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As filed with the Securities and Exchange Commission on August 1, 1997
Registration No. 333-____
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
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CHASE MANHATTAN MARINE OWNER TRUST 1997-A
(Issuer of Securities)
CHASE MANHATTAN BANK THE CHASE MANHATTAN BANK
USA, NATIONAL ASSOCIATION
(Depositors of the Trust described herein)
(Exact name as specified in registrants' charter)
United States New York
(States or other jurisdictions of incorporation)
22-2382028 13-4994650
(I.R.S. employer identification numbers)
802 Delaware Avenue 270 Park Avenue
Wilmington, Delaware 19801 New York, New York 10017
(302) 575-5000 (212) 270-6000
(Address, including zip code, and telephone number,
including area code, of registrant's Principal Executive Office)
ANDREW T. SEMMELMAN ANTHONY J. HORAN
Secretary Secretary
Chase Manhattan Bank USA, National Association The Chase Manhattan Bank
802 Delaware Avenue 270 Park Avenue
Wilmington, Delaware 19801 New York, New York 10017
(302) 575-5033 (212) 270-7122
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
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MARTIN R. JOYCE LAURA PALMA WILLIAM A. GRAY
The Chase Manhattan Bank Simpson Thacher & Bartlett Orrick, Herrington & Sutcliffe LLP
270 Park Avenue 425 Lexington Avenue 666 Fifth Avenue
New York, New York 10017 New York, New York 10017 New York, New York 10103
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Approximate date of commencement of proposed sale to the public: As
soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be
offered pursuant to dividend or interest reinvestment plans, please check the
following box. / /
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act Registration Statement number of the earlier
effective Registration Statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act Registration Statement number of the earlier effective Registration
Statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
CALCULATION OF REGISTRATION FEE
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Amount of
Amount to be Proposed Maximum Proposed Maximum Registration
Title of Securities to be Registered(1) Registered Aggregate Price Per Unit(2) Aggregate Offering Price(2) Fee(2)
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Asset-Backed Securities $1,000,000.00 100% $1,000,000.00 $304.00
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(1) The Securities are also being registered for the purpose of market making.
(2) Estimated solely for the purpose of calculating the registration fee.
The Registrants hereby amend this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment that specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until the Registration Statement shall thereafter
become effective in accordance on such date as the Commission, acting pursuant
to said Section 8(a), may determine.
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SUBJECT TO COMPLETION, DATED AUGUST 1, 1997
PROSPECTUS
$____________________
Chase Manhattan Marine Owner Trust 1997-A
$______________ Class A-1 _____% Asset Backed Notes
$______________ Class A-2 _____% Asset Backed Notes
$______________ Class A-3 _____% Asset Backed Notes
$______________ Class B _____% Asset Backed Notes
$______________ _____% Asset Backed Certificates
Chase Manhattan Bank USA, National Association
The Chase Manhattan Bank
Sellers
The CIT Group/Sales Financing, Inc.
Servicer
Chase Manhattan Marine Owner Trust 1997-A (the "Trust" or the "Issuer") will be
formed pursuant to a Trust Agreement, to be dated as of ________ __, 1997, among
Chase Manhattan Bank USA, National Association, a national banking association
("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. The Trust will issue $___________ aggregate principal
amount of Class A-1 _____%
(continued on the following page)
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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.
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.
Prospective investors should consider, among other things, the information set
forth under the heading "Risk Factors" commencing on page 14 herein.
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Underwriting Discount
Price to Public (1) and Commissions Proceeds to the Sellers(1)(2)
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Per Class A-1 Note..................... % % %
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Per Class A-2 Note..................... % % %
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Per Class A-3 Note..................... % % %
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Per Class B Note....................... % % %
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Per Certificate........................ % % %
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Total $ $ $
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(1) Plus accrued interest, if any, from _____ __, 1997.
(2) Before deduction of expenses estimated at $_______.
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
_____ __, 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.
Chase Securities Inc.
The date of this Prospectus is _____ __, 1997.
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(continued from preceding page)
Asset Backed Notes (the "Class A-1 Notes"), $___________ aggregate principal
amount of Class A-2 _____% Asset Backed Notes (the "Class A-2 Notes"),
$___________ aggregate principal amount of Class A-3 _____% Asset Backed Notes
(the "Class A-3 Notes" and, together with the Class A-1 Notes and Class A-2
Notes, the "Class A Notes") and $___________ aggregate principal amount of Class
B _____% Asset Backed Notes (the "Class B Notes" and, together with the Class A
Notes, the "Notes") pursuant to an indenture (as amended and supplemented from
time to time, the "Indenture") to be dated as of ________ __, 1997, between the
Trust and Norwest Bank Minnesota, National Association, as indenture trustee
(the "Indenture Trustee"). The Trust will also issue $_____________ aggregate
principal amount of _____% Asset Backed Certificates (the "Certificates" and,
together with the Notes, the "Securities"). The assets of the Trust will include
a pool of retail installment sales contracts and purchase money notes and other
notes secured by new and used boats, boat motors and boat trailers, certain
monies received or due thereunder on and after ________ __, 1997 (the "Cutoff
Date"), security interests in the boats financed thereby, amounts on deposit in
certain accounts 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 all classes of Notes will accrue at the fixed per annum
interest rates specified above. Interest on the Notes will generally be payable
on the 15th day of each month (each, a "Distribution Date"), commencing
____________ __, 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 the Class A-2 Notes until the Class A-1 Notes have been paid in full,
no principal will be paid on the Class A-3 Notes until the Class A-2 Notes have
been paid in full and no principal will be paid on the Class B Notes until the
Class A Notes have been paid in full. The rights of the Class B Noteholders will
be subordinated to the rights of the Class A Noteholders to receive payments of
interest on and principal of the Class A Notes to the extent described herein.
The Certificates will represent fractional undivided interests in the
assets of the Trust. Interest, to the extent of the Certificate Rate (as defined
herein), 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 and principal on the Certificates will be subordinated
in priority to payments due on the Notes to the extent described herein.
The Class A-1 Notes will be payable in full on the _____ 1998
Distribution Date, the Class A-2 Notes will be payable in full on the _______
199_ Distribution Date, the Class A-3 Notes will be payable in full on the
__________ ____ Distribution Date and the Class B Notes will be payable in full
on the _____________ Distribution Date. The final scheduled Distribution Date
with respect to the Certificates will be the _________ 20__ 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 Class B Notes and 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 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 Issuer, a newly-formed limited purpose Delaware business trust,
generally will be prohibited from incurring any indebtedness other than the
Notes, and its assets will include the Receivables and related property, the
Collection Account, the Note Distribution Account, the Certificate Distribution
Account, the Paid-Ahead Account and the Reserve Account, as described 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 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.
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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, any amendments thereof, and the
exhibits thereto 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 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.
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.
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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: Gilmar Rodrigues. 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--CPR 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.
