0.64
$240,000 to less than $260,000............. 27 0.09 6,071,227.96 0.68
$260,000 to less than $280,000............. 20 0.07 4,838,726.60 0.54
$280,000 to less than $300,000............. 13 0.05 3,414,130.32 0.38
$300,000 to less than $340,000............. 20 0.07 5,685,005.07 0.63
$340,000 to less than $380,000............. 11 0.04 3,339,909.89 0.37
$380,000 to less than $420,000............. 13 0.05 4,726,219.79 0.53
$420,000 to less than $460,000............. 7 0.02 2,880,609.91 0.32
$460,000 to less than $500,000............. 8 0.03 3,531,136.31 0.39
$500,000 to less than $550,000............. 6 0.02 2,932,838.93 0.33
$550,000 to less than $720,000............. 4 0.01 2,328,828.08 0.26
----------- --------------- --------------- -------------
Total(2):............................. 28,439 100.00% $897,395,285.54 100.00%
----------- --------------- --------------- -------------
----------- --------------- --------------- -------------
</TABLE>
- ------------------
(1) The 'Original Principal Balance' with respect to any Receivable is its
Principal Balance as of its date of origination.
(2) Dollar amounts and percentages may not add to the total or to 100.00%,
respectively, due to rounding.
22
<PAGE>
DISTRIBUTION BY CUTOFF DATE PRINCIPAL BALANCE
<TABLE>
<CAPTION>
PERCENTAGE OF AGGREGATE PERCENTAGE OF
CUTOFF DATE PRINCIPAL NUMBER OF TOTAL NUMBER OF PRINCIPAL CUTOFF DATE
BALANCE RANGE (MONTHS) RECEIVABLES RECEIVABLES BALANCE POOL BALANCE
- ------------------------------------------- ----------- --------------- --------------- -------------
<S> <C> <C> <C> <C>
$ 1 to less than $ 10,000............ 6,030 21.20% $ 35,918,815.31 4.00%
$ 10,000 to less than $ 20,000............. 5,081 17.87 74,981,566.37 8.36
$ 20,000 to less than $ 30,000............. 5,801 20.40 145,639,257.21 16.23
$ 30,000 to less than $ 40,000............. 4,837 17.01 167,214,912.04 18.63
$ 40,000 to less than $ 50,000............. 2,744 9.65 121,761,551.53 13.57
$ 50,000 to less than $ 60,000............. 1,346 4.73 73,293,720.77 8.17
$ 60,000 to less than $ 70,000............. 706 2.48 45,522,275.55 5.07
$ 70,000 to less than $ 80,000............. 390 1.37 29,014,173.27 3.23
$ 80,000 to less than $ 90,000............. 240 0.84 20,359,202.57 2.27
$ 90,000 to less than $100,000............. 240 0.84 22,854,061.55 2.55
$100,000 to less than $120,000............. 351 1.23 38,353,783.10 4.27
$120,000 to less than $140,000............. 219 0.77 28,148,290.15 3.14
$140,000 to less than $160,000............. 144 0.51 21,393,023.84 2.38
$160,000 to less than $180,000............. 88 0.31 14,903,905.62 1.66
$180,000 to less than $200,000............. 70 0.25 13,253,759.06 1.48
$200,000 to less than $220,000............. 28 0.10 5,857,830.37 0.65
$220,000 to less than $240,000............. 32 0.11 7,359,911.49 0.82
$240,000 to less than $260,000............. 14 0.05 3,469,547.15 0.39
$260,000 to less than $280,000............. 13 0.05 3,474,292.05 0.39
$280,000 to less than $300,000............. 13 0.05 3,748,191.56 0.42
$300,000 to less than $350,000............. 17 0.06 5,428,593.48 0.60
$350,000 to less than $400,000............. 11 0.04 4,144,243.21 0.46
$400,000 to less than $450,000............. 11 0.04 4,655,740.98 0.52
$450,000 to less than $500,000............. 8 0.03 3,802,357.19 0.42
$500,000 to less than $700,000............. 5 0.02 2,842,280.12 0.32
----------- --------------- --------------- -------------
Total(1)................................... 28,439 100.00% $897,395,285.54 100.00%
----------- --------------- --------------- -------------
----------- --------------- --------------- -------------
</TABLE>
- ------------------------
(1) Dollar amounts and percentages may not add to the total or to 100.00%,
respectively, due to rounding.
DISTRIBUTION BY AGE
<TABLE>
<CAPTION>
PERCENTAGE OF AGGREGATE PERCENTAGE OF
NUMBER OF TOTAL NUMBER OF PRINCIPAL CUTOFF DATE
MONTHS SINCE ORIGINATION RECEIVABLES RECEIVABLES BALANCE POOL BALANCE
- ------------------------------------------- ----------- --------------- --------------- -------------
<S> <C> <C> <C> <C>
0 to 12................................. 1,862 6.55% $110,593,892.72 12.32%
13 to 24................................. 3,814 13.41 192,523,190.10 21.45
25 to 36................................. 3,818 13.43 138,377,249.18 15.42
37 to 48................................. 5,831 20.50 176,615,245.43 19.68
49 to 60................................. 5,180 18.21 132,992,086.15 14.82
61 to 72................................. 3,224 11.34 69,271,518.94 7.72
73 to 84................................. 2,036 7.16 34,629,731.97 3.86
85 to 96................................. 1,090 3.83 19,147,124.16 2.13
97 to 108................................. 785 2.76 13,932,945.31 1.55
109 to 120................................. 509 1.79 7,085,243.85 0.79
121 to 132................................. 188 0.66 1,824,681.44 0.20
133 to 144................................. 102 0.36 402,376.29 0.04
----------- --------------- --------------- -------------
Total(1)................................... 28,439 100.00% $897,395,285.54 100.00%
----------- --------------- --------------- -------------
----------- --------------- --------------- -------------
</TABLE>
- ------------------------
(1) Dollar amounts and percentages may not add to the total or to 100.00%,
respectively, due to rounding.
23
<PAGE>
DISTRIBUTION BY YEAR OF ORIGINATION
<TABLE>
<CAPTION>
PERCENTAGE OF AGGREGATE PERCENTAGE OF
NUMBER OF TOTAL NUMBER OF PRINCIPAL CUTOFF DATE
ORIGINATION YEAR RECEIVABLES RECEIVABLES BALANCE POOL BALANCE
- ------------------------------------------- ----------- --------------- --------------- -------------
<S> <C> <C> <C> <C>
1985....................................... 29 0.10% $ 34,259.82 0.00%
1986....................................... 102 0.36 524,176.69 0.06
1987....................................... 224 0.79 2,307,400.62 0.26
1988....................................... 628 2.21 10,069,915.66 1.12
1989....................................... 966 3.40 17,912,839.96 2.00
1990....................................... 1,124 3.95 18,881,004.08 2.10
1991....................................... 2,063 7.25 36,724,886.67 4.09
1992....................................... 3,692 12.98 84,208,157.91 9.38
1993....................................... 5,805 20.41 152,747,850.82 17.02
1994....................................... 6,100 21.45 198,672,997.10 22.14
1995....................................... 3,174 11.16 125,126,369.96 13.94
1996....................................... 3,408 11.98 184,604,602.48 20.57
1997....................................... 1,124 3.95 65,580,823.77 7.31
----------- --------------- --------------- -------------
Total(1).............................. 28,439 100.0% $897,395,285.54 100.00%
----------- --------------- --------------- -------------
----------- --------------- --------------- -------------
</TABLE>
- ------------------
(1) Dollar amounts and percentages may not add to the total or to 100.00%,
respectively, due to rounding.
DELINQUENCIES AND NET LOSSES
The following tables set forth information with respect to delinquencies,
loan losses and recoveries for the Chase RV Finance Portfolio as of the dates
indicated and for each of the one-year periods ended December 31, 1996, 1995,
1994 and 1993 and for each of the six-month periods ended June 30, 1997 and June
30, 1996. The data presented in the following tables are for illustrative
purposes only.
Higher delinquencies since December 31, 1995 reflect in large part a
modification of CFMC's servicing system in 1995 which resulted in the
classification for the first time of Recreational Vehicle Loans as delinquent if
force-placed and other insurance premiums with respect to such loans were
unpaid. Higher net charge-offs for the six-month period ended June 30, 1997 and
the one-year period ended December 31, 1996 reflect, in addition to economic
conditions affecting consumer debt generally, a combination of regular aging of
the Chase RV Finance Portfolio as a whole (as Recreational Vehicle Loans
originated in 1991 and 1992 (13.48% of the Cutoff Date Pool Balance consisted of
Receivables originated in 1991 and 1992) reached the point in their terms when
they are most likely to be charged-off) and a decline in the growth rate of the
Chase RV Finance Portfolio, and the implementation of a new policy in July 1996
of using the discounted market value of financed vehicles, rather than the
market value thereof, in calculating gross charge-offs upon repossession. These
factors magnified net charge-offs as a percent of Period End Outstanding Amount
and Average Outstanding Principal Amount for those periods.
Although steps were taken and will continue to be taken to ensure an
orderly and efficient transfer of the servicing of the Receivables to CITSF in
accordance with the Servicing Transfer, the Sellers anticipate a temporary
increase in the number of delinquent Receivables during the first few months
following such transfer.
The delinquency and loan loss data presented in the following tables
include data with respect to Recreational Vehicle Loans serviced by CFMC and for
which, if necessary, force-placed insurance had been obtained. Since CITSF will
not be obtaining force-placed insurance on the Financed Vehicles, charge-offs on
the Receivables in future periods may be greater than those experienced by the
Chase RV Finance Portfolio and reflected in the tables below.
There can be no assurance that the loss and delinquency experience of the
Receivables will be comparable to that of the Chase RV Finance Portfolio,
particularly since the performance of the
24
<PAGE>
Receivables will reflect to a large extent CITSF's loss and delinquency policies
which are different from those of Chase RV Finance. See 'The CIT Group/Sales
Financing, Inc., Servicer--CITSF's Servicing Procedures.' In addition, under
certain circumstances, CITSF may be replaced as Servicer. See 'The CIT
Group/Sales Financing, Inc., Servicer.' Accordingly, the information presented
in the tables below should not be considered as a basis for assessing the
likelihood, amount or severity of delinquency or losses on the Receivables in
the future, and no assurances can be given that the delinquency and loss
experience presented in the tables below will be indicative of such experience
of the Receivables.
25
<PAGE>
DELINQUENCY EXPERIENCE
<TABLE>
<CAPTION>
AS OF JUNE 30, AS OF DECEMBER 31,
----------------------------------------------- -------------------------------------------------
1997 1996 1996 1995
----------------------------------------------- -------------------------------------------------
NUMBER NUMBER NUMBER NUMBER
DOLLARS OF DOLLARS OF DOLLARS OF DOLLARS OF
(000'S) LOANS (000'S) LOANS (000'S) LOANS (000'S) LOANS
----------------------------------------------- -------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Outstanding Principal
Amount(1) $995,273,000 31,607 $1,169,362,240 38,107 $1,083,830,797 35,022 $1,166,137,723 39,869
Delinquencies ($)(2)(3)
30-59 Days $ 10,835,275 458 $ 8,474,722 372 $ 11,904,202 463 $ 11,301,829 473
60-89 Days 3,962,124 159 3,436,054 131 3,548,806 150 2,630,595 110
90 Days or More 4,028,022 153 3,876,189 121 4,403,793 178 3,116,651 127
----------------------------------------------- -------------------------------------------------
TOTAL Delinquencies $ 18,825,421 770 $ 15,786,965 624 $ 19,856,801 791 $ 17,049,075 710
Repossession Inventory (4) 3,650,381 96 4,580,430 115 4,614,120 117 4,423,004 127
----------------------------------------------- -------------------------------------------------
TOTAL Delinquencies and
Repossession Inventory $ 22,475,802 866 $ 20,367,395 739 $ 24,470,921 908 $ 21,472,079 837
----------------------------------------------- -------------------------------------------------
----------------------------------------------- -------------------------------------------------
Delinquencies (%)(2)(3)(5)
30-59 Days 1.09% 1.45% 0.72% 0.98% 1.10% 1.32% 0.97% 1.19%
60-89 Days 0.40% 0.50% 0.29% 0.34% 0.33% 0.43% 0.23% 0.28%
90 Days or More 0.40% 0.48% 0.33% 0.32% 0.41% 0.51% 0.27% 0.32%
----------------------------------------------- -------------------------------------------------
TOTAL Delinquencies (6) 1.89% 2.44% 1.35% 1.64% 1.83% 2.26% 1.46% 1.78%
Repossession Inventory (4) 0.37% 0.30% 0.39% 0.30% 0.43% 0.33% 0.38% 0.32%
----------------------------------------------- -------------------------------------------------
TOTAL Delinquencies
and Repossession
Inventory (4)(6) 2.26% 2.74% 1.74% 1.94% 2.26% 2.59% 1.84% 2.10%
----------------------------------------------- -------------------------------------------------
----------------------------------------------- -------------------------------------------------
<CAPTION>
AS OF DECEMBER 31,
--------------------------------------------------
1994 1993
--------------------------------------------------
NUMBER NUMBER
DOLLARS OF DOLLARS OF
(000'S) LOANS (000'S) LOANS
--------------------------------------------------
<S> <C> <C> <C> <C>
Outstanding Principal
Amount(1) $1,198,121,000 43,064 $1,073,005,000 N/A
Delinquencies ($)(2)(3)
30-59 Days $ 6,745,000 324 $ 6,014,000 N/A
60-89 Days 1,734,000 79 1,532,000 N/A
90 Days or More 2,694,000 99 2,563,000 N/A
--------------------------------------------------
TOTAL Delinquencies $ 11,173,000 502 $ 10,109,000 N/A
Repossession Inventory (4) 3,369,368 110 N/A N/A
--------------------------------------------------
TOTAL Delinquencies and
Repossession Inventory $ 14,542,368 612 $ 10,109,000 N/A
--------------------------------------------------
--------------------------------------------------
Delinquencies (%)(2)(3)(5)
30-59 Days 0.56% 0.75% 0.56% N/A
60-89 Days 0.14% 0.18% 0.14% N/A
90 Days or More 0.22% 0.23% 0.24% N/A
--------------------------------------------------
TOTAL Delinquencies (6) 0.93% 1.17% 0.94% N/A
Repossession Inventory (4) 0.28% 0.26% 0.00% N/A
--------------------------------------------------
TOTAL Delinquencies
and Repossession
Inventory (4)(6) 1.21% 1.42% 0.94% N/A
--------------------------------------------------
--------------------------------------------------
</TABLE>
*N/A: Data is not available.
(1) Outstanding Principal Amount is (i) the sum of all amounts scheduled to be
paid under precomputed Recreational Vehicle Loans, less the unearned finance
charges on such Recreational Vehicle Loans, plus (ii) the sum of the unpaid
principal balances on simple interest Recreational Vehicle Loans (in each
case, excluding Recreational Vehicle Loans in repossession).
(2) The period of delinquency is calculated on a 'Fed' basis, which means that
delinquencies are not reported until the month-end following 30 days after a
payment is contractually due.
(3) Delinquencies include principal amounts only.
(4) Amounts shown in repossession inventory represent the principal balances of
Recreational Vehicle Loans whose related financed vehicles have been
repossessed but have not been sold.
(5) Historically, Delinquencies as a percent of the Outstanding Principal Amount
as of year-end have been higher than those at the end of any prior quarter
during the related year principally due to year-end seasonal factors.
(6) Percentages representing components of TOTAL Delinquencies and TOTAL
Delinquencies and Repossession Inventory may not add to the totals thereof
due to rounding.
26
<PAGE>
LOAN LOSS EXPERIENCE
<TABLE>
<CAPTION>
SIX MONTHS ENDED
--------------------------------
JUNE 30, JUNE 30,
1997 1996
-------------- --------------
<S> <C> <C>
Number of Loans Outstanding (1) 31,607 38,107
Portfolio Growth Rate (2) (16.34%) 0.55%
Period End Outstanding Principal
Amount (3) $ 995,273,000 $1,169,362,240
Average Outstanding Principal
Amount (4) $1,039,988,907 $1,173,454,293
Number of Repossessions 242 251
Number of Repossessions as a % of
Period End Number of Loans
Outstanding (2) 1.53% 1.32%
Gross Charge-Offs (5) $ 5,303,825 $ 3,361,880
Gross Charge-Offs as a % of Period
End Outstanding Principal
Amount (2) 1.07% 0.57%
Gross Charge-Offs as a % of Average
Outstanding Principal Amount (2) 1.02% 0.57%
Recoveries (6) $ (524,631) $ (679,137)
Net Charge-Offs $ 4,779,194 $ 2,682,743
Net Charge-Offs as a % of Period
End Outstanding Principal Amount
(2) 0.96% 0.46%
Net Charge-Offs as a % of Average
Outstanding Principal Amount (2) 0.92% 0.46%
<CAPTION>
YEAR ENDED
----------------------------------------------------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1994 1993
----------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Number of Loans Outstanding (1) 35,022 39,869 43,064 N/A
Portfolio Growth Rate (2) (7.06%) (2.67%) 11.66% N/A
Period End Outstanding Principal
Amount (3) $ 1,083,830,797 $1,166,137,723 $1,198,121,000 $1,073,005,000
Average Outstanding Principal
Amount (4) $ 1,144,889,929 $1,182,268,169 $1,131,883,417 $1,029,450,333
Number of Repossessions 493 432 411 N/A
Number of Repossessions as a % of
Period End Number of Loans
Outstanding (2) 1.41% 1.08% 0.95% N/A
Gross Charge-Offs (5) $ 8,610,134 $ 6,582,583 $ 5,311,171 $ 6,374,846
Gross Charge-Offs as a % of Period
End Outstanding Principal
Amount (2) 0.79% 0.56% 0.44% 0.59%
Gross Charge-Offs as a % of Average
Outstanding Principal Amount (2) 0.75% 0.56% 0.47% 0.62%
Recoveries (6) $ (1,778,925) $ (627,547) $ (1,035,982) $ (882,166)
Net Charge-Offs $ 6,831,209 $ 5,955,036 $ 4,275,189 $ 5,492,680
Net Charge-Offs as a % of Period
End Outstanding Principal Amount
(2) 0.63% 0.51% 0.36% 0.51%
Net Charge-Offs as a % of Average
Outstanding Principal Amount (2) 0.60% 0.50% 0.38% 0.53%
</TABLE>
- -----------------------------------
*N/A: Data is not available.
(1) Number of loans at period end.
(2) Percentages for the six-month periods ending June 30, 1996 and June 30, 1997
are annualized.
(3) 'Outstanding Principal Amount' is (i) the sum of all amounts scheduled to be
paid under precomputed Recreational Vehicle Loans, less the unearned finance
charges on such Recreational Vehicle Loans, plus (ii) the sum of the unpaid
principal balances on simple interest Recreational Vehicle Loans (in each
case, excluding Recreational Vehicle Loans in repossession).
(4) Averages were computed by taking a simple average of month-end Outstanding
Principal Amounts for each period presented.
(5) Amount charged-off includes amounts charged to losses at the time of
repossession of the related financed vehicle or when the Recreational
Vehicle Loan is otherwise deemed to be uncollectible, plus or minus any
subsequent loss or gain recognized at the time of disposition of the related
financed vehicle. Such amounts exclude related repossession and other
liquidation expenses and amounts subsequently recovered from the obligor.
(6) Recoveries represent any deficiency amounts recovered from the obligor,
including proceeds realized in connection with accounts previously
charged-off without repossessing the related financed vehicle.
27
<PAGE>
THE FINANCED VEHICLES
The Financed Vehicles consist of motor homes, travel trailers and other
types of recreational vehicles. Motor homes are recreational camping and travel
vehicles built on or as an integral part of a self-propelled motor vehicle
chassis. A motor home may provide kitchen, sleeping, and bathroom facilities, is
equipped with the ability to store and carry fresh water and sewage, and falls
within one of the following types:
Motor Home (Class A): The living unit is entirely constructed on a
bare, specially designed motor vehicle chassis.
Van Campers (Class B): A panel-type truck to which the manufacturer
adds any two of the following conveniences: sleeping, kitchen, and toilet
facilities. The manufacturer typically also adds 110-volt hookup, fresh
water storage, city water hookup, and top extension to provide more
headroom.
Mini Motor Home or Compact Motor Home (Class C): This unit is built on
an automotive manufactured cab and chassis or van frame with an attached
cab section. The manufacturer completes the body section containing the
living area and attaches it to the cab section.
Travel trailers are trailers designed to be towed by a motorized vehicle
(automobile, van, or pickup truck) and are of such size and weight as not to
require a special highway permit. A travel trailer is designed to provide
temporary living quarters for recreational, camping, or travel use, does not
require permanent on-site hookup, and falls within one of the following types:
Conventional Travel Trailer: This unit ranges typically from 12 feet
to 35 feet in length and is towed by means of a bumper or frame hitch
attached to the towing vehicle.
Park Trailer: These are designed for seasonal or temporary living.
When set up, the unit may be connected to utilities necessary for operation
of installed fixtures and appliances. The unit is built on a single chassis
mounted on wheels. Park trailers are not more than 12 feet in overall body
width when in the traveling mode.
Fifth-Wheel Travel Trailer: This unit can be equipped the same as the
conventional travel trailer, but is constructed with a raised forward
section that allows a bi-level floor plan and is designed to be towed by a
vehicle equipped with a device known as a fifth-wheel hitch.
PAYMENTS ON RECREATIONAL VEHICLE LOANS
'SIMPLE INTEREST RECEIVABLES' provide for the allocation of payments made
thereunder to principal and interest in accordance with the 'simple interest'
method. As payments are received under a Simple Interest Receivable, the finance
charges accrued to date are paid first, the unpaid amount financed (to the
extent of the remaining monthly scheduled payment) is paid second and the
remaining payment is applied to the unpaid late charges. Accordingly, if an
Obligor pays the fixed monthly installment in advance of the date on which a
payment is due (the 'DUE DATE'), the portion of the payment allocable to finance
charges for the period since the preceding payment will be less than it would be
if the payment were made on the Due Date, and the portion of the payment
allocable to reduce the amount financed will be correspondingly greater.
Conversely, if the Obligor pays the fixed monthly installment after its Due
Date, the portion of the payment allocable to finance charges for the period
since the last payment will be greater than it would be if the payment were made
on the Due Date, and the portion of the payment allocable to reduce the amount
financed will be correspondingly smaller. When necessary, an adjustment is made
at the maturity of the loan to the scheduled final payment to reflect the larger
or smaller, as the case may be, allocations of payments to the amount financed
under a Simple Interest Receivable as a result of early or late payments, as the
case may be. See 'Weighted Average Life of the Securities--Paid-Ahead Simple
Interest Receivables.'
'PRECOMPUTED RECEIVABLES' consist of Actuarial Receivables and Rule of 78's
Receivables. 'ACTUARIAL RECEIVABLES' provide for amortization of the loan over a
series of fixed level payment monthly installments. Each monthly installment,
including the monthly installment representing the final
28
<PAGE>
payment on the Receivable, consists of an amount of interest equal to 1/12th of
the related Contract Rate multiplied by the unpaid principal balance of the
Receivable, and an amount of principal equal to the remainder of the monthly
payment. 'RULE OF 78'S RECEIVABLES' provide for the payment by the related
Obligor of a specified total amount of payments, payable in equal monthly
installments on each Due Date, which total represents the principal amount
financed and add-on interest in an amount calculated based on the Contract Rate
for the term of the Receivable. The rate at which such amount of add-on interest
is earned and, correspondingly, the amount of each fixed monthly payment
allocated to reduction of the outstanding principal are calculated in accordance
with the 'RULE OF 78'S'. Substantially all of the Precomputed Receivables are
Actuarial Receivables.
If a Simple Interest Receivable is prepaid, rather than receive a rebate,
the Obligor is required to pay interest only to the date of prepayment. If an
Actuarial Receivable is prepaid in full, with minor variations based upon state
law, the Actuarial Receivable requires that the rebate be calculated on the
basis of a constant interest rate. For purposes of making the calculations
required by the Sale and Servicing Agreement, the Servicer will calculate the
amount of interest paid on a Rule of 78's Receivable in the same manner that it
calculates such amounts on Actuarial Receivables.
CHASE RV FINANCE
Prior to the Servicing Transfer, Chase and Chase USA, together with several
of their affiliates, were engaged in the recreational vehicle financing and
recreational vehicle loan servicing business. As used herein, the term Chase RV
Finance refers to such business of the Sellers, their respective predecessors
and their affiliates. Prior to the Servicing Transfer, recreational vehicle loan
servicing by Chase RV Finance was performed by CFMC.
Recreational Vehicle Loans originated by Chase RV Finance prior to mid-1990
were originated by several affiliates of Chase Financial Acceptance Corporation,
an Ohio corporation headquartered in Cleveland, Ohio and a wholly-owned
subsidiary of Chase USA ('CFAC'), and subsequently transferred to CFAC. On April
1, 1995, those Recreational Vehicle Loans owned by CFAC which at the time were
considered 'low quality assets' under Section 23 of the Federal Reserve Act were
transferred to Chase Financial Holdings, Inc., an Ohio headquartered in
Cleveland, Ohio and an affiliate of Chase and Chase USA ('CFHI'). Prior to the
Closing Date, 4.41% of the Receivables by Cutoff Date Pool Balance were sold by
CFAC to Chase USA and 0.01% of the Receivables by Cutoff Date Pool Balance were
sold by CFHI to Chase USA (collectively, the 'CHASE FINANCIAL RECEIVABLES').
Since mid-1990, all Recreational Vehicle Loans in the form of retail
installment sales contracts purchased from Dealers ('INDIRECT RECEIVABLES') were
originated by Chase. Commencing on November 1, 1990, all Recreational Vehicle
Loans in the form of purchase money loans or other loans made directly to
obligors (including transactions involving a Dealer) ('DIRECT RECEIVABLES') were
originated by Chase USA or its predecessor.
In July 1996, Chase N.A. and Chemical Bank, both wholly-owned subsidiaries
of the Corporation, merged, with Chemical Bank, a New York banking corporation,
continuing as the surviving entity under the name 'The Chase Manhattan Bank'
(the 'CHASE/CHEMICAL MERGER'). As survivor of the Chase/Chemical Merger, Chase
succeeded to all right, title and interest in the portfolio of Recreational
Vehicle Loans owned by Chemical Bank.
In connection with the Chase/Chemical Merger, Chemical Bank, N.A. changed
its name to Chase Manhattan Bank USA, N.A. and, on December 1, 1996, merged with
Chase USA, with Chase USA continuing as the surviving entity. As survivor of
this merger, Chase USA succeeded to all right, title and interest in the
portfolio of Recreational Vehicle Loans owned by Chemical Bank, N.A.
The term 'ORIGINATOR' refers to the affiliates of CFAC who originated
Recreational Vehicle Loans prior to mid-1990, Chase, Chase USA, and their
respective predecessors.
On June 3, 1997, the right to service or subservice the Recreational
Vehicle Loans then serviced by CFMC was sold to CITSF. CITSF began servicing
such Recreational Vehicle Loans on August 18,
29
<PAGE>
1997. CITSF also agreed to service any Recreational Vehicle Loans retained or
repurchased by either of the Sellers and to serve as Servicer under the Sale and
Servicing Agreement. Following the Servicing Transfer, none of the Sellers and
their affiliates (other than CIT and its affiliates) is financing or servicing
Recreational Vehicle Loans. Pursuant to the Servicing Transfer Agreements, CITSF
and its affiliate, The CIT Group Consumer Finance, Inc. (NY) have agreed to
acquire from the Sellers all Recreational Vehicle Loans owned by the Sellers as
of the Cutoff Date which did not satisfy the criteria for inclusion in the Trust
described herein under 'The Receivables Pool--General.'
ORIGINATION OF RECREATIONAL VEHICLE LOANS
In accordance with Chase RV Finance's underwriting criteria, the
Originators purchased recreational vehicle retail installment sales contracts
relating to new and used recreational vehicles from recreational vehicle dealers
who regularly originated and sold such contracts to the Originators pursuant to
the terms of approved Dealer Agreements and made purchase money loans secured by
financed vehicles directly to obligors or pursuant to arrangements with Dealers
in accordance with approved Dealer Agreements. The dealers who arranged the
Recreational Vehicle Loans, unless otherwise specified, are collectively
referred to herein as 'DEALERS.' The agreements with the Dealers and the
assignments of the Recreational Vehicle Loans by the Dealers are collectively
referred to herein as 'DEALER AGREEMENTS.' Dealer Agreements were entered into
with Dealers based upon a financial review of each Dealer, and in some cases,
the reputation and prior experience of Chase RV Finance with such Dealer and its
key management. The Dealer network was serviced by several account executives
who initiated and managed the Dealer relationships.
Almost all of the Receivables are Indirect Receivables and Direct
Receivables originated in accordance with Chase RV Finance's underwriting
criteria. A small percentage of the Receivables were purchased by Chase from an
unaffiliated finance company pursuant to a bulk purchase and were not originated
in accordance with Chase RV Finance's underwriting criteria (the 'BULK PURCHASE
RECEIVABLES').
The Originators made or purchased the Receivables throughout the United
States. Each Dealer made representations and warranties to the Originator with
respect to those Receivables made with the involvement of such Dealer, the
Obligors on such Receivables and the security interests in the Financed Vehicles
relating thereto, which representations and warranties typically included, among
others, that (i) each Obligor was of legal age and competent to execute a
binding contract at the time of such execution; (ii) the documentation submitted
by the Dealer evidenced a bona fide loan contract actually executed by the
Obligor; (iii) the property securing the loan had not been previously titled if
described as new; (iv) the property securing the loan as described in the
security agreement either had been or promptly was delivered to the purchaser;
(v) the amount represented by the Dealer as having been received from the
Obligor as a down payment was actually received in cash or by property received
in trade and valued at no more than its actual cash value; (vi) the Dealer had
not granted an extension of credit for any portion of the down payment; (vii) no
recoupments, counterclaims, or setoffs existed on the part of the Obligor
against the Dealer; (viii) the Dealer had complied with each and every
applicable federal, state and local law and administrative regulation in
connection with the transaction; (ix) the Dealer had fully performed the terms
of any purchase agreement with the Obligor at the time the Originator funded the
loan; and (x) application had been made for a certificate of title or other
ownership documents in the name of the Obligor with the security interest of the
Originator noted as a lien thereon.
Upon breach of any representation or warranty with respect to a Receivable
made by a Dealer, the Trust will have (or its assignee) will have a right of
recourse against such Dealer to require it to purchase or repurchase such
Receivable. Historically, in determining whether to exercise any right of
recourse, Chase RV Finance considered the prior performance of the Dealer and
other business and commercial factors. The Servicer will be obligated to enforce
such rights under the Dealer Agreements relating to the Receivables in
accordance with its customary practices, and the right to any proceeds received
upon such enforcement will be conveyed to the Trust pursuant to the Sale and
Servicing Agreement. In accordance with its customary practices in determining
whether to exercise any right of
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recourse, the Servicer considers the prior performance of the related Dealer and
other business and commercial factors, including its own commercial relationship
with such Dealer. The Sellers will make no representations as to the financial
condition of any Dealer to which any Seller may have recourse, and there can be
no assurance as to the ability of any such Dealer to perform its obligations
under a Dealer Agreement.
As described herein, certain of the Receivables were originated without the
involvement of Dealers. Since there were no Dealers involved in the origination
of these Receivables, no Dealer representations and warranties were made with
respect to them.
In substantially all cases, no Direct Receivable was entered into by the
Originator, and no Indirect Receivable was purchased from a Dealer by the
Originator, until a completed customer file, including the credit application of
the customer, was submitted to the Originator and was reviewed and approved by
one of the Originator's recreational vehicle finance specialists in accordance
with Chase RV Finance's underwriting procedures.
Until October 1996, certain aspects of Dealer liaison, Dealer sales, credit
underwriting and documentation reviews with respect to the Receivables
originated with the involvement of Dealers took place at several regional
support offices ('REGIONAL CENTERS'). At August 1995, there were eight Regional
Centers. The Regional Centers were consolidated over time until November 1996,
when all of such activities were centralized at the Regional Center in Mission
Viejo, California (except for some underwriting support functions which took
place in the Regional Center in Tampa, Florida). All origination and
underwriting functions with respect to the Receivables originated without the
involvement of Dealers were performed by Chase RV Finance on a centralized basis
in Cleveland, Ohio, including the funding of the Recreational Vehicle Loans,
customer service, document file keeping, computerized account record keeping and
vehicle title processing.