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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 Marine Owner Trust 1997-A (the "Trust" or the
"Issuer"), a Delaware business trust established pursuant to a
trust agreement (as amended and supplemented, the "Trust
Agreement"), dated as of ________ __, 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
respective affiliates has guaranteed, insured or is otherwise
obligated with respect to the Securities. See "Risk
Factors--Subordination; Limited Assets."
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 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 Marine Finance............................ Prior to the Servicing Transfer, Chase and Chase USA, each a
wholly-owned subsidiary of the Corporation, together with several
of their respective affiliates, were engaged in the marine financing
and marine loan servicing business. As used herein, the term
"Chase Marine Finance" refers to such business of the Sellers,
their respective predecessors and their respective affiliates, and
such term does not include what was the marine financing and
marine 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 Marine Loans by Chase Marine 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 Marine
Loans then serviced by CFMC was sold to CITSF (such
transaction, the "Servicing Transfer"). CITSF began servicing
such Marine Loans on August __, 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 respective affiliates (other than CIT
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and its affiliates) is actively engaged in the business of financing
and servicing Marine 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 _____% Asset Backed Notes in the aggregate principal
amount of $___________.
Class A-2 _____% Asset Backed Notes in the aggregate principal
amount of $___________.
Class A-3 _____% Asset Backed Notes in the aggregate principal
amount of $___________.
Class B _____% Asset Backed Notes in the aggregate principal
amount of $__________.
The rights of Class B Noteholders to receive distributions with
respect to the Class B Notes will be subordinated to the rights of
the Class A Noteholders to receive distributions with respect to
the Class A Notes to the extent described herein.
The Notes will be issued by the Trust pursuant to an Indenture to
be dated as of ________ __, 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 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
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Information Regarding the Securities--Book-Entry Registration" herein.
The Certificates................................ _____% Asset Backed Certificates with an initial Certificate
Balance of $_____________. 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 established 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, all
monies received thereunder on and after the Cutoff Date, and (B)
with respect to Precomputed Receivables, all monies due or
received 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
Boats, (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 any and all proceeds
of the foregoing.
The Receivables................................. The Receivables are marine retail installment sales contracts and
purchase money notes and other notes secured by new and used
boats (the "Boats")(references to Boats herein include the boat
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motor and boat trailer with respect to each Boat and the
separately financed boat motors or boat trailers, as
applicable, unless the context otherwise requires). 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 ________ __, 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 $__________,
as of the Cutoff Date, and Chase USA will transfer Receivables
to the Trust having an aggregate principal balance of
$__________ as of the Cutoff Date. On or prior to the
Closing Date, certain of the Receivables (the "Chase
Financial Receivables") then owned by Chase Financial
Acceptance Corporation, an Ohio corporation headquartered
in Cleveland, Ohio and a wholly-owned subsidiary of
Chase USA ("CFAC"), and Chase Financial Holdings, Inc., an
Ohio corporation headquartered in Cleveland, Ohio and an
affiliate of Chase and Chase USA ("CFHI"), will be sold by
CFAC and CFHI to Chase USA. See "Description of the
Transfer and Servicing Agreements" herein.
The Receivables consist of all of the Marine Loans owned by the
Sellers, CFAC and CFHI which met the criteria stated herein as
of the Cutoff Date. No Receivable will have a scheduled maturity
that, after giving prospective effect to any permitted extensions or
deferrals, would be later than ______ __, 20__ (the "Final
Scheduled Maturity Date"). As of the Cutoff Date, the weighted
average remaining maturity of the Receivables was approximately
_____ months and the weighted average original maturity of the
Receivables was approximately _____ months.
The "Pool Balance" at any time will represent the aggregate
principal balance of the Receivables as of the close of business on
the last day of the preceding Collection Period, after giving effect
to all payments received from Obligors and Repurchase Amounts
to be remitted by the Servicer or either Seller, as the case may
be, for such Collection Period and all Receivables which became
Liquidated Receivables during such Collection Period. The
aggregate principal balance of the Receivables as of the Cutoff
Date (the "Cutoff Date Pool Balance") was $________________,
and the aggregate principal balance of the Receivables as of each
of their respective origination dates ("Original Pool Balance")
was $________________.
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 _____ __, 1997. Interest on the Class B Notes will
not be paid on any Distribution Date until interest on the Class A
Notes for such Distribution Date has been paid in full. In
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addition, if an Event of Default has occurred and the
Notes have been accelerated, the Class B Noteholders will
not be entitled to any payment of interest on or principal of
the Class B Notes until the Class A Notes have been paid
in full. 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 urpose of conducting a commercial banking business.
Interest Rates. The Class A-1 Notes will bear interest at the rate
of _____% per annum, the Class A-2 Notes will bear interest at
the rate of _____% per annum, the Class A-3 Notes will bear
interest at the rate of _____% per annum and the Class B Notes
will bear interest at the rate of _____% per annum. The interest
rates for all classes of Notes are referred to herein collectively as
"Interest Rates."
Interest. Interest on the outstanding principal amount of the Notes
of each class will accrue at the related Interest Rate from and
including the Closing Date (in the case of the first 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 related
Interest Rate on the outstanding principal balance generally to the
extent of funds available therefor as described herein. See
"Description of the Transfer and Servicing
Agreements--Distributions" herein. Interest on the Class A-1
Notes will be calculated on the basis of a 360-day year based
upon the actual number of days elapsed during the related Interest
Accrual Period. Interest on the Class A-2 Notes, the Class A-3
Notes and the Class B 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
respective 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
funds available therefor as described herein. 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
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by the Servicer in the manner described under "Description of the
Transfer and Servicing Agreements--Distributions."
No principal payments will be made on the Class A-2 Notes until
the Class A-1 Notes have been paid in full, no principal payments
will be made on the Class A-3 Notes until the Class A-2 Notes
have been paid in full and no principal payments will be made on
the Class B Notes until the Class A Notes have been paid in full.
No principal will be paid to the Certificateholders until the Notes
have been paid in full.
The outstanding principal amount of the Class A-1 Notes, to the
extent not previously paid, will be payable on the _____ 1998
Distribution Date (the "Class A-1 Final Scheduled Distribution
Date"), the outstanding principal amount of the Class A-2 Notes,
to the extent not previously paid, will be payable on the _______
199_ Distribution Date (the "Class A-2 Final Scheduled
Distribution Date"), the outstanding principal amount of the
Class A-3 Notes, to the extent not previously paid, will be
payable on the _______ Distribution Date (the "Class A-3 Final
Scheduled Distribution Date") and the outstanding principal
amount of the Class B Notes, to the extent not previously paid,
will be payable on the ________ 20__ Distribution Date (the
"Class B Final Scheduled Distribution Date" and, together with
the Class A-1 Final Scheduled Distribution Date, the Class A-2
Final Scheduled Distribution Date and the Class A-3 Final
Scheduled Distribution Date, each a "Note Final Scheduled
Distribution Date"), in each case from funds available therefor
as described herein.
Optional Redemption. After the Class A Notes have been paid in
full, the Class B Notes and the Certificates will be redeemed in
whole, but not in part, on any Distribution Date on which the
Servicer exercises its option to purchase the Receivables, which
can occur 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, at a redemption price equal to the unpaid principal
amount of the Class B Notes and the Certificates plus accrued and
unpaid interest thereon. See "Description of the Notes--Optional
Redemption" herein.
Limited Rights. If an Event of Default occurs under the
Indenture, except as described herein, the Class B Noteholders
will not have any right to direct or to consent to any remedies
therefor by the Indenture Trustee, including the sale of
Receivables, until the Class A Notes have been paid in full, and
if an Event of Servicing Termination occurs, the Class B
Noteholders will not have any right to direct or consent to
removal of the Servicer or waiver of any Event of Servicing
Termination until the Class A Notes have been paid in full. See
"Risk Factors--Rights of Noteholders and Certificateholders,"
"Description of the Notes--Indenture--Events of Default; Rights
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upon an Event of Default" and "Description of the Transfer
and Servicing Agreements--Rights Upon Event of Servicing
Termination" and "--Waiver of Past Defaults" herein. As
described herein, the Certificateholders also will not have
any such rights until the Notes are paid in full.
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 _____ __,
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. _____% 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 funds
available as described herein. Interest will be calculated on the
basis of a 360-day year consisting of twelve 30-day months.
Payment of interest on the Certificates is subordinated to payment
of interest on the Notes. If an Event of Default shall occur 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.
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The outstanding principal amount, if any, of the Certificates is
expected to be paid in full on the _________ 200_ Distribution
Date (the "Certificate Final Scheduled Distribution Date").
Optional Prepayment. If the Servicer exercises its option to
purchase the Receivables, which can occur after the Class A
Notes have been paid in full, following the last day of any
Collection Period as of which the Pool Balance declines to 5% or
less of the Original Pool Balance, the Certificateholders will
receive an amount in respect of the Certificates equal to the
Certificate Balance together with accrued interest at the Certificate
Rate, and the Certificates will be retired. Any outstanding Class
B Notes will be redeemed simultaneously with the Certificates.
See "Description of the Certificates--Optional Prepayment"
herein.
Reserve Account................................. The Sellers will establish a reserve account (the "Reserve
Account") in the name of the Owner Trustee on behalf of the
Certificateholders. The Reserve Account will be funded with an
initial deposit by the Sellers of cash or certain investments having
a value of $_____________ (____% 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 to the Note
Distribution Account and 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 Trust 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 Certificateholders on the related Distribution Date
exceeds (y) the Available Amount for such Distribution Date
remaining after payment of the Servicing Payment and the
Noteholders' Distributable Amount. Amounts so withdrawn will
be deposited into the Certificate Distribution Account. If the
amount in the Reserve Account is reduced to zero,
Certificateholders will bear the credit and other risks associated
with ownership of the Receivables, including the risk that the
Trust may not, and in the case of Unendorsed U.S. Documented
Receivables, does not, have a perfected security interest in the
Boats. See "Description of the Transfer and Servicing
Agreements--Subordination of the Class B Notes and Certificates;
The 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 ____%
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(____% under certain circumstances described herein) of the
Pool Balance as of the related Settlement Date, but in any event
not less than the lesser of (i) $____________ (____% of the
Cutoff Date Pool Balance) and (ii) the Certificate Balance
then outstanding. 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 shall 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 collections 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 shall not ultimately be
recoverable from subsequent collections, the Servicer shall be
reimbursed for such Monthly Advance from collections on all
Receivables. 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 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
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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 one or more accounts in the
name of the Indenture Trustee (collectively, the "Collection
Account") on each Deposit Date, net of any amounts due 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 Class
A Noteholders' Interest Distributable Amount into the Note
Distribution Account, (iii) the Class B Noteholders' Interest
Distributable Amount into the Note Distribution Account (except
as described below), (iv) the Noteholders' Principal Distributable
Amount into the Note Distribution Account, (v) the
Certificateholder's Interest Distributable Amount into the
Certificate Distribution Account and (vi) the Certificateholders'
Principal Distributable Amount into the Certificate Distribution
Account.
Notwithstanding the foregoing, if an Event of Default has
occurred and the maturity of the Notes has been accelerated, the
Class B Noteholders will not be entitled to receive any
distributions in respect of the Class B Notes until the Class A
Notes have been paid in full, and 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 Account.............................. Early payments by or on behalf of Obligors on Precomputed
Receivables which do not constitute scheduled payments, full
prepayments or certain partial prepayments that result in a
reduction of an Obligor's periodic payment below the scheduled
payment as of the Cutoff Date will be deposited into the Paid-
Ahead Account until such time as the paid-ahead payment falls
due. See "Description of the Transfer and Servicing
Agreements--Paid-Ahead Precomputed Receivables" herein.
Servicer Payment................................ The Servicer shall 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
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"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 is 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 Agreement.........................The Servicer, in its capacity as administrator of the Trust (the
"Administrator"), will enter into an agreement (the
"Administration Agreement") with the Trust and the Indenture
Trustee, pursuant to which the Administrator will agree to provide
the notices and to perform certain other administrative functions
required of the Trust pursuant to the Transfer and Servicing
Agreements. See "Description of the Transfer and Servicing
Agreements--Administration Agreement" herein.
Certain Federal Income
Tax Considerations............................ Upon issuance of the Securities, Simpson Thacher & Bartlett,
special 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
federal, state and local income 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 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
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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, (ii)
the Class A-2 Notes and the Class A-3 Notes be rated in the
highest long-term rating category and (iii) the Class B Notes be
rated at least in the "A" category, in each case by Moody's
Investors Service, a division of Dun & Bradstreet ("Moody's"),
and Standard & Poor's Ratings Services, a division of the
McGraw-Hill Companies ("Standard & Poor's", and together
with Moody's, the "Rating Agencies"). There can be no
assurance that any of these ratings will not be lowered or
withdrawn by either Rating Agency if, in its judgment,
circumstances in the future so warrant. See "Risk Factors--Ratings
of the Securities" herein.
Ratings of the Certificates...................... It is a condition to the issuance of the Securities that the
Certificates be rated at least in the investment grade category, or
its equivalent, by at least one Rating Agency. There can be no
assurance that any of these ratings will not be lowered or
withdrawn by a 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
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 Marine Loans then serviced by CFMC was sold to CITSF. CITSF began
servicing such Marine Loans on August __, 1997. Following the Servicing
Transfer, none of the Sellers or any of their respective affiliates (other than
CIT and its affiliates) is actively engaged in the business of marine loan
financing and marine loan servicing, and CITSF is servicing all of the
Receivables which were previously serviced by CFMC. Although steps were 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.
If at the end of any calendar year Losses on the Receivables exceeded
1.20% of the average of the month-end principal balances of the Receivables for
each month in such calendar year, the Servicer may be replaced at the direction
of the Sellers as described herein, which may result in delays in payments being
made on the Securities. There can be no assurance that the performance of the
Receivables would not be adversely affected by the replacement of CITSF as
Servicer. 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 the Servicer's activities as Servicer which could
result in the Servicer's servicing the Receivables in accordance with policies
and procedures which are materially different than those it follows with respect
to its own serviced portfolio of marine loans. 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.