UNDERWRITING OF RECREATIONAL VEHICLE LOANS
Chase RV Finance's underwriting procedures were intended to assess the
applicant's ability to repay the amounts due on the Receivable and the adequacy
of the Financed Vehicle as collateral. The application, which listed the
liabilities, income and credit and employment history of the applicant, was
reviewed by Chase RV Finance for completeness and compliance with Chase RV
Finance's guidelines. Chase RV Finance's guidelines were intended to provide a
basis for lending decisions, but were not meant to supersede the credit judgment
of the recreational vehicle finance specialist overseeing the application. As a
result, certain Receivables may not comply with all of Chase RV Finance's stated
guidelines. The discretion granted to a recreational vehicle finance specialist
varied depending on the proposed loan amount and the applicant's credit. Chase
RV Finance also reviewed a credit report issued by an independent credit
reporting agency and, where deemed necessary, substantiated information
regarding the applicant's employment. The ability of the applicant to repay the
amount financed was evaluated by applying Chase RV Finance's then current credit
underwriting criteria, which were intended to provide a general indication based
on the information available to Chase RV Finance of the relative likelihood of
repayment of such amount. Among the criteria considered in evaluating the
individual applications were (i) stability of the obligor with specific regard
to the obligor's length of residence in the area, occupation, length of
employment and whether the obligor rents or owns his or her home; (ii) the
obligor's payment history with respect to present and past debt based on
information known directly by Chase RV Finance or as provided by various credit
reporting agencies; (iii) a debt service to gross monthly income ratio test
(Chase RV Finance's general policy was to reject applications for Recreational
Vehicle Loans whose applicants' debt service to gross monthly income ratios
exceeded 45%, although ratios of up to 55% were allowed if approved at senior
levels); (iv) a loan to value ratio test taking into account the age, type and
market value of the financed vehicle; and (v) a credit bureau score. Each
application was coded with the relevant recreational vehicle finance
specialist's name, and Chase RV Finance tracked the historical performance of
the Recreational Vehicle Loans approved by each recreational vehicle finance
specialist.
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Prior to 1994 Chase RV Finance sought to make Recreational Vehicle Loans
secured by a broad spectrum of recreational vehicle products. Commencing in
1994, Chase RV Finance through its pricing policies targeted obligors purchasing
higher priced recreational vehicles (Class A). See '--The Financed Vehicles'
herein.
Each Receivable arose from a credit sale, refinancing or casual sale of a
new or used recreational vehicle. In most cases, Chase RV Finance would not
finance a Recreational Vehicle Loan relating to a new recreational vehicle if
the amount financed under the loan exceeded the sum of (a) 110% of the
manufacturer's invoice price of the financed vehicle to the Dealer (or 100% if
the amount financed was greater than $125,000), (b) the cost to the Dealer of
any options and (c) the cost to the customer of any warranties, taxes, fees and
credit life and disability insurance. In the case of new recreational vehicles,
Chase RV Finance generally required an obligor to make a down payment of at
least 10% of the total purchase price; provided, however, that a 15% down
payment was required if the amount financed was greater than 110% of
manufacturer's invoice, and a 25% down payment was required if the amount
financed was in excess of $250,000.
With respect to Recreational Vehicle Loans relating to used recreational
vehicles, while Chase RV Finance generally reviewed the sale price of a used
recreational vehicle to determine whether it was within guidelines acceptable to
Chase RV Finance, the prices of used recreational vehicles vary significantly
based upon the individual circumstances of the sale. There can be no assurance
that a ready resale market exists for any used recreational vehicle. Chase RV
Finance used various national publications, including the Kelly Blue Book and
the National Automobile Dealers Association's ('NADA') Recreational Vehicle
Appraisal Guide, to assess the value of a used recreational vehicle and to
determine whether it met Chase RV Finance's underwriting criteria. Generally,
Chase RV Finance would not finance a Recreational Vehicle Loan relating to a
used recreational vehicle unless the amount financed under the contract was
consistent with such national publications or Chase RV Finance's appraisal and,
in any case, unless such amount did not exceed the sum of (a) 85% of the
wholesale value indicated in such national publications and (b) the cost to the
customer of any taxes, fees and credit life and disability insurance. In the
case of used recreational vehicles, Chase RV Finance generally required an
obligor to make a down payment of at least 15% of the amount financed (or 25% if
the amount financed was in excess of $75,000).
In addition, whether a financed vehicle was new or used, Chase RV Finance
also financed credit life/accident/health insurance and service warranties under
a Recreational Vehicle Loan.
INSURANCE PROCEDURES
Each Receivable requires the Obligor to obtain fire, theft and collision
insurance or comprehensive and collision insurance with respect to the related
Financed Vehicle. The Dealer Agreements include a representation and warranty
that each Financed Vehicle had such insurance at the time of origination of the
Receivable. Since Obligors may choose their own insurers to provide the required
coverage, the specific terms and conditions of their policies vary. Prior to
August 18, 1997, in the event an obligor under a Recreational Vehicle Loan did
not maintain the required insurance coverage with respect to the related
financed vehicle and the outstanding balance and months remaining to maturity on
such Recreational Vehicle Loan were greater than $5,000 and 15 months,
respectively, CFMC purchased a collateral protection insurance policy on behalf
of such obligor. The Principal Balance of a small percentage of the Receivables
will include the outstanding amount of premiums for collateral protection
insurance purchased by CFMC on behalf of the related Obligors prior to the
Cutoff Date. In addition, the Obligors with respect to a small percentage of the
Receivables will be obligated to make premium payments in respect of collateral
protection insurance purchased by CFMC. Such premium payment obligations will
not be included in the Principal Balance of the related Receivables and will not
be property of the Trust. Although insurance will continue to be required
pursuant to the terms of the Receivables, none of the Sellers or CITSF as
Servicer will purchase collateral protection insurance on behalf of any Obligor,
verify if such insurance is being maintained by any Obligor or be obligated to
pursue any remedies under any Receivable or applicable
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law as a result of the failure of any Obligor to maintain insurance. See
'Description of Transfer and Servicing Agreements--Servicing and Insurance
Procedures' herein.
CHASE AND CHASE USA
Chase, a wholly-owned banking subsidiary of the Corporation, is a New York
banking corporation, a member of the Federal Reserve System and is subject to
the primary supervision of the New York State Department of Banking. Chase's
activities are primarily related to retail and commercial banking. The principal
executive office of Chase is located at 270 Park Avenue, New York, New York
10017 (telephone (212) 270-3000).
At June 30, 1997, Chase's total assets were approximately $278.7 billion,
total liabilities were approximately $261.6 billion and total stockholders'
equity was approximately $17.1 billion.
Chase USA, a wholly-owned subsidiary of the Corporation, is a national
banking association, a member of the Federal Reserve System and is subject to
the primary supervision of the Office of the Comptroller of the Currency. Chase
USA's activities are primarily related to general consumer lending. The
principal executive office of Chase USA is located at 802 Delaware Avenue,
Wilmington, Delaware 19801 (telephone (302) 575-5000).
At June 30, 1997, Chase USA's total assets were approximately $26.6
billion, total liabilities were approximately $23.8 billion and total
stockholders' equity was approximately $2.8 billion.
Neither Chase nor Chase USA is currently originating Recreational Vehicle
Loans.
THE CIT GROUP/SALES FINANCING, INC., SERVICER
GENERAL
CITSF, a Delaware corporation, is a wholly-owned subsidiary of CIT. It has
its principal executive office at 650 CIT Drive, Livingston, New Jersey 07039,
and its telephone number is (201) 740-5000.
CITSF originates, purchases, sells and services conditional sales contracts
for recreational vehicles, manufactured housing, marine products and other
consumer goods throughout the United States. CITSF has been a lender to the
recreational vehicle industry for more than 30 years. CITSF has a centralized
asset service facility (the 'ASSET SERVICE CENTER') in Oklahoma City, Oklahoma.
Working through dealers and manufacturers, CITSF currently offers retail
installment credit. In addition to purchasing recreational vehicle contracts
from dealers on an individual basis, CITSF makes bulk purchases of recreational
vehicle contracts. These bulk purchases may be from the portfolios of other
lending institutions or finance companies, the portfolios of governmental
agencies or instrumentalities or the portfolios of other entities that purchase
and hold recreational vehicle contracts.
As of June 30, 1997, CITSF serviced approximately 231,500 contracts for
itself and others (consisting primarily of recreational vehicle, home equity,
marine and manufactured housing contracts), representing an outstanding balance
of approximately $5.9 billion. Of this portfolio, approximately 59,900 contracts
(representing an outstanding balance of approximately $1.3 billion) consisted of
recreational vehicle contracts. The foregoing statistics on CITSF's servicing
portfolio do not include the Recreational Vehicle Loans and other loans serviced
by CITSF pursuant to the Servicing Transfer Agreements.
The Asset Service Center of CITSF services consumer credit transactions in
50 states and the District of Columbia. It provides full servicing for
recreational vehicle, home equity, marine products and manufactured housing
retail installment contracts. The Asset Service Center is supplemented by
outside collectors and field remarketers located throughout the United States.
CIT, a Delaware corporation, is a successor to a company founded in St.
Louis, Missouri on February 11, 1908. It has its principal executive offices at
1211 Avenue of the Americas, New York, New York 10036, and its telephone number
is (212) 536-1950. CIT, operating directly or through its
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subsidiaries primarily in the United States, engages in financial services
activities through a nationwide distribution network. CIT provides financing
primarily on a secured basis to commercial borrowers, ranging from middle-market
to larger companies and to consumers. CIT has eight strategic business units
which offer commercial and consumer financing, and factoring products and
services to clients. CIT had 2,950 employees at December 31, 1996, up from 2,750
employees at December 31, 1995.
The Dai-Ichi Kangyo Bank, Limited ('DKB') owns eighty percent (80%) of the
issued and outstanding shares of common stock of CIT. DKB purchased a sixty
percent (60%) common stock interest in CIT from Manufacturers Hanover
Corporation ('MHC') (a predecessor of the Corporation) at year-end 1989 and
acquired an additional twenty percent (20%) common stock interest in CIT on
December 15, 1995 from CBC Holding (Delaware) Inc., a subsidiary of the
Corporation (formerly known as MHC Holdings (Delaware) Inc.) ('CBC HOLDING').
DKB has an option, expiring December 15, 2000, to purchase the remaining twenty
percent (20%) common stock interest in CIT from CBC Holding. CBC Holding became
a direct, wholly-owned subsidiary of Chemical Banking Corporation ('CBC') after
the merger between MHC and CBC on December 31, 1991. On March 31, 1996, CBC was
merged into the Corporation, and the Corporation became the sole stockholder of
CBC Holding and the holder of the twenty percent (20%) interest in CIT.
In accordance with a stockholders agreement among DKB, the Corporation, as
direct successor to CBC and indirect successor to MHC, and CIT, dated as of
December 29, 1989, as amended by an Amendment to Stockholders' Agreement, dated
December 15, 1995 (as amended, the 'STOCKHOLDERS AGREEMENT'), one nominee of the
Board of Directors of CIT is designated by the Corporation. The Stockholders
Agreement also contains restrictions with respect to the transfer of the stock
of CIT to third parties.
ASSET SERVICE CENTER
Through its Asset Service Center, CITSF services recreational vehicle,
manufactured housing, home equity, and other consumer loans. CITSF services all
of the recreational vehicle loans it originates or purchases (except those it
has sold to third parties on a servicing released basis). CITSF is actively
seeking arrangements pursuant to which it will service recreational vehicle
loans held by other entities, such as the Receivables. Generally, such servicing
responsibilities are, and would be, also carried out through the Asset Service
Center. Servicing responsibilities include collecting principal and interest
payments, taxes, insurance premiums, where applicable, and other payments from
obligors and remitting principal and interest payments to the holders of such
loans to the extent such holders are entitled thereto. Collections procedures
include repossession and resale of recreational vehicles securing defaulted
loans and, if deemed advisable by CITSF, entering into workout arrangements with
obligors under certain defaulted loans. Although decisions as to whether to
repossess any recreational vehicle are made on an individual discretionary
basis, CITSF's general policy is to institute repossession procedures promptly
after Asset Service Center personnel determine that it is unlikely that a
defaulted loan will be brought current or that the related financed vehicle is
at risk, and thereafter to diligently pursue the resale of such recreational
vehicle if the market is favorable.
CITSF'S SERVICING PROCEDURES
Collection activities with respect to delinquent Receivables will be
performed by the Servicer or its affiliates consistent with the Servicer's
servicing policies and practices in effect from time to time with respect to
recreational vehicle loans that it services for its own account (except as set
forth in the Servicing Transfer Agreements and described herein). CITSF may
change such policies and practices, provided, that any such change applicable to
the Receivables that would have a material effect on the collectibility of the
Receivables may not be made without CFMC's consent. Collection activities
include prompt investigation and evaluation of the causes of any delinquency. An
obligor is deemed current if an amount equal to no more than $65 of a scheduled
monthly payment remains unpaid.
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An automated collection system, together with manual collectors, are
utilized to assist in collection efforts. The automated collection system
provides relevant obligor information (for example, current addresses, phone
numbers and loan information), records of all contacts with obligors and, in
some cases, automated dialing. The system also records an obligor's promise to
pay and allows supervisor review of collection personnel activity, permits
supervisors to modify priorities as to which obligors should be contacted and
provides extensive reports concerning recreational vehicle loan delinquencies.
The Servicer may attempt to collect delinquent payments by sending letters or
making continued phone calls to obligors. In the event that contact by telephone
can not be made within 10 days of the due date of a payment, a manual review of
the recreational vehicle loan is made to determine the appropriate course of
action, which may be continued phone calls and/or sending of letters. Pursuant
to the Servicing Transfer Agreements, CITSF has agreed to attempt to make such
contacts with Obligors of delinquent Receivables at specified time intervals.
See 'Description of the Transfer and Servicing Agreements--Servicing and
Insurance Procedures' herein. Generally, after a recreational vehicle loan
continues to be delinquent for more than 30 days (regardless of whether contact
had been made), such recreational vehicle loan is assigned to a specific 'late
stage' collector until resolution. A field visit may be scheduled at this time.
The Servicer has agreed to employ the same means to cure delinquencies on the
Receivables as it does for recreational vehicle loans it services for itself,
including deferments and reschedulings, except as set forth in the Servicing
Transfer Agreements. CITSF may change such means in accordance with its business
judgment; provided, that any such change applicable to the Receivables that
would have a material effect on the collectibility of the Receivables may not be
made without CFMC's consent.
Chase RV Finance's collection procedures are substantially the same as
those of CITSF, although CITSF's individual collectors have more discretion than
Chase RV Finance's individual collectors had in determining what actions are
appropriate at different stages of delinquency. In addition, Chase RV Finance's
collection procedures at the initial stages of delinquency used a combination of
automatic dialing and letters and Chase RV Finance customarily assigned a
delinquent account to a specific late stage collector at 26 days delinquent
(with field visits scheduled if appropriate at 60 days delinquent).
CITSF implements repossession procedures when it is evident to it that the
obligor can no longer make payment on the recreational vehicle loan or if the
related financed vehicle is at risk. Repossessions are generally conducted by
third parties who are engaged in the business of repossessing vehicles for
secured parties. After repossession, the obligor generally has 10 to 30 days to
redeem the recreational vehicle before the recreational vehicle is resold. CITSF
uses site auctions, pool auctions, individual bids, brokers, retail sale
outlets, newspaper advertisements and telemarketing for asset remarketing.
Decisions on the remarketing method are made by an internal remarketer based
upon recommendations from field personnel. CITSF will typically send a
recreational vehicle to auction before attempting a retail sale.
Losses may occur in connection with delinquent recreational vehicle loans
and can arise in several ways, including the inability to locate the
recreational vehicle or the obligor, because of a discharge of the obligor in a
bankruptcy proceeding, or because of depreciation of the related financed
vehicle. Generally, CITSF recognizes some losses on recreational vehicle loans
when the loan is 180 days past due or when the related financed vehicle is
repossessed. Recreational Vehicle Loans are generally charged off when CITSF has
received all amounts that it expects to recover upon disposition or sale of the
related financed vehicle. The charge-off decision with respect to the
Receivables will be subject to the Servicer's discretion, except that CFMC has
the right to approve charge-offs in certain circumstances described in the
Servicing Transfer Agreements. See 'Description of the Transfer and Servicing
Agreements--Servicing and Insurance Procedures.' Upon charge- off, receivables
are routed to a recovery collector who, as appropriate, may assign the loan to a
collection agency or an attorney, and any deficiency remaining will be pursued
to the extent deemed practical and to the extent permitted by law and the
Servicing Transfer Agreements. The loss recognition and collection policies and
practices of the Servicer may change over time in accordance with CITSF's
business judgment; provided, that any such change applicable to the Receivables
that would have a material effect on the collectibility of the Receivables may
not be made without CFMC's
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consent. Under Chase RV Finance's loss recognition policies, losses on
Recreational Vehicle Loans were recognized upon repossession of the related
financed vehicle and all Recreational Vehicle Loans were required to be charged
off no later than when 240 days past due.
CITSF may, on a case-by-case basis, permit extensions with respect to the
Due Dates of payments on Receivables and other modifications of Receivables in
accordance with its normal and customary servicing practices and procedures, as
described more fully in 'Description of the Transfer and Servicing
Agreements--Modification of Receivables' herein. The extension policies of CITSF
may be changed over time in accordance with CITSF's business judgment, provided,
that any such change applicable to the Receivables that would have a material
effect on the collectibility of the Receivables may not be made without CFMC's
consent.
USE OF PROCEEDS
As consideration of the transfer of the Receivables to the Trust, the Trust
will issue the Notes and the Certificates to the Sellers, with (i) Chase
receiving 87.17% of the original principal amount of each class of Notes and the
original Certificate Balance and (ii) Chase USA receiving 12.83% of the original
principal amount of each class of Notes and the original Certificate Balance.
After the deposit of the Reserve Account Initial Deposit and the deduction of
estimated expenses, the net proceeds to be received by the Sellers from the sale
of the Securities will be added to their respective general funds.
WEIGHTED AVERAGE LIFE OF THE SECURITIES
GENERAL
The weighted average life of the Notes and the Certificates will generally
be influenced by the rate at which the principal balances of the Receivables are
paid, which payment may be in the form of scheduled amortization or prepayments.
For this purpose, the term 'PREPAYMENTS' includes prepayments in full, partial
prepayments, liquidations due to default, as well as receipts of proceeds from
theft and physical damage, credit life and credit disability insurance policies
covering the Financed Vehicles and amounts received in connection with certain
other Receivables repurchased by a Seller or purchased by the Servicer for
administrative reasons. The Receivables are prepayable by the Obligors at any
time.
The rate of prepayments on the Receivables may be influenced by a variety
of economic, social and other factors, including the fact that an Obligor may
not sell or transfer the Financed Vehicle securing a Receivable without the
Servicer's consent. The rate of prepayment of the Receivables may also be
influenced by programs offered by lenders (including the Sellers, the Servicer
and their respective affiliates) that solicit or make available credit that may
be used by Obligors to prepay the Receivables. Such credit includes but is not
limited to home equity lines of credit, consumer installment credit and credit
cards offered by lenders (including the Sellers, the Servicer and their
respective affiliates). The Sellers, the Servicer and their respective
affiliates may, in the ordinary course of business, offer general or targeted
solicitations for such extensions of credit, and such solicitations may be sent,
to Obligors. In addition, the Sale and Servicing Agreement permits the Servicer
to refinance an existing Receivable for an Obligor, so long as the proceeds of
such refinanced loan would be used to prepay such existing Receivable in full
and any such refinanced loan is evidenced by a new promissory note. Any such
loan thus created by a refinancing would not be the property of the Trust. See
'Description of the Transfer and Servicing Agreements--Termination' herein
regarding the Servicer's option to purchase the Receivables from the Trust.
In light of the above considerations, there can be no assurance as to the
amount of principal payments to be made on the Securities on each Distribution
Date since such amount will depend, in part, on the amount of principal
collected on the Receivables Pool during the applicable Collection Period. Any
reinvestment risks resulting from a faster or slower incidence of prepayment of
Receivables will be borne entirely by the Securityholders.
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No principal payments will be made on any class of Notes until all Notes
with preceding class designations have been paid in full. For example, no
principal payments will be made on the Class A-2 Notes until the Class A-1 Notes
have been paid in full, and no principal payments will be made on the Class A-3
Notes until the Class A-2 Notes have been paid in full. In addition, no
principal payments on the Certificates will be made until the Notes have been
paid in full. See 'Description of the Notes-- Payments of Principal' and
'Description of the Certificates--Distributions of Principal Payments' herein.
As the rate of payment of principal of each class of Notes and the Certificates
depends primarily on the rate of payment (including prepayments) of the
Principal Balances of the Receivables, final payment of any class of the Notes
and the final distribution in respect of the Certificates could occur
significantly earlier than their respective Note Final Scheduled Distribution
Dates or the Certificate Final Scheduled Distribution Date. It is expected that
final payment of the Notes and the final distribution in respect of the
Certificates will occur on or prior to the related Note Final Scheduled
Distribution Date or the Certificate Final Scheduled Distribution Date. However,
if sufficient funds are not available to pay the Notes or the Certificates in
full on or prior to the related Note Final Scheduled Distribution Date or the
Certificate Final Scheduled Distribution Date, final payment of the Notes and
the final distribution in respect of the Certificates could occur later than
such date. Securityholders will bear the risk of being able to reinvest
principal payments of the Securities at yields at least equal to the Interest
Rate or the Certificate Rate, as applicable.
With respect to the Receivables that are Simple Interest Receivables and,
to the extent that payments of the fixed monthly installments thereunder are
received prior to the scheduled due dates for such installments, the portions of
such installments allocable to interest will be less that they would be if the
payments were received as scheduled. If the Reserve Account is exhausted and
losses on the Receivables occur, the amount of interest distributed to the
Securityholders may be less than described above.
If an Event of Default occurs and the Notes are accelerated, the
Certificateholders will not be entitled to receive any distributions in respect
of their Certificates until the Notes have been paid in full.
Subject to the conditions set forth herein under the heading 'Description
of the Transfer and Servicing Agreements--Servicing and Insurance Procedures,'
the Servicer may reschedule the Due Date of any scheduled payment. Any such
deferrals will have the effect of increasing the weighted average life of the
Notes and Certificates. However, the Servicer will not be permitted to grant any
such deferral or extension if, as a result, the final scheduled payment on a
Receivable would fall after the Final Scheduled Maturity Date, unless the
Servicer purchases such Receivable.
PAID-AHEAD SIMPLE INTEREST RECEIVABLES
If an Obligor with respect to any Simple Interest Receivable, in addition
to making his or her regularly scheduled payment, makes one or more additional
scheduled payments in any Collection Period (for example, because the Obligor
intends to be on vacation the following month), the additional scheduled
payments made in such Collection Period will be treated as a principal
prepayment and applied to reduce the principal balance of the related Receivable
in such Collection Period and, unless otherwise requested by the Obligor, the
Obligor will not be required to make any scheduled payment in respect of such
Receivable (a 'PAID-AHEAD SIMPLE INTEREST RECEIVABLE') for the number of Due
Dates corresponding to the number of such additional scheduled payments (the
'PAID-AHEAD PERIOD'). During the Paid-Ahead Period, interest will continue to
accrue on the Principal Balance of such Paid-Ahead Simple Interest Receivable,
as reduced by the application of the additional scheduled payments made in the
Collection Period in which such Receivable was paid-ahead. The Obligor's
Receivable will not be considered delinquent during the Paid-Ahead Period. A
Payment Shortfall with respect to a Paid-Ahead Simple Interest Receivable will
exist during each Collection Period occurring during the Paid-Ahead Period, and
the Servicer may be required to make a Monthly Advance in respect of such
Payment Shortfall, as described under 'Description of the Transfer and Servicing
Agreements--Monthly Advances' herein; provided, that no Monthly Advances will be
made in respect of principal of a Paid-Ahead Simple Interest Receivable.
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When the Obligor resumes his required payments following the Paid-Ahead
Period, the payments so paid may be insufficient to cover the interest that has
accrued since the last payment by the Obligor. Notwithstanding such
insufficiency, the Obligor's Paid-Ahead Simple Interest Receivable would be
considered current. This situation will continue until the regularly scheduled
payments are once again sufficient to cover all accrued interest and to reduce
the Principal Balance of the Paid-Ahead Simple Interest Receivable. Depending on
the Principal Balance and the Contract Rate of the related Receivable, and on
the number of payments that were paid-ahead, there may be extended periods of
time during which Receivables that are current are not amortizing.
Paid-Ahead Simple Interest Receivables will affect the weighted average
life of the Securities. The distribution of the paid-ahead amount on the
Distribution Date following the Collection Period in which such amount was
received will generally shorten the weighted average life of the Securities. In
addition, to the extent the Servicer makes Monthly Advances with respect to a
Paid-Ahead Simple Interest Receivable which subsequently goes into default,
because liquidation proceeds with respect to such Receivable will be applied
first to reimburse the Servicer for such Monthly Advances, the loss with respect
to such Receivable may be larger than would have been the case had such Monthly
Advances not been made.
As of the Cutoff Date, approximately 25% of the number of Receivables were
Paid-Ahead Simple Interest Receivables with at least one scheduled monthly
payment having been paid-ahead. The Chase RV Finance Portfolio has historically
included Recreational Vehicle Loans which have been paid-ahead by one or more
scheduled monthly payments. There can be no assurance as to the number of
Receivables which may become Paid-Ahead Simple Interest Receivables or the
number or the principal amount of the scheduled payments which may be
paid-ahead.
If an Obligor with respect to any Precomputed Receivable, in addition to
making his or her regularly scheduled payment, makes one or more additional
scheduled payments in any Collection Period for similar reasons (such Receivable
being a 'PAID-AHEAD PRECOMPUTED RECEIVABLE'), the Paid-Ahead Amounts will be
deposited into an account in the name of the Indenture Trustee (the 'PAID-AHEAD
ACCOUNT') or the Collection Account and applied on subsequent Deposit Dates as
described herein under 'Description of the Transfer and Servicing
Agreements-Paid-Ahead Precomputed Receivables.' Because Paid-Ahead Amounts on
Paid-Ahead Precomputed Receivables are not deposited into the Collection Account
and distributed to Securityholders until the Deposit Date and Distribution Date,
respectively, related to the Collection Period during which any such scheduled
payment was due, no shortfalls of interest or principal will result therefrom.
Chase RV Finance maintains certain records of the historical prepayment
experience of the Chase RV Finance Portfolio. The Sellers believe that such
records are not adequate to provide meaningful information with respect to the
Receivables. In any event, no assurance can be given that prepayments on the
Receivables would conform to any historical experience, and no prediction can be
made as to the actual prepayment experience to be expected with respect to the
Receivables.
ABS TABLES
Prepayments on Recreational Vehicle Loans can be measured relative to a
prepayment standard or model. The model used in this Prospectus is the Absolute
Prepayment Model ('ABS'). ABS assumes that all the Receivables are the same size
and amortize at the same rate and that each Receivable in each month of its life
will either be paid as scheduled or be prepaid in full. For example, in a pool
of receivables originally containing 10,000 receivables, a 1% ABS rate means
that 100 receivables prepay each month. The ABS 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 captioned 'Percent of Initial Note Principal Balance at Various
ABS Percentages' and 'Percent of Initial Certificate Balance at Various ABS
Percentages' (each an 'ABS TABLE') have been prepared on the basis of the
characteristics of the Receivables. Each ABS Table assumes that (a) the
Receivables prepay in full at the specified constant percentage of ABS monthly,
with no defaults,
38
<PAGE>
losses or repurchases, (b) each scheduled monthly payment on the Receivables is
made on the last day of each month and each month has 30 days, (c) payments on
the Notes and distributions on the Certificates are made on each Distribution
Date (and each such date is assumed to be the 15th day of each applicable
month), (d) the balance in the Reserve Account on each Distribution Date is
equal to the Specified Reserve Account Balance, and (e) the Servicer does not
exercise its option to purchase the Receivables. The Receivables Pool has an
assumed cutoff date of the Cutoff Date. The ABS Tables indicate the projected
weighted average life of each class of Notes and the Certificates and set forth
the percent of the initial principal amount of each class of Notes and the
percent of the initial Certificate Balance, as applicable, that is projected to
be outstanding after each of the Distribution Dates or each September 15, as
indicated, at various ABS percentages.
The tables also assume that the Receivables have been aggregated into five
hypothetical pools with all of the Receivables within each such pool having the
following characteristics:
<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
AVERAGE AVERAGE
AGGREGATE WEIGHTED ORIGINAL REMAINING
PRINCIPAL AVERAGE TERM TERM
POOL BALANCE CONTRACT RATE IN MONTHS IN MONTHS
- --------------------------------------------------- --------------- ------------- --------- ---------
<S> <C> <C> <C> <C>
1.................................................. $115,996,183.21 10.41% 125 60
2.................................................. 88,358,662.53 10.26% 155 98
3.................................................. 185,740,182.09 9.12% 175 123
4.................................................. 260,864,247.00 8.88% 179 144
5.................................................. 246,436,010.71 9.05% 180 166
---------------
$897,395,285.54
</TABLE>
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 each ABS Table. The assumptions used are
hypothetical and have been provided only to give a general sense of how the
principal cash flows might behave under varying prepayment scenarios. For
example, it is very unlikely that the Receivables will prepay at a constant
level of prepayment until maturity or that all of the Receivables will prepay at
the same level of ABS. Moreover, the diverse terms of the Receivables within
each of the five hypothetical pools could produce slower or faster principal
distributions than indicated in each ABS Table at the various constant
percentages of ABS specified, even if the original and remaining terms to
maturity of the Receivables are as assumed. Any difference between such
assumptions and the actual characteristics and performance of the Receivables,
or actual prepayment experience, will affect the percentages of initial balances
outstanding over time and the weighted average lives of each class of Notes and
the Certificates.
39
<PAGE>
PERCENT OF INITIAL NOTE PRINCIPAL BALANCE AT VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
CLASS A-1 NOTES
--------------------------------------------------------------------
ASSUMED ABS PERCENTAGE
--------------------------------------------------------------------
0.00% 0.50% 0.75% 0.90% 1.00% 1.10% 1.25% 1.50%
----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Closing Date.................................. 100 100 100 100 100 100 100 100
September 15, 1998............................ 0 0 0 0 0 0 0 0
September 15, 1999............................ 0 0 0 0 0 0 0 0
September 15, 2000............................ 0 0 0 0 0 0 0 0
September 15, 2001............................ 0 0 0 0 0 0 0 0
September 15, 2002............................ 0 0 0 0 0 0 0 0
September 15, 2003............................ 0 0 0 0 0 0 0 0
September 15, 2004............................ 0 0 0 0 0 0 0 0
September 15, 2005............................ 0 0 0 0 0 0 0 0
September 15, 2006............................ 0 0 0 0 0 0 0 0
September 15, 2007............................ 0 0 0 0 0 0 0 0
September 15, 2008............................ 0 0 0 0 0 0 0 0
September 15, 2009............................ 0 0 0 0 0 0 0 0
September 15, 2010............................ 0 0 0 0 0 0 0 0
September 15, 2011............................ 0 0 0 0 0 0 0 0
September 15, 2012............................ 0 0 0 0 0 0 0 0
Weighted Average Life (years)(1).............. 0.52 0.26 0.19 0.16 0.14 0.12 0.09 0.06
</TABLE>
PERCENT OF INITIAL NOTE PRINCIPAL BALANCE AT VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
CLASS A-2 NOTES
--------------------------------------------------------------------
ASSUMED ABS PERCENTAGE
--------------------------------------------------------------------
DISTRIBUTION DATES 0.00% 0.50% 0.75% 0.90% 1.00% 1.10% 1.25% 1.50%
- ---------------------------------------------- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Closing Date.................................. 100 100 100 100 100 100 100 100
September 15, 1998............................ 100 47 8 0 0 0 0 0
September 15, 1999............................ 45 0 0 0 0 0 0 0
September 15, 2000............................ 0 0 0 0 0 0 0 0
September 15, 2001............................ 0 0 0 0 0 0 0 0
September 15, 2002............................ 0 0 0 0 0 0 0 0
September 15, 2003............................ 0 0 0 0 0 0 0 0
September 15, 2004............................ 0 0 0 0 0 0 0 0
September 15, 2005............................ 0 0 0 0 0 0 0 0
September 15, 2006............................ 0 0 0 0 0 0 0 0
September 15, 2007............................ 0 0 0 0 0 0 0 0
September 15, 2008............................ 0 0 0 0 0 0 0 0
September 15, 2009............................ 0 0 0 0 0 0 0 0
September 15, 2010............................ 0 0 0 0 0 0 0 0
September 15, 2011............................ 0 0 0 0 0 0 0 0
September 15, 2012............................ 0 0 0 0 0 0 0 0
Weighted Average Life (years)(1).............. 1.91 0.99 0.71 0.58 0.50 0.43 0.33 0.10
</TABLE>
- ------------------
(1) The weighted average life of a Note is determined by (i) multiplying the
amount of each principal payment of such Note by the number of years from
the date of the issuance of such Note to the Distribution Date on which such
principal payment is made, (ii) adding the results and (iii) dividing the
sum by the initial principal balance of such Note.