Subordination; Limited Assets
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 the
Certificateholders must rely for repayment upon payments on the Receivables.
Certificateholders may also rely upon amounts on deposit in the Reserve Account
to the extent available. 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. In the case of the Class A
Noteholders, to the extent the subordination of amounts distributable to Class B
Noteholders and Certificateholders is insufficient, and, in the case of the
Class B Noteholders, to the extent the subordination of amounts distributable to
the Certificateholders is insufficient, the Trust will depend solely on current
distributions on the Receivables to make payments on the Notes. There is no
other protection against losses on the Receivables afforded the Class A
Noteholders and the Class B Noteholders. The Reserve Account will not be
available to provide a source of funds to make payments of interest on or
principal
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of the Notes. Except for amounts on deposit in the Reserve Account,
Certificateholders will depend solely on current distributions on the
Receivables for distributions on 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 interest on the Class B Notes will be subordinated in
priority of payment to distributions of interest on the Class A Notes. In
addition, the Class B Noteholders will not receive any distributions of
principal until the Class A Notes have been paid in full.
Distributions of principal of the Certificates will be subordinated in
priority of payment to distributions 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 and
principal due on the Notes with respect to such Interest Accrual Period has been
deposited in the Note Distribution Account, and under certain circumstances
described herein, 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 both Rating
Agencies, (ii) the Class A-2 Notes and the Class A-3 Notes be rated in the
highest long-term rating category by both Rating Agencies, (iii) the Class B
Notes be rated at least in the "A" category by both Rating Agencies and (iv) the
Certificates be rated at least in the investment grade category, or its
equivalent, by at least one Rating Agency. A rating is not a recommendation to
purchase, hold or sell Securities, inasmuch as such rating does not comment as
to market price or suitability for a particular investor. The ratings of 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 Boats. When originated, each Receivable included a
security interest in the Boat financed thereby, such interest was perfected
under state law and, in the case of Boats having a purchase price of $75,000 or
more and Boats 27 feet or more in length, under federal law. In connection with
the sale of the Receivables to the Trust, each Seller will assign its security
interest in each individual Boat transferred by it to the Trust. However, due to
administrative burden and expense, none of the Sellers or the Owner Trustee will
amend the certificates of title, UCC-1 financing statements and Preferred
Mortgages (in the case of Unassigned U.S. Documentable Receivables) with respect
to the Boats to identify the Trust or the Indenture Trustee as the new secured
party. In addition, with respect to Receivables originated by an affiliate of
CFAC or CFHI or their respective predecessors (in the case of the Chase
Financial Receivables) or those Receivables acquired by an Originator or a
Seller from an unaffiliated originating entity (in the case of Bulk Purchase
Receivables), liens noted on the certificates of title, the UCC-1 financing
statements and Preferred Mortgages (in the case of Unassigned U.S. Documentable
Receivables) with respect to the related Boats will remain in the name of the
originating entity in whose name the security interest was originally recorded
and have not and will not be amended to reflect CFAC's, CFHI's or the related
Seller's ownership of the security interests in the related Boats. In addition,
the certificates of title, UCC-1 financing statements or Preferred Mortgages (in
the case of Unassigned U.S. Documentable Receivables) have not and will not be
modified to reflect any name change resulting from mergers or otherwise, of any
secured party of record. In most 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 certificates of
title or UCC-1 financing statements, and the new owner of the Receivables
succeeds to the original secured party's rights 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, the related Seller (if not the secured party of record), the Trust
and/or the Indenture Trustee may not have a perfected security interest in the
related Boat, and under the Ship Mortgage Act, in the absence of assignment of
the related Preferred
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Mortgage, the related Seller (if not the secured party of record), the Trust
and/or the Indenture Trustee will not have a perfected security interest in the
related Boat. With respect to the Assigned U.S. Documentable Receivables, the
Sellers will cause assignments of the Preferred Mortgages for the related U.S.
Documentable Boats to be filed to identify the Trust and the Indenture Trustee
as assignees of the Preferred Mortgages thereon on or before the 120th day
following the Closing Date. Each Seller will be obligated to repurchase any
Receivable sold by it to the Trust as to which such Seller has represented that
the related originating entity of such Receivable (or in the case of an Assigned
U.S. Documentable Receivable, the Indenture Trustee) has a first perfected
security interest in the Boat 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 Boat, the only recourse of the Trust would be against the related Obligor on
an unsecured basis or (if the related originating entity did not have a
perfected security interest in such Boat) against the related Seller pursuant to
its repurchase obligation.
If the Trust does not have a perfected security interest in a Boat, its
ability to realize on such Boat 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 Boats and holders of
subsequently perfected security interests in such Boat. However, under the laws
of many states, certain possessory liens for repairs on a boat and storage, as
well as certain rights in favor of federal and state governmental authorities
arising from the use of a boat in connection with illegal activities, may take
priority even over a perfected security interest. Certain preferred maritime
liens will have priority over security interests in Boats perfected under state
and federal law. 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 Boat. 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 Boat 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 Receivable--Security Interests in Boats" herein.
Foreclosure. Applicable law also imposes requirements and restrictions
relating to foreclosure sales of boats and on the obtaining of deficiency
judgements following such sales. Even if the Boat securing a Receivable is
successfully repossessed or arrested and sold, the full amount due on the
Receivable may not be realized because of depreciation, damage or loss of or to
the Boat and because the resale value of the Boat may vary significantly due to
the limited market for used boats, seasonal factors and other economic and
social factors.
In sum, the Trust may not realize the full amount due on a Receivable
because of the failure to endorse the certificate of title, failure to file a
UCC-1 financing statement or failure to record the assignment of the Preferred
Mortgage, as the case may be, or the application of requirements and
restrictions on foreclosure and deficiency judgements, or because of
depreciation, damage or loss of or to a Boat, the application of federal and
state bankruptcy and insolvency laws, or other factors. As a result, the
Securityholders will be subject to delays in payments and losses.
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 its related Receivables 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.
15
<PAGE>
On or prior to the Closing Date, the Chase Financial Receivables will
be sold by CFAC and CFHI to Chase USA pursuant to a purchase agreement (the
"Purchase Agreement"). CFAC and CFHI will warrant to Chase USA in the Purchase
Agreement that the sale of the Chase Financial Receivables to Chase USA are
absolute sales of such Receivables to Chase USA. In addition, each of CFAC, CFHI
and Chase USA will treat the Purchase Agreement as a sale of the Chase Financial
Receivables to Chase USA, and Chase USA will take all actions that are required
to perfect Chase USA's ownership interest in such Receivables by filing UCC-1
financing statements with the appropriate governmental authorities in the State
of Ohio. Notwithstanding the foregoing, if CFAC or CFHI were to become a debtor
in a bankruptcy case and CFAC or CFHI or a creditor or trustee-in-bankruptcy of
CFAC or CFHI were to take the position that the sale of the Receivables to Chase
USA should be recharacterized as a pledge of such Receivables to secure a
borrowing of CFAC or CFHI, then delays in payments of collections of the Chase
Financial Receivables to the Trust could occur or (should the court rule in
favor of any such trustee, debtor or creditor) reductions in the amount of such
payments, or a reduction in the amount of the Chase Financial Receivables
securing such a borrowing, could result. If the transactions contemplated in the
Purchase Agreement are treated as a sale, the Chase Financial Receivables would
not be part of the bankruptcy estate of CFAC or CFHI and would not be available
to the related creditors.