THE ABS TABLES HAVE BEEN PREPARED BASED ON THE ASSUMPTIONS DESCRIBED ABOVE
(INCLUDING THE ASSUMPTIONS REGARDING THE CHARACTERISTICS AND PERFORMANCE OF THE
RECEIVABLES WHICH WILL DIFFER FROM THE ACTUAL CHARACTERISTICS AND PERFORMANCE
THEREOF) AND SHOULD BE READ IN CONJUNCTION THEREWITH.
40
<PAGE>
PERCENT OF INITIAL NOTE PRINCIPAL BALANCE AT VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
CLASS A-3 NOTES
--------------------------------------------------------------------
ASSUMED ABS PERCENTAGE
--------------------------------------------------------------------
DISTRIBUTION DATES 0.00% 0.50% 0.75% 0.90% 1.00% 1.10% 1.25% 1.50%
- ---------------------------------------------- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Closing Date.................................. 100 100 100 100 100 100 100 100
September 15, 1998............................ 100 100 100 75 47 13 0 0
September 15, 1999............................ 100 45 0 0 0 0 0 0
September 15, 2000............................ 83 0 0 0 0 0 0 0
September 15, 2001............................ 13 0 0 0 0 0 0 0
September 15, 2002............................ 0 0 0 0 0 0 0 0
September 15, 2003............................ 0 0 0 0 0 0 0 0
September 15, 2004............................ 0 0 0 0 0 0 0 0
September 15, 2005............................ 0 0 0 0 0 0 0 0
September 15, 2006............................ 0 0 0 0 0 0 0 0
September 15, 2007............................ 0 0 0 0 0 0 0 0
September 15, 2008............................ 0 0 0 0 0 0 0 0
September 15, 2009............................ 0 0 0 0 0 0 0 0
September 15, 2010............................ 0 0 0 0 0 0 0 0
September 15, 2011............................ 0 0 0 0 0 0 0 0
September 15, 2012............................ 0 0 0 0 0 0 0 0
Weighted Average Life (years)(1).............. 3.49 1.97 1.43 1.16 1.00 0.85 0.64 0.28
</TABLE>
PERCENT OF INITIAL NOTE PRINCIPAL BALANCE AT VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
CLASS A-4 NOTES
--------------------------------------------------------------------
ASSUMED ABS PERCENTAGE
--------------------------------------------------------------------
DISTRIBUTION DATES 0.00% 0.50% 0.75% 0.90% 1.00% 1.10% 1.25% 1.50%
- ---------------------------------------------- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Closing Date.................................. 100 100 100 100 100 100 100 100
September 15, 1998............................ 100 100 100 100 100 100 1 0
September 15, 1999............................ 100 100 53 0 0 0 0 0
September 15, 2000............................ 100 16 0 0 0 0 0 0
September 15, 2001............................ 100 0 0 0 0 0 0 0
September 15, 2002............................ 1 0 0 0 0 0 0 0
September 15, 2003............................ 0 0 0 0 0 0 0 0
September 15, 2004............................ 0 0 0 0 0 0 0 0
September 15, 2005............................ 0 0 0 0 0 0 0 0
September 15, 2006............................ 0 0 0 0 0 0 0 0
September 15, 2007............................ 0 0 0 0 0 0 0 0
September 15, 2008............................ 0 0 0 0 0 0 0 0
September 15, 2009............................ 0 0 0 0 0 0 0 0
September 15, 2010............................ 0 0 0 0 0 0 0 0
September 15, 2011............................ 0 0 0 0 0 0 0 0
September 15, 2012............................ 0 0 0 0 0 0 0 0
Weighted Average Life (years)(1).............. 4.61 2.79 2.03 1.65 1.42 1.21 0.91 0.49
</TABLE>
- ------------------
(1) The weighted average life of a Note is determined by (i) multiplying the
amount of each principal payment of such Note by the number of years from
the date of the issuance of such Note to the Distribution Date on which such
principal payment is made, (ii) adding the results and (iii) dividing the
sum by the initial principal balance of such Note.
THE ABS TABLES HAVE BEEN PREPARED BASED ON THE ASSUMPTIONS DESCRIBED ABOVE
(INCLUDING THE ASSUMPTIONS REGARDING THE CHARACTERISTICS AND PERFORMANCE OF THE
RECEIVABLES WHICH WILL DIFFER FROM THE ACTUAL CHARACTERISTICS AND PERFORMANCE
THEREOF) AND SHOULD BE READ IN CONJUNCTION THEREWITH.
41
<PAGE>
PERCENT OF INITIAL NOTE PRINCIPAL BALANCE AT VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
CLASS A-5 NOTES
--------------------------------------------------------------------
ASSUMED ABS PERCENTAGE
--------------------------------------------------------------------
DISTRIBUTION DATES 0.00% 0.50% 0.75% 0.90% 1.00% 1.10% 1.25% 1.50%
- ---------------------------------------------- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Closing Date.................................. 100 100 100 100 100 100 100 100
September 15, 1998............................ 100 100 100 100 100 100 100 0
September 15, 1999............................ 100 100 100 78 36 0 0 0
September 15, 2000............................ 100 100 23 0 0 0 0 0
September 15, 2001............................ 100 28 0 0 0 0 0 0
September 15, 2002............................ 100 0 0 0 0 0 0 0
September 15, 2003............................ 51 0 0 0 0 0 0 0
September 15, 2004............................ 0 0 0 0 0 0 0 0
September 15, 2005............................ 0 0 0 0 0 0 0 0
September 15, 2006............................ 0 0 0 0 0 0 0 0
September 15, 2007............................ 0 0 0 0 0 0 0 0
September 15, 2008............................ 0 0 0 0 0 0 0 0
September 15, 2009............................ 0 0 0 0 0 0 0 0
September 15, 2010............................ 0 0 0 0 0 0 0 0
September 15, 2011............................ 0 0 0 0 0 0 0 0
September 15, 2012............................ 0 0 0 0 0 0 0 0
Weighted Average Life (years)................. 6.02 3.74 2.75 2.24 1.92 1.63 1.23 0.73
</TABLE>
PERCENT OF INITIAL NOTE PRINCIPAL BALANCE AT VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
CLASS A-6 NOTES
--------------------------------------------------------------------
ASSUMED ABS PERCENTAGE
--------------------------------------------------------------------
DISTRIBUTION DATES 0.00% 0.50% 0.75% 0.90% 1.00% 1.10% 1.25% 1.50%
- ---------------------------------------------- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Closing Date.................................. 100 100 100 100 100 100 100 100
September 15, 1998............................ 100 100 100 100 100 100 100 64
September 15, 1999............................ 100 100 100 100 100 75 0 0
September 15, 2000............................ 100 100 100 33 0 0 0 0
September 15, 2001............................ 100 100 0 0 0 0 0 0
September 15, 2002............................ 100 31 0 0 0 0 0 0
September 15, 2003............................ 100 0 0 0 0 0 0 0
September 15, 2004............................ 96 0 0 0 0 0 0 0
September 15, 2005............................ 8 0 0 0 0 0 0 0
September 15, 2006............................ 0 0 0 0 0 0 0 0
September 15, 2007............................ 0 0 0 0 0 0 0 0
September 15, 2008............................ 0 0 0 0 0 0 0 0
September 15, 2009............................ 0 0 0 0 0 0 0 0
September 15, 2010............................ 0 0 0 0 0 0 0 0
September 15, 2011............................ 0 0 0 0 0 0 0 0
September 15, 2012............................ 0 0 0 0 0 0 0 0
Weighted Average Life (years)................. 7.54 4.85 3.60 2.92 2.50 2.12 1.65 1.05
</TABLE>
- ------------------
(1) The weighted average life of a Note is determined by (i) multiplying the
amount of each principal payment of such Note by the number of years from
the date of the issuance of such Note to the Distribution Date on which such
principal payment is made, (ii) adding the results and (iii) dividing the
sum by the initial principal balance of such Note.
THE ABS TABLES HAVE BEEN PREPARED BASED ON THE ASSUMPTIONS DESCRIBED ABOVE
(INCLUDING THE ASSUMPTIONS REGARDING THE CHARACTERISTICS AND PERFORMANCE OF THE
RECEIVABLES WHICH WILL DIFFER FROM THE ACTUAL CHARACTERISTICS AND PERFORMANCE
THEREOF) AND SHOULD BE READ IN CONJUNCTION THEREWITH.
42
<PAGE>
PERCENT OF INITIAL NOTE PRINCIPAL BALANCE AT VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
CLASS A-7 NOTES
------------------------------------------------------------------------------------
ASSUMED ABS PERCENTAGE
------------------------------------------------------------------------------------
DISTRIBUTION DATES 0.00% 0.50% 0.75% 0.90% 1.00% 1.10% 1.25% 1.50%
- --------------------------------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Closing Date..................... 100 100 100 100 100 100 100 100
September 15, 1998............... 100 100 100 100 100 100 100 100
September 15, 1999............... 100 100 100 100 100 100 37 0
September 15, 2000............... 100 100 100 100 25 0 0 0
September 15, 2001............... 100 100 91 0 0 0 0 0
September 15, 2002............... 100 100 0 0 0 0 0 0
September 15, 2003............... 100 17 0 0 0 0 0 0
September 15, 2004............... 100 0 0 0 0 0 0 0
September 15, 2005............... 100 0 0 0 0 0 0 0
September 15, 2006............... 0 0 0 0 0 0 0 0
September 15, 2007............... 0 0 0 0 0 0 0 0
September 15, 2008............... 0 0 0 0 0 0 0 0
September 15, 2009............... 0 0 0 0 0 0 0 0
September 15, 2010............... 0 0 0 0 0 0 0 0
September 15, 2011............... 0 0 0 0 0 0 0 0
September 15, 2012............... 0 0 0 0 0 0 0 0
Weighted Average Life
(years)(1)..................... 8.50 5.76 4.23 3.42 2.93 2.51 1.98 1.34
</TABLE>
PERCENT OF INITIAL NOTE PRINCIPAL BALANCE AT VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
CLASS A-8 NOTES
------------------------------------------------------------------------------------
ASSUMED ABS PERCENTAGE
------------------------------------------------------------------------------------
DISTRIBUTION DATES 0.00% 0.50% 0.75% 0.90% 1.00% 1.10% 1.25% 1.50%
- --------------------------------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Closing Date..................... 100 100 100 100 100 100 100 100
September 15, 1998............... 100 100 100 100 100 100 100 100
September 15, 1999............... 100 100 100 100 100 100 100 11
September 15, 2000............... 100 100 100 100 100 39 0 0
September 15, 2001............... 100 100 100 44 0 0 0 0
September 15, 2002............... 100 100 41 0 0 0 0 0
September 15, 2003............... 100 100 0 0 0 0 0 0
September 15, 2004............... 100 32 0 0 0 0 0 0
September 15, 2005............... 100 0 0 0 0 0 0 0
September 15, 2006............... 91 0 0 0 0 0 0 0
September 15, 2007............... 2 0 0 0 0 0 0 0
September 15, 2008............... 0 0 0 0 0 0 0 0
September 15, 2009............... 0 0 0 0 0 0 0 0
September 15, 2010............... 0 0 0 0 0 0 0 0
September 15, 2011............... 0 0 0 0 0 0 0 0
September 15, 2012............... 0 0 0 0 0 0 0 0
Weighted Average Life
(years)(1)..................... 9.48 6.79 4.94 3.98 3.42 2.95 2.40 1.80
</TABLE>
- ------------------
(1) The weighted average life of a Note is determined by (i) multiplying the
amount of each principal payment of such Note by the number of years from
the date of the issuance of such Note to the Distribution Date on which such
principal payment is made, (ii) adding the results and (iii) dividing the
sum by the initial principal balance of such Note.
THE ABS TABLES HAVE BEEN PREPARED BASED ON THE ASSUMPTIONS DESCRIBED ABOVE
(INCLUDING THE ASSUMPTIONS REGARDING THE CHARACTERISTICS AND PERFORMANCE OF THE
RECEIVABLES WHICH WILL DIFFER FROM THE ACTUAL CHARACTERISTICS AND PERFORMANCE
THEREOF) AND SHOULD BE READ IN CONJUNCTION THEREWITH.
43
<PAGE>
PERCENT OF INITIAL NOTE PRINCIPAL BALANCE AT VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
CLASS A-9 NOTES
------------------------------------------------------------------------------------
ASSUMED ABS PERCENTAGE
------------------------------------------------------------------------------------
DISTRIBUTION DATES 0.00% 0.50% 0.75% 0.90% 1.00% 1.10% 1.25% 1.50%
- --------------------------------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Closing Date..................... 100 100 100 100 100 100 100 100
September 15, 1998............... 100 100 100 100 100 100 100 100
September 15, 1999............... 100 100 100 100 100 100 100 100
September 15, 2000............... 100 100 100 100 100 100 52 0
September 15, 2001............... 100 100 100 100 54 0 0 0
September 15, 2002............... 100 100 100 3 0 0 0 0
September 15, 2003............... 100 100 27 0 0 0 0 0
September 15, 2004............... 100 100 0 0 0 0 0 0
September 15, 2005............... 100 48 0 0 0 0 0 0
September 15, 2006............... 100 0 0 0 0 0 0 0
September 15, 2007............... 100 0 0 0 0 0 0 0
September 15, 2008............... 3 0 0 0 0 0 0 0
September 15, 2009............... 0 0 0 0 0 0 0 0
September 15, 2010............... 0 0 0 0 0 0 0 0
September 15, 2011............... 0 0 0 0 0 0 0 0
September 15, 2012............... 0 0 0 0 0 0 0 0
Weighted Average Life
(years)(1)..................... 10.51 8.00 5.83 4.67 4.07 3.60 3.03 2.28
</TABLE>
PERCENT OF INITIAL NOTE PRINCIPAL BALANCE AT VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
CLASS A-10 NOTES
------------------------------------------------------------------------------------
ASSUMED ABS PERCENTAGE
------------------------------------------------------------------------------------
DISTRIBUTION DATES 0.00% 0.50% 0.75% 0.90% 1.00% 1.10% 1.25% 1.50%
- --------------------------------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Closing Date..................... 100 100 100 100 100 100 100 100
September 15, 1998............... 100 100 100 100 100 100 100 100
September 15, 1999............... 100 100 100 100 100 100 100 100
September 15, 2000............... 100 100 100 100 100 100 100 36
September 15, 2001............... 100 100 100 100 100 93 16 0
September 15, 2002............... 100 100 100 100 41 0 0 0
September 15, 2003............... 100 100 100 14 0 0 0 0
September 15, 2004............... 100 100 35 0 0 0 0 0
September 15, 2005............... 100 100 0 0 0 0 0 0
September 15, 2006............... 100 73 0 0 0 0 0 0
September 15, 2007............... 100 15 0 0 0 0 0 0
September 15, 2008............... 100 0 0 0 0 0 0 0
September 15, 2009............... 12 0 0 0 0 0 0 0
September 15, 2010............... 0 0 0 0 0 0 0 0
September 15, 2011............... 0 0 0 0 0 0 0 0
September 15, 2012............... 0 0 0 0 0 0 0 0
Weighted Average Life
(years)(1)..................... 11.61 9.41 6.85 5.60 4.93 4.37 3.69 2.89
</TABLE>
- ------------------
(1) The weighted average life of a Note is determined by (i) multiplying the
amount of each principal payment of such Note by the number of years from
the date of the issuance of such Note to the Distribution Date on which such
principal payment is made, (ii) adding the results and (iii) dividing the
sum by the initial principal balance of such Note.
THE ABS TABLES HAVE BEEN PREPARED BASED ON THE ASSUMPTIONS DESCRIBED ABOVE
(INCLUDING THE ASSUMPTIONS REGARDING THE CHARACTERISTICS AND PERFORMANCE OF THE
RECEIVABLES WHICH WILL DIFFER FROM THE ACTUAL CHARACTERISTICS AND PERFORMANCE
THEREOF) AND SHOULD BE READ IN CONJUNCTION THEREWITH.
44
<PAGE>
PERCENT OF INITIAL CERTIFICATE PRINCIPAL BALANCE AT VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
CERTIFICATES
----------------------------------------------------------------------
ASSUMED ABS PERCENTAGE
----------------------------------------------------------------------
DISTRIBUTION DATES 0.00% 0.50% 0.75% 0.90% 1.00% 1.10% 1.25% 1.50%
- -------------------------------------------- ------ ------ ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Closing Date................................ 100 100 100 100 100 100 100 100
September 15, 1998.......................... 100 100 100 100 100 100 100 100
September 15, 1999.......................... 100 100 100 100 100 100 100 100
September 15, 2000.......................... 100 100 100 100 100 100 100 100
September 15, 2001.......................... 100 100 100 100 100 100 100 40
September 15, 2002.......................... 100 100 100 100 100 93 38 0
September 15, 2003.......................... 100 100 100 100 64 25 0 0
September 15, 2004.......................... 100 100 100 48 8 0 0 0
September 15, 2005.......................... 100 100 68 4 0 0 0 0
September 15, 2006.......................... 100 100 26 0 0 0 0 0
September 15, 2007.......................... 100 100 0 0 0 0 0 0
September 15, 2008.......................... 100 65 0 0 0 0 0 0
September 15, 2009.......................... 100 26 0 0 0 0 0 0
September 15, 2010.......................... 56 9 0 0 0 0 0 0
September 15, 2011.......................... 0 0 0 0 0 0 0 0
September 15, 2012.......................... 0 0 0 0 0 0 0 0
Weighted Average Life (years)(1)............ 13.09 11.55 8.50 7.02 6.26 5.64 4.88 3.93
</TABLE>
- ------------------
(1) The weighted average life of the Certificates is determined by (i)
multiplying the amount of each principal payment on the Certificates by the
number of years from the date of the issuance of the Certificates to the
Distribution Date on which such principal payment is made, (ii) adding the
results and (iii) dividing the sum by the initial Certificate Balance.
THE ABS TABLES HAVE BEEN PREPARED BASED ON THE ASSUMPTIONS DESCRIBED ABOVE
(INCLUDING THE ASSUMPTIONS REGARDING THE CHARACTERISTICS AND PERFORMANCE OF THE
RECEIVABLES WHICH WILL DIFFER FROM THE ACTUAL CHARACTERISTICS AND PERFORMANCE
THEREOF) AND SHOULD BE READ IN CONJUNCTION THEREWITH.
45
<PAGE>
POOL FACTORS AND TRADING INFORMATION
The 'NOTE POOL FACTOR' for each class of Notes will be an eight-digit
decimal that the Servicer will compute prior to each distribution with respect
to such class of Notes expressing the remaining outstanding principal balance of
such class of Notes, as of the applicable Distribution Date (after giving effect
to payments to be made on such Distribution Date), as a fraction of the initial
outstanding principal balance of such class of Notes. The 'CERTIFICATE POOL
FACTOR' for the Certificates will be an eight-digit decimal that the Servicer
will compute prior to each distribution with respect to the Certificates
expressing the remaining Certificate Balance, as of the applicable Distribution
Date (after giving effect to distributions to be made on such Distribution
Date), as a fraction of the initial Certificate Balance. Each Note Pool Factor
and the Certificate Pool Factor will be 1.00000000 as of the Cutoff Date and
thereafter will decline to reflect reductions in the outstanding principal
balance of the applicable class of Notes, or the reduction of the Certificate
Balance, as the case may be. A Noteholder's portion of the aggregate outstanding
principal balance of the related class of Notes is the product of (i) the
original denomination of such Noteholder's Note and (ii) the applicable Note
Pool Factor. A Certificateholder's portion of the aggregate outstanding
Certificate Balance is the product of (a) the original denomination of such
Certificateholder's Certificate and (b) the Certificate Pool Factor.
The Paying Agent will send to Securityholders monthly reports concerning
payments received on the Receivables, the Pool Balance, the Certificate Pool
Factor or each Note Pool Factor, as applicable, and various other items of
information specified herein. In addition, the Applicable Trustee or the Paying
Agent will furnish to Securityholders of record during any calendar year any
information for tax reporting purposes as required by law not later than the
latest date permitted by law. See 'Certain Information Regarding the
Securities--Reports to Securityholders' herein.
DESCRIPTION OF THE NOTES
GENERAL
The Notes will be issued pursuant to the terms of the Indenture
substantially in the form of the Indenture filed as an exhibit to the
Registration Statement of which this Prospectus forms a part. The following, as
well as other pertinent information included elsewhere herein, summarizes the
material terms of the Notes and the Indenture. The summary does not purport to
be complete and is subject to, and is qualified in its entirety by reference to,
all of the provisions of the Notes and the Indenture. Norwest Bank Minnesota,
National Association, a national banking corporation with its corporate trust
offices located at Norwest Center, Sixth Street and Marquette Avenue,
Minneapolis, Minnesota 55479-0070, will be the Indenture Trustee under the
Indenture. In the ordinary course of its business, the Indenture Trustee and its
affiliates have engaged and may in the future engage in commercial banking or
financial advisory transactions with the Sellers, the Servicer and their
respective affiliates.
PAYMENTS OF INTEREST
Interest on the outstanding principal amount of each class of Notes will
accrue at the applicable Interest Rate specified on the cover page hereof and
will be payable to the Noteholders of record monthly on each Distribution Date,
commencing October 15, 1997. Interest on the outstanding principal amount of
each class of Notes will accrue at the applicable Interest Rate for each
Interest Accrual Period and shall be calculated on the basis of a 360-day year
based on the actual number of days with respect to the Class A-1 Notes, and on
the basis of a 360-day year of twelve 30-day months with respect to all other
classes of Notes. Interest payments on the Notes will generally be derived from
the Available Amount after payment of the Servicer Payment and from amounts, if
any, on deposit in the Reserve Account. See 'Description of the Transfer and
Servicing Agreements--Distributions' and '--Subordination of the Certificates;
Reserve Account' herein.
Interest payments to all classes of Noteholders will have the same
priority. Under certain circumstances, the amount available for interest
payments on the Notes could be less than the amount of interest payable on the
Notes on any Distribution Date, in which case each class of Noteholders will
receive their ratable share (based upon the aggregate amount of interest due to
such class of Noteholders) of the aggregate amount available to be distributed
in respect of interest on the Notes.
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PAYMENTS OF PRINCIPAL
Principal payments will be made to the Noteholders on each Distribution
Date in an amount generally equal to the Noteholders' Principal Distributable
Amount. Principal payments on the Notes will generally be derived from the
remaining Available Amount after payment of the Servicing Payment, the deposit
of the Noteholders' Interest Distributable Amount into the Note Distribution
Account and the deposit of the Certificateholders' Interest Distributable Amount
into the Certificate Distribution Account, and from amounts, if any, on deposit
in the Reserve Account.
On each Distribution Date, principal payments on the Notes, to the extent
of the Noteholders' Principal Distributable Amount, will be applied in the
following order of priority: (i) to the principal balance of the Class A-1 Notes
until the principal balance of the Class A-1 Notes is reduced to zero; (ii) to
the principal balance of the Class A-2 Notes until the principal balance of the
Class A-2 Notes is reduced to zero; (iii) to the principal balance of the Class
A-3 Notes until the principal balance of the Class A-3 Notes is reduced to zero;
(iv) to the principal balance of the Class A-4 Notes until the principal balance
of the Class A-4 Notes is reduced to zero; (v) to the principal balance of the
Class A-5 Notes until the principal balance of the Class A-5 Notes is reduced to
zero; (vi) to the principal balance of the Class A-6 Notes until the principal
balance of the Class A-6 Notes is reduced to zero; (vii) to the principal
balance of the Class A-7 Notes until the principal balance of the Class A-7
Notes is reduced to zero; (viii) to the principal balance of the Class A-8 Notes
until the principal balance of the Class A-8 Notes is reduced to zero; (ix) to
the principal balance of the Class A-9 Notes until the principal balance of the
Class A-9 Notes is reduced to zero; and (x) to the principal balance of the
Class A-10 Notes until the principal balance of the Class A-10 Notes is reduced
to zero. Notwithstanding the foregoing, if an Event of Default occurs and the
Notes are accelerated, the Noteholders' Principal Distributable Amount shall be
applied to the repayment of principal on each class of Notes pro rata on the
basis of their respective unpaid principal amounts. The principal balance of
each class of Notes, to the extent not previously paid, will be due on the Note
Final Scheduled Distribution Date with respect to such class specified on the
cover page hereof. The actual date on which the aggregate outstanding principal
amount of any class of Notes is paid may be earlier than the applicable Note
Final Scheduled Distribution Date based on a variety of factors, including those
described under 'Weighted Average Life of the Securities' herein.
THE INDENTURE
Modification of Indenture. The Trust and the Indenture Trustee may, with
the consent of the Noteholders representing not less than a majority of the
aggregate principal amount of the Notes then outstanding, execute a supplemental
indenture to add provisions to, change in any manner or eliminate any provisions
of, the Indenture, or modify (except as provided below) in any manner the rights
of the Noteholders.
Without the consent of the holder of each outstanding Note affected
thereby, no supplemental indenture will: (i) change the date of payment of any
installment of principal of or interest on any such Note or reduce the principal
amount thereof, the Interest Rate specified thereon or the redemption price with
respect thereto or change any place of payment where, or the coin or currency in
which, any such Note or any interest thereon is payable; (ii) impair the right
to institute suit for the enforcement of certain provisions of the Indenture
regarding payment; (iii) reduce the percentage of the aggregate principal amount
of the outstanding Notes, the consent of the Noteholders of which is required
(a) for any such supplemental indenture or (b) for any waiver of compliance with
certain provisions of the Indenture or of certain defaults thereunder and their
consequences as provided for in the Indenture; (iv) modify or alter the
provisions of the Indenture regarding the voting of Notes held by the Trust, any
other obligor on such Notes, the Sellers or an affiliate of any of them; (v)
reduce the percentage of the aggregate outstanding principal amount of such
Notes required to direct the Indenture Trustee to sell or liquidate the
Receivables, the consent of the Noteholders of which is required if the proceeds
of such sale or liquidation would be insufficient to pay the principal amount
and accrued but unpaid interest on the outstanding Notes; (vi) decrease the
percentage of the aggregate principal amount of the Notes required to amend the
sections of the Indenture that specify the applicable percentage of aggregate
principal amount of the Notes necessary to amend the Indenture or certain other
related
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agreements; (vii) modify any provisions of the Indenture in such a manner as to
affect the calculation of the amount of any payment of interest or principal due
on any Note on any Distribution Date (including the calculation of any of the
individual components of such calculation); or (viii) permit the creation of any
lien ranking prior to or on a parity with the lien of the Indenture with respect
to any of the collateral for the Notes or, except as otherwise permitted or
contemplated in the Indenture, terminate the lien of the Indenture on any such
collateral or deprive the holder of any Note of the security afforded by the
lien of the Indenture.
The Trust and the Indenture Trustee may also enter into supplemental
indentures, without obtaining the consent of the Noteholders, for the purpose
of, among other things, adding any provisions to or changing in any manner or
eliminating any of the provisions of the Indenture or modifying in any manner
the rights of the Noteholders; provided that such action will not materially
adversely affect the interest of any such Noteholder.
In addition to the foregoing limitations on executing supplemental
indentures, the Issuer will covenant in the Sale and Servicing Agreement not to
execute any supplemental indentures without the prior written consent of CITSF,
as Administrator.
Events of Default; Rights Upon Event of Default. With respect to the
Notes, 'EVENTS OF DEFAULT' under the Indenture will consist of: (i) a default in
the payment of any interest on any such Note for a period of 5 days; (ii) a
default in the payment of the principal of or any installment of the principal
of any such Note when the same becomes due and payable; (iii) a default in the
observance or performance of any covenant or agreement of the Trust made in the
Indenture, which default materially adversely affects the rights of the
Noteholders and which default continues for a period of 30 days after written
notice thereof is given to the Trust by the Indenture Trustee or to the Trust
and the Indenture Trustee by the Noteholders representing not less than 25% of
the aggregate principal amount of the Notes then outstanding (or for such longer
period, not in excess of 90 days, as may be reasonably necessary to remedy such
default; provided that such default is capable of remedy within 90 days or
less); or (iv) certain events of bankruptcy, insolvency, receivership or
liquidation of the Trust. However, the amount of principal required to be paid
to Noteholders under the Indenture will generally be limited to the Principal
Distributable Amount (absent acceleration of the Notes). Therefore, the failure
to pay principal on a class of Notes on any Distribution Date generally will not
result in the occurrence of an Event of Default until the Note Final Scheduled
Distribution Date for such class of Notes.
If an Event of Default occurs and is continuing with respect to the Notes,
the Indenture Trustee or the Noteholders representing not less than a majority
of the aggregate principal amount of the Notes then outstanding may declare the
principal of the Notes to be immediately due and payable. Such declaration may,
under certain circumstances, be rescinded by the Noteholders representing not
less than a majority of the aggregate principal amount of such Notes then
outstanding.
If the Notes are declared to be due and payable following an Event of
Default with respect thereto, the Indenture Trustee may institute proceedings to
collect amounts due or foreclose on the Trust property, exercise remedies as a
secured party, sell the Receivables or elect to have the Trust maintain
possession of the Receivables and continue to apply collections on the
Receivables as if there had been no declaration of acceleration. However, the
Indenture Trustee is prohibited from selling the Receivables following an Event
of Default, unless (i) Noteholders representing 100% of the aggregate principal
amount of the Notes then outstanding consent to such sale, (ii) the proceeds of
such sale are sufficient to pay in full the principal of and the accrued
interest on the outstanding Notes and the Certificate Balance and accrued
interest on the Certificates, in each case at the date of such sale, or (iii)
there has been an Event of Default arising from a failure to make a required
payment of principal of or interest on any Notes, and the Indenture Trustee
determines that the proceeds of Receivables would not be sufficient on an
ongoing basis to make all payments on the Notes as such payments would have
become due if such obligations had not been declared due and payable, and the
Indenture Trustee obtains the consent of Noteholders representing not less than
66-2/3% of the aggregate principal amount of the Notes then outstanding.
If an Event of Default occurs and is continuing with respect to the Notes,
the Indenture Trustee will be under no obligation to exercise any of the rights
or powers under the Indenture at the request or
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direction of any of the Noteholders if the Indenture Trustee reasonably believes
it will not be adequately indemnified against the costs, expenses and
liabilities that might be incurred by it in complying with such request. Subject
to the provisions for indemnification and certain limitations contained in the
Indenture, Noteholders representing not less than a majority of the aggregate
principal amount of the Notes then outstanding will have the right to direct the
time, method and place of conducting any proceeding or any remedy available to
the Indenture Trustee, and Noteholders representing not less than a majority of
the aggregate principal amount of the Notes then outstanding may, in certain
cases, waive any default with respect thereto, except a default in the payment
of principal or interest or a default in respect of a covenant or provision of
the Indenture that cannot be modified without the waiver or consent of
Noteholders representing 100% of the aggregate principal amount of the Notes
then outstanding.
No Noteholders will have the right to institute any proceeding with respect
to the Indenture unless (i) such holder has previously given written notice to
the Indenture Trustee of a continuing Event of Default, (ii) Noteholders
representing not less than 25% of the aggregate principal amount of the Notes
then outstanding have made written request to the Indenture Trustee to institute
such proceeding in its own name as Indenture Trustee, (iii) such Noteholder or
Noteholders have offered the Indenture Trustee indemnity reasonably satisfactory
to it against the costs, expenses and liabilities to be incurred in complying
with such request, (iv) the Indenture Trustee has for 60 days after receipt of
such notice, request and offer of indemnity failed to institute such proceeding,
and (v) no direction inconsistent with such written request has been given to
the Indenture Trustee during such 60-day period by Noteholders representing not
less than a majority of the aggregate principal amount of the Notes then
outstanding.
In addition, the Indenture Trustee and the Noteholders, by accepting the
Notes, will covenant that they will not at any time institute against the Trust
any bankruptcy, reorganization or other proceeding under any federal or state
bankruptcy or similar law.
With respect to the Trust, neither the Indenture Trustee nor the Owner
Trustee in its individual capacity, nor any holder of a Certificate representing
an ownership interest in the Trust nor any of their respective owners,
beneficiaries, agents, officers, directors, employees, affiliates, successors or
assigns will, in the absence of an express agreement to the contrary, be
personally liable for the payment of the principal of or interest on the Notes
or for the agreements of the Trust contained in the Indenture.
CERTAIN COVENANTS
The Indenture will provide that the Trust may not consolidate with or merge
into any other entity, unless (i) the entity formed by or surviving such
consolidation or merger is organized under the laws of the United States, any
state of the United States or the District of Columbia, (ii) such entity
expressly assumes the Trust's obligation to make due and punctual payments of
principal of and interest on the Notes and the performance or observance of
every agreement and covenant of the Trust under the Indenture, (iii) no Event of
Default shall have occurred and be continuing immediately after such merger or
consolidation, (iv) the Trust has been advised that no rating then in effect of
the Notes or the Certificates by any Rating Agency would be downgraded or
withdrawn as a result of such merger or consolidation, (v) such action as was
necessary to maintain the lien and security interest created by the Indenture
shall have been taken and (vi) the Trust has received an opinion of counsel to
the effect that such consolidation or merger would have no material adverse tax
consequence to the Trust or to any Noteholder or Certificateholder.
The Trust will not, among other things, (i) except as expressly permitted
by the Indenture or the Sale and Servicing Agreement, sell, transfer, exchange
or otherwise dispose of any of the properties or assets of the Trust, (ii) claim
any credit on or make any deduction from the principal or interest payable in
respect of the Notes (other than amounts withheld under the Code or applicable
state law) or assert any claim against any present or former holder of such
Notes because of the payment of taxes levied or assessed upon the Trust, (iii)
permit the validity or effectiveness of the Indenture to be impaired, or permit
the lien of the Indenture to be amended, hypothecated, subordinated, terminated
or discharged
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or permit any person to be released from any covenants or obligations with
respect to the Notes under the Indenture except as may be expressly permitted
thereby, (iv) permit any lien, charge, excise, claim, security interest,
mortgage or other encumbrance to be created on or extend to or otherwise arise
upon or burden the assets of the Trust or any party thereof, or any interest
therein or the proceeds thereof (other than tax liens, mechanics' liens and
other liens that arise by operation of law, in each case on a Financed Vehicle
and arising solely as a result of an action or omission of the related Obligor)
or (v) permit any lien of the Indenture not to constitute a valid first priority
security interest in the Trust (other than with respect to any such tax,
mechanics or other lien).
The Trust may not engage in any activity other than as specified herein.
The Trust will not incur, assume or guarantee any indebtedness other than
indebtedness incurred pursuant to the Notes and the Indenture or otherwise in
accordance with the Indenture or the Sale and Servicing Agreement.
Annual Compliance Statement. The Trust will be required to file annually
with the Indenture Trustee a written statement as to the fulfillment of its
obligations under the Indenture.
Indenture Trustee's Annual Report. The Indenture Trustee will be required
to mail each year to all Noteholders a brief report relating to its eligibility
and qualification to continue as Indenture Trustee under the Indenture, any
amounts advanced by it under the Indenture, the amount, interest rate and
maturity date of certain indebtedness owing by the Trust to the Indenture
Trustee in its individual capacity, the property and funds physically held by
the Indenture Trustee as such and any action taken by it that materially affects
the Notes and that has not been previously reported.
Satisfaction and Discharge of Indenture. The Indenture will be discharged
with respect to the Notes upon the delivery to the Indenture Trustee for
cancellation of all the Notes or, with certain limitations, upon deposit with
the Indenture Trustee of funds sufficient for the payment in full of all the
Notes.
THE INDENTURE TRUSTEE
The Indenture Trustee may resign at any time by notifying the Issuer and
the Noteholders, in which event the Issuer will be obligated to appoint a
successor indenture trustee. The Issuer may remove the Indenture Trustee if the
Indenture Trustee ceases to be eligible to continue as such under the Indenture
or if the Indenture Trustee becomes insolvent. Noteholders representing not less
than a majority of the aggregate principal amount of the Notes then outstanding
may also remove the Indenture Trustee by so notifying the Indenture Trustee. In
such circumstances, the Issuer will be obligated to appoint a successor
indenture trustee. Any resignation or removal of the Indenture Trustee and
appointment of a successor indenture trustee will not become effective until
acceptance of the appointment by the successor indenture trustee.
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the terms of the Trust
Agreement in substantially the form of the Trust Agreement filed as an exhibit
to the Registration Statement of which this Prospectus forms a part. The
following, as well as other pertinent information included elsewhere herein,
summarizes the material terms of the Certificates and the Trust Agreement. The
summary does not purport to be complete and is subject to, and qualified in its
entirety by reference to, all the provisions of the Certificates and the Trust
Agreement.
RESTRICTIONS ON OWNERSHIP
Purchasers of Certificates and their assignees will be deemed to represent
that the beneficial owners of such Certificates are not Foreign Investors and
that no Plan Assets of any Plan were used to acquire the Certificates. See
'Certain Federal Income Tax Consequences' and 'ERISA Considerations' herein.
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DISTRIBUTION OF INTEREST INCOME
On each Distribution Date, commencing October 15, 1997, the
Certificateholders will be entitled to distributions in an amount equal to the
amount of interest that would accrue on the Certificate Balance at the
Certificate Rate. Interest in respect of a Distribution Date will accrue during
the related Interest Accrual Period and shall be calculated on the basis of a
360-day year of twelve 30-day months. Interest distributions due for any
Distribution Date but not distributed on such Distribution Date will be due on
the next Distribution Date in addition to an amount equal to interest on such
amount at the Certificate Rate (to the extent lawful). Interest distributions
with respect to the Certificates will generally be derived from the Available
Amount remaining after the payment of the Servicer Payment and the deposit of
the Noteholders' Interest Distributable Amount into the Note Distribution
Account and from amounts, if any, on deposit in the Reserve Account. See
'Description of the Transfer and Servicing Agreement--Distributions' and
'--Subordination of the Certificates; Reserve Account' herein.
The Certificateholders will not receive any distributions of interest with
respect to an Interest Accrual Period until the full amount of interest on the
Notes due with respect to such Interest Accrual Period has been deposited in the
Note Distribution Account. If an Event of Default occurs and the Notes are
accelerated, Certificateholders will not be entitled to receive any
distributions of interest or principal until the Notes have been paid in full.
DISTRIBUTIONS OF PRINCIPAL PAYMENTS
Certificateholders will be entitled to distributions of principal on each
Distribution Date in an amount generally equal to the Certificateholders'
Principal Distributable Amount. The Certificateholders' Principal Distributable
Amount will be zero for each Distribution Date occurring before the Distribution
Date on which the Notes have been paid in full; and on and after such
Distribution Date, it will generally be 100% of the Principal Distributable
Amount (after payment of all of the Notes in full). Distributions with respect
to principal payments on the Certificates will generally be derived from the
Available Amount remaining after the payment of the Servicer Payment, the
deposit of the Noteholders' Distributable Amount into the Note Distribution
Account and the deposit of the Certificateholders' Interest Distributable Amount
into the Certificate Distribution Account and from amounts, if any, on deposit
in the Reserve Account. Notwithstanding the foregoing, if an Event of Default
occurs and the Notes are accelerated, the Certificateholders will not be
entitled to receive any distributions of interest or principal until the Notes
have been paid in full. See 'Description of the Transfer and Servicing
Agreements--Distributions' and '--Subordination of the Certificates; Reserve
Account' herein.
OPTIONAL PREPAYMENT
On any Distribution Date, after the Notes have been paid in full, the
Certificates will be prepaid if the Servicer exercises its option to purchase
the Receivables. The Servicer may purchase the Receivables after the last day of
a Collection Period as to which the Pool Balance shall have declined to 5% or
less of the Cutoff Date Pool Balance. If the Servicer exercises its option to
purchase the Receivables, the Certificateholders will receive an amount equal to
the Certificate Balance then outstanding together with accrued interest at the
Certificate Rate, which distribution shall effect early retirement of the
Certificates. See 'Description of the Transfer and Servicing Agreements--
Termination' herein.
THE OWNER TRUSTEE
The Owner Trustee's liability in connection with the issuance and sale of
the Securities is limited solely to the express obligations of the Owner Trustee
set forth in the Trust Agreement and the Sale and Servicing Agreement. The Owner
Trustee under the Trust Agreement will perform administrative functions,
including making distributions from the Certificate Distribution Account. The
Owner Trustee may resign at any time by giving written notice thereof to the
Sellers under the Trust Agreement, in which event the Sellers will be obligated
to appoint a successor owner trustee. The Sellers may also remove the Owner
Trustee if the Owner Trustee ceases to be eligible to continue as Owner Trustee
under the Trust Agreement, becomes legally unable to act or if the Owner Trustee
becomes insolvent.
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In such circumstances, the Sellers will be obligated to appoint a successor
owner trustee. Any resignation or removal of the Owner Trustee and appointment
of a successor owner trustee will not become effective until acceptance of the
appointment by the successor owner trustee.
CERTAIN INFORMATION REGARDING THE SECURITIES
BOOK-ENTRY REGISTRATION
Securityholders may hold their Securities through DTC (in the United
States) or Cedel or Euroclear (in Europe), which in turn hold through DTC, if
they are participants of such systems, or indirectly through organizations that
are participants in such systems.
The Sellers have been informed by DTC that DTC's nominee will be Cede.
Accordingly, such nominee is expected to be the holder of record of any
Book-Entry Securities. Unless and until Definitive Securities are issued under
the limited circumstances described herein, no Securityholder will be entitled
to receive a physical certificate representing its interest in such Security.
All references herein to actions by Securityholders refer to actions taken by
DTC upon instructions from its Participants and all references herein to
distributions, notices, reports and statements to Securityholders of Book-Entry
Securities refer to distributions, notices, reports and statements to DTC or its
nominee, as the registered holder of the Securities, for distribution to
Securityholders in accordance with DTC's procedures with respect thereto. See
'--Definitive Securities' herein.
Cedel and Euroclear will hold omnibus positions on behalf of the Cedel
Participants and the Euroclear Participants, respectively, through customers'
securities accounts in Cedel's and Euroclear's names on the books of their
respective depositaries (collectively, the 'DEPOSITARIES'), which in turn will
hold such positions in customers' securities accounts in the Depositaries' names
on the books of DTC.
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a 'CLEARING
CORPORATION' within the meaning of the New York Uniform Commercial Code and a
'CLEARING AGENCY' registered pursuant to the provisions of Section 17A of the
Exchange Act. DTC was created to hold securities for its Participants and
facilitate the clearance and settlement of securities transactions between
Participants through electronic book-entry changes in accounts of its
Participants, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers (who may
include any Underwriter), banks, trust companies and clearing corporations and
may include certain other organizations, including Cedel and Euroclear. Indirect
access to the DTC system also is available to Indirect Participants such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Participant, either directly or indirectly.
Transfers between Participants will occur in accordance with DTC rules.
Transfers between Cedel Participants and Euroclear Participants will occur in
the ordinary way in accordance with their applicable rules and operating
procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC in the United States, on the one hand, and directly or indirectly
through Cedel Participants or Euroclear Participants, on the other, will be
effected in DTC in accordance with DTC rules on behalf of the relevant European
international clearing system by its Depositary; however, such cross-market
transactions will require delivery of instructions to the relevant European
international clearing system by the counterparty in such system in accordance
with its rules and procedures and within its established deadlines (European
time). The relevant European international clearing system will, if the
transaction meets its settlement requirements, deliver instructions to its
Depositary to take action to effect final settlement on its behalf by delivering
or receiving securities in DTC, and making or receiving payment in accordance
with normal procedures for same-day funds settlement applicable to DTC. Cedel
Participants and Euroclear Participants may not deliver instructions directly to
the Depositaries.
Because of time-zone differences, credits or securities in Cedel or
Euroclear as a result of a transaction with a Participant will be made during
the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions in
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such securities settled during such processing will be reported to the relevant
Cedel Participant or Euroclear Participant on such business day. Cash received
in Cedel or Euroclear as a result of sales of securities by or through a Cedel
Participant or Euroclear Participant to a Participant will be received with
value on the DTC settlement date but will be available in the relevant Cedel or
Euroclear cash account only as of the business day following settlement in DTC.
A 'SECURITYHOLDER,' as used herein, shall mean a holder of a beneficial
interest in a Book-Entry Security. Securityholders that are not Participants or
Indirect Participants but desire to purchase, sell or otherwise transfer
ownership of, or other interest in, Securities may do so only through
Participants and Indirect Participants. In addition, Securityholders will
receive all distributions of principal of and interest on Securities from the
Owner Trustee or Indenture Trustee, as applicable (the 'APPLICABLE TRUSTEE'),
through the Participants, who in turn will receive them from DTC. Under a
book-entry format, Securityholders may experience some delay in their receipt of
payments, since such payments will be forwarded by the Applicable Trustee to
Cede, as nominee for DTC. DTC will forward such payments to its Participants
which thereafter will forward them to Indirect Participants or Securityholders.
It is anticipated that the only 'NOTEHOLDER' and 'CERTIFICATEHOLDER' will be
Cede, as nominee of DTC. Securityholders will not be recognized by the
Applicable Trustee as Noteholders or Certificateholders, as such term is used in
the Trust Agreement and Indenture, as applicable, and Securityholders will only
be permitted to exercise the rights of Securityholders indirectly through DTC,
Cedel or Euroclear and their respective participants or organizations.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the 'RULES'), DTC is required to make book-entry transfers of
Securities among Participants on whose behalf it acts with respect to the
Securities and to receive and transmit distributions of principal of, and
interest on, the Securities. Participants and Indirect Participants with which
Securityholders have accounts with respect to the Securities similarly are
required to make book-entry transfers and receive and transmit such payments on
behalf of their respective Securityholders. Accordingly, although
Securityholders will not physically possess Securities, the Rules provide a
mechanism by which Participants will receive payments and will be able to
transfer their interests.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a
Securityholder to pledge Securities to persons or entities that do not
participate in the DTC system, or to otherwise act with respect to such
Securities, may be limited due to the lack of physical certificates for such
Securities.
DTC has advised the Sellers that it will take any action permitted to be
taken by a Noteholder under the Indenture or a Certificateholder under the Trust
Agreement, as applicable, only at the direction of one or more Participants to
whose accounts with DTC the applicable Notes or Certificates are credited. DTC
may take conflicting actions with respect to other undivided interests to the
extent that such actions are taken on behalf of Participants whose holdings
include such undivided interests.
Cedel Bank, societe anonyme ('CEDEL') is incorporated under the laws of
Luxembourg as a professional depository. Cedel holds securities for its
participating organizations ('CEDEL PARTICIPANTS') and facilitates the clearance
and settlement of securities transactions between Cedel Participants through
electronic book-entry changes in accounts of Cedel Participants, thereby
eliminating the need for physical movement of certificates. Transactions may be
settled by Cedel in any of 28 currencies, including United States dollars. Cedel
provides to its Cedel Participants, among other things, services for
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Cedel interfaces with domestic
markets in several countries. As a professional depository, Cedel is subject to
regulations by the Luxembourg Monetary Institute. Cedel Participants are
recognized financial institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations and may include any Underwriter. Indirect access
to Cedel is also available to others, such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a Cedel
Participant, either directly or indirectly.
The Euroclear System ('EUROCLEAR') was created in 1968 to hold securities
for participants of Euroclear ('EUROCLEAR PARTICIPANTS') and to clear and settle
transactions between Euroclear
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Participants through simultaneous electronic book-entry delivery against
payment, thereby eliminating the need for physical movement of certificates and
any risk from lack of simultaneous transfers of securities and cash.
Transactions may now be settled in any of 27 currencies, including United States
dollars. Euroclear includes various other services, including securities lending
and borrowing and interfaces with domestic markets in several countries
generally similar to the arrangement for cross-market transfers with DTC
described above. Euroclear is operated by Morgan Guaranty Trust Company of New
York, Brussels, Belgium office (the 'EUROCLEAR OPERATOR'), under contract with
Euroclear Clearance System, S.C., a Belgian cooperative corporation (the
'COOPERATIVE'). All operations are conducted by the Euroclear Operator, and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear Operator, not the Cooperative. The Cooperative establishes
policy for 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 any Underwriter.
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.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of Euroclear and applicable Belgian law
(collectively, the 'TERMS AND CONDITIONS'). The Terms and Conditions govern
transfers of securities and cash within Euroclear, withdrawal 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.
Euroclear 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.
Distributions with respect to Securities held through Cedel or Euroclear
will be credited to the cash accounts of Cedel Participants or Euroclear
Participants in accordance with the relevant system's rules and procedures, to
the extent received by its Depositary. Such distributions will be subject to tax
reporting in accordance with relevant United States tax laws and regulations.
Cedel or the Euroclear Operator, as the case may be, will take any other action
permitted to be taken by a Securityholder under the Indenture or the Trust
Agreement, as applicable, on behalf of a Cedel Participant or a Euroclear
Participant only in accordance with its relevant rules and procedures and
subject to its Depositary's ability to effect such actions on its behalf through
DTC.
Although DTC, Cedel and Euroclear have agreed to the foregoing procedures
in order to facilitate transfers of Securities among participants of DTC, Cedel
and Euroclear, they are under no obligation to perform or continue to perform
such procedures, and such procedures may be discontinued at any time.
Except as required by law, the Applicable Trustee will not have any
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests of the Securities held by DTC, Cedel or
Euroclear or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
DEFINITIVE SECURITIES
The Notes of any class and the Certificates issued in book-entry form will
be issued in fully registered, certificated form ('DEFINITIVE NOTES' and
'DEFINITIVE CERTIFICATES,' as the case may be, and collectively referred to
herein as 'DEFINITIVE SECURITIES') to Noteholders or Certificateholders or their
respective nominees, rather than to the DTC or its nominee, only if (i) the
Sellers advise the Applicable Trustee in writing that DTC is no longer willing
or able to discharge properly its responsibilities as depository with respect to
the Securities and the Applicable Trustee is unable to locate a qualified
successor depository, (ii) the Sellers, at their option, elect to terminate the
book-entry
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system through DTC or (iii) after the occurrence of an Event of Default or an
Event of Servicing Termination, holders representing not less than a majority of
the outstanding principal amount of the Notes of such class or the Certificates,
as applicable, advise DTC through Participants in writing (with instructions to
notify the Applicable Trustee in writing) that the continuation of a book-entry
system through DTC (or a successor thereto) with respect to such Notes or
Certificates is no longer in the best interest of the holders of such
Securities.
Upon the occurrence of any event described in the immediately preceding
paragraph, DTC will be required to notify all applicable Securityholders through
Participants of the availability of Definitive Securities. Upon surrender by DTC
of the definitive certificates representing the corresponding Securities and
receipt of instructions for re-registration, the Applicable Trustee will reissue
such Securities as Definitive Securities to such Securityholders.
Distributions of principal with respect to, and interest on, such
Definitive Securities will thereafter be made in accordance with the procedures
set forth in the Indenture or the Trust Agreement, as applicable, directly to
holders of Definitive Securities in whose names the Definitive Securities were
registered at the close of business on the Record Date. Such distributions will
be made by check mailed to the address of such holder as it appears on the
register maintained by the Applicable Trustee. The final payment on any such
Definitive Security (whether a Definitive Security or the Securities registered
in the name of Cede representing the Securities), however, will be made only
upon presentation and surrender of such Definitive Security at the office or
agency specified in the notice of final distribution to the applicable
Securityholders.
Definitive Securities will be transferable and exchangeable at the offices
of the transfer agent and registrar, which shall initially be the corporate
trust department of Chase (in such capacity, the 'TRANSFER AGENT AND
REGISTRAR'). No service charge will be imposed for any registration of transfer
or exchange, but the Applicable Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge imposed in connection therewith.
LIST OF SECURITYHOLDERS
Three or more Noteholders (each of whom has owned a Note for at least six
months) may, by written request to the Indenture Trustee, obtain access to the
list of all Noteholders maintained by the Indenture Trustee for the purpose of
communicating with other Noteholders with respect to their rights under the
Indenture or the Notes. The Indenture Trustee may elect not to afford the
requesting Noteholders access to the list of such Noteholders if it agrees to
mail the desired communication or proxy, on behalf and at the expense of the
requesting Noteholders, to all Noteholders of record. Unless Definitive Notes
have been issued, the only Noteholder appearing on the list maintained by the
Indenture Trustee will be Cede, as nominee for DTC. In such circumstances, any
beneficial owner of a Note wishing to communicate with other beneficial owners
of Notes will not be able to identify those beneficial owners through the
Indenture Trustee and instead will have to attempt to identify them through DTC
and its Participants or such other means as such beneficial owner may find
available.
Three or more Certificateholders or one or more Certificateholders
representing not less than 25% of the Certificate Balance may, by written
request to the Owner Trustee or registrar for the Certificates specified in the
Trust Agreement, obtain access to the list of all Certificateholders for the
purpose of communicating with such Certificateholders with respect to their
rights under the Trust Agreement or under the Certificates. Unless Definitive
Certificates have been issued, the only Certificateholder appearing on the list
maintained by the Owner Trustee will be Cede, as nominee for DTC. In such
circumstances, any beneficial owner of a Certificate wishing to communicate with
other beneficial owners of Certificates will not be able to identify those
beneficial owners through the Owner Trustee and instead will have to attempt to
identify them through DTC and its Participants or such other means as such
beneficial owner may find available.
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REPORTS TO SECURITYHOLDERS
On each Distribution Date, the Paying Agent will include with each
distribution to each Noteholder and Certificateholder a statement prepared by
the Servicer. Each such statement to be delivered to Noteholders will include
(to the extent applicable), among other things, the following information as to
the Notes with respect to such Distribution Date or the period since the
previous Distribution Date, as applicable, and each such statement to be
delivered to Certificateholders will include (to the extent applicable) the
following information as to the Certificates with respect to such Distribution
Date or the period since the previous Distribution Date, as applicable:
(i) the amount of the distribution allocable to interest with respect
to each class of Notes and to the Certificate Balance and the derivation of
such amounts;
(ii) the amount of the distribution allocable to principal on or with
respect to each class of Notes and the Certificates;
(iii) the amount of the Servicing Fee paid and the amount of Monthly
Advances being reimbursed to the Servicer in respect of the related
Collection Period, and the total Servicer Payment;
(iv) the Pool Balance as of the close of business on the last day of
the preceding Collection Period;
(v) the aggregate outstanding principal balance and the Note Pool
Factor for each class of Notes, and the Certificate Balance and the
Certificate Pool Factor, in each case after giving effect to all payments
reported under clause (i) above on such date;
(vi) the amount of the Aggregate Net Losses, if any, for the preceding
Collection Period and the derivation of such amount, and the amount of
Aggregate Losses on all Liquidated Receivables for the year to date;
(vii) the Noteholders' Interest Carryover Shortfall, the Noteholders'
Principal Carryover Shortfall, the Certificateholders' Interest Carryover
Shortfall and the Certificateholders' Principal Carryover Shortfall, if
any, in each case as applicable to each class of Securities and the change
in such amounts from the preceding statement;
(viii) the aggregate Repurchase Amounts with respect to the
Receivables, if any, that were repurchased by either Seller or purchased by
the Servicer in such Collection Period;
(ix) the balance of the Reserve Account as of such date, after giving
effect to changes therein on such date, the Specified Reserve Account
Balance on such date and the components of calculating any such required
balance;
(x) the amount of Monthly Advances included in the Available Amount;
and
(xi) the balance of the Paid-Ahead Account as of such date, after
giving effect to any changes therein on such date.
Each amount set forth pursuant to subclauses (i), (ii) and (iii) with
respect to the Notes or the Certificates will be expressed as a dollar amount
per $1,000 of the initial principal balance of such Notes or the initial
Certificate Balance, as applicable.
The statements for each Collection Period will be delivered to DTC for
further distribution to Securityholders in accordance with DTC procedures. See
'Certain Information Regarding the Securities--Book-Entry Registration' herein.
Chase, as Administrator, will file with the Commission such periodic reports
with respect to the Trust as required under the Exchange Act and the rules and
regulations of the Commission thereunder.
Within the prescribed period of time for tax reporting purposes after the
end of each calendar year during the term of the Trust, the Applicable Trustee
or the Paying Agent will furnish to each person who at any time during such
calendar year has been a Noteholder or a Certificateholder and received any
payment thereon a statement containing certain information for the purposes of
such Securityholder's preparation of federal income tax returns. See 'Certain
Federal Income Tax Consequences' herein.
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DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following, as well as other information included elsewhere herein,
summarizes the material terms of the Sale and Servicing Agreement, the Trust
Agreement and the Administration Agreements (collectively, the 'TRANSFER AND
SERVICING AGREEMENTS'). Each of the Transfer and Servicing Agreements is in
substantially the form of the corresponding agreement filed as an exhibit to the
Registration Statement of which this Prospectus forms a part. The summary does
not purport to be complete and is subject to, and qualified in its entirety by
reference to, all the provisions of the Transfer and Servicing Agreements. The
following summary supplements the description of the general terms and
provisions of the Transfer and Servicing Agreements set forth herein, to which
description reference is hereby made.
SALE AND ASSIGNMENT OF RECEIVABLES
Pursuant to the Sale and Servicing Agreement, on or before the Closing
Date, the Sellers will transfer and assign to the Trust in consideration of the
receipt of the Securities, without recourse, their entire interest in the
Receivables, certain related property and the proceeds thereof, including, among
other things, their respective security interests in the related Financed
Vehicles. Each Receivable will be identified in a schedule appearing as an
exhibit to the Sale and Servicing Agreement (a 'SCHEDULE OF RECEIVABLES'). The
Sellers will sell the Certificates to the Certificate Underwriter and the Notes
to the Note Underwriters. See 'Underwriting' herein.
In the Sale and Servicing Agreement, each Seller will make representations
and warranties with respect to its Receivables and the security interests in the
Financed Vehicles related thereto, which representations and warranties will
include, among others, the following: (i) each Receivable (A) was originated by
a Dealer and acquired by an Originator from such Dealer in the ordinary course
of business, (B) was originated by an Originator directly, or (C) was a Bulk
Purchase Receivable; (ii) each Receivable is secured by a Financed Vehicle;
(iii) each Receivable was originated in the form of a retail installment sales
contract with a Dealer or a purchase money loan from an Originator through a
Dealer located in one of the states of the United States (or the District of
Columbia) or without the involvement of a Dealer for the financing of a Financed
Vehicle, and in each case was fully and properly executed by the parties
thereto; (iv) (A) in the case of a Receivable originated with the involvement of
a Dealer, if in the form of a retail installment sales contract, such Receivable
was purchased by an Originator from the originating Dealer and was validly
assigned by such Dealer to such Originator and (B) in the case of a Chase
Financial Receivable, such Receivable was purchased by Chase USA from CFAC or
CFHI, and was validly assigned by CFAC or CFHI, as applicable, to Chase USA; (v)
no provision of a Receivable has been waived, altered or modified in any
respect, except by instruments or documents contained in the related Receivables
file; (vi) each Receivable is a legal, valid and binding obligation of the
related Obligor and is enforceable in accordance with its terms (except as may
be limited by laws affecting creditors' rights generally); (vii) as of the
Cutoff Date, such Seller had no knowledge of any facts which would give rise to
any right of rescission, setoff, counterclaim or defense or of the same being
asserted or threatened with respect to any Receivable; (viii) the Obligor on
each Receivable is required to maintain physical damage insurance covering the
related Financed Vehicle in accordance with its terms; (ix) no Receivable was
originated in or is subject to the laws of any jurisdiction whose laws would
prohibit (A) the transfer of the Receivable to the Trust pursuant to the Sale
and Servicing Agreement, (B) the ownership of the Receivable by the Trust or (C)
the pledge by the Trust of such Receivable to the Indenture Trustee; (x) each
Receivable complies with all requirements of law in all material respects; (xi)
no Receivable has been satisfied, subordinated in whole or in part or rescinded,
and no Financed Vehicle has been released from the security interest of the
related Receivable in whole or in part; (xii) each Receivable creates a valid
and enforceable first priority security interest in favor of the originator of
such Receivable in the Financed Vehicle covered thereby, such security interest
is assignable to the Trust (by such originator to such Seller, if such
originator is not such Seller, and by such Seller to the Trust), and all
necessary action with respect to such Receivable has been taken to perfect the
security interest in the related Financed Vehicle in favor of such originator;
(xiii) all parties to each Receivable had capacity to execute such Receivable;
(xiv) no Receivable has been
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sold, assigned or pledged by such Seller to any person other than the Trust and,
prior to the transfer of the Receivables by such Seller to the Trust, such
Seller had good and marketable title to such Receivable, free and clear of any
lien, encumbrance, equity, loan, pledge, charge, claim or security interest, and
such Seller was the sole owner and had full right to transfer such Receivable to
the Trust; (xv) as of the Cutoff Date, such Seller had no knowledge that a
default, breach, violation or event permitting acceleration under any Receivable
existed; such Seller had no knowledge of any event which with notice and the
expiration of any grace or cure period would constitute a default, breach,
violation or event permitting acceleration under such Receivable (except for
payment delinquencies permitted as described herein), and such Seller has not
waived any of the foregoing (except for payment delinquencies permitted); (xvi)
as of the Cutoff Date, such Seller had no knowledge of any liens or claims which
have been filed for work, labor or materials affecting a Financed Vehicle
securing a Receivable, which are or may be liens prior to or equal or coordinate
with the security interest of the Receivable; (xvii) each Receivable is a fully
amortizing loan with interest at a fixed rate (the 'CONTRACT RATE'), provides
for level payments over the term of such Receivable and is either a Simple
Interest Receivable or a Precomputed Receivable; (xviii) each Receivable
contains customary and enforceable provisions such as to render the rights and
remedies of the holder thereof adequate for realization against the related
collateral (except as may be limited by creditors' rights generally); (xix) the
description of each Receivable set forth in the Schedule of Receivables is true
and correct as of its date; (xx) no Obligor is the United States of America or
any state or any agency, department, instrumentality or political subdivision
thereof; (xxi) if the Obligor is in the military (including an Obligor who is a
member of the National Guard or is in the reserves) and the Receivable is
subject to the Soldiers' and Sailors' Civil Relief Act of 1940, as amended (the
'SOLDIERS' AND SAILORS' CIVIL RELIEF ACT'), or the California Military Reservist
Relief Act of 1991 (the 'MILITARY RESERVIST RELIEF ACT'), such Obligor has not
made a claim to a Seller or the Servicer that (A) the amount of interest on the
Receivable should be limited to 6% pursuant to the Soldiers' and Sailors' Civil
Relief Act during the period of such Obligor's active duty status or (B)
payments on the Receivable should be delayed pursuant to the Military Reservist
Relief Act, in either case unless a court has ordered otherwise upon application
of a Seller (in either case 'RELIEF ACT REDUCTION'); (xxii) there is only one
original executed copy of each Receivable, which, prior to the execution of the
Sale and Servicing Agreement, was transferred to the Servicer on behalf of the
Trust; (xxiii) the Receivable is 'chattel paper' as defined in the New York and
Ohio Uniform Commercial Codes; (xxiv) each Receivable satisfies the other
criteria specified above under 'The Receivables Pool' herein; and (xxv) each
Receivable was originated in the United States of America. The representations
and warranties will be for the benefit of the Trust and, with respect to any
Receivable purchased by the Servicer, the Servicer.
As of the last day of the month following the date (or, if the related
Seller elects, the last day of the month including such date) on which the
related Seller discovers or receives written notice from the Owner Trustee or
the Indenture Trustee that a Receivable did not meet any of the criteria set
forth in the Sale and Servicing Agreement as of the Closing Date or the Cutoff
Date, as applicable, and such failure materially adversely affects the interests
of the Securityholders in such Receivable (regardless of whether such Seller had
actual knowledge of such failure as of the Cutoff Date), such Seller, unless it
has cured the failed criterion, will repurchase such Receivable from the Trust
at a price equal to the Actual Principal Balance owed by the Obligor thereof
plus accrued and unpaid interest thereon at the respective Contract Rate through
such last day (the 'REPURCHASE AMOUNT'). For administrative convenience, if
Chase is obligated pursuant to the Sale and Servicing Agreement to repurchase a
Receivable from the Trust, Chase USA, at its option, may satisfy Chase's
obligation by repurchasing such Receivable on the same terms. The repurchase
obligation will constitute the sole remedy available to the Certificateholders
or the Owner Trustee and the Noteholders or the Indenture Trustee for the
failure of a Receivable to meet any of the criteria set forth in the Sale and
Servicing Agreement. 'ACTUAL PRINCIPAL BALANCE' means, as of the close of
business on the last day of any month, (a) with respect to a Precomputed
Receivable, the sum of (i) the Principal Balance thereof as of such day and (ii)
the portion of all scheduled payments on such Receivable due and unpaid on or
prior to such day allocable to principal using the actuarial method and (b) with
respect to a Simple Interest Receivable, its Principal Balance as of such day.
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CUSTODY OF RECEIVABLES
Pursuant to the Sale and Servicing Agreement, to assure uniform quality in
servicing the Receivables and to reduce administrative costs, the Owner Trustee
on behalf of the Trust and the Indenture Trustee will appoint the Servicer as
initial custodian of the Receivables files. Receivables will not be stamped or
otherwise marked to reflect the transfer of the Receivables to the Trust and
will not be segregated from the other recreational vehicle loans owned or
serviced by the Servicer, CFMC or any of their respective affiliates. Custody of
the Receivables files may be held by the Servicer or a third party custodian
together with files for recreational vehicle loans or other loans owned by Chase
RV Finance or CITSF. The Obligors under the Receivables will not be notified of
the transfer of the Receivables to the Trust, but each Seller's accounting
records and computer systems will be purged of all references to the Receivables
to reflect the sale and assignment of the Receivables to the Trust. See 'Certain
Legal Aspects of the Receivables' herein.