However, the U.S. Court of Appeals for the Tenth Circuit issued its
opinion in Octagon Gas Systems, Inc. v. Rimmer (In re Meridian Reserve, Inc.)
(decided May 27, 1993) in which it concluded (noting that its position is in
contrast to that taken by another court) that accounts receivable sold by the
debtor prior to the filing for bankruptcy remain property of the debtor's
bankruptcy estate. Although the Chase Financial Receivables are likely to be
viewed as "chattel paper," as defined in the UCC, rather than as accounts, the
rationale behind the Octagon ruling is equally applicable to chattel paper. The
circumstances under which the Octagon ruling would apply are not fully known,
and the extent to which the Octagon decision will be followed in other courts or
outside the Tenth Circuit is not certain. If the holding in the Octagon case
were applied in bankruptcy of CFAC or CFHI, however, even if the transfers of
the Chase Financial Receivables to Chase USA were treated as sales, the Chase
Financial Receivables would be part of the bankruptcy estate of CFAC or CFHI and
would be subject to claims of certain creditors and delays and reductions in
payments to the Trust and holders of the Securities, or a reduction in the
amount of Chase Financial Receivables supporting the Securities, could result.
Geographic Concentration of Receivables
Based on the Cutoff Date Pool Balance, ____%, ____%, ____%, _____% and
_____% of the Receivables have Obligors with mailing addresses in New York,
Florida, New Jersey, Connecticut and California, 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 New York, Florida, New
Jersey, Connecticut or California 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 increases in the Principal Distribution Amount
with respect to 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, under the Servicing Transfer Agreements, the Servicer may,
on a case-by-case basis, permit extensions with respect to the Due Dates of
payments on Receivables in accordance with its normal and customary servicing
practices and procedures as in effect on the date of the Servicing Transfer
Agreements (which practices and procedures, as they apply to the Receivables,
are subject to change with CFMC's consent). 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
16
<PAGE>
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 Transfer and Servicing Agreements, the Servicer will be
obligated to deposit all payments on the Receivables (from whatever source) and
all proceeds of the Receivables collected during each Collection Period into the
Collection Account or the Paid-Ahead Account, as applicable; provided, however,
that for so long as CITSF is the Servicer and CITSF satisfies certain
requirements for making deposits less frequently than daily, the Servicer will
not be required to deposit such amounts in the Collection Account or Paid-Ahead
Account until the related Deposit Date. Pending deposit into the Collection
Account or Paid-Ahead Account, as provided in the Servicing Transfer Agreements,
collections will be transferred by the Servicer to CFMC and held by CFMC until
the Deposit Date. The Servicer is required to deposit such funds 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 did not otherwise have funds available), the
Securityholders might incur a loss. The Servicer may, in order to satisfy the
requirements referred to herein, 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 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 Boat. The Dealer Agreements include a representation and warranty that
each Boat had such insurance at the time of origination of the Marine Loan.
Since Obligors may choose their own insurers to provide the required coverage,
the specific terms and conditions of their policies may vary. Prior to August
__, 1997, in the event an Obligor did not maintain adequate insurance coverage
and the outstanding balance and months remaining to maturity on the Marine Loan
were greater than $5,000 and 15 months, respectively, Chase Marine Finance
purchased a collateral protection insurance policy on behalf of the Obligor.
Although insurance will continue to be required pursuant to the terms of the
Receivables, after August __, 1997, none of the Sellers or CITSF as Servicer
will purchase collateral protection insurance on behalf of Obligors, verify if
such insurance is being maintained by the Obligor on the related Boat or be
obligated to pursue any remedies under any Receivable or applicable law as a
result of such failure of any Obligor to maintain insurance. See "Description of
Transfer and Servicing Agreements--Servicing and Insurance Procedures" herein.
As a result, there may be Boats that are not covered by collateral protection
insurance.
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 issued by
the Trust, 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 Trust 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 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 the Noteholders representing more than 50% of the aggregate
principal amount of the Notes then outstanding before modifying, amending,
supplementing, waiving or terminating the Sale and Servicing Agreement or 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.
17
<PAGE>
If an Event of Default under the Indenture occurs and the maturity of
the Notes is accelerated, the Indenture Trustee will have the right or be
required in certain circumstances to sell 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 Class B Noteholders will not have any
right to direct or to consent to any actions by the Indenture Trustee until the
Class A Noteholders have been paid in full, and the Certificateholders will not
have any such rights until the Class B Noteholders have been paid in full. There
is no assurance that the proceeds of such sale will be equal to or greater than
the aggregate outstanding principal amount of the Notes and the Certificate
Balances plus, in each case, accrued interest thereon. Because neither interest
nor principal is distributed to Class B Noteholders following an Event of
Default and acceleration of the Notes until the Class A Notes have been paid in
full, and neither interest nor principal is distributed to Certificates
following an Event of Default and acceleration of the Notes until the Class B
Notes have been paid in full, the interests of the Class B Noteholders, the
Certificateholders and the Class A Noteholders may conflict, and the exercise by
the Indenture Trustee of its right to sell the Receivables or exercise other
remedies may cause the Class B Noteholders and/or Certificateholders to suffer a
loss of all or part of their investment. See "Description of the Notes--The
Indenture--Events of Default; Rights upon an Event of Default" herein.
In the event that an Event of Servicing Termination occurs, the
Indenture Trustee or the Class A Noteholders evidencing not less than a majority
of the aggregate principal amount of the Class A 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
consent of any of the Class B Noteholders, the Owner Trustee or any of the
Certificateholders. None of the Certificateholders or the Class B Noteholders
will have the ability, with certain specified exceptions, to waive defaults by
the Servicer, including defaults that could materially adversely affect the
Class B Noteholders or the Certificateholders. See "Description of the Transfer
and Servicing Agreements--Waiver of Past Events of Servicing Termination"
herein.
THE TRUST
General
The Issuer, Chase Manhattan Marine Owner Trust 1997-A, is a business
trust formed under the laws of the State of Delaware pursuant to the Trust
Agreement for the transaction described herein. 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 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 Marine Loans in the Chase Marine 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 Boats.
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 marine retail installment sales contracts and purchase money notes
and other notes secured by Boats ("Marine Loans") and (i) with respect to Simple
Interest Receivables, all monies received thereunder on and after the Cutoff
Date and (ii) with respect to
18
<PAGE>
Precomputed Receivables, all monies due or received thereunder on or after the
Cutoff Date (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 Boats; (iii)
proceeds from the exercise of the Seller's recourse rights against Dealers (as
described herein under "The Receivables Pools--Origination and Servicing of
Marine 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 Boats 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 a schedule appearing as an exhibit
to the Sale and Servicing Agreement.