ACCOUNTS
The Sellers will establish the Collection Account, the Reserve Account and
the Paid-Ahead Account in the name of the Indenture Trustee on behalf of the
Noteholders and the Certificateholders and the Note Distribution Account in the
name of the Indenture Trustee on behalf of the Noteholders. The Owner Trustee
will establish the Certificate Distribution Account in the name of the Owner
Trustee on behalf of the Certificateholders. Each of the Collection Account, the
Paid-Ahead Account, the Reserve Account, the Note Distribution Account and the
Certificate Distribution Account are collectively referred to herein as the
'TRUST ACCOUNTS.' Each Trust Account (other than the Reserve Account) will be
established initially with the trust department of Chase, and the Reserve
Account will be established initially with the trust department of Norwest Bank
Minnesota, National Association. Chase, in its capacity as the initial paying
agent (the 'PAYING AGENT'), will have the revocable right, at the direction of
the Servicer, to withdraw funds from each Trust Account (other than the Reserve
Account) for the purpose of making distributions to Securityholders in the
manner provided in the Transfer and Servicing Agreements. See '--Subordination
of the Certificates; Reserve Account' below.
The Trust Accounts will be maintained as Eligible Deposit Accounts. An
'ELIGIBLE DEPOSIT ACCOUNT' shall be either (a) a separately identifiable deposit
account established in the deposit taking department of a Qualified Institution
or (b) a segregated identifiable trust account established in the trust
department of a Qualified Trust Institution. A 'QUALIFIED INSTITUTION' shall be
a depository institution (including Chase) organized under the laws of the
United States or any state thereof or incorporated under the laws of a foreign
jurisdiction with a branch or agency located in the United States or any state
thereof and subject to supervision and examination by federal or state banking
authorities, having a short-term certificate of deposit rating and a long-term
unsecured debt rating confirmed by each Rating Agency as being consistent with
the ratings of the Securities and, in the case of any such institution
(including Chase) organized under the laws of the United States, the deposits of
which are insured by the FDIC. A 'QUALIFIED TRUST INSTITUTION' shall be an
institution organized under the laws of the United States or any state thereof
or incorporated under the laws of a foreign jurisdiction with a branch or agency
located in the United States and subject to supervision and examination by
federal or state banking authorities with the authority to act under such laws
as a trustee or in any other fiduciary capacity, having not less than $1 billion
in assets under fiduciary management and a long-term deposit rating confirmed by
each Rating Agency as being consistent with the ratings of the Securities.
Should Chase, Norwest Bank Minnesota, National Association or any other
depositary of a Trust Account cease to be a Qualified Institution or Qualified
Trust Institution, such Trust Account shall be moved to a Qualified Institution
or Qualified Trust Institution, provided that such Trust Account may remain at
such depositary if the Owner Trustee and the Indenture Trustee receive written
confirmation from each related Rating Agency to the effect that the ratings of
the Securities will not be adversely affected.
Funds in the Trust Accounts will be invested as provided in the Sale and
Servicing Agreement in Permitted Investments. 'PERMITTED INVESTMENTS' are
generally limited to investments confirmed by
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the related Rating Agencies as being consistent with the ratings of the
Securities. Permitted Investments may include Securities issued by either Seller
or its affiliates or trusts originated by either Seller or its affiliates, and
may also include certain money market mutual funds for which Chase or any of its
affiliates serves as an investment advisor, administrator, shareholder servicing
agent and/or custodian or subcustodian (for which it collects fees and
expenses). Permitted Investments are limited to obligations or securities that
mature on or before the Business Day preceding the next Distribution Date (each
such preceding day, a 'DEPOSIT DATE'). Investment earnings on funds deposited in
the Trust Accounts (other than the Reserve Account), net of losses and
investment expenses (collectively, 'INVESTMENT EARNINGS'), shall be paid to the
Sellers.
PAID-AHEAD PRECOMPUTED RECEIVABLES
So long as CITSF is the Servicer and provided that (i) there exists no
Event of Servicing Termination and (ii) each other condition to holding
Paid-Ahead Amounts as may be required by the Sale and Servicing Agreement is
satisfied, Paid-Ahead Amounts will be retained by the Servicer until the Deposit
Date relating to the Collection Period in which such amounts were due. As
provided in the Servicing Transfer Agreements, pending deposit into the
Collection Account, Paid-Ahead Amounts will be transferred by the Servicer to
CFMC and held by CFMC on behalf of the Servicer until the Business Day prior to
the applicable Deposit Date. If any of the above-described conditions to
retaining Paid-Ahead Amounts is not satisfied, Paid-Ahead Amounts will be
deposited into the Paid-Ahead Account and retained therein until such time as
the paid-ahead payment falls due. As of the Cutoff Date, the Servicer held
$561,500.57 of Paid-Ahead Amounts on the Receivables. Until such time as
Paid-Ahead Amounts are transferred from the Paid-Ahead Account or by the
Servicer to the Collection Account, they will not constitute collected interest
or collected principal and will not be available for distribution to the
Noteholders or Certificateholders.
SERVICING COMPENSATION
The Servicer will be entitled to receive, out of collections on the
Receivables, a Servicing Fee for each Collection Period, payable on the
following Distribution Date, equal to the sum of (i) one-twelfth of the product
of the Servicing Fee Rate and the Pool Balance as of the related Settlement Date
(or, in the case of the first Distribution Date, the Cutoff Date Pool Balance)
and (ii) any Administrative Fees paid by the Obligors during the related
Collection Period. 'ADMINISTRATIVE FEES' shall mean late payment fees, extension
fees and transfer of equity and assumption fees with respect to the Receivables.
In addition, the Servicing Transfer Agreements provide that CFMC may be
required to pay to CITSF a fee, or, in the alternative, CITSF may be required to
pay CFMC a fee, in each case, based on the performance of the Receivables. If
the ratio (expressed as a percentage) of (x) the Aggregate Losses on the
Receivables for any calendar year or partial calendar year over (y) the average
monthly Pool Balance with respect to such calendar year or partial calendar year
is less than 0.60%, CFMC will be required to pay to CITSF an additional fee of
up to 0.475% per annum of such average monthly Pool Balance (based on the actual
level of Aggregate Losses), and if such ratio exceeds 0.60%, CITSF will be
required to refund to CFMC an amount up to 0.200% per annum of such average
monthly Pool Balance (based on the actual level of Aggregate Losses). Neither
the Trust nor any successor Servicer under the Sale and Servicing Agreement will
be entitled to receive from CFMC or will be required to refund to CFMC any of
the foregoing amounts. A 'LOSS' on a Receivable is equal to the sum of its
principal balance, accrued interest thereon, collection and insurance expenses,
repossession and liquidation expenses and forbearance expenses related to such
Receivable, net of any liquidation proceeds, insurance proceeds, collections,
and any recoveries on such Receivable. 'AGGREGATE LOSSES' mean, with respect to
any calendar year or partial calendar year, an amount equal to (x) the sum of
the Losses for such calendar year or partial calendar year, less (y) any
recoveries (including, but not limited to, sales proceeds and insurance credits)
received during such calendar year or partial calendar year in respect of the
Receivables in default in, and included in the calculation of Aggregate Losses
with respect to, any prior calendar year or partial calendar year.
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Payments to the Servicer of such amounts will compensate the Servicer for
performing the functions of a third party servicer of Recreational Vehicle Loans
as an agent for the Trust, including collecting and posting all payments,
responding to inquiries of Obligors, investigating delinquencies, reporting
federal income tax information to Obligors, monitoring the Financed Vehicles in
cases of Obligor default and handling the foreclosure or other liquidation of
the Financed Vehicle in appropriate instances (subject to reimbursement of its
expenses incurred in connection with such foreclosure, liquidation or other
realization on the Receivables to the extent described herein). The Servicing
Fee will also compensate the Servicer for serving as an Administrator under its
related Administration Agreement. The Servicer will also be responsible for
compensating Chase for serving as an Administrator under its related
Administration Agreement. The Servicer shall be responsible for all of its own
expenses and costs incurred in carrying out its obligations under the Sale and
Servicing Agreement, except that, in accordance with the Servicing Transfer
Agreements, CFMC has agreed to reimburse the Servicer for customary or necessary
repossession and other expenses incurred in connection with the repair, care and
custody of repossessed Financed Vehicles in an amount up to $1,000 per defaulted
Receivable, legal fees in an amount up to $1,000 per defaulted Receivable, or
such higher amounts as CFMC shall agree to from time to time, and funds advanced
by the Servicer to pay taxes or satisfy tax liens in respect of Financed
Vehicles. The Servicer is not required to take any action which would cause it
to incur expenses in excess of such amounts nor is CFMC required to reimburse
any such expenses in excess of such amounts. CFMC has also agreed to pay the
Servicer reasonable compensation and reimburse it for its expenses if, at the
request of CFMC, the Servicer takes action beyond its agreed-upon scope in
servicing the Receivables.
The Servicing Fee also will compensate the Servicer for administering the
Receivables, including reimbursing the Servicer for accounting for collections,
furnishing monthly and annual statements to the Owner Trustee and Indenture
Trustee with respect to distributions and providing certain federal income tax
information to the Paying Agent. The Servicing Fee also will compensate the
Servicer for accounting fees, outside auditor fees, data processing costs and
other costs incurred in connection with administering and servicing the
Receivables.
The Servicer Payment is equal on each Distribution Date to the sum of the
reimbursement then due to the Servicer for outstanding Monthly Advances and the
Servicing Fee (including any unpaid Servicing Fees for past Distribution Dates).
SERVICING AND INSURANCE PROCEDURES
The Servicer will make reasonable efforts, consistent with the customary
servicing practices and procedures employed by the Servicer with respect to
recreational vehicle loans owned by it (except as set forth in the Servicing
Transfer Agreements and described herein), to collect all payments due with
respect to the Receivables and, in a manner consistent with the Transfer and
Servicing Agreements, will continue such normal collection practices and
procedures as it follows with respect to comparable recreational vehicle loans
that it services for itself (except as set forth in the Servicing Transfer
Agreements and described herein). The Servicer will follow such normal
collection practices and procedures as it deems necessary or advisable to
realize upon any Receivable with respect to which it determines that eventual
payment in full is unlikely or to realize upon any defaulted Receivable. The
Servicer may sell the related Financed Vehicle securing such Receivable at a
public or private sale in accordance with the Servicing Transfer Agreements, or
take any other action permitted by applicable law. See 'Certain Legal Aspects of
the Receivables.' The proceeds of any such realization will be deposited in the
Collection Account. CITSF's customary servicing practices and procedures with
respect to recreational vehicle loans may be changed in accordance with CITSF's
business judgment; provided, that any such change relating to the Receivables
that would have a material effect on the collectibility of the Receivables may
not be made without CFMC's consent.
In accordance with the Servicing Transfer Agreements, CITSF has agreed to
several limitations on how it services the Receivables. In addition, CFMC has
retained the right to direct CITSF with respect to loss mitigation strategies,
to require CITSF to initiate repossession actions or to direct CITSF to refrain
from repossessing Financed Vehicles, in each case based upon reasonable criteria
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communicated in writing to CITSF from time to time. Such limitations and
instructions may result in the Servicer's taking actions from time to time
different from actions it otherwise would take in accordance with its customary
servicing policies and procedures at such time.
The Servicer has agreed that, with respect to defaulted Receivables having
Principal Balances in excess of $30,000, the Servicer may not enter into a
repossession sale or short sale/settlement which would result in a loss
exceeding 60% of such Principal Balance without the approval of CFMC. In
addition, the Servicer may not charge-off a Receivable (by deeming it to be a
Liquidated Receivable) in connection with a non-repossession loss if the
resulting charge-off would exceed $50,000 without the approval of CFMC. Pursuant
to the Servicing Transfer Agreements, the Servicer has agreed to attempt to
contact by telephone Obligors whose Receivables have become more than ten days
delinquent, and in the event contact by telephone is not made on or before the
21st day of delinquency, to perform a manual review of the Receivable to
determine the appropriate course of action, which may be continued phone calls
and/or the sending of letters.
In accordance with the Servicing Transfer Agreements, the Servicer is not
permitted to initiate litigation with respect to any Receivable without CFMC's
consent except for actions to recover possession or to foreclose upon a Financed
Vehicle, collection suits or actions to recover deficiencies (subject to
limitations on reimbursement of the Servicer's expenses as described under
'--Servicing Compensation' herein). The Servicing Transfer Agreements also
require that the Servicer, before commencing any litigation to collect amounts
owing with respect to a Receivable, review the related files to determine if
there exist facts which might constitute a defense or counterclaim in any such
litigation. If such review indicates the existence of facts which might
constitute a defense or counterclaim, the Servicer is not permitted to initiate
any litigation with respect to such Receivable without the prior written consent
of CFMC.
The Servicer shall, at its own cost and expense, keep in force throughout
the term of the Transfer and Servicing Agreements a fidelity bond. Such fidelity
bond shall protect against losses, including forgery, theft, embezzlement and
fraud and shall have such deductibles, and be in such form and amount as is
generally customary among persons which service a portfolio of recreational
vehicle loans having an aggregate principal amount of $100 million or more and
which are generally regarded as servicers acceptable to institutional investors,
but in no case shall such fidelity bond be less than $5,000,000.
PURCHASE BY THE SERVICER
Under the Sale and Servicing Agreement, the Servicer will agree not to,
except as expressly provided therein, (i) release the Financed Vehicle securing
each Receivable from the security interest granted by such Receivable except in
accordance with the terms of such Receivable and applicable law, (ii) impair the
rights of the Trust in the Receivables or take any action inconsistent with the
Trust's ownership of the Receivables, (iii) increase the number of payments
under a Receivable, or increase the principal amount of a Receivable which is
used to finance the purchase price of the related Financed Vehicle, or extend or
forgive payments on a Receivable, or (iv) fail to file and process claims under
any insurance policy covering a Receivable, if the failure to file and process
such claims would impair the protection or benefit to be afforded by such
insurance policy. A breach of any of the above described covenants that
materially adversely affects the Trust's interest in any Receivable will require
the Servicer to purchase such Receivable from the Trust for the Repurchase
Amount, unless such breach is cured by the last day of the Collection Period
following the Collection Period in which such discovery occurred. The purchase
obligation will constitute the sole remedy available to the Certificateholders
or the Owner Trustee and the Noteholders or the Indenture Trustee for a breach
of any of the above covenants.
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MODIFICATION OF RECEIVABLES
Consistent with its customary servicing procedures in effect from time to
time (except as described herein), the Servicer may, in its discretion, arrange
with an Obligor to defer, reschedule, extend or modify the payment schedule on a
Receivable or otherwise to modify the terms of a Receivable, provided that (i)
the maturity of such Receivable would not extend beyond the Final Scheduled
Maturity Date and (ii) if any such modification constitutes a refinancing, the
proceeds of such refinancing are used to pay the related Receivable in full.
CITSF may change such servicing procedures in accordance with its business
judgment, provided, that any such change relating to the Receivables that would
have a material effect on the collectibility of the Receivables may not be made
without CFMC's consent. Notwithstanding the foregoing, in connection with the
settlement by the Servicer of a defaulted Receivable, the Servicer may forgive a
portion of such Receivable, if in its discretion it believes that the acceptance
of the settlement proceeds from the related Obligor would result in the Trust's
receiving a greater amount of collections than the Net Liquidation Proceeds that
would result from repossessing and liquidating the related Financed Vehicle.
REMOVAL OF RECEIVABLES
Except as otherwise specified herein, none of the Sellers or the Servicer
will have the right to remove any Receivables from the Trust after the Closing
Date. In certain circumstances, a Seller may have the obligation to repurchase,
the Servicer may have the obligation to purchase or the Servicer may have the
option to purchase, a Receivable from the Trust, but all such repurchases or
purchases will be made at the Repurchase Amount.
COLLECTIONS
The Servicer may deposit all payments on or with respect to the Receivables
during each Collection Period (other than Paid-Ahead Amounts) into the
Collection Account monthly on the Deposit Date following the last day of such
Collection Period, provided that (i) (A) CITSF or any of its affiliates is the
Servicer and (B) the Servicer or the direct or indirect parent of the Servicer
has and maintains a short-term debt rating of at least A-1 by Standard & Poor's
and at least 'D-1' by Duff & Phelps (if rated by Duff & Phelps) and either a
short-term debt rating of P-1 or a long-term debt rating of at least A2 by
Moody's, or (ii) the Sellers or the Servicer obtain a letter of credit, surety
bond or insurance policy as set forth in the Sale and Servicing Agreement, under
which demands for payment may be made to secure timely remittance of monthly
collections to the Collection Account and, in the case of clause (ii), the Owner
Trustee and the Indenture Trustee are provided with a letter from each Rating
Agency to the effect that the utilization of such alternative remittance
schedule will not result in a qualification, reduction or withdrawal of any of
its then-current ratings of the Securities. As of the date of this Prospectus,
CITSF, as Servicer, will be permitted to remit collections to the Collection
Account on a monthly basis by virtue of clause (i) above. In the event that the
Servicer is permitted to make remittances of collections to the Collection
Account on a monthly basis pursuant to satisfaction of clause (ii) above, the
Sale and Servicing Agreement will be modified, to the extent necessary, without
the consent of any Securityholder. Pending such a monthly deposit into the
Collection Account, the Servicing Transfer Agreements require that collections
be transferred by the Servicer to CFMC and held by CFMC until the Business Day
prior to the Deposit Date. See 'Risk Factors--Risk of Commingling.' If the
Servicer is not permitted to remit collections to the Collection Account on a
monthly basis, the Servicer will be obligated to deposit all payments on or with
respect to the Receivables and all proceeds of Receivables collected on or with
respect to the Receivables during each Collection Period into the Collection
Account or the Paid-Ahead Account (in the case of Paid-Ahead Amounts) not later
than two Business Days after receipt.
A Seller or the Servicer, as the case may be, will remit the aggregate
Repurchase Amount of any Receivables to be purchased from the Trust into the
Collection Account on or before the next succeeding Deposit Date.
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The Servicer will not be required to deposit in the Collection Account
amounts relating to the Receivables attributable to the following: (a) amounts
received with respect to each Receivable (or property acquired in respect
thereof) which has been repurchased by a Seller or purchased by the Servicer,
respectively, pursuant to the Sale and Servicing Agreement, (b) Investment
Earnings on funds deposited in the Collection Account or the Paid-Ahead Account,
(c) amounts to be reimbursed to the Servicer in respect of nonrecoverable
Monthly Advances, (d) Net Liquidation Proceeds of any Liquidated Receivable to
the extent such proceeds exceed its Principal Balance, (e) Administrative Fees
incurred by the Obligors prior to August 18, 1997, (f) any Excluded
Forced-Placed Insurance Premiums or (g) any Excluded Precomputed Amounts.
MONTHLY ADVANCES
With respect to each Receivable as to which there has been a Payment
Shortfall during the related Collection Period (other than a Payment Shortfall
arising from a Receivable which has been prepaid in full or which has been
subject to a Relief Act Reduction during the related Collection Period), on each
Deposit Date the Servicer will be obligated to make a Monthly Advance but only
to the extent that the Servicer, in its good faith judgment, expects to recover
such Monthly Advance from subsequent collections on such Receivable made by or
on behalf of the Obligor (but only to the extent of expected interest
collections in the case of a Simple Interest Receivable) or from Net Liquidation
Proceeds or insurance proceeds with respect to such Receivable. The Servicer
shall be reimbursed for any Monthly Advance from subsequent collections with
respect to such Receivable. If the Servicer determines in its good faith
judgment that an unreimbursed Monthly Advance shall not ultimately be
recoverable from subsequent collections or that the related Receivable will be
sold pursuant to the Sale and Servicing Agreement, the Servicer shall be
reimbursed for such Monthly Advance from collections on all Receivables in
accordance with the priority of distributions described herein. In determining
whether a Monthly Advance is or will be nonrecoverable, the Servicer need not
take into account that it might receive any amounts in a deficiency judgment
against an Obligor. The Servicer will not make a Monthly Advance in respect of
(i) the principal component of any scheduled payment on a Simple Interest
Receivable or (ii) a Payment Shortfall arising from a Receivable which has been
prepaid in full or which has been subject to a Relief Act Reduction during the
related Collection Period.
NET DEPOSITS
As an administrative convenience, the Servicer will be permitted to make
deposits of collections, Monthly Advances, and the aggregate Repurchase Amount
of Receivables purchased by the Servicer for, or with respect to, a Collection
Period net of distributions to be made to the Sellers (to the extent of
Investment Earnings and amounts received with respect to Excluded Forced-Placed
Insurance Premiums and Excluded Precomputed Amounts) or to the Servicer
(including, without limitation, the Servicer Payment, amounts received with
respect to Administrative Fees incurred by Obligors prior to August 18, 1997 and
amounts to be deducted in the definition of 'Available Amount' and paid to the
Servicer set forth under '--Distributions' below). The Servicer, however, will
account to the Owner Trustee and the Indenture Trustee and to the
Securityholders as if all such deposits and distributions were made on an
aggregate basis for each type of payment or deposit. On each Distribution Date,
the Servicer will pay directly to the Sellers any Investment Earnings on funds
deposited in the Collection Account or the Paid-Ahead Account and any other
amounts the Sellers are entitled to (such as amounts received with respect to
Excluded Forced-Placed Insurance Premiums and Excluded Precomputed Amounts).
DISTRIBUTIONS
Deposits to Collection Account. On or before the third Business Day prior
to a Distribution Date, the Servicer will inform the Indenture Trustee, the
Owner Trustee and the Paying Agent of the following amounts: (i) the Available
Amount and the Principal Distribution Amount for the next succeeding
Distribution Date; (ii) the aggregate Repurchase Amount, if any, of Receivables
to be repurchased by the Sellers or purchased by the Servicer with respect to
the preceding Collection Period; (iii) the
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amount to be withdrawn from the Reserve Account on the next succeeding Deposit
Date and deposited into the Certificate Distribution Account; (iv) the
Noteholders' Interest Distributable Amount with respect to each class of Notes,
the Noteholders' Principal Distributable Amount, the Certificateholders'
Interest Distributable Amount and the Certificateholders' Principal
Distributable Amount for the next succeeding Distribution Date; (v) the Servicer
Payment; (vi) the amount deposited in the Paid-Ahead Account or retained by the
Servicer on account of Paid-Ahead Amounts during the preceding Collection Period
and any Paid-Ahead Amounts to be deposited into the Collection Account on the
related Deposit Date; (vii) the Monthly Advances to be deposited into the
Collection Account on the related Deposit Date; and (viii) the amount to be
deposited in the Reserve Account and the amount to be distributed to the Sellers
therefrom on such Distribution Date.
On or before each Deposit Date, the Servicer will cause all collections and
other amounts constituting the Available Amount for the related Distribution
Date to be deposited into the Collection Account, together with any amounts
withdrawn by the Indenture Trustee from the Reserve Account on such Deposit
Date.
The 'AVAILABLE AMOUNT' on any Distribution Date is equal to the excess of
(A) the sum of (i) all amounts on deposit in the Collection Account attributable
to collections or deposits made in respect of the Receivables in the related
Collection Period (including Net Liquidation Proceeds, any recoveries on
Liquidated Receivables and any applied Paid-Ahead Amounts), (ii) the Repurchase
Amount for any Receivable repurchased by either Seller or purchased by the
Servicer and the price paid by the Servicer, if any, to purchase the assets of
the Trust as described herein under '--Termination' and (iii) any Monthly
Advances made by the Servicer (with respect to (ii) and (iii) above, to the
extent such amounts are paid on or before the Deposit Date immediately preceding
such Distribution Date), over (B) the sum of the following amounts (to the
extent that the Servicer has not already withheld such amounts from collections
on the Receivables): (i) any amounts incorrectly deposited in the Collection
Account, (ii) net investment earnings on the funds in the Collection Account,
(iii) any amounts received with respect to Administrative Fees incurred by the
Obligors prior to August 18, 1997, Excluded Forced-Placed Insurance Premiums or
Excluded Precomputed Amounts and (iv) any other amounts, if any, permitted to be
withdrawn from the Collection Account by the Servicer (or to be retained by the
Servicer from collections on the Receivables) pursuant to the Sale and Servicing
Agreement.
Principal Distribution Amount. The 'PRINCIPAL DISTRIBUTION AMOUNT' on each
Distribution Date is equal to the sum of the following amounts with respect to
the related Collection Period, in each case calculated in accordance with the
method specified in each Receivable: (i) (A) all payments of principal
(including all Principal Prepayments applied during the related Collection
Period as described below) made on each Simple Interest Receivable during the
related Collection Period and (B) the portion of the scheduled payment due
during such Collection Period allocable to principal using the actuarial method
with respect to each Precomputed Receivable (or the Principal Balance thereof if
such Precomputed Receivable is prepaid in full during such Collection Period),
(ii) the Principal Balance of each Receivable which, during the related
Collection Period, was repurchased by a Seller or purchased by the Servicer
pursuant to the Sale and Servicing Agreement (a 'REPURCHASED RECEIVABLE') and
(iii) the Principal Balance of each Receivable that became a Liquidated
Receivable during the related Collection Period provided, however, that (x)
payments of principal (including Principal Prepayments) with respect to a
Repurchased Receivable received after the last day of the Collection Period in
which the Receivable became a Repurchased Receivable shall not be included in
the Principal Distribution Amount and (y) if a Liquidated Receivable is
purchased by a Seller or the Servicer pursuant to the Sale and Servicing
Agreement on the Deposit Date immediately following the Collection Period in
which it became a Liquidated Receivable, no amount will be included with respect
to such Receivable in the Principal Distribution Amount pursuant to clause (iii)
of the definition thereof.
'PRINCIPAL BALANCE' means, as of the close of business on the last day of a
Collection Period, (a) with respect to a Precomputed Receivable, the amount
originally advanced thereunder minus the sum of (i) that portion of all
scheduled payments due on or prior to such day allocable to principal using the
actuarial method, (ii) any payment of the Repurchase Amount with respect to such
Precomputed Receivable allocable to principal and (iii) any Principal Prepayment
applied to reduce
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the Principal Balance of such Precomputed Receivable in full and (b) with
respect to a Simple Interest Receivable, the amount originally advanced
thereunder minus the sum of (i) the portion of all payments made by or on behalf
of the related Obligor on or prior to such day and allocable to principal using
the simple interest method and (ii) any payment of the Repurchase Amount with
respect to such Simple Interest Receivable allocable to principal, in each case
without giving effect to any adjustments due to bankruptcy or similar
proceedings. A 'LIQUIDATED RECEIVABLE' is a defaulted Receivable as to which the
Servicer has recovered all amounts that it expects to recover either by sale or
disposition of the related Financed Vehicle or otherwise, but in any event a
Receivable will be deemed to become a Liquidated Receivable no later than the
date on which the Servicer has received proceeds from the sale or disposition of
such Financed Vehicle. 'PRINCIPAL PREPAYMENT' means a payment or other recovery
of principal on a Receivable (including insurance proceeds and Net Liquidation
Proceeds applied to principal on a Receivable) which is received in advance of
its Due Date. 'NET LIQUIDATION PROCEEDS' means the monies collected by the
Servicer (from whatever source) during a Collection Period on a Liquidated
Receivable, net of (i) any payments required by law to be remitted to the
Obligor and (ii) other expenses customarily deducted from sales proceeds by
third parties in connection with sales or other dispositions of recreational
vehicles.
Deposits to the Distribution Accounts. On each Distribution Date, the
Servicer shall instruct the Indenture Trustee or the Paying Agent to make the
following distributions, to the extent of the sum of the Available Amount and
any amounts withdrawn from the Reserve Account then on deposit in the Collection
Account, in the following order of priority (except under the limited
circumstances provided herein):
(i) to the Servicer, the Servicer Payment with respect to such
Distribution Date and all unpaid Servicing Fees with respect to prior
Distribution Dates, to the extent such amounts are not deducted from the
Servicer's remittance to the Collection Account;
(ii) to the Note Distribution Account, the Noteholders' Interest
Distributable Amount for each class of Notes;
(iii) to the Owner Trustee for deposit into the Certificate
Distribution Account, the Certificateholders' Interest Distributable Amount
(unless the Notes have been accelerated as described herein);
(iv) to the Note Distribution Account, the Noteholders' Principal
Distributable Amount;
(v) to the Owner Trustee for deposit into the Certificate Distribution
Account, the Certificateholders' Principal Distributable Amount; and
(vi) to the Reserve Account, any remaining portion of the Available
Amount.
Notwithstanding the foregoing, if an Event of Default occurs and the Notes
are accelerated, the Certificateholders will not be entitled to receive any
distributions in respect of their Certificates, until the Notes have been paid
in full.
For purposes hereof, the following terms shall have the following meanings:
'CERTIFICATE BALANCE' shall be an amount equal to $44,895,285.54
(approximately 5% of the Cutoff Date Pool Balance) as of the Closing Date and,
thereafter, shall be an amount equal to such initial Certificate Balance,
reduced by all amounts allocable to principal previously distributed to
Certificateholders. The Certificate Balance shall also be reduced on any
Distribution Date by the excess, if any, of (i) the sum of (A) the Certificate
Balance and (B) the outstanding principal amount of the Notes (in each case
after giving effect to amounts in respect of principal to be deposited in the
Certificate Distribution Account and the Note Distribution Account on such
Distribution Date), over (ii) the Pool Balance as of the close of business on
the last day of the preceding Collection Period. Thereafter, the Certificate
Balance shall be increased on any Distribution Date to the extent that any
portion of the Available Amount on such Distribution Date is available to pay
the existing Certificateholders' Principal Carryover Shortfall, but not by more
than the aggregate reductions in the Certificate Balance set forth in the
preceding sentence.
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'CERTIFICATEHOLDERS' DISTRIBUTABLE AMOUNT' means, for any Distribution
Date, the sum of the Certificateholders' Principal Distributable Amount and the
Certificateholders' Interest Distributable Amount.
'CERTIFICATEHOLDERS' INTEREST CARRYOVER SHORTFALL' means, for any
Distribution Date, the excess of the Certificateholders' Interest Distributable
Amount for the preceding Distribution Date over the amount in respect of
interest at the Certificate Rate that was actually deposited into the
Certificate Distribution Account on such preceding Distribution Date, plus
interest on such excess, to the extent permitted by law, at the Certificate Rate
from and including such preceding Distribution Date to but excluding the current
Distribution Date.
'CERTIFICATEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT' means, for any
Distribution Date, the sum of the Certificateholders' Monthly Interest
Distributable Amount for such Distribution Date and the Certificateholders'
Interest Carryover Shortfall for such Distribution Date.
'CERTIFICATEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE AMOUNT' means, for any
Distribution Date, one month's interest (or, in the case of the first
Distribution Date, interest accrued from and including the Closing Date to but
excluding such Distribution Date) at the Certificate Rate on the Certificate
Balance on the immediately preceding Distribution Date (or, in the case of the
first Distribution Date, the Certificate Balance on the Closing Date), after
giving effect to all distributions of principal to the Certificateholders on or
prior to such Distribution Date.
'CERTIFICATEHOLDERS' MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT' means, for any
Distribution Date prior to the Distribution Date on which the Notes have been
paid in full, zero; and for any Distribution Date commencing on or after the
Distribution Date on which the Notes have been paid in full, 100% of the
Principal Distribution Amount (less the portion of the Principal Distribution
Amount required on the first such Distribution Date to pay the Notes in full).
'CERTIFICATEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL' means, for any
Distribution Date, the sum of (a) the excess of (i) the Certificateholders'
Principal Distributable Amount for the preceding Distribution Date, over (ii)
the amount in respect of principal that was actually deposited into the
Certificate Distribution Account on such Distribution Date and (b) without
duplication of clause (a), the unreimbursed portion of the amount by which the
Certificate Balance has been reduced pursuant to the second sentence of the
definition thereof.
'CERTIFICATEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT' means, for any
Distribution Date, the sum of (i) the Certificateholders' Monthly Principal
Distributable Amount for such Distribution Date and (ii) the Certificateholders'
Principal Carryover Shortfall for such Distribution Date; provided, that the
Certificateholders' Principal Distributable Amount shall not exceed the
Certificate Balance. In addition, on the Certificate Final Scheduled
Distribution Date, the principal required to be distributed to
Certificateholders will include the lesser of (a) any payments of principal due
and remaining unpaid on each Receivable owned by the Trust as of the last day of
the immediately preceding Collection Period, or (b) the amount that is necessary
(after giving effect to the other amounts to be deposited in the Certificate
Distribution Account on such Distribution Date and allocable to principal) to
reduce the Certificate Balance to zero.
'NOTEHOLDERS' DISTRIBUTABLE AMOUNT' means, for any Distribution Date, the
sum of the Noteholders' Principal Distributable Amount and the Noteholders'
Interest Distributable Amount for all classes of Notes.
'NOTEHOLDERS' INTEREST CARRYOVER SHORTFALL' means, for any Distribution
Date for each class of Notes (other than the initial Distribution Date), the
excess of (i) the Noteholders' Interest Distributable Amount for the preceding
Distribution Date for such class of Notes, over (ii) the amount in respect of
interest that was actually deposited into the Note Distribution Account in
respect of such class of Notes on such preceding Distribution Date, plus
interest on the amount of interest due but not paid to the Noteholders of such
class on the preceding Distribution Date, to the extent permitted by law, at the
applicable Interest Rates borne by such class of Notes for the related Interest
Accrual Period.
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'NOTEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT' means, for any Distribution
Date for any class of Notes, the sum of (x) the Noteholders' Monthly Interest
Distributable Amount for such Distribution Date for such class of Notes and (y)
the Noteholders' Interest Carryover Shortfall for such Distribution Date for
such class of Notes.
'NOTEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE AMOUNT' means, for any
Distribution Date for any class of Notes, interest accrued during the related
Interest Accrual Period at the applicable Interest Rate on the outstanding
principal balance of the Notes of such class on such Distribution Date (or, in
the case of the first Distribution Date, on the Closing Date).
'NOTEHOLDERS' MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT' means, for any
Distribution Date, prior to the Distribution Date on which the Notes have been
paid in full, 100% of the Principal Distribution Amount; and for the
Distribution Date on which the Notes are paid in full, the portion of the
Principal Distribution Amount required to pay the Notes in full.
'NOTEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL' means, for any Distribution
Date, the excess of (x) the Noteholders' Principal Distributable Amount for the
preceding Distribution Date over (y) the amount in respect of principal that was
actually deposited into the Note Distribution Account on such preceding
Distribution Date.
'NOTEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT' means, for any Distribution
Date, the sum of (i) the Noteholders' Monthly Principal Distributable Amount for
such Distribution Date and (ii) the Noteholders' Principal Carryover Shortfall
for such Distribution Date; provided, that the Noteholders' Principal
Distributable Amount shall not exceed the outstanding principal balance of the
Notes. In addition, on the Note Final Scheduled Distribution Date of each class
of Notes, the principal required to be deposited in the Note Distribution
Account will include the amount necessary (after giving effect to other amounts
to be deposited in the Note Distribution Account on such Distribution Date and
allocable to principal) to reduce the outstanding principal balance of the
related class of Notes to zero.
SUBORDINATION OF THE CERTIFICATES; RESERVE ACCOUNT
The rights of the Certificateholders to receive distributions with respect
to the Receivables generally will be subordinated to the rights of the
Noteholders in the event of defaults and delinquencies on the Receivables as
provided in the Sale and Servicing Agreement. The protection afforded to the
Noteholders through subordination of the Certificates will be effected by the
preferential right of the Noteholders both to receive current distributions with
respect to the Receivables and withdrawals from the Reserve Account. The Reserve
Account will be funded with an initial deposit by the Sellers of cash or
Permitted Investments having a value of at least the Reserve Account Initial
Deposit. In addition, on each Distribution Date, the Reserve Account will be
augmented by the deposit therein of the Available Amount remaining after the
payment of the Servicer Payment, the deposit of the Noteholders' Distributable
Amount in the Note Distribution Account, and the deposit of the
Certificateholders' Distributable Amount in the Certificate Distribution
Account, in each case as described above under '--Distributions.' On each
Distribution Date, any amounts on deposit in the Reserve Account (after giving
effect to deposits and withdrawals made on such Distribution Date) in excess of
the Specified Reserve Account Balance on such Distribution Date will be released
and paid to the Sellers in accordance with the terms of the Sale and Servicing
Agreement.
Under the Sale and Servicing Agreement, on each Deposit Date, the Indenture
Trustee is required to demand a withdrawal from the amounts on deposit in the
Reserve Account, up to the Available Reserve Account Amount, in an amount equal
to the excess, if any, of the sum of the Noteholders' Distributable Amount and
the Certificateholders' Distributable Amount for the related Distribution Date
over the Available Amount for such Distribution Date remaining after the payment
of the Servicer Payment for such Distribution Date. Amounts so withdrawn will be
deposited in the Collection Account.
On each Distribution Date, the amount available in the Reserve Account (the
'AVAILABLE RESERVE ACCOUNT AMOUNT') will equal the lesser of (i) the amount on
deposit in the Reserve Account and (ii) the Specified Reserve Account Balance.
The aggregate amount withdrawn from the Reserve
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Account on any Deposit Date may not exceed the Available Reserve Account Amount
for the related Distribution Date.
The Specified Reserve Account Balance on any Distribution Date will equal
2.00% of the Pool Balance as of the related Settlement Date, but in any event
will not be less than the lesser of (i) $8,973,952.86 (1.00% of the Cutoff Date
Pool Balance) and (ii) such Pool Balance; provided, that the Specified Reserve
Account Balance will be calculated using a percentage of 3.00% on any
Distribution Date (beginning with the December 1997 Distribution Date) for which
(x) the Average Net Loss Ratio exceeds 1.75% or (y) the Average Delinquency
Percentage exceeds 2.00%. If the Specified Reserve Account Balance is increased
pursuant the foregoing proviso, it will revert back to the amount as previously
calculated if, for any three consecutive Distribution Dates, clauses (x) or (y)
is not triggered.
'AGGREGATE NET LOSSES' means, for any Distribution Date, the amount equal
to (i) the aggregate Principal Balance of all Receivables that became Liquidated
Receivables during the related Collection Period minus (ii) the Net Liquidation
Proceeds collected during such Collection Period with respect to any Liquidated
Receivables.
'AVERAGE DELINQUENCY PERCENTAGE' means, for any Distribution Date, the
average of the Delinquency Percentages for such Distribution Date and the
preceding two Distribution Dates.
'AVERAGE NET LOSS RATIO' means, for any Distribution Date, the average of
the Net Loss Ratios for such Distribution Date and the preceding two
Distribution Dates.
'DELINQUENCY PERCENTAGE' means, for any Distribution Date, the sum of the
outstanding Principal Balances of all Receivables which are 60 days or more
delinquent (including Receivables, which are not Liquidated Receivables,
relating to Financed Vehicles that have been repossessed), as of the close of
business on the last day of the Collection Period immediately preceding such
Distribution Date, determined in accordance with the Servicer's normal
practices, such sum expressed as a percentage of the Pool Balance as of the
close of business on the last day of such Collection Period.
'NET LOSS RATIO' means, for any Distribution Date, an amount expressed as a
percentage, equal to (i) the Aggregate Net Losses for such Distribution Date,
divided by (ii) the average of the Pool Balances on each of the related
Settlement Date and the last day of the related Collection Period.
The Specified Reserve Account Balance may be reduced to a lesser amount as
determined by the Sellers; provided, that such reduction may not adversely
affect any rating by a Rating Agency of a Security. Upon distribution to the
Sellers of amounts from the Reserve Account, neither the Noteholders nor the
Certificateholders will have any rights in, or claims to, such amounts.
The availability of funds in the Reserve Account and the subordination of
amounts distributable to the Certificateholders are intended to enhance the
likelihood of receipt by Noteholders of the full amount of principal and
interest due them, and to decrease the likelihood that the Noteholders will
experience losses. There is no other protection against losses on the
Receivables afforded the Noteholders. In addition, the availability of funds in
the Reserve Account is intended solely to enhance the likelihood of receipt by
Certificateholders of the full amount of principal and interest due them and to
decrease the likelihood that the Certificateholders will experience losses.
However, in certain circumstances, the Reserve Account could be depleted. If the
amount required to be withdrawn from the Reserve Account to cover shortfalls in
collections on the Receivables exceeds the amount of available cash in the
Reserve Account, Noteholders or Certificateholders could incur losses or a
temporary shortfall in the amounts distributed to the Noteholders or
Certificateholders could result, which could, in turn, increase the average life
of the Notes or Certificates. Such shortfalls may result from, among other
things, Aggregate Net Losses on the Receivables or the failure by either Seller
or the Servicer to make any remittance under the Sale and Servicing Agreement.
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ADMINISTRATION AGREEMENTS
Each of CITSF and Chase, as Administrators, will enter into an
Administration Agreement with the Trust and the Indenture Trustee. Pursuant to
each Administration Agreement, the Administrator party thereto will agree on
behalf of the Trust to provide certain notices and to perform certain other
administrative functions required by the Transfer and Servicing Agreements and
the Indenture and specified in such Administration Agreement as being the
responsibility of such Administrator. Compensation for the performance by CITSF
of its obligations under the Administration Agreement to which it is a party
will be included in the Servicing Fee. CITSF will be responsible for
compensating Chase for the performance of Chase's obligations under the
Administration Agreement to which Chase is a party.
Each Administration Agreement provides that the Administrator party thereto
may act directly or through its agents or attorneys pursuant to agreements
entered into with any of them, and that such Administrator will not be liable
for the conduct or misconduct of such agents or attorneys if such agents or
attorneys shall have been selected by such Administrator with due care.
STATEMENTS TO THE OWNER TRUSTEE AND THE INDENTURE TRUSTEE
Prior to each Distribution Date, the Servicer will provide to the Owner
Trustee and Indenture Trustee a statement setting forth substantially the same
information for such date and the related Collection Period as is required to be
provided in the periodic reports provided to Noteholders and Certificateholders
described herein under 'Certain Information Regarding the Securities--Reports to
Securityholders.'
EVIDENCE AS TO COMPLIANCE
The Sale and Servicing Agreement will provide that a firm of independent
public accountants will annually furnish to the Sellers, the Owner Trustee and
the Indenture Trustee a statement as to compliance by the Servicer during the
preceding twelve months (or, in the case of the first such certificate, from the
Closing Date) with certain standards relating to the servicing of the
Receivables, or as to the effectiveness of its processing and reporting
procedures and certain other matters.
The Sale and Servicing Agreement will also provide for delivery to the
related firm of independent public accountants referred to in the immediately
preceding paragraph, substantially simultaneously with the delivery of such
accountants' statement referred to above, of a certificate signed by an officer
of the Servicer stating that the Servicer has fulfilled its obligations in all
material respects under the Sale and Servicing Agreement throughout the
preceding twelve months (or, in the case of the first such certificate, from the
Closing Date) or, if there has been a default in the fulfillment of any such
obligation, describing each such default.
Copies of such statements and certificates may be obtained by
Securityholders by a request in writing addressed to the Servicer.
CERTAIN MATTERS REGARDING THE SERVICER
The Sale and Servicing Agreement will provide that the Servicer may not
resign from its obligations and duties as Servicer thereunder, except upon a
determination that the Servicer's performance of such duties is no longer
permissible under applicable law. Such resignation will not become effective
until a successor Servicer has assumed the Servicer's servicing obligations and
duties under the Transfer and Servicing Agreements.
Pursuant to the Sale and Servicing Agreement, the Sellers will have the
right to terminate all rights and obligations of the Servicer thereunder at any
time after a calendar year, or in the case of 1997, the last four calendar
months of such year, during which Aggregate Losses on the Receivables exceed
0.80% of the average of the month-end principal balances of the Receivables for
each month in such calendar year, or such four calendar months, so long as
Chase, Chase USA or another party
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acceptable to the Rating Agencies assumes the Servicer's servicing obligations
and duties under the Transfer and Servicing Agreements.
The Sale and Servicing Agreement will provide that neither the Servicer nor
any of its shareholders, affiliates, directors, officers, employees and agents
shall be under any liability to the Owner Trustee, the Indenture Trustee, the
Trust or the Securityholders for taking any action or for refraining from taking
any action pursuant to the Transfer and Servicing Agreements or for errors in
judgment; provided, however, that neither the Servicer nor any such person will
be protected against any liability which otherwise would be imposed by reason of
willful misfeasance, bad faith or negligence in the performance of duties or by
reason of reckless disregard of obligations and duties thereunder. In addition,
the Transfer and Servicing Agreements will provide that the Servicer is under no
obligation to appear in, prosecute or defend any legal action which arises under
the Transfer and Servicing Agreements and that, in its opinion, may cause it to
incur any expense or liability. The Servicer may, however, undertake any
reasonable action that it may deem necessary or desirable in respect of the
Transfer and Servicing Agreements and the rights and duties of the parties
thereto and the interests of the Securityholders thereunder. In the event that
the Servicer, in its discretion, undertakes any action which it deems necessary
or desirable in connection with its rights and duties under the Transfer and
Servicing Agreements or the interests of the Securityholders thereunder, the
legal expenses and costs of such action and any liability resulting therefrom
will be expenses, costs and liabilities of the Trust, and the Servicer will be
entitled to be reimbursed therefor out of amounts otherwise distributable to the
Sellers from the Reserve Account.
Any corporation or other entity into which the Servicer may be merged or
consolidated, or any corporation or other entity resulting from any merger,
conversion or consolidation to which the Servicer is a party, or any corporation
or other entity succeeding to the business of the Servicer, which corporation or
other entity assumes the obligations of the Servicer, will be the successor of
the Servicer under the Transfer and Servicing Agreements.
EVENTS OF SERVICING TERMINATION
'EVENTS OF SERVICING TERMINATION' under the Sale and Servicing Agreement
will consist of (i) any failure by the Servicer to deliver to the Owner Trustee
or the Indenture Trustee the Servicer's certificate for the related Collection
Period or any failure by the Servicer to deliver to the Owner Trustee or the
Indenture Trustee for deposit in any Trust Account any proceeds or payments
required to be delivered under the terms of the Securities or the Sale and
Servicing Agreement (or, in the case of a payment or deposit to be made not
later than the Deposit Date, the failure to make such payment or deposit on such
Deposit Date), which failure continues unremedied for five Business Days after
discovery by the Servicer or for five Business Days after receipt of written
notice to the Servicer by the Owner Trustee or the Indenture Trustee or to the
Owner Trustee or the Indenture Trustee and the Servicer by Noteholders
representing not less than 25% of the aggregate principal amount of the Notes
then outstanding (so long as Notes are outstanding) or, if no Notes are
outstanding, Certificateholders representing not less than 25% of the
Certificate Balance then outstanding; (ii) any failure by the Servicer to duly
observe or perform in any material respect any other covenant or agreement of
the Servicer set forth in the Sale and Servicing Agreement or Indenture, which
failure materially adversely affects the rights of the Trust or the
Securityholders and which continues unremedied for 60 days after receipt of
written notice of such failure to the Servicer by the Owner Trustee or the
Indenture Trustee or to the Owner Trustee or the Indenture Trustee and the
Servicer by Noteholders representing not less than 25% of the aggregate
principal amount of the Notes then outstanding (so long as Notes are
outstanding) or, if no Notes are outstanding, Certificateholders representing
not less than 25% of the Certificate Balance then outstanding; (iii) a court or
other governmental authority having jurisdiction in the premises shall have
entered a decree or order for relief in respect of the Servicer in an
involuntary case under any applicable bankruptcy, insolvency or other similar
law now or hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of the Servicer, as the
case may be, or for any substantial liquidation of its affairs, and such order
remains undischarged and unstayed for at least 60 days; or
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(iv) the Servicer shall have commenced a voluntary case under any applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, or shall
have consented to the entry of an order for relief in an involuntary case under
any such law, or shall have consented to the appointment of or taking possession
by a receiver, liquidator, assignee, trustee, custodian or sequestrator (or
other similar official) of the Servicer or for any substantial part of its
property, or shall have made any general assignment for the benefit of its
creditors, or shall have failed to, or admitted in writing its inability to, pay
its debts as they become due, or shall have taken any corporate action in
furtherance of the foregoing.
RIGHTS UPON EVENT OF SERVICING TERMINATION
As long as an Event of Servicing Termination under the Sale and Servicing
Agreement remains unremedied, the Indenture Trustee or Noteholders representing
not less than a majority of the aggregate principal amount of the Notes then
outstanding (or, if the Notes have been paid in full and the Indenture has been
discharged in accordance with its terms, by the Owner Trustee or
Certificateholders representing not less than a majority of the Certificate
Balance then outstanding) may terminate all the rights and obligations of the
Servicer under the Sale and Servicing Agreement, whereupon Chase will succeed to
all the responsibilities, duties and liabilities of the Servicer under the Sale
and Servicing Agreement and will be entitled to similar compensation
arrangements. In the event that Chase is unwilling or unable to so act, the
Sellers may appoint, or petition a court of competent jurisdiction for the
appointment of, a successor Servicer to act as successor to the outgoing
Servicer. The Sellers may make such arrangements for compensation to be paid,
which in no event may be greater than the Servicing Fee paid to the Servicer
under the Sale and Servicing Agreement.
WAIVER OF PAST DEFAULTS
The Noteholders representing not less than a majority of the aggregate
principal amount of the Notes then outstanding (or the Certificateholders
representing not less than a majority of the Certificate Balance then
outstanding, in the case of any Event of Servicing Termination that does not
adversely affect the Indenture Trustee or the Noteholders) may, on behalf of all
the Noteholders and Certificateholders, waive any default by the Servicer in the
performance of its obligations under the Sale and Servicing Agreement and its
consequences, except an Event of Servicing Termination in making any required
deposits to or payments from any of the Trust Accounts in accordance with the
Sale and Servicing Agreement. Therefore, the Noteholders have the ability, as
limited above, to waive defaults by the Servicer that could in certain instances
materially adversely affect the Certificateholders. No such waiver will impair
such Certificateholders' rights with respect to subsequent defaults.
AMENDMENT
Each of the Transfer and Servicing Agreements may be amended by the parties
thereto, without prior notice to the Noteholders or Certificateholders but with
prior consent of the Owner Trustee and notice to the Rating Agencies (i) to cure
any ambiguity, to correct or supplement any provision therein or in the
Securities that may be inconsistent with any other provision therein, to
evidence a succession to the Servicer or a Seller pursuant to the related
Transfer and Servicing Agreement, or to add any other provisions with respect to
matters or questions arising under such Transfer and Servicing Agreement that
are not inconsistent with the provisions of such Transfer and Servicing
Agreement; provided, however, that such action will not, on the basis of
officer's certificate of the Servicer and the Sellers reasonably acceptable to
the Owner Trustee and the Indenture Trustee, materially adversely affect the
interests of the Trust or any Securityholder or (ii) to effect a transfer or
assignment of the Trust's or the Servicer's rights, obligations and duties under
such Transfer and Servicing Agreement. The Transfer and Servicing Agreements may
also be amended by the Sellers, the Servicer, the Owner Trustee and the
Indenture Trustee with the consent of the Noteholders representing not less than
a majority of the aggregate principal amount of the Notes then outstanding, if
any, and the Certificateholders representing not less than a majority of the
Certificate Balance then outstanding, for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions
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of such Transfer and Servicing Agreements or of modifying in any manner the
rights of the Noteholders or Certificateholders; provided, however, that no such
amendment may (i) increase or reduce in any manner the amount of, or accelerate
or delay the timing of, collections of payments on the Receivables or
distributions that are required to be made for the benefit of the Noteholders or
Certificateholders or (ii) reduce the aforesaid percentage of the Noteholders or
Certificateholders that are required to consent to any such amendment, without
the consent of Noteholders representing 100% of the aggregate principal amount
of the Notes then outstanding or the Certificateholders representing 100% of the
Certificate Balance then outstanding, as the case may be. In addition to the
foregoing limitations, the Sellers will covenant in the Sale and Servicing
Agreement that they will not amend the Trust Agreement without the prior written
consent of CITSF, as Administrator.
PAYMENT OF NOTES
Upon the payment in full of all outstanding Notes and the satisfaction and
discharge of the Indenture, the Owner Trustee will succeed to all the rights of
the Indenture Trustee, and the Certificateholders will succeed to all the rights
of the Noteholders under the Sale and Servicing Agreement, except as otherwise
provided therein.
TERMINATION
The obligations of the Servicer, the Sellers, the Owner Trustee and the
Indenture Trustee pursuant to the Transfer and Servicing Agreements will
terminate upon the earlier of (i) the Distribution Date next succeeding the
month that is six months after the maturity or other liquidation of the last
Receivable and the disposition of any amounts received upon liquidation of any
property remaining in the Trust and (ii) the payment to Noteholders and
Certificateholders of all amounts required to be paid to them pursuant to the
Transfer and Servicing Agreements.
In order to avoid excessive administrative expense, the Servicer will be
permitted at its option to purchase from the Trust, as of the last day of any
applicable Collection Period, if the outstanding Pool Balance with respect to
the Receivables held by the Trust is 5% or less of the Cutoff Date Pool Balance
as of such last day, all assets of the Trust (other than the Trust Accounts,
except for the Paid-Ahead Account), including the remaining Receivables, any
related Paid-Ahead Amounts and any rights of the Trust to Liquidated
Receivables, at the price specified in the Sale and Servicing Agreement, which
price shall not be less than the amount necessary to retire the Certificates on
the related Distribution Date after paying the Servicer Payment to the Servicer.
The subsequent distribution to the Certificateholders of all amounts required to
be distributed to them pursuant to the Trust Agreement will effect early
retirement of the Certificates.
The Owner Trustee and the Indenture Trustee will give written notice of
termination to each Securityholder of record, which notice will specify the
Distribution Date upon which such Securityholders may surrender their Securities
to the Owner Trustee or the Transfer Agent and Registrar, as the case may be,
for final payment. The final distribution to any Securityholder will be made
only upon surrender and cancellation of such holder's Security (whether a
Definitive Security or the Securities registered in the name of Cede
representing the Securities) at the office or agency of the Owner Trustee or the
Transfer Agent and Registrar, as the case may be, specified in the notice of
termination.
Subject to applicable law and after the Indenture Trustee has taken certain
measures to notify Noteholders, any money held by the Indenture Trustee or the
Paying Agent in trust for payment on the Notes that remain unclaimed for two
years shall, upon request of the Trust, be paid to the Trust. Following any such
payment, the Owner Trustee and the Paying Agent shall no longer be liable to any
Noteholder with respect to such unclaimed amount, and any claim with respect to
such amount shall be an unsecured claim against the Trust. If, within 18 months
after the first notice of final payment on the Certificates, there remain
Certificates that have not been surrendered for cancellation, the Owner Trustee
may take appropriate steps to notify the applicable Certificateholders (the cost
thereof paid out of the unclaimed amounts). Subject to applicable law, any funds
that then remain shall be paid to the Sellers in accordance with the Trust
Agreement.
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CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
TRANSFER OF RECEIVABLES TO THE TRUST
The Receivables are 'chattel paper' as defined in the Uniform Commercial
Code (the 'UCC') in effect in the State of New York. Pursuant to the UCC, the
sale of chattel paper is treated in a manner similar to a security interest in
chattel paper. In order to protect the Trust's ownership or security interest in
the Receivables, the Sellers will file UCC-1 financing statements with the
appropriate governmental authorities in the States of New York and Delaware, to
give notice of the Trust's and the Indenture Trustee's ownership of and security
interest in the Receivables and their proceeds. Under the Sale and Servicing
Agreement, the Servicer will be obligated to maintain the perfection of the
Trust's and the Indenture Trustee's interest in the Receivables. It should be
noted, however, that a purchaser of chattel paper who gives new value and takes
possession of it in the ordinary course of such purchaser's business has
priority over a security interest, including an ownership interest, in the
chattel paper that is perfected by filing UCC-1 financing statements and not by
possession of such chattel paper by the original secured party, if such
purchaser acts in good faith without knowledge that the related chattel paper is
subject to a security interest, including an ownership interest. Any such
purchaser would not be deemed to have such knowledge merely because there are
UCC filings and would not learn of the sale of or security interest in the
Receivables from a review of the Receivables files since they would not be
marked to show such sale, although Chase RV Finance's master computer records
will indicate such sale.
Each of the Sellers intends that the transfer of the Receivables by it to
the Trust under the Sale and Servicing Agreement constitutes a sale. In the
event that either Seller were to become insolvent, the FDIA sets forth certain
powers that the FDIC may exercise if it were appointed receiver of such Seller.
To the extent that a Seller has granted a security interest in the Receivables
transferred by it to the Trust and that interest was validly perfected before
such Seller's insolvency and was not taken in contemplation of insolvency or
with the intent to hinder, delay or defraud such Seller or its creditors, that
security interest would not be subject to avoidance by the FDIC as receiver of
such Seller. Positions taken by the FDIC staff prior to the passage of FIRREA do
not suggest that the FDIC, if appointed receiver of either Seller, would
interfere with the timely transfer to the Trust of payments collected on the
Receivables. If, however, the FDIC were to assert a contrary position, or were
to require the Owner Trustee to establish its rights to those payments by
submitting to and completing the administrative claims procedure established
under the FDIA, or the conservator or receiver were to request a stay of
proceedings with respect to such Seller as provided under the FDIA, delays in
payments on the Securities and possible reductions in the amount of those
payments could occur.
SECURITY INTERESTS IN THE FINANCED VEHICLES
The Receivables represent installment sale contracts, purchase money notes
and other notes that evidence the financing of Financed Vehicles. The
Receivables also constitute personal property security agreements and include
grants of security interests in the Financed Vehicles under the Uniform
Commercial Code as adopted in each state. Perfection rules relating to security
interests in recreational vehicles are generally governed under state
certificate of title statutes (Alabama, Connecticut, Georgia, Maine,
Massachusetts, Minnesota, Mississippi, New Hampshire, New York, Rhode Island and
Vermont have adopted the Uniform Motor Vehicle Certificate of Title and
Anti-Theft Act) or by the vehicle registration laws of the state in which each
recreational vehicle is located. In states which have adopted the Uniform Motor
Vehicle Certificate of Title and Anti-Theft Act, security interests in
recreational vehicles may be perfected either by notation of the secured party's
lien on the certificate of title or by delivery of the certificate of title and
payment of a fee to the state motor vehicle authority, depending on the
particular state law. In states in which perfection of a security interest in a
particular motor vehicle is not governed by a certificate of title statute,
perfection is usually accomplished by filing pursuant to the provisions of the
applicable Uniform Commercial Code. Notwithstanding the foregoing, in certain
states, folding camping trailers and/or slide-in campers are not subject to
state titling and vehicle registration laws and a security interest in such
recreational
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vehicles is perfected by filing pursuant to the provisions of the applicable
Uniform Commercial Code. In most states, a security interest in a recreational
vehicle is perfected by notation of the secured party's lien on the vehicle's
certificate of title.
Chase RV Finance had policies and procedures in place to ensure that all
actions necessary under the laws of the states in which the related Financed
Vehicles were located at the time of origination of the Receivables to perfect
the originators' security interests in such Financed Vehicles were taken,
including, where applicable, having a notation of the originator's lien recorded
on the related certificate of title or delivering the required documents and
fees, obtaining possession of the related certificate of title (if possible),
or, where applicable, by perfecting its security interest in the related
Financed Vehicles under the applicable Uniform Commercial Code. In the event
that the originator of a Receivable failed, due to clerical errors, to effect
such notation or delivery, or attempted to perfect the security interest under
an inapplicable statute (for example, under the Uniform Commercial Code rather
than under a motor vehicle title law), such originator would not have a
perfected first priority security interest in such Financed Vehicle. In this
event the only recourse of the Trust would be against the Obligor on an
unsecured basis, if applicable, against a Dealer pursuant to its repurchase
obligation or against the related Seller.
Pursuant to the terms of the Sale and Servicing Agreement, each Seller will
assign its security interest in the Financed Vehicles to the Trust and the Trust
will assign the security interest in the Financed Vehicles to the Indenture
Trustee. However, because of the administrative burden and expense, none of the
Sellers or the Owner Trustee will amend the certificates of title or UCC-1
financing statements with respect to the Financed Vehicles to identify the Trust
or the Indenture Trustee as the new secured party nor will either such entity
execute and file any transfer instruments. In addition, the certificates of
title and the UCC-1 financing statements with respect to the Financed Vehicles
relating to those Receivables not originated by either Seller have not and will
not be amended to reflect any interim transfers of ownership of the security
interests in such Financed Vehicles. In a majority of states, the assignment of
a Receivable together with the related security interest is an effective
conveyance of such security interest without amendment of any lien noted on the
related certificate of title or of any UCC-1 financing statement or the filing
of any transfer instruments with the appropriate governmental authorities, and
the new owner of the Receivable succeeds to the original secured party's rights
in the related Financed Vehicle as against creditors of the Obligor. In certain
states, in the absence of such amendment and delivery or execution and filing of
transfer instruments with the appropriate governmental authorities to reflect
the successive assignments of the security interest in such Financed Vehicle,
the related Seller, the Trust and/or the Indenture Trustee may not have a
perfected security interest in such Financed Vehicle. In California, a security
interest in a recreational vehicle may be perfected only by depositing with the
state department of motor vehicles a properly endorsed certificate of title for
the vehicle showing the secured party as legal owner. A transferee (such as the
Trust) of a security interest in a motor vehicle may be required to file
appropriate documents with the California Department of Motor Vehicles. No such
applications will be made with respect to the assignments under the Sale and
Servicing Agreement, and thus the Trust may not have a perfected security
interest in the Financed Vehicles titled in California. The failure of the Trust
to possess perfected security interests in the Financed Vehicles titled in
California may affect the Trust's ability to realize on such Financed Vehicles
and thus may reduce the proceeds to be distributed to Securityholders. However,
in the absence of fraud, negligence or administrative error, the notation of the
originator's lien on the certificates of title should be sufficient to protect
the Trust against the risk that it will not be able to realize on the Financed
Vehicles titled in California.
In the event that the Trust does not have a perfected first priority
security interest in any Financed Vehicle, the only recourse of the Trust would
be against an Obligor on an unsecured basis or against the related Seller
pursuant to its repurchase obligation if the related originator did not have a
perfected first priority security interest in such Financed Vehicle. See
'Description of the Transfer and Servicing Agreements--Sale and Assignment of
Receivables' herein.
Except as described above, in the absence of fraud or forgery by a vehicle
owner or administrative error by state recording officials, the notation of the
lien of the originator of each
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Receivable on the certificate of title with respect to the related Financed
Vehicle will be sufficient to protect the Trust against the rights of subsequent
purchasers of such Financed Vehicle or subsequent lenders who take a security
interest in such Financed Vehicle. If there are any Financed Vehicles as to
which the originator of the related Receivable has failed to perfect the
security interest assigned to the Trust (i) such security interest would be
subordinate to, among others, holders of perfected security interests and (ii)
subsequent purchasers of such Financed Vehicles would take possession free and
clear of such security interest. There is also a risk that in not identifying
the Trust or the Indenture Trustee as the new secured party on the certificates
of title or executing and filing of transfer instruments, the security interest
of the Trust or Indenture Trustee could be released through fraud or negligence.
Under the laws of most states (including California), a perfected security
interest in a recreational vehicle continues for four months after the vehicle
is moved to a new state (from the state in which a financing statement was
properly filed initially to perfect the security interest or in which the
certificate of title was issued) and thereafter until the owner re-registers
such recreational vehicle in the new state. A majority of states generally
require surrender of a certificate of title to re-register a recreational
vehicle. Accordingly, the Servicer must surrender possession if it holds the
certificate of title to such a recreational vehicle or, in the case of a
recreational vehicle originally registered in a state which provides for
notation of lien on the certificate of title (e.g., California) but not
possession of the certificate of title by the holder of the security interest in
the related recreational vehicle, the Servicer should receive notice of
surrender if the security interest in the recreational vehicle is noted on the
certificate of title. Accordingly, the Servicer should have the opportunity to
re-perfect the security interest in the recreational vehicle in the state of
relocation. In states that do not require a surrender of the old certificate of
title for registration of a recreational vehicle, re-registration could defeat
perfection. In the ordinary course of servicing its portfolio of recreational
vehicle loans, the Servicer takes steps to effect such re-perfection upon
receipt of notice of re-registration or information from the obligor as to
relocation. Similarly, when an Obligor under a Receivable sells a Financed
Vehicle, unless the Servicer surrenders possession of the certificate of title,
it will receive notice as a result of the lien noted thereon and accordingly
will have an opportunity to require satisfaction of the related Receivable
before release of the lien. Under the Sale and Servicing Agreement, the Servicer
is obligated to take such steps, at the Servicer's expense, as are necessary to
maintain perfection of security interests in the Financed Vehicles.
Under the laws of many states (including California), certain possessory
liens for repairs performed on a motor vehicle and storage, as well as certain
rights in favor of Federal and state governmental authorities arising from the
use of a motor vehicle in connection with illegal activities, may take priority
even over a perfected security interest. Certain U.S. federal tax liens may have
priority over the lien of a secured party. Each Seller will represent in the
Sale and Servicing Agreement that, as of the Cutoff Date, it had no knowledge of
any such liens with respect to any Financed Vehicle related to a Receivable
transferred by such Seller to the Trust. However, such liens could arise at any
time during the term of a Receivable. No notice will be given to the Owner
Trustee or the Indenture Trustee in the event such a lien arises.