If the protection provided to the investment of the Class A Noteholders
in the Trust by the subordination of the Class B Notes and the Certificates, the
protection provided to the Class B Noteholders in the Trust by the subordination
of the Certificates, and the protection provided to the Certificateholders 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 Boats that
secure defaulted Receivables. In such event, certain factors, such as the
Trust's not having a first priority perfected security interest in some of the
Boats, 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 Class B Notes and
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:
Class A-1 Notes......................... $
Class A-2 Notes.........................
Class A-3 Notes.........................
Class B Notes...........................
Certificates............................
-------------
Total................................... $
=============
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.
THE RECEIVABLES POOL
General
The Receivables held by the Trust consist of all of the Marine Loans
owned by the Sellers, CFAC and CFHI meeting several criteria, including the
criteria stated below. Each Receivable:
(i) has a remaining principal balance as of the Cutoff Date of not
greater than $600,000;
(ii) is not secured by a Boat in repossession status;
19
<PAGE>
(iii) does not have a related Obligor who has filed for bankruptcy;
(iv) is not delinquent for 60 or more days as of the Cutoff Date;
and
(v) was not originated by Chase N.A. or any of its affiliates prior
to the Chase/Chemical Merger.
Approximately __% of the Cutoff Date Pool Balance were Simple Interest
Receivables, and approximately ___% of the Cutoff Date Pool Balance were
Precomputed Receivables. Approximately ____% of the Cutoff Date Pool Balance
related to New Boats. Approximately ___% of the Cutoff Date Pool Balance related
to Used Boats. As used herein, "New Boat" means a Boat the model year of which
is the year of origination of the related Receivable or a later year, and "Used
Boat" means a Boat the model year of which is earlier than the year of
origination of the related Receivable. There can be no assurance that these
definitions accurately identify all Boats which were new or used at the time the
related Receivables were originated.
Approximately ___%, ___%, ___%, ___% and ___% of the Cutoff Date Pool
Balance had Obligors with mailing addresses in the States of New York, Florida,
New Jersey, Connecticut and California, respectively. Approximately ___% of the
Cutoff Date Pool Balance were delinquent between 30 and 59 days as of the Cutoff
Date.
Approximately ___% of the Cutoff Date Pool Balance were originated or
arranged by ____________, a Dealer in __________, and in the aggregate,
approximately ___% of the Cutoff Date Pool Balance were originated or arranged
through the five Dealers who originated or arranged the most Receivables.
All statistical information with respect to the Receivables set forth
in the following tables is given as of the Cutoff Date.
20
<PAGE>
Composition of the Receivables
<TABLE>
<CAPTION>
Average
Cutoff Cutoff Average Weighted Weighted Weighted
Date Date Original Original Average Average Average
Number of Pool Principal Pool Principal Contract Original Remaining
Receivables Balance Balance Balance Balance Rate (Range) Term (Range) Term (Range)
- ------------ -------- --------- -------- ---------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
Distribution by Contract Rate
<TABLE>
<CAPTION>
Percentage of Percentage of
Number of Total Number of Aggregate Cutoff Date
Contract Rate Range Receivables Receivables Principal Balance Pool Balance
- ------------------- ----------- --------------- ----------------- ------------
<S> <C> <C> <C> <C>
Total(1)................ 100.00%
=========== ================ ================= ======
</TABLE>
(1) Dollar amounts and percentages may not add to the total or to 100.00%,
respectively, due to rounding.
21
<PAGE>
Geographic Distribution(1)
<TABLE>
<CAPTION>
Percentage of Percentage of
Number of Total Number of Aggregate Cutoff Date
State Receivables Receivables Principal Balance Pool Balance
- ----- ------------- --------------- ----------------- -------------
<S> <C> <C> <C> <C>
Total(2)............................ $ 100.00%
============= ================ ================== ======
</TABLE>
(1) Based on location of the related Obligor (in the case of Receivables
originated without involvement of Dealers) or the Dealer from which the
related Marine Loan was acquired or through which it was made (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.
Distribution by Original Term(1)
<TABLE>
<CAPTION>
Percentage of Percentage of
Number of Total Number of Aggregate Cutoff Date
Original Term Range (months) Receivables Receivables Principal Balance Pool Balance
- ---------------------------- ----------- ------------ ----------------- ------------
<S> <C> <C> <C> <C>
Total(2).................................. 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.
22
<PAGE>
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>
Total(2)..................................... 100.00%
=========== =============== ========== ======
</TABLE>
(1) The "Remaining Term" with respect to any Receivable is such Receivables'
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.
Distribution by Original Receivable Principal Balance
<TABLE>
<CAPTION>
Original Receivable Percentage of Percentage of
Principal Balance Number of Total Number of Aggregate Cutoff Date
Range (months) Receivables Receivables Principal Balance Pool Balance
------------------- ------------ --------------- ----------------- -------------
<S> <C> <C> <C> <C>
Total(1)...................... 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 Cutoff Date Principal Balance
<TABLE>
<CAPTION>
Cutoff Date Principal Percentage of Percentage of
Balance Number of Total Number of Aggregate Cutoff Date
Range (months) Receivables Receivables Principal Balance Pool Balance
---------------------- ----------- ---------------- ----------------- ---------------
<S> <C> <C> <C> <C>
Total(1)...................... 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 Percentage of
Months Since Number of Total Number of Aggregate Cutoff Date
Origination Receivables Receivables Principal Balance Pool Balance
------------- ------------ -------------- ----------------- --------------
<S> <C> <C> <C> <C>
Total(1)...................... 100.00%
============= =============== ================== ======
</TABLE>
(1) Dollar amounts and percentages may not add to the total or to 100.00%,
respectively, due to rounding.
24
<PAGE>
Distribution by Year of Origination
<TABLE>
<CAPTION>
Percentage of Percentage of
Number of Total Number of Aggregate Cutoff Date
Origination Year Receivables Receivables Principal Balance Pool Balance
---------------- ----------- ---------------- ----------------- -------------
<S> <C> <C> <C> <C>
Total(1)...................... 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 portfolio of Marine Loans
owned and/or serviced by Chase Marine Finance prior to the Servicing Transfer
(including Marine Loans sold pursuant to prior securitizations which CFMC
continued to service prior to the Servicing Transfer) (the "Chase Marine 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. Delinquency and loan loss experience
may be influenced by a variety of economic, social and other factors.
Higher delinquencies since December 31, 1995, when compared to previous
periods, reflect in large part a modification of CFMC's servicing system in 1995
which resulted in the classification of Marine 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
for 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 Marine Finance Portfolio as a whole (as Marine Loans originated in
1991 and 1992 (consisting of ____% of the Chase Marine Finance Portfolio)
reached the point in their terms when they are most likely to be charged-off), a
decline in the growth rate of the Chase Marine Finance Portfolio, and the
implementation of a policy in July 1996 of using a discounted market value of
financed boats 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 Marine 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 Boats when necessary, charge-offs on the
Receivables in future periods may be greater than those experienced by the Chase
Marine 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 Marine Finance
Portfolio, particularly since the performance of the Receivables will reflect
CITSF's loss and delinquency policies which are different from those of Chase
Marine Finance. In addition, under certain circumstances, CITSF may be replaced
as Servicer. See "The CIT Group/Sales Financing, Inc., Servicer." Accordingly,
the information
25
<PAGE>
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.