ENFORCEMENT OF SECURITY INTERESTS IN VEHICLES
The Servicer on behalf of the Trust and the Indenture Trustee may take
action to enforce the Trust's security interest by repossession and resale of
the Financed Vehicles securing the Receivables. The actual repossession may be
contracted out to third party contractors. Under the Uniform Commercial Code and
laws applicable in most states, a creditor can repossess a motor vehicle
securing a loan by voluntary surrender, 'self-help' repossession that is
'peaceful' (i.e., without breach of the peace) and, in the absence of voluntary
surrender and the ability to repossess without breach of the peace, by judicial
process. In California, under certain circumstances after the financed vehicle
has been repossessed, an obligor may reinstate the contract by paying the
delinquent installments and other amounts due. In the event of default by the
obligor, some jurisdictions (not including California) require that the obligor
be notified of the default and be given a time period within
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which to cure the default prior to repossession. Generally, this right of cure
may be exercised on a limited number of occasions during the term of the
contract. The Uniform Commercial Code and consumer protection laws in most
states place restrictions on repossession sales, including requiring prior
notice to the debtor and commercial reasonableness in effecting such a sale. In
the event of such repossession and resale of a Financed Vehicle, the Trust would
be entitled to be paid out of the sale proceeds before such proceeds could be
applied to the payment of the claims of unsecured creditors or the holders of
subsequently perfected security interests or, thereafter, to the debtor.
Under the Uniform Commercial Code and laws applicable in most states, a
creditor is entitled to obtain a deficiency judgment from a debtor for any
deficiency on repossession and resale of the motor vehicle securing such
debtor's loan. However, many states (including California) impose prohibitions
or limitations on deficiency judgments. In general, a defaulting Obligor may not
have sufficient assets to make the pursuit of a deficiency worthwhile.
Certain other statutory provisions, including federal and state bankruptcy
and insolvency laws, and general equitable principles may limit or delay the
ability of a lender to repossess and resell collateral or enforce a deficiency
judgment.
OTHER MATTERS
Numerous federal and state consumer protection laws may impose requirements
applicable to the origination and servicing of the Receivables, including the
Truth in Lending Act, the Fair Credit Reporting Act, the Equal Credit
Opportunity Act, the Magnuson-Moss Warranty Act and the Federal Trade Commission
Act.
The so-called 'Holder-in-Due-Course' Rule of the Federal Trade Commission
(the 'FTC RULE'), other state statutes or the common law in certain states have
the effect of subjecting a seller (and certain related lenders and their
assignees) in a consumer credit transaction and any assignee of the seller
(which would include the Trust) to all claims and defenses that the obligor in
the transaction could assert against the seller of the goods. Liability of a
subsequent holder under the FTC Rule is limited to the amounts paid by the
obligor under the contract, and a subsequent holder of the contract may also be
unable to collect any balance remaining due thereunder from the obligor. The
Uniform Consumer Credit Code applicable in certain states contains provisions
that generally duplicate this rule.
LEGAL INVESTMENT
The Class A-1 Notes will be eligible securities for purchase by money
market funds under paragraph (a)(9) of Rule 2a-7 under the Investment Company
Act of 1940, as amended.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of the material United States ('U.S.')
federal income tax consequences that may be relevant to the purchase, ownership
and disposition of the Notes and the Certificates by an investor who purchases
the Notes or the Certificates pursuant to their original issuance at their
original issue price. This summary is based upon the Internal Revenue Code of
1986, as amended (the 'CODE'), the Treasury regulations promulgated thereunder,
administrative rulings or pronouncements and judicial decisions, all as in
effect on the date hereof and all of which are subject to change, possibly
retroactively. The following discussion does not deal with all aspects of U.S.
income taxation, nor does it address U.S. federal income tax consequences that
may be relevant to certain types of investors, such as banks, insurance
companies, dealers in securities, tax-exempt organizations or persons whose
functional currency is not the U.S. dollar, who may be subject to special
treatment under the Code. In addition, the following discussion does not address
the alternative minimum tax consequences of an investment in the Notes or the
Certificates or the consequences of such an investment under state and local tax
laws or foreign tax laws. Accordingly, investors should consult their own tax
advisors to determine the federal, state, local, and other tax
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consequences that may be relevant to their purchase, ownership and disposition
of the Notes or the Certificates based upon their particular facts and
circumstances. Prospective investors should note that no rulings have been or
will be sought from the Internal Revenue Service ('IRS') with respect to any of
the U.S. federal income tax consequences discussed herein and opinions of
counsel are not binding on the IRS or the courts. Thus, no assurance can be
given that the IRS will not take positions contrary to those described below.
The opinions of Simpson Thacher & Bartlett, special U.S. federal income tax
counsel to the Sellers ('FEDERAL TAX COUNSEL'), described herein will be based
upon certain representations and assumptions, including, but not limited to, the
assumption that all relevant parties will comply with the terms of the Trust
Agreement and related documents.
This summary is intended as an explanatory discussion of the tax matters
affecting investors generally, but does not purport to furnish information in
the level of detail or with the attention to the investor's specific tax
circumstances that would be provided by an investor's own tax adviser.
Accordingly, each investor is advised to consult its own advisers with regard to
the tax consequences to it of investing in the Notes and the Certificates. An
opinion of Federal Tax Counsel will be filed as an Exhibit to the Registration
Statement.
For purposes of the following discussion, except as otherwise provided
herein, the terms 'NOTEHOLDER' and 'CERTIFICATEHOLDER' refer, respectively, to
the beneficial owner of a Note or Certificate. In addition, the discussion below
assumes that Noteholders and Certificateholders will hold their Notes and
Certificates as 'capital assets' within the meaning of Section 1221 of the Code.
TRUST TREATED AS PARTNERSHIP
Tax Characterization of the Trust. In the opinion of Federal Tax Counsel,
the Trust will not be classified as an association (or publicly traded
partnership) taxable as a corporation. This opinion is based on, among other
things, certain facts and assumptions contained in such opinion and Federal Tax
Counsel's conclusion that the nature of the Trust's income exempts it from the
rule that certain publicly traded partnerships are taxable as corporations.
The Sellers and the Certificateholders, by their purchase of Certificates,
will agree to treat the Trust as a partnership for all U.S. tax purposes with
the assets of such partnership being the assets held by the Trust (including the
Reserve Account and all Investment Earnings earned thereon), the partners of the
partnership being the Certificateholders and the Sellers, and the Notes being
debt of the partnership. However, the proper characterization of the arrangement
involving the Trust, the Certificateholders, the Noteholders and the Sellers is
not clear.
A variety of alternative characterizations are possible. For example,
because the Certificates have certain features characteristic of debt, the
Certificates might be considered debt of the Sellers or the Trust. Any such
characterization generally would not result in materially adverse tax
consequences as compared to the tax consequences that will result from treating
the Certificates as equity interests in a partnership which are described below
under the caption 'Tax Consequences to Certificateholders.' The following
discussion assumes that, for U.S. federal income tax purposes, (i) the Trust
will be classified as a partnership and (ii) the Certificates will represent
equity interests in such partnership.
TAX CONSEQUENCES TO NOTEHOLDERS
Treatment of the Notes as Indebtedness. The Trust and the Noteholders, by
their purchase of the Notes, agree to treat the Notes as debt for all U.S. tax
purposes. In the opinion of Federal Tax Counsel, the Notes will be characterized
as debt for U.S. federal income tax purposes. The discussion below assumes this
characterization of the Notes is correct.
Interest Income on the Notes. The Notes will not be considered to have
been issued with original issue discount ('OID') in excess of the statutorily
defined de minimis amount (i.e., 1/4% of the principal amount of a Note
multiplied by its weighted average to maturity). Consequently, the stated
interest thereon will be taxable to a Noteholder as ordinary interest income at
the time it is received or accrued in accordance with such Noteholder's method
of tax accounting. Under the applicable
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Treasury regulations, a holder of a Note issued with a de minimis amount of OID
must include such OID in income, on a pro rata basis, as principal payments are
made on the Note. A purchaser who buys a Note for more or less than its
principal amount generally will be subject, respectively, to the premium
amortization or market discount rules of the Code.
Sale or Other Disposition. If a Noteholder sells or otherwise disposes of
a Note in a taxable transaction, the former Noteholder will recognize gain or
loss in an amount equal to the difference between the amount realized on such
sale or other disposition and the former Noteholder's adjusted tax basis in the
Note. The adjusted tax basis of a Note to a particular Noteholder generally will
equal the holder's cost therefor increased by any market discount previously
included in income by such Noteholder and decreased by the amount of bond
premium (if any) previously amortized and the amount of any payments, other than
payments of stated interest, 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 to the extent such gain represents accrued
interest or accrued market discount not previously included in income. Capital
losses generally may be used only to offset capital gains.
Foreign Noteholders. For purposes of this discussion, the term 'FOREIGN
INVESTOR' means any person other than (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity organized in or under
the laws of the United States or any political subdivision thereof, (iii) an
estate, the income of which is includible in gross income for U.S. federal
income tax purposes regardless of its source, or (iv) a trust if the primary
supervision over the administration of such trust can be exercised by a U.S.
court and one or more U.S. fiduciaries have the authority to control all
substantial decisions of such trust.
Under present U.S. federal income tax law, and subject to the discussion
below concerning backup withholding:
(a) no withholding of U.S. federal income tax will be required with
respect to the payment by the Trust of principal or interest on a Note
owned by a Foreign Investor, provided that the beneficial owner of the Note
(i) is not actually or constructively a '10 percent shareholder' of the
Trust (including a holder of 10% or more of such Trust's outstanding
Certificates) or either Seller, (ii) is not a 'controlled foreign
corporation' with respect to which the Trust or either Seller is a 'related
person' within the meaning of the Code and (iii) satisfies the statement
requirement (described generally below) set forth in Section 871(h) and
Section 881(c) of the Code and the regulations thereunder; and
(b) no withholding of U.S. federal income tax will be required with
respect to any gain realized by a Foreign Investor upon the sale, exchange
or retirement of a Note provided that, in the case of any gain representing
accrued interest, the conditions described in (a) above are satisfied.
To satisfy the requirement referred to in (a)(iii) above, the beneficial
owner of such Note, or a financial institution holding the Note on behalf of
such owner, must provide, in accordance with specified procedures, the U.S.
entity that would otherwise be required to withhold U.S. taxes with a statement
to the effect that the beneficial owner is not a U.S. person. Pursuant to
current temporary Treasury regulations, these requirements will be met if (i)
the beneficial owner provides his name and address, and certifies, under
penalties of perjury that he, she or it is not a 'U.S. person' (which
certification may be made on an IRS Form W-8 or successor form), or (ii) a
financial institution or securities clearing organization holding the Note on
behalf of such beneficial owner certifies, under penalties of perjury, that such
statement has been received by it and furnishes the U.S. entity otherwise
required to withhold U.S. taxes with a copy thereof.
If a Foreign Investor cannot satisfy the requirements of the 'portfolio
interest' exception described in (a) above, payments of premium, if any, and
interest (including OID) made to a Foreign Investor with respect to a Note will
be subject to a 30% U.S. withholding tax unless the beneficial owner of the Note
provides the U.S. entity otherwise required to withhold U.S. taxes with a
properly executed (i) IRS Form 1001 (or successor form) claiming an exemption
from withholding under the benefit of a tax
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treaty or (ii) IRS Form 4224 (or successor form) stating that the interest paid
on the Note is not subject to U.S. withholding tax because such interest income
is effectively connected with the beneficial owner's conduct of a trade or
business in the United States.
If a Foreign Investor is engaged in a trade or business in the United
States and premium, if any, or interest on the Note is effectively connected
with the conduct of such trade or business, the Foreign Investor, although
exempt from the U.S. withholding tax discussed above, will be subject to U.S.
federal income tax on such premium, if any, and interest on a net income basis
in the same manner as if it were a U.S. person. In addition, if such Foreign
Investor is a foreign corporation, it may be subject to a branch profits tax
equal to 30% of its effectively connected earnings and profits for the taxable
year, subject to adjustments. For this purpose, such premium, if any, and
interest on the Note will be included in such foreign corporation's effectively
connected earnings and profits.
Any gain realized by a Foreign Investor upon the sale, exchange or
retirement of a Note generally will not be subject to U.S. federal income tax
unless (i) such gain or income is effectively connected with a trade or business
conducted by the Foreign Investor in the United States and (ii) in the case of a
Foreign Investor who is an individual, such individual is present in the United
States for 183 days or more in the taxable year of such sale, exchange or
retirement, and certain other conditions are met.
Information Reporting and Backup Withholding. In general, information
reporting requirements generally will apply to payments of principal, interest
and premium, if any, paid on the Notes and to the proceeds from the sale of a
Note paid to U.S. persons, other than certain exempt recipients (such as
corporations). In addition, a 31% U.S. backup withholding tax will apply to such
payments if the Noteholder (i) is a U.S. person who fails to provide a taxpayer
identification number, (ii) fails to certify such Noteholder's foreign or other
exempt status or (iii) fails to report in full dividend and interest income.
No information reporting or backup withholding will be required with
respect to payments made by the Trust to a Foreign Investor if a statement
described in (a)(iii) above under the caption 'Foreign Noteholders' has been
received by the U.S. entity otherwise required to withhold U.S. taxes and such
entity does not have actual knowledge that the beneficial owner is a U.S.
person.
In addition, backup withholding and information reporting will not apply if
payments of principal, interest and premium (if any) on a Note are paid or
collected by a foreign office of a custodian, nominee or other foreign agent on
behalf of the beneficial owner of such Note, or if a foreign office of a broker
(as defined in applicable Treasury regulations) pays the proceeds from the sale
of a Note to the owner thereof. If, however, such nominee, custodian, agent or
broker is, for U.S. federal income tax purposes, a U.S. person, a controlled
foreign corporation or a foreign person that derives 50% or more of its gross
income for certain periods from the conduct of a trade or business in the United
States, such payments will not be subject to backup withholding but will be
subject to information reporting, unless (i) such custodian, nominee, agent or
broker has documentary evidence in its records that the beneficial owner is not
a U.S. person and certain other conditions are met or (ii) the beneficial owner
otherwise establishes an exemption. Temporary Treasury regulations provide that
the Treasury is considering whether backup withholding will apply with respect
to such payments of principal, interest and premium (if any), or to the proceeds
from a sale that are not subject to backup withholding under the current
regulations. Under proposed Treasury regulations, not currently in effect,
backup withholding will not apply to such payments absent actual knowledge that
the payee is a U.S. person.
Payments of principal, interest and premium (if any) on a Note paid to the
beneficial owner of a Note by a United States office of a custodian, nominee or
agent, or the payment by the United States office of a broker of the proceeds
from the sale of a Note, will be subject to both backup withholding and
information reporting unless the beneficial owner (i) provides the statement
referred to in (a)(iii) above and the payor does not have actual knowledge that
the beneficial owner is a U.S. person or (ii) otherwise establishes an
exemption.
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Any amounts withheld under the backup withholding rules will be allowed as
a refund or a credit against such holder's U.S. federal income tax liability
provided the required information is furnished to the IRS.
Possible Alternative Classification of the Notes. If, contrary to the
opinion of Federal Tax Counsel, the IRS successfully asserted that one or more
of the Notes did not represent debt for U.S. federal income tax purposes, the
Notes might be treated as equity interests in the Trust. Treatment of the Notes
as equity interests in the Trust could have adverse tax consequences to certain
Noteholders. For example, income to Foreign Investors generally would be subject
to U.S. tax and U.S. tax return filing and withholding requirements and
Noteholders who are individuals might be subject to certain limitations on their
ability to deduct their allocable share of the Trust's expenses. See 'Tax
Consequences to Certificateholders' below.
TAX CONSEQUENCES TO CERTIFICATEHOLDERS
Treatment of the Trust as a Partnership. As discussed above under the
caption 'Trust Treated as Partnership--Tax Characterization of the Trust,' the
following discussion assumes that (i) the Trust will be treated as a partnership
(other than a publicly traded partnership) and (ii) the Certificates represent
equity interests in such partnership, for U.S. federal income tax purposes.
Partnership Taxation. As a partnership, the Trust will not be subject to
U.S. federal income tax. Rather, each Certificateholder will be required to
separately take into account such Certificateholder's allocable share of the
Trust's income, gains, losses, deductions and credits. The Trust's income will
consist primarily of interest and Administrative Fees earned on the Receivables
(including appropriate adjustments for market discount, OID and bond premium)
and any gain realized upon the collection or disposition of Receivables. The
Trust's deductions will consist primarily of interest accruing with respect to
the Notes, servicing and other fees, and losses or deductions realized upon the
collection or disposition of Receivables.
The tax items of a partnership are allocable to the partners in accordance
with the Code, the relevant Treasury regulations promulgated thereunder and the
partnership agreement (here, the Trust Agreement and related documents).
However, inasmuch as the Trust's payment of the Certificate Rate on the
Certificates is payable to the Certificateholders without regard to the income
of the Trust, the Trust's payment of such amounts to Certificateholders should
be treated (and the Trust intends to so treat such payments) as 'guaranteed
payments' within the meaning of Section 707(c) of the Code, and not as a
distributive share of the Trust's income. Such guaranteed payments will be
considered ordinary income to a Certificateholder but may not be considered
interest income for U.S. federal income tax purposes.
In the event that such tax treatment is not respected, the Trust Agreement
provides that the Certificateholders will be allocated gross income of the Trust
for each calendar month equal to the sum of (i) the amount of interest that
accrues on the Certificates for such calendar month, (ii) an amount equivalent
to interest that accrues during such period on amounts previously due on the
Certificates but not yet distributed, and (iii) any gross income of the Trust
attributable to discount on the Receivables that corresponds to any excess of
the principal amount of the Certificates over their initial issue price. All
remaining income of the Trust will be allocated to the Sellers. All deductions
and losses also will be allocated to the Sellers.
Based on the economic arrangement of the parties, such allocations should
be respected for U.S. federal income tax purposes. However, no assurance can be
given that the IRS would not require the Trust to allocate a greater amount of
income to the Certificateholders. Moreover, even under the foregoing method of
allocation, Certificateholders may be allocated income equal to the entire
Certificate Rate plus the other items described above, even though the Trust may
not have sufficient cash to make current cash distributions with respect to such
income. Thus, cash method Certificateholders will be required effectively to
report income from the Certificates on an accrual basis and all
Certificateholders will be liable for the U.S. federal income taxes due on their
allocable share of the Trust's income even if they have not received any cash
distributions from the Trust with respect to
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such income. In addition, because tax allocations and tax reporting will be done
on a uniform basis for all Certificateholders, Certificateholders purchasing
Certificates at different times and at different prices may be required to
recognize an amount of taxable income that is greater or less than the amount
reported to them by the Trust. See '--Allocations between Transferors and
Transferees' below.
The Trust intends to make all tax calculations relating to income and
allocations to Certificateholders on an aggregate basis. If the IRS were to
require that such calculations be made separately for each Receivable, the Trust
might be required to incur additional expense, but it is believed that there
would not be a material adverse effect on Certificateholders.
Discount and Premium. It is anticipated that the Receivables held by the
Trust will not have been issued with OID. Therefore, the Trust should not have
to accrue any OID income. However, the purchase price paid by the Trust for the
Receivables may be greater or less than the remaining principal balance of the
Receivables at the time of purchase. If so, the Receivables will have been
acquired at a premium or discount, as the case may be. (As indicated above, the
Trust will make this calculation on an aggregate basis, but might be required to
recompute it on a Receivable-by-Receivable basis.)
If the Trust acquires the Receivables at a market discount or premium, the
Trust will elect to include any such discount in income currently as it accrues
over the life of the Receivables or to offset any such premium against interest
income on the Receivables. As indicated above, a portion of such market discount
income or premium deduction may be allocated to Certificateholders.
Section 708 Termination. Under Section 708 of the Code, the Trust will be
deemed to terminate for U.S. federal income tax purposes if 50% or more of the
capital and profits interests in the Trust are sold or exchanged within a
12-month period. If such a termination occurs, the Trust would be considered to
have transferred all of its assets and liabilities to a new Trust and then to
have immediately liquidated and distributed the interests in the new Trust to
the continuing Certificateholders. The Trust will not comply with certain
technical requirements that might apply should such a constructive termination
occur. Consequently, the Trust may be subject to certain tax penalties and may
incur additional expenses if it is required to comply with these requirements.
Disposition of Certificates. Generally, a Certificateholder will recognize
capital gain or loss on a sale or other taxable disposition of Certificates in
an amount equal to the difference between the amount realized by the
Certificateholder on such sale or disposition and the Certificateholder's tax
basis in such Certificates. A Certificateholder's tax basis in a Certificate
generally will equal the Certificateholder's cost therefor increased by the
Certificateholder's allocable share of Trust income and decreased by any
distributions received with respect to such Certificate. In addition, both the
tax basis in the Certificates and the amount realized on a sale of a Certificate
would include the Certificateholder's allocable share of the Notes and other
liabilities of the Trust. A Certificateholder acquiring Certificates at
different prices may be required to maintain a single aggregate adjusted tax
basis in such Certificates, and, upon sale or other disposition of some of the
Certificates, allocate a portion of such aggregate tax basis to the Certificates
sold (rather than maintaining a separate tax basis in each Certificate for
purposes of computing gain or loss on a sale of that Certificate).
Any gain on the sale of a Certificate attributable to the
Certificateholder's share of unrecognized accrued market discount on the
Receivables generally would be treated as ordinary income to the
Certificateholder and would give rise to special tax reporting requirements. The
Trust does not expect to have any other assets that would give rise to such
special reporting requirements. Thus, to avoid those special reporting
requirements, the Trust will elect to include market discount in income as it
accrues.
If a Certificateholder is required to recognize an aggregate amount of
income (not including income attributable to disallowed itemized deductions
described above) over the life of the Certificates that exceeds the aggregate
cash distributions with respect thereto, such excess generally will give rise
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to a capital loss upon the retirement of the Certificates. The deductibility of
capital losses is subject to limitations.
Allocations Between Transferors and Transferees. In general, the Trust's
taxable income and losses will be determined monthly and the tax items for a
particular calendar month will be apportioned among the Certificateholders in
proportion to the principal amount of Certificates owned by them as of the close
of the last day of such month. As a result, an investor purchasing Certificates
may be allocated tax items (which will affect its tax liability and tax basis)
attributable to periods before the actual transaction.
The use of such a monthly convention may not be permitted by existing
regulations. If a monthly convention is not allowed (or only applies to
transfers of less than all of the partner's interest), taxable income or losses
of the Trust might be reallocated among the Certificateholders. The Owner
Trustee is authorized to revise the Trust's method of allocation between
transferors and transferees to conform to a method permitted by future
regulations.
Section 754 Election. In the event that a Certificateholder sells its
Certificates at a profit (or loss), the purchasing Certificateholder will have a
higher (or lower) tax basis in the Certificates than the selling
Certificateholder had. The tax basis of the Trust's assets will not be adjusted
to reflect that higher (or lower) basis unless the Trust were to file an
election under Section 754 of the Code. In order to avoid the administrative
complexities that would be involved in keeping accurate accounting records, as
well as potentially onerous information reporting requirements, the Trust will
not make such an election. As a result, Certificateholders might be allocated a
greater or lesser amount of Trust income than would be appropriate based on
their own purchase price for Certificates.
Administrative Matters. The Owner Trustee will be required to keep
complete and accurate books for the Trust. Such books will be maintained for
financial reporting and tax purposes on an accrual basis and the fiscal year of
the Trust will be the calendar year. The Owner Trustee will file or cause to be
filed a partnership information return (IRS Form 1065) with the IRS for each
taxable year of the Trust and will report each Certificateholder's allocable
share of items of Trust income and expense to holders and the IRS on Schedule
K-1. The Owner Trustee will provide or cause to be provided the Schedule K-1
information to nominees that fail to provide the Trust with the information
statement described below and such nominees will be required to forward such
information to the beneficial owners of the Certificates. Generally,
Certificateholders must file tax returns that are consistent with the
information return filed by the Trust or be subject to penalties unless the
Certificateholder notifies the IRS of all such inconsistencies.
Under Section 6031 of the Code, any person that holds Certificates as a
nominee at any time during a calendar year is required to furnish the Trust with
a statement containing certain information on the nominee, the beneficial owners
and the Certificates so held. Such information includes (i) the name, address
and taxpayer identification number of the nominee and (ii) as to each beneficial
owner (x) the name, address and taxpayer identification number of such person,
(y) whether such person is a United States person, a tax-exempt entity or a
foreign government, an international organization, or any wholly owned agency or
instrumentality of either of the foregoing, and (z) certain information on
Certificates that were held, bought or sold on behalf of such person throughout
the year. In addition, brokers and financial institutions that hold Certificates
through a nominee are required to furnish directly to the Trust information as
to themselves and their ownership of Certificates. A clearing agency registered
under Section 17A of the Exchange Act is not required to furnish any such
information statement to the Trust. The information referred to above for any
calendar year must be furnished to the Trust on or before the following January
31. Nominees, brokers and financial institutions that fail to provide the Trust
with the information described above may be subject to penalties.
Chase will be designated as the tax matters partner in the Trust Agreement
and, as such, will be responsible for representing the Certificateholders in any
dispute with the IRS. The Code provides for administrative examination of a
partnership as if the partnership were a separate and distinct taxpayer.
Generally, the statute of limitations for partnership items does not expire
before three years after the date on which the partnership information return is
filed. Any adverse determination following an audit
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of the return of the Trust by the appropriate taxing authorities could result in
an adjustment of the returns of the Certificateholders, and, under certain
circumstances, a Certificateholder may be precluded from separately litigating a
proposed adjustment to the items of the Trust. An adjustment could result in an
audit of a Certificateholder's U.S. federal income tax returns and,
consequently, to adjustments of items not related to the Certificateholder's
allocable share of the income and losses of the Trust.
Tax Consequences to Foreign Certificateholders. Under the terms of the
Trust Agreement, the Certificates may not be acquired by or for the account of
an individual or entity that is not a U.S. person as defined in Section
7701(a)(30) of the Code, and any transfer of a Certificate to a person that is
not a U.S. person shall be void. Moreover, in order to protect the Trust from
the potential adverse tax consequences that may result if the Trust failed to
withhold on amounts allocable to Foreign Investors, the Trust intends to, and
will, withhold on any amounts allocable or payable to a Foreign Investor at a
rate of 35% for Foreign Investors that are taxable as corporations and 39.6% for
all other Foreign Investors. In determining a Certificateholder's withholding
status, the U.S. entity otherwise required to withhold U.S. taxes may rely on
IRS Form W-8, IRS Form W-9 or a Certificateholder's certification of nonforeign
status signed under penalties of perjury.
Backup Withholding. Distributions made on the Certificates and proceeds
from the sale of the Certificates generally will be subject to the 31% U.S.
backup withholding tax if the Certificateholder fails to comply with certain
identification procedures or otherwise fails to establish an exemption.
CERTAIN STATE TAX CONSEQUENCES
The activities to be undertaken by the Servicer in servicing and collecting
the Receivables will take place in Oklahoma. The State of Oklahoma imposes a
state income tax on individuals, nonresident aliens (with respect to Oklahoma
taxable income), corporations, certain foreign corporations, and trusts and
estates with Oklahoma taxable income. No ruling on any of the issues discussed
below will be sought from the Oklahoma Tax Commission.
Because of the variation in each state's or locality's tax laws, it is
impossible to predict the tax consequences to Noteholders, Certificateholders or
the Trust in all of the other state and local taxing jurisdictions. Noteholders
and Certificateholders, particularly financial institutions, are urged to
consult their own tax advisors with respect to state and local tax consequences
arising out of the purchase, ownership and disposition of the Notes and/or the
Certificates.
TAX CONSEQUENCES WITH RESPECT TO THE NOTES
Crowe & Dunlevy, P.C., Oklahoma tax counsel to the Sellers ('OKLAHOMA TAX
COUNSEL'), will advise the Trust that, assuming the Notes will be treated as
debt for federal income tax purposes, the Notes will be treated as debt for
Oklahoma income tax purposes, and the Noteholders not otherwise subject to
taxation in Oklahoma should not become subject to taxation in Oklahoma solely
because of a holder's ownership of Notes. However, a Noteholder already subject
to Oklahoma's income tax could be required to pay additional Oklahoma tax as a
result of the holder's ownership or disposition of Notes.
TAX CONSEQUENCES WITH RESPECT TO THE CERTIFICATES ISSUED BY A TRUST TREATED AS A
PARTNERSHIP
Oklahoma Tax Counsel will advise the Trust that if the arrangement created
by the Trust Agreement is treated as a partnership (not taxable as a
corporation) for U.S. federal income tax purposes, the same treatment should
also apply for Oklahoma income tax purposes; under current law,
Certificateholders that are nonresidents of Oklahoma and are not otherwise
subject to Oklahoma income tax should not be subject to Oklahoma income tax on
the income from the Trust because it is unlikely that the Trust has established
a nonunitary business or commercial situs in Oklahoma. In any event,
classification of the arrangement as a 'partnership' would not cause a
Certificateholder not otherwise subject to taxation in Oklahoma to pay Oklahoma
income tax on income beyond that derived from the Certificates.
84
<PAGE>
ERISA CONSIDERATIONS
GENERAL
The Employee Retirement Income Security Act of 1974, as amended ('ERISA'),
and Section 4975 of the Code, impose certain requirements on employee benefit
plans and certain other plans and arrangements, including individual retirement
accounts and annuities, Keogh plans and certain collective investment funds or
insurance company general or separate accounts in which such plans, accounts or
arrangements are invested, that are subject to the fiduciary responsibility
provisions of ERISA and/or Section 4975 of the Code (collectively, 'PLANS'), and
on persons who are fiduciaries with respect to Plans, in connection with the
investment of 'plan assets' of any Plan ('PLAN ASSETS'). ERISA generally imposes
on Plan fiduciaries certain general fiduciary requirements, including those of
investment prudence and diversification and the requirement that a Plan's
investments be made in accordance with the documents governing the Plan.
Generally, any person who has discretionary authority or control respecting the
management or disposition of Plan Assets, and any person who provides investment
advice with respect to such assets for a fee, is a fiduciary with respect to
such Plan Assets.
ERISA and Section 4975 of the Code prohibit a broad range of transactions
involving Plan Assets and persons ('Parties in Interest' under ERISA and
'Disqualified Persons' under the Code) who have certain specified relationships
to a Plan or its Plan Assets, unless a statutory or administrative exemption is
available. Parties in Interest or Disqualified Persons that participate in a
prohibited transaction may be subject to a penalty imposed under ERISA and/or an
excise tax imposed pursuant to Section 4975 of the Code, unless a statutory or
administrative exemption is available. These prohibited transactions generally
are set forth in Section 406 of ERISA and Section 4975 of the Code.
Any fiduciary or other Plan investor considering whether to purchase any
Securities on behalf of or with Plan Assets of any Plan should consult with its
counsel for guidance regarding the ERISA Considerations applicable to the
Securities offered hereby.
Certain employee benefit plans, such as governmental plans (as defined in
Section 3(32) of ERISA) and certain church plans (as defined in Section 3(33) of
ERISA), are not subject to the requirements of ERISA or Section 4975 of the
Code. Accordingly, assets of such plans may be invested in the Securities
without regard to the ERISA considerations described herein, subject to the
provisions of other applicable federal and state law. However, any such plan
that is qualified and exempt from taxation under Sections 401(a) and 501(a) of
the Code is subject to the prohibited transaction rules set forth in Section 503
of the Code.
THE NOTES
Subject to the considerations described below, the Notes are eligible for
purchase with Plan Assets of any Plan.
Any fiduciary or other Plan investor considering whether to purchase the
Notes with Plan Assets of any Plan should determine whether such purchase is
consistent with its fiduciary duties and whether such purchase would constitute
or result in a non-exempt prohibited transaction under ERISA and/or Section 4975
of the Code because any of the Sellers, the Servicer, the Trust (by reason of
the Seller's ownership of Certificates), the Indenture Trustee, the Owner
Trustee, any other Certificateholder or any other parties may be deemed to be
benefiting from the issuance of the Notes and may be Parties in Interest or
Disqualified Persons with respect to the investing Plan. Any fiduciary or other
Plan investor considering whether to purchase the Notes should consult with its
counsel regarding the applicability of the fiduciary responsibility and
prohibited transaction provisions of ERISA and Section 4975 of the Code to such
investment, and of the Seller, the Servicer or the Trust as a Party-in-Interest
or Disqualified Person with respect to the investing Plan, the availability of
exemptive relief under any prohibited transaction exemption. For example, DOL
Prohibited Transaction Exemptions 96-23 (relating to transactions determined by
'in-house asset managers'), 95-60 (relating to transactions involving insurance
company general accounts), 91-38 (relating to transactions involving bank
collective investment funds), 90-1 (relating to transactions involving insurance
company pooled separate accounts) or 84-14 (relating to transactions determined
by independent 'qualified
85
<PAGE>
professional asset managers') may be available. A purchaser of the Notes should
be aware, however, that even if the conditions specified in an exemption are
met, the scope of the exemptive relief provided by the exemption might not cover
all acts which might be construed as prohibited transactions.