26
<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)
Delinquencies ($)(2)(3)
30-59 Days $ $ $ $
60-89 Days
90 Days or More
TOTAL Delinquencies $ $ $ $
Repossession Inventory(4)
TOTAL Delinquencies and
Repossession Inventory $ $ $ $
Delinquencies (%)(2)(3)(5)
30-59 Days % % % % % % % %
60-89 Days % % % % % % % %
90 Days or More % % % % % % % %
TOTAL Delinquencies % % % % % % % %
Repossession Inventory(4) % % % % % % % %
TOTAL Delinquencies and
Repossession % % % % % % % %
Inventory(4)
<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) N/A*
Delinquencies ($)(2)(3)
30-59 Days $ $ N/A
60-89 Days
90 Days or More
TOTAL Delinquencies $ $ N/A
Repossession Inventory(4)
TOTAL Delinquencies and
Repossession Inventory $ $ N/A
Delinquencies (%)(2)(3)(5)
30-59 Days % % % N/A
60-89 Days % % % N/A
90 Days or More % % % N/A
TOTAL Delinquencies % % % N/A
Repossession Inventory(4) % % % N/A
TOTAL Delinquencies and
Repossession % % % N/A
Inventory(4)
</TABLE>
- ---------------------------
(1) "Outstanding Principal Amount" is (i) the sum of all amounts scheduled to
be paid under precomputed Marine Loans, less the unearned finance charges
on such Marine Loans, plus (ii) the sum of the unpaid principal balances
on simple interest Marine Loans (in each case, excluding Marine Loans in
repossession).
(2) The period of delinquency is calculated on a "Fed" basis, which means that
delinquencies are not reported until the end of the month 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 Marine Loans whose related financed boats 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.
*N/A: Data is not available.
27
<PAGE>
LOAN LOSS EXPERIENCE
(Dollars in 000's)
<TABLE>
<CAPTION>
Six Months
Ended Year Ended
--------------------- ------------------------------------------------------
June 30, June 30, December 31, December 31, December 31, December 31,
1997 1996 1996 1995 1994 1993
-------- -------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Number of Loans(1)
Period End Outstanding Principal Amount(2) $ $ $ $ $ $
Average Outstanding Principal Amount(3) $ $ $ $ $ $
Number of Repossessions
Repossessions as a % of Period End Number
of Loans $ $ $ $ $ $
Gross Charge-Offs(4) $ $ $ $ $ $
Gross Charge-Offs as a % of Period End
Outstanding Principal Amount(6) % % % % %
Gross Charge-Offs as a % of Average
Outstanding Principal Amount % % % % %
Recoveries(5) $ $ $ $ $ $
Net Charge-Offs $ $ $ $ $ $
Net Charge-Offs as a % of Period End
Outstanding Principal Amount(6) % % % % %
Net Charge-Offs as a % of Average
Outstanding Principal Amount(6) % % % % %
</TABLE>
- ---------------------------
(1) Number of loans at period end.
(2) "Outstanding Principal Amount" is (i) the sum of all amounts scheduled to
be paid under precomputed Marine Loans, less the unearned finance charges
on such Marine Loans, plus (ii) the sum of the unpaid principal balances on
simple interest Marine Loans (in each case, excluding Marine Loans in
repossession).
(3) Averages were computed by taking a simple average of month end Outstanding
Principal Amounts for each period presented.
(4) Amount charged-off includes amounts charged to losses at the time of
repossession of the related financed boat or when the loan is otherwise
deemed to be uncollectible plus or minus any subsequent loss or gain,
respectively, recognized at the time of disposition of the related financed
boat. Such amounts exclude related repossession and other liquidation
expenses and amounts subsequently recovered from the obligor.
(5) Recoveries represent any deficiency amounts recovered from obligors,
including proceeds realized in connection with accounts previously
charged-off without repossessing the related financed boat.
(6) Percentages for the six-month periods ending June 30, 1996 and June 30,
1997 are annualized.
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<PAGE>
The Boats
The Boats consist of cruisers, sailboats, houseboats, outboard boats
and runabouts. Cruisers typically range from 25 to 50 feet in length, and
include sleeping and galley accommodations. Sailboats typically range from 27
to 50 feet in length and are defined as multi-person, wind-powered craft.
Houseboats typically range from 40 to 70 feet in length. Outboard boats
typically range from 12 to 27 feet in length and are equipped primarily for
fishing. Runabouts typically range from 14 to 24 feet in length and are family
pleasure or ski boats.
Payments on Marine 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 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 Transfer and Servicing Agreements, 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.
In the case of the liquidation of a Receivable or repossession of a
Boat, amounts recovered will be applied in accordance with the Servicer's normal
and customary servicing practices and procedures. The Servicer reserves the
right to change its policy with respect to the application of amounts recovered
from a liquidated Receivable or a repossessed Boat.
Chase Marine Finance
Prior to the Servicing Transfer, Chase and Chase USA, together with
several of their affiliates, were engaged in the marine financing and marine
loan servicing business. As used herein, the term "Chase Marine
29
<PAGE>
Finance" refers to such business of the Sellers, their respective predecessors
and their respective affiliates. Prior to the Servicing Transfer, marine loan
servicing by Chase Marine Finance was performed by CFMC.
Marine Loans originated by Chase Marine Finance prior to mid-1990 were
originated by several affiliates of CFAC and subsequently transferred to CFAC.
On April 1, 1995, those Marine Loans owned by CFAC which at the time were
considered "low quality assets" under Section 23 of the Federal Reserve Act were
transferred to CFHI. On or prior to the Closing Date, the Chase Financial
Receivables will be sold by CFAC and CFHI to Chase USA.
Since mid-1990, all Indirect Receivables originated by Chase Marine
Finance were purchased from Dealers by Chase. Commencing on November 1, 1990,
all Direct Receivables originated by Chase Marine Finance were originated by
Chase USA or its predecessor, except that certain Receivables (i) originated in
California, (ii) secured by Boats manufactured by Genmar and (iii) having
original principal balances up to $25,000 were purchased at origination by or
originated by CFAC.
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
Marine 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. ("Chase USA (New York)") 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 Marine Loans owned by Chemical Bank, N.A.
The term "Originator" refers to the affiliates of CFAC (or its
predecessor) who originated Marine Loans prior to mid-1990, Chase, Chase USA,
and their respective predecessors.
On June 3, 1997, the right to service or subservice the Marine Loans
then serviced by CFMC was sold to CITSF pursuant to the Servicing Transfer.