In addition, under U.S. Department of Labor Regulation Section 2510.3-101
(the 'PLAN ASSET REGULATION'), the purchase with Plan Assets of equity interests
in the Trust could, in certain circumstances, cause the Receivables and other
assets of the Trust to be deemed Plan Assets of the investing Plan which, in
turn, would subject the Trust and its assets to the fiduciary responsibility
provisions of ERISA and the prohibited transaction provisions of ERISA and
Section 4975 of the Code. Nevertheless, because the Notes (a) should be treated
as indebtedness under local law and debt, rather than equity, for tax purposes
(see 'Certain Federal Income Tax Consequences--Tax Consequences to
Noteholders--Treatment of the Notes as Indebtedness' herein), and (b) should not
be deemed to have any 'substantial equity features,' purchases of the Notes with
Plan Assets should not be treated as equity investments and, therefore, the
Receivables and other assets included as assets of the Trust should not be
deemed to be Plan Assets of the investing Plans. Those conclusions are based, in
part, upon the traditional debt features of the Notes, including the reasonable
expectation of purchasers of Notes that the Notes (which are highly rated by the
Rating Agencies) will be repaid when due, as well as the absence of conversion
rights, warrants and other typical equity features. Before purchasing the Notes,
a fiduciary or other Plan investor should itself confirm that the Notes
constitute debt for purposes of the Plan Asset Regulation.
The Notes may not be purchased with Plan Assets of any Plan if any of the
Sellers, the Servicer, the Indenture Trustee, the Owner Trustee or any of their
respective affiliates (a) has investment or administrative discretion with
respect to the Plan Assets used to effect such purchase; (b) has authority or
responsibility to give, or regularly gives, investment advice with respect to
such Plan Assets, for a fee and pursuant to an agreement or understanding that
such advice (1) will serve as a primary basis for investment decisions with
respect to such Plan Assets, and (2) will be based on the particular investment
needs of such Plan; or (c) is an employer maintaining or contributing to such
Plan. Each purchaser will be deemed to have represented and warranted that its
purchase of a Note or any interest therein does not violate the foregoing
limitation.
THE CERTIFICATES
Because purchases of the Certificates are equity investments, the
Certificates may not be purchased by, on behalf of or with the Plan Assets of
any Plan. In addition, each purchaser of the Certificates will be deemed to have
represented and warranted that it is neither a Plan nor purchasing the
Certificates on behalf of or with Plan Assets of a Plan.
The Small Business Job Protection Act of 1996 added new Section 401(c) of
ERISA relating to the status of the assets of insurance company general accounts
under ERISA and Section 4975 of the Code. Pursuant to Section 401(c), the
Department of Labor is required to issue final regulations (the 'GENERAL ACCOUNT
REGULATIONS') not later than December 31, 1997 with respect to insurance
policies issued on or before December 31, 1998 that are supported by an
insurer's general account. The General Account Regulations are to provide
guidance on which assets held by the insurer constitute Plan Assets for purposes
of the fiduciary responsibility provisions of ERISA and Section 4975 of the
Code. The assets of a general account that support insurance policies (other
than 'guaranteed benefit policies' within the meaning of Section 401(b)(2) of
ERISA) (i) issued to Plans after December 31, 1998 or (ii) issued to Plans on or
before December 31, 1998 for which the insurance company does not comply with
the General Account Regulations, may be treated as Plan Assets. However, except
in the case of avoidance of the General Account Regulations and actions brought
by the Secretary of Labor relating to certain breaches of fiduciary duties that
also constitute breaches of state or federal criminal law, until the date that
is 18 months after the General Account Regulations become final, no liability
under the fiduciary responsibility and prohibited transaction provisions of
ERISA and Section 4975 may result on the basis of a claim that the assets of the
general account of an insurance company constitute the Plan Assets of any Plan.
The Plan Asset status of insurance company separate accounts
86
<PAGE>
is unaffected by new Section 401(c) of ERISA, and separate account assets
continue to be treated as the Plan Assets of any Plan invested in a separate
account.
If the assets of a general account invested in the Certificates are treated
as Plan Assets of any Plan or the protections of Section 401(c) of ERISA become
unavailable, certain violations of the prohibited transaction rules may be
deemed to occur as a result of the operation of the Trust. Insurance companies
contemplating the investment of general account assets in the Certificates
should consult with their own counsel concerning the impact of Section 401(c) of
ERISA, including the status of assets of the general account and its ability to
continue to hold the Certificates after the date that is 18 months after the
General Account Regulations become final. The deemed representation and warranty
regarding the acquisition and holding of Certificates by any Plan or person
investing Plan Assets of any Plan (See 'Summary of Terms--ERISA Considerations'
herein) will not apply to the acquisition or holding of Certificates with the
assets of the general account of an insurance company to the extent that such
acquisition or holding, respectively, (i) is and will be permitted by Section
401(c) of ERISA and final regulations thereunder or another exemption under
ERISA and (ii) does not and will not result in the contemplated operations of
the Trust being treated as non-exempt prohibited transactions.
UNDERWRITING
As consideration for the transfer of the Receivables to the Trust, the
Trust will issue the Notes and the Certificates to the Sellers, with (i) Chase
receiving 87.17% of the original principal amount of each class of Notes and the
original Certificate Balance and (ii) Chase USA receiving 12.83% of the original
principal amount of each class of Notes and the original Certificate Balance.
Subject to the terms and conditions set forth in the note underwriting
agreement (the 'NOTE UNDERWRITING AGREEMENT') and the certificate underwriting
agreement (the 'CERTIFICATE UNDERWRITING AGREEMENT,' and together with the Note
Underwriting Agreement, the 'UNDERWRITING AGREEMENTS'), the Sellers have agreed
to sell to the note underwriters indicated below (the 'NOTE UNDERWRITERS') and
to Chase Securities Inc. (the 'CERTIFICATE UNDERWRITER,' and together with the
Note Underwriters, the 'UNDERWRITERS'), and each of the Underwriters has agreed
to purchase, the principal amount of each class of Notes and the Certificates
set forth opposite its name below.
<TABLE>
<CAPTION>
MERRILL, LYNCH, PIERCE,
CHASE BEAR, STEARNS FENNER & SMITH SALOMON
SECURITIES INC. & CO. INC. INCORPORATED BROTHERS INC
--------------- --------------- ----------------------- ---------------
<S> <C> <C> <C> <C>
Class A-1................ $ 14,875,000.00 $ 14,875,000.00 $ 14,875,000.00 $ 14,875,000.00
Class A-2................ 29,750,000.00 29,750,000.00 29,750,000.00 29,750,000.00
Class A-3................ 28,250,000.00 28,250,000.00 28,250,000.00 28,250,000.00
Class A-4................ 18,250,000.00 18,250,000.00 18,250,000.00 18,250,000.00
Class A-5................ 33,000,000.00 33,000,000.00 33,000,000.00 33,000,000.00
Class A-6................ 22,000,000.00 22,000,000.00 22,000,000.00 22,000,000.00
Class A-7................ 14,250,000.00 14,250,000.00 14,250,000.00 14,250,000.00
Class A-8................ 21,250,000.00 21,250,000.00 21,250,000.00 21,250,000.00
Class A-9................ 15,250,000.00 15,250,000.00 15,250,000.00 15,250,000.00
Class A-10............... 16,250,000.00 16,250,000.00 16,250,000.00 16,250,000.00
Certificates............. 44,895,285.54 -- -- --
--------------- --------------- --------------- ---------------
Total............... $258,020,285.54 $213,125,000.00 $213,125,000.00 $213,125,000.00
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- ---------------
</TABLE>
The Underwriters initially propose to offer all or a part of the Notes and
Certificates, as applicable, directly to the public at the respective public
offering prices set forth on the cover page of this Prospectus and may offer a
portion of the Notes and Certificates, as applicable, to dealers at a price
which represents a concession not in excess of the amounts set forth below for
the respective classes of Notes and the Certificates. The Underwriters may
allow, and such dealers may allow, a concession not in excess of the amounts set
forth below for the respective classes of the Notes and the Certificates
87
<PAGE>
for certain dealers. After the initial public offering, the public offering
prices and such concessions may from time to time be varied by the Underwriters.
<TABLE>
<CAPTION>
CONCESSION TO REALLOWANCE
DEALERS CONCESSION
------------- -----------
<S> <C> <C>
Class A-1......................................................................... 0.085% 0.050%
Class A-2......................................................................... 0.100 0.075
Class A-3......................................................................... 0.100 0.075
Class A-4......................................................................... 0.125 0.100
Class A-5......................................................................... 0.125 0.100
Class A-6......................................................................... 0.150 0.125
Class A-7......................................................................... 0.150 0.125
Class A-8......................................................................... 0.200 0.150
Class A-9......................................................................... 0.200 0.150
Class A-10........................................................................ 0.250 0.200
Certificates...................................................................... 0.300 0.250
</TABLE>
The Indenture Trustee and the Owner Trustee (on behalf of the Trust) may,
from time to time, invest the funds in the Collection Account, the Paid-Ahead
Account and the Reserve Account in Permitted Investments acquired from the
Underwriters.
Chase Securities Inc. may engage in over-allotment transactions,
stabilizing transactions, syndicate covering transactions and penalty bids with
respect to the Securities in accordance with Regulation M under the Exchange
Act. Over-allotment transactions involve syndicate sales in excess of the
offering size, which creates a syndicate short position. Stabilizing
transactions permit bids to purchase the Security so long as the stabilizing
bids do not exceed a specified maximum. Syndicate covering transactions involve
purchases of the Securities in the open market after the distribution has been
completed in order to cover syndicate short positions. Penalty bids permit Chase
Securities Inc. to reclaim a selling concession from a syndicate member when the
Securities originally sold by such syndicate member are purchased in a syndicate
covering transaction. Such over-allotment transactions, stabilizing
transactions, syndicate covering transactions and penalty bids may cause the
prices of the Securities to be higher than they would otherwise be in the
absence of such transactions. Neither the Issuer nor Chase Securities Inc.
represent that Chase Securities Inc. will engage in any such transactions or
that such transactions, if commenced, will not be discontinued without notice.
This Prospectus may be used by Chase Securities Inc., an affiliate of the
Sellers and a subsidiary of the Corporation, in connection with offers and sales
related to market-making transactions in the Securities. Chase Securities Inc.
may act as principal or agent in such transactions. Such sales will be made at
prices related to prevailing market prices at the time of sale. Chase Securities
Inc. has no obligation to make a market in the Securities, and it may
discontinue any such market-making activities at any time without notice, in its
sole discretion.
The Sellers and CITSF will indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act or contribute to
payments the Underwriters may be required to make in respect thereof.
LEGAL MATTERS
Certain legal matters relating to the issuance of the Securities will be
passed upon for the Sellers by Simpson Thacher & Bartlett (a partnership that
includes professional corporations), New York, New York and certain other legal
matters will be passed upon for the Sellers by Orest J. Lechnowsky, Esq., a
Senior Vice President of Chase Financial Corporation, an affiliate of the
Sellers, and for the Underwriters by Orrick, Herrington & Sutcliffe LLP, New
York, New York. Certain Oklahoma state tax matters will be passed upon for the
Sellers by Crowe & Dunlevy, P.C., Oklahoma City, Oklahoma. From time to time
Simpson Thacher & Bartlett and Orrick, Herrington & Sutcliffe LLP provide legal
services to the Sellers and their affiliates.
88
<PAGE>
INDEX OF TERMS
<TABLE>
<CAPTION>
TERM PAGE
- ---------------------------------------------------------------------------------------------------- -----------
<S> <C>
ABS................................................................................................. 38
ABS Table........................................................................................... 38
Actual Principal Balance............................................................................ 58
Actuarial Receivables............................................................................... 28
Administration Agreement............................................................................ 10
Administrative Fees................................................................................. 60
Administrator....................................................................................... 10
Aggregate Losses.................................................................................... 60
Aggregate Net Losses................................................................................ 69
Applicable Trustee.................................................................................. 53
Asset Service Center................................................................................ 33
Available Amount.................................................................................... 65
Available Reserve Account Amount.................................................................... 68
Average Delinquency Percentage...................................................................... 69
Average Net Loss Ratio.............................................................................. 69
Banks............................................................................................... 1
Bulk Purchase Receivables........................................................................... 30
Business Day........................................................................................ 4
CBC................................................................................................. 34
CBC Holding......................................................................................... 34
Cede................................................................................................ ii
Cedel............................................................................................... i, 53
Cedel Participants.................................................................................. 53
Certificate Balance................................................................................. 66
Certificate Final Scheduled Distribution Date....................................................... 6
Certificate Pool Factor............................................................................. 46
Certificate Rate.................................................................................... 6
Certificate Underwriter............................................................................. 87
Certificate Underwriting Agreement.................................................................. 87
Certificateholder................................................................................... 53, 78
Certificateholders.................................................................................. 6
Certificateholders' Distributable Amount............................................................ 67
Certificateholders' Interest Carryover Shortfall.................................................... 67
Certificateholders' Interest Distributable Amount................................................... 67
Certificateholders' Monthly Interest Distributable Amount........................................... 67
Certificateholders' Monthly Principal Distributable Amount.......................................... 67
Certificateholders' Principal Carryover Shortfall................................................... 67
Certificateholders' Principal Distributable Amount.................................................. 67
Certificates........................................................................................ ii, 3
CFAC................................................................................................ 29
CFHI................................................................................................ 29
CFMC................................................................................................ 1
Chase............................................................................................... ii
Chase Financial Receivables......................................................................... 29
</TABLE>
89
<PAGE>
<TABLE>
<CAPTION>
TERM PAGE
- ---------------------------------------------------------------------------------------------------- -----------
<S> <C>
Chase N.A........................................................................................... 1
Chase RV Finance.................................................................................... 1
Chase RV Finance Portfolio.......................................................................... 15
Chase USA........................................................................................... ii
Chase/Chemical Merger............................................................................... 29
CIT................................................................................................. 1
CITSF............................................................................................... ii, 1
Class A-1 Notes..................................................................................... ii
Class A-2 Notes..................................................................................... ii
Class A-3 Notes..................................................................................... ii
Class A-4 Notes..................................................................................... ii
Class A-5 Notes..................................................................................... ii
Class A-6 Notes..................................................................................... ii
Class A-7 Notes..................................................................................... ii
Class A-8 Notes..................................................................................... ii
Class A-9 Notes..................................................................................... ii
Class A-10 Notes.................................................................................... ii
Clearing agency..................................................................................... 52
Clearing corporation................................................................................ 52
Closing Date........................................................................................ i
Code................................................................................................ 77
Collection Account.................................................................................. 9
Collection Period................................................................................... 7
Commission.......................................................................................... iii
Contract Rate....................................................................................... 58
Cooperative......................................................................................... 54
Corporation......................................................................................... i
Cutoff Date......................................................................................... ii
Cutoff Date Pool Balance............................................................................ 4
Dealer Agreements................................................................................... 30
Dealers............................................................................................. 30
Definitive Certificates............................................................................. 54
Definitive Notes.................................................................................... 54
Definitive Securities............................................................................... 54
Delinquency Percentage.............................................................................. 69
Deposit Date........................................................................................ 60
Depositaries........................................................................................ 52
Direct Receivables.................................................................................. 29
Distribution Date................................................................................... ii
DKB................................................................................................. 34
DTC................................................................................................. i
Due Date............................................................................................ 28
Duff & Phelps....................................................................................... 11
Eligible Deposit Account............................................................................ 59
ERISA............................................................................................... 85
</TABLE>
90
<PAGE>
<TABLE>
<CAPTION>
TERM PAGE
- ---------------------------------------------------------------------------------------------------- -----------
<S> <C>
Euroclear........................................................................................... i, 53
Euroclear Operator.................................................................................. 54
Euroclear Participants.............................................................................. 53
Events of Default................................................................................... 48
Events of Servicing Termination..................................................................... 71
Exchange Act........................................................................................ iii
Excluded Forced-Placed Insurance Premiums........................................................... 17
Excluded Precomputed Amounts........................................................................ 17
FDIA................................................................................................ 14
FDIC................................................................................................ i
Federal Tax Counsel................................................................................. 78
Final Scheduled Maturity Date....................................................................... 4
Financed Vehicles................................................................................... 4
FIRREA.............................................................................................. 14
Foreign Investor.................................................................................... 79
FTC Rule............................................................................................ 77
General Account Regulations......................................................................... 86
Indenture........................................................................................... ii, 2
Indenture Trustee................................................................................... ii, 2
Indirect Receivables................................................................................ 29
Interest Accrual Period............................................................................. 5
Interest Rate....................................................................................... 4
Investment Earnings................................................................................. 60
IRS................................................................................................. 78
Issuer.............................................................................................. i, 1
Liquidated Receivable............................................................................... 66
Loss................................................................................................ 60
MHC................................................................................................. 34
Military Reservist Relief Act....................................................................... 58
Monthly Advance..................................................................................... 8
Moody's............................................................................................. 11
NADA................................................................................................ 32
Net Liquidation Proceeds............................................................................ 66
Net Loss Ratio...................................................................................... 69
New Financed Vehicle................................................................................ 18
Note Final Scheduled Distribution Date.............................................................. 5
Note Pool Factor.................................................................................... 46
Note Underwriters................................................................................... 87
Note Underwriting Agreement......................................................................... 87
Noteholder.......................................................................................... 53, 78
Noteholders......................................................................................... 4
Noteholders' Distributable Amount................................................................... 67
Noteholders' Interest Carryover Shortfall........................................................... 67
Noteholders' Interest Distributable Amount.......................................................... 68
Noteholders' Monthly Interest Distributable Amount.................................................. 68
</TABLE>
91
<PAGE>
<TABLE>
<CAPTION>
TERM PAGE
- ---------------------------------------------------------------------------------------------------- -----------
<S> <C>
Noteholders' Monthly Principal Distributable Amount................................................. 68
Noteholders' Principal Carryover Shortfall.......................................................... 68
Noteholders' Principal Distributable Amount......................................................... 68
Notes............................................................................................... ii, 2
Obligor............................................................................................. 8
OID................................................................................................. 78
Oklahoma Tax Counsel................................................................................ 84
Original Pool Balance............................................................................... 4
Originator.......................................................................................... 29
Owner Trustee....................................................................................... ii, 2
Paid-Ahead Account.................................................................................. 38
Paid-Ahead Amounts.................................................................................. 9
Paid-Ahead Period................................................................................... 37
Paid-Ahead Precomputed Receivable................................................................... 38
Paid-Ahead Simple Interest Receivable............................................................... 37
Participants........................................................................................ iii
Paying Agent........................................................................................ 59
Payment Shortfall................................................................................... 8
Permitted Investments............................................................................... 59
Plan Asset Regulation............................................................................... 86
Plan Assets......................................................................................... 85
Plans............................................................................................... 85
Pool Balance........................................................................................ 4
Precomputed Receivables............................................................................. 28
Prepayments......................................................................................... 36
Principal Balance................................................................................... 65
Principal Distribution Amount....................................................................... 65
Principal Prepayment................................................................................ 66
Qualified Institution............................................................................... 59
Qualified Trust Institution......................................................................... 59
Rating Agencies..................................................................................... 11
Receivables......................................................................................... 17
Receivables Pool.................................................................................... 17
Record Date......................................................................................... 4
Recreational Vehicle Loans.......................................................................... 17
Regional Centers.................................................................................... 31
Registration Statement.............................................................................. iii
Relief Act Reduction................................................................................ 58
Repurchase Amount................................................................................... 58
Repurchased Receivable.............................................................................. 65
Reserve Account..................................................................................... 7
Reserve Account Initial Deposit..................................................................... 7
Rule of 78's........................................................................................ 29
Rule of 78's Receivables............................................................................ 29
Rules............................................................................................... 53
</TABLE>
92
<PAGE>
<TABLE>
<CAPTION>
TERM PAGE
- ---------------------------------------------------------------------------------------------------- -----------
<S> <C>
Sale and Servicing Agreement........................................................................ 4
Schedule of Receivables............................................................................. 57
Securities.......................................................................................... ii
Securities Act...................................................................................... iii
Securityholder...................................................................................... 53
Securityholders..................................................................................... 6
Sellers............................................................................................. ii, 1
Servicer............................................................................................ ii, 1
Servicer Payment.................................................................................... 10
Servicing Fee....................................................................................... 10
Servicing Fee Rate.................................................................................. 10
Servicing Transfer.................................................................................. 1
Servicing Transfer Agreements....................................................................... 2
Settlement Date..................................................................................... 10
Simple Interest Receivables......................................................................... 28
Soldiers' and Sailors' Civil Relief Act............................................................. 58
Specified Reserve Account Balance................................................................... 8
Standard & Poor's................................................................................... 11
Stockholders Agreement.............................................................................. 34
Terms and Conditions................................................................................ 54
Transfer Agent and Registrar........................................................................ 55
Transfer and Servicing Agreements................................................................... 57
Trust............................................................................................... i, 1
Trust Accounts...................................................................................... 59
Trust Agreement..................................................................................... 1
UCC................................................................................................. 74
Underwriters........................................................................................ 87
Underwriting Agreements............................................................................. 87
U.S................................................................................................. 77
Used Financed Vehicle............................................................................... 18
</TABLE>
93
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[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
ANNEX A
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Chase
Manhattan RV Trust 1997-A Class A-1 5.598% Asset Backed Notes, Class A-2 5.852%
Asset Backed Notes, Class A-3 5.919% Asset Backed Notes, Class A-4 6.020% Asset
Backed Notes, Class A-5 6.050% Asset Backed Notes, Class A-6 6.130% Asset Backed
Notes, Class A-7 6.140% Asset Backed Notes, Class A-8 6.230% Asset Backed Notes,
Class A-9 6.320% Asset Backed Notes, and Class A-10 6.370% Asset Backed Notes
(the 'GLOBAL NOTES') and 6.540% Asset Backed Certificates (the 'GLOBAL
CERTIFICATES,' and together with the Global Notes, the 'GLOBAL SECURITIES') to
be issued will be available only in book-entry form. Investors in the Global
Securities may hold Global Notes through any of The Depository Trust Company
('DTC'), Cedel or Euroclear or hold Global Certificates through DTC. The Global
Securities will be tradeable as home market instruments in both the European and
U.S. domestic markets. Initial settlement and all secondary trades will settle
in same-day funds.
Secondary market trading between investors holding Global Notes through
Cedel and Euroclear will be conducted in the ordinary way in accordance with
their normal rules and operating procedures and in accordance with conventional
eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear and DTC
Participants holding Global Notes will be effected on a delivery-against-payment
basis through the respective Depositaries of Cedel and Euroclear (in such
capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing corporation
organizations or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the name of
Cede & Co. as nominee or DTC. Investors' interests in the Global Securities will
be represented through financial institutions acting on their behalf as direct
and indirect Participants in DTC. As a result, Cedel and Euroclear will hold
positions on behalf of their participants through their respective Depositaries,
which in turn will hold such positions in accounts as DTC Participants.
Investors electing to hold their Global Securities through DTC will follow
the settlement practice applicable to U.S. corporate debt obligations. Investor
securities custody accounts will be credited with the holdings against payment
in same-day funds on the settlement date.
Investors electing to hold their Global Notes through Cedel or Euroclear
accounts will follow the settlement procedures applicable to conventional
eurobonds, except that there will be no temporary global security and no
'lock-up' or restricted period. Global Securities will be credited to the
securities custody accounts on the settlement date against payment in same-day
funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to U.S. corporate
debt obligations in same-day funds.
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Trading between Cedel and/or Euroclear Participants. Secondary market
trading between Cedel Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
Trading between DTC seller and Cedel or Euroclear purchaser. When Global
Notes are to be transferred from the account of a DTC Participant to the account
of a Cedel Participant or a Euroclear Participant, the purchaser will send
instructions to Cedel, or Euroclear through a Cedel Participant or Euroclear
Participant, at least one business day prior to settlement. Cedel or Euroclear
will instruct the respective Depositary to receive the Global Notes against
payment. Payment will include interest accrued on the Global Notes from and
including the last coupon payment date to and excluding the settlement date.
Payment will then be made by the respective Depositary to the DTC Participant's
account against delivery of the Global Notes. After settlement has been
completed, the Global Notes will be credited to the respective clearing system
and by the clearing system, in accordance with its usual procedures, to the
Cedel Participant's or Euroclear Participant's account. The Global Notes credit
will appear the next day (European time) and the cash debit will be
backed-valued to, and the interest on the Global Notes will accrue from, the
value date (which would be the preceding day when settlement occurred in New
York). If settlement is not completed on the intended value date (i.e., the
trade fails), the Cedel or Euroclear cash debit will be valued instead as of the
actual settlement date.
Cedel Participants and Euroclear Participants will need to make available
to the respective clearing systems the funds necessary to process same-day funds
settlement. The most direct means of doing so is to preposition funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within Cedel or Euroclear. Under this approach,
they may take on credit exposure to Cedel or Euroclear until the Global Notes
are credited to their accounts one day later.
As an alternative, if Cedel or Euroclear has extended a line of credit to
them, Cedel Participants or Euroclear Participants can elect not to preposition
funds and allow that credit line to be drawn upon the finance settlement. Under
this procedure, Cedel Participants or Euroclear Participants purchasing Global
Notes would incur overdraft charges for one day, assuming they cleared the
overdraft when the Global Notes were credited to their accounts. However,
interest on the Global Notes would accrue from the value date. Therefore, in
many cases the investment income on the Global Notes earned during the one-day
period may substantially reduce or offset the amount of such overdraft charges,
although this result will depend on each Cedel Participant's or Euroclear
Participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Notes to the
respective Depositary for the benefit of Cedel Participants or Euroclear
Participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC Participant a cross-market transaction will
settle no differently than a trade between two DTC Participants.
Trading between Cedel or Euroclear seller and DTC purchaser. Due to time
zone differences in their favor, Cedel Participants and Euroclear Participants
may employ their customary procedures for transactions in which Global Notes are
to be transferred by the respective clearing system, through the respective
Depositary, to a DTC Participant. The seller will send instructions to Cedel or
Euroclear through a Cedel Participant or Euroclear Participant at least one
business day prior to settlement. In these cases, Cedel or Euroclear will
instruct the respective Depositary, as appropriate, to deliver the bonds to the
DTC Participant's account against payment. Payment will include interest accrued
on the Global Notes from and including the last coupon payment date to and
excluding the settlement date. The payment will then be reflected in the account
of the Cedel Participant or Euroclear Participant the following day, and receipt
of the cash proceeds in the Cedel Participant's or Euroclear Participant's
account would be back-valued to the value date (which would be the preceding
day, when settlement occurred in New York). Should the Cedel Participant or
Euroclear Participant have a line of credit with its respective clearing system
and elect to be in debit in anticipation of receipt of the sale proceeds in its
account, the back-valuation will extinguish any overdraft charges incurred over
that one-day period.
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If settlement is not completed on the intended value date (i.e., the trade
fails), receipt of the cash proceeds in the Cedel Participant's or Euroclear
Participant's account would instead be valued as of the actual settlement date.
Finally, day traders that use Cedel or Euroclear and that purchase Global
Notes from DTC Participants for delivery to Cedel Participants or Euroclear
Participants should note that these trades would automatically fail on the sale
side unless affirmative action were taken. At least three techniques should be
readily available to eliminate this potential problem:
(a) borrowing through Cedel or Euroclear for one day (until the
purchase side of the day trade is reflected in their Cedel or Euroclear
accounts) in accordance with the clearing system's custom procedures;
(b) borrowing the Global Notes in the U.S. from a DTC Participant no
later than one day prior to settlement, which would give the Global Notes
sufficient time to be reflected in their Cedel or Euroclear account in
order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the trade
so that the value date for the purchase from the DTC Participant is at
least one day prior to the value date for the sale to the Cedel Participant
or Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
GLOBAL NOTES
A beneficial owner of Global Notes holding securities through Cedel or
Euroclear (or through DTC if the holder has an address outside the U.S.) will be
subject to the 30% U.S. withholding tax that generally applies to payments of
interest (including original issue discount) on registered debt issued by U.S.
Persons, unless (i) each clearing system, bank or other financial institution
that holds customers' securities in the ordinary course of its trade or business
in the chain of intermediaries between such beneficial owner and the U.S. entity
required to withhold tax complies with applicable certification requirements and
(ii) such beneficial owner takes one of the following steps to obtain an
exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of the
Notes that are non-U.S. Persons can obtain a complete exemption from the
withholding tax by filing a signed Form W-8 (Certificate of Foreign
Status). If the information shown on Form W-8 changes, a new Form W-8 must
be filed within 30 days of such change.
Exemption for non-U.S. Persons with effectively connected income
(Form 4224). A non-U.S. Person, including a non-U.S. corporation or bank
with a U.S. branch, for which the interest income is effectively connected
with its conduct of a trade or business in the United States, can obtain an
exemption from the withholding tax by filing Form 4224 (Exemption from
Withholding of Tax on Income Effectively Connected with the Conduct of a
Trade or Business in the United States).
Exemption or reduced rate for non-U.S. Persons resident in treaty
countries (Form 1001). Non-U.S. Persons that are beneficial owners of Notes
and who reside in a country that has a tax treaty with the United States
can obtain an exemption or reduced tax rate (depending on the treaty terms)
by filing Form 1001 (Ownership, Exemption of Reduced Rate Certificate). If
the treaty provides only for a reduced rate, withholding tax will be
imposed at that rate unless the filer alternatively files Form W-8. Form
1001 may be filed by such beneficial owner or his agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a
complete exemption from the withholding tax by filing Form W-9 (Payer's
Request for Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The beneficial owner of
a Global Note or, in the case of a Form 1001 or a Form 4224 filer, his
agent, files by submitting the appropriate form to the person through whom
it holds (the clearing agency, in the case of persons holding directly on
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the books of the clearing agency). Form W-8 and Form 1001 are effective for
three calendar years and Form 4224 is effective for one calendar year.
The term 'U.S. PERSON' means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States or any political subdivision thereof, (iii) an estate the income
of which is includible in gross income for United States tax purposes regardless
of its source or (iv) a trust if a court within the United States is able to
exercise primary supervision over the administration of such trust and one or
more United States fiduciaries have the authority to control all substantial
decisions of such trust. This summary does not deal with all aspects of U.S.
federal income tax withholding that may be relevant to foreign holders of the
Global Notes. Investors are advised to consult their own tax advisors for
specific tax advice concerning their holding and disposing of the Global Notes.
GLOBAL CERTIFICATES
A beneficial owner of Global Certificates holding such Certificates through
DTC will be subject to U.S. withholding tax at a rate of 35% in the case of
corporations and at a rate of 39.6% in the case of all other persons if such
holder has an address outside of the U.S., unless (i) each clearing system, bank
or other financial institution that holds customers' securities in the ordinary
course of its business in the chain of intermediaries between such beneficial
owner and the U.S. entity required to withhold tax complies with applicable
certification requirements and (ii) such beneficial owner certifies that it is a
U.S. Person and such certification is signed under penalties of perjury.
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<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE SELLERS, THE SERVICER OR BY THE UNDERWRITERS.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE SELLERS, THE SERVICER OR THE RECEIVABLES SINCE THE DATE HEREOF OR
THEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR A SOLICITATION BY
ANYONE IN ANY STATE IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR
TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
- ------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Summary of Terms.............................................. 1
Risk Factors.................................................. 12
The Trust..................................................... 16
The Receivables Pool.......................................... 18
Chase and Chase USA........................................... 33
The CIT Group/Sales Financing, Inc., Servicer................. 33
Use of Proceeds............................................... 36
Weighted Average Life of the Securities....................... 36
Pool Factors and Trading Information.......................... 46
Description of the Notes...................................... 46
Description of the Certificates............................... 50
Certain Information Regarding
the Securities.............................................. 52
Description of the Transfer and Servicing Agreements.......... 57
Certain Legal Aspects of the Receivables...................... 74
Legal Investment.............................................. 77
Certain Federal Income Tax
Consequences................................................ 77
Certain State Tax Consequences................................ 84
ERISA Considerations.......................................... 85
Underwriting.................................................. 87
Legal Matters................................................. 88
Index of Terms................................................ 89
Annex A....................................................... A-1
</TABLE>
Until December 21, 1997 (90 days after the date of this Prospectus), all dealers
effecting transactions in the Securities, whether or not participating in this
distribution, may be required to deliver this Prospectus. This delivery
requirement is in addition to the obligation of dealers to deliver this
Prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
PROSPECTUS
$897,395,285.54
CHASE MANHATTAN RV
OWNER TRUST 1997-A
$852,500,000.00
ASSET BACKED NOTES
$ 44,895,285.54
ASSET BACKED CERTIFICATES
CHASE MANHATTAN BANK USA,
NATIONAL ASSOCIATION
THE CHASE MANHATTAN BANK
SELLERS
THE CIT GROUP/
SALES FINANCING, INC.
SERVICER
UNDERWRITERS OF THE NOTES
CHASE SECURITIES INC.
BEAR, STEARNS & CO. INC.
MERRILL LYNCH & CO.
SALOMON BROTHERS INC
UNDERWRITER OF THE CERTIFICATES
CHASE SECURITIES INC.
SEPTEMBER 22, 1997