CITSF began servicing such Marine Loans on August __, 1997. CITSF also agreed to
service Marine Loans retained or repurchased by any 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 actively engaged in the business of financing and servicing
Marine Loans. CITSF and its affiliate, The CIT Group Consumer Finance, Inc. (NY)
("CITNY"), has agreed to acquire from the Sellers, CFAC and CFHI Marine Loans
which do not satisfy the criteria for inclusion in the Trust described herein
under "The Receivables Pool--General."
Origination of Marine Loans
In accordance with Chase Marine Finance's underwriting criteria, the
Originators purchased marine retail installment sales contracts relating to new
and used boats (including boat motors and boat trailers) from boat dealers who
regularly originated and sold such contracts to the Originators pursuant to the
terms of approved Dealer Agreements and Assignments and the Originators also
made purchase money loans secured by financed boats directly or pursuant to
arrangements with Dealers in accordance with approved Dealer Agreements. Such
dealers and brokers who arrange loans, unless otherwise specified, are
collectively referred to herein as "Dealers." Dealer Agreements and Assignments
related to marine retail installment sales contracts and Dealer Agreements
related to purchase money loans are collectively referred to herein as "Dealer
Agreements." The Originators purchased such contracts from Dealers pursuant to
assignments. 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 Marine Finance with such Dealer and its key management. The
Dealer network was serviced by several account executives who initiated and
managed the Dealer relationships.
The Receivables in the form of retail installment sales contracts
purchased from Dealers are referred to herein as "Indirect Receivables," and the
Receivables in the form of purchase money loans or other loans made by the
Originator directly (including transactions involving a Dealer) are referred to
herein as "Direct Receivables."
30
<PAGE>
Almost all of the Receivables are Indirect Receivables and Direct Receivables
originated in accordance with Chase Marine 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 Marine Finance's underwriting criteria (the "Bulk Purchase
Receivables").
The Originators made or purchased the Receivables throughout the United
States. Each Dealer (except for brokers) made representations and warranties to
the Originator with respect to such Receivables made with the involvement of a
Dealer, the Obligors on such Receivables and the security interests in the Boats
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 and would
inform the Originator if it learned of such a loan by any other entity; (vii) no
recoupments, counterclaims, or setoffs existed on the part of the Obligor
against the Dealer; (viii) the Dealer would comply 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) the Dealer ensured that the collateral securing the loan was fully
and accurately described in the security agreement, that all documents necessary
to perfect such security interest in accordance with the Originator's
requirements were properly completed, executed and filed, and that such
Originator's security interest was in fact perfected and that original documents
evidencing perfection were forwarded to such Originator after recording. Brokers
typically made similar but less comprehensive representations and warranties
with respect to the Receivables they arranged.
Upon breach of any representation or warranty made by a Dealer (except
for a broker), the Originator (or its assignee) has a right of recourse against
such Dealer (except for a broker) to require it to purchase or repurchase such
Receivable. Historically, in determining whether to exercise any right of
recourse, Chase Marine Finance considered the prior performance of the Dealer
and other business and commercial factors. The Servicer will enforce such rights
with respect to Dealer Agreements relating to the Marine Loans 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. The Servicer currently maintains relationships with many of the
Dealers with whom Chase Marine Finance did business. In determining whether to
exercise any right of recourse, the Servicer will consider the prior performance
of the related Dealer and other business and commercial factors in accordance
with its customary practices. 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 marine finance specialists in accordance with Chase
Marine Finance's underwriting procedures.
Until October 1996, certain aspects of Dealer liaison, Dealer sales,
credit underwriting, 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 Chase Marine Finance's Regional
Center in Mission Viejo, California (except for some regional underwriting
support functions which took place in its Regional Center in Tampa, Florida).
All origination and underwriting functions with respect to the Receivables
originated without the involvement of Dealers (except for boat title and
Preferred Mortgage
31
<PAGE>
processing) were performed by Chase Marine Finance on a centralized basis in
Cleveland, Ohio, including the disbursement of proceeds of Marine Loans to
Dealers, customer service, document file keeping and computerized account record
keeping.
Underwriting of Marine Loans
Chase Marine Finance's underwriting procedures were intended to assess
the applicant's ability to repay the amounts due on the Receivables and the
adequacy of the financed Boat as collateral. The application, which listed the
liabilities, income and credit and employment history of the applicant, was
reviewed by Chase Marine Finance for completeness and compliance with Chase
Marine Finance's guidelines. Chase Marine Finance's guidelines were intended to
provide a basis for lending decisions, but were not meant to supersede the
credit judgment of the marine finance specialist overseeing the application. As
a result, certain Receivables may not comply with all of Chase Marine Finance's
stated guidelines. The discretion granted to a finance specialist varied
depending on the proposed loan amount and the applicant's credit. Chase Marine
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 Marine Finance's then current credit
underwriting criteria, which were intended to provide a general indication based
on the information available to Chase Marine 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 based on information known directly by Chase Marine
Finance or as provided by various credit reporting agencies with respect to
present and past debt; (iii) a debt service to gross monthly income ratio test
(Chase Marine Finance's general policy was to reject applications for Marine
Loans whose applicants' debt service to gross monthly income ratios exceeded
45%, although higher ratios 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 boat; and (v) a credit bureau score. Each application was coded
with the relevant marine finance specialist's name, and Chase Marine Finance
tracked each marine finance specialist's historical performance.
Although prior to 1994 Chase Marine Finance sought to make Marine Loans
secured against a broad base of marine products, commencing in 1994 Chase Marine
Finance through its pricing policies targeted obligors purchasing higher priced
boats.
Each Receivable arose from a credit sale, refinancing or casual sale of
a new or used boat. In most cases, Chase Marine Finance would not finance a
Marine Loan relating to a new financed boat if the amount financed under the
loan exceeded the sum of (a) 110% of the manufacturer's invoice price of the
financed boat to the Dealer (or 115% if the related Boat was manufactured by
Genmar and the amount financed was less than $25,000), (b) the cost to the
Dealer of any options and (c) the cost to the customer of any warranties, taxes,
fees, credit life and disability insurance and title and license fees (other
than federal excise taxes). In the case of new boats, Chase Marine Finance
generally financed Marine Loans on which an Obligor made a down payment of at
least 15% of the total purchase price if the amount financed was over $25,000
and 10% if the amount financed was less than $25,000.
With respect to Marine Loans relating to used boats, while Chase Marine
Finance generally reviewed the sale price of a used boat to determine whether it
was within guidelines acceptable to Chase Marine Finance, the prices of used
boats vary significantly based upon the individual circumstances of the sale.
There can be no assurance that a ready resale market exists for any used boat.
Chase Marine Finance used various national publications to assess the value of a
used boat and to determine whether it met Chase Marine Finance's underwriting
criteria. Marine appraisal surveys were required for Marine Loans in excess of
$50,000. Generally, Chase Marine Finance would not finance a Marine Loan
relating to a used boat unless the amount financed under the contract was
consistent with such national publications or Chase Marine Finance's appraisal
and, in any case, unless such amount did not exceed 80% of the wholesale value
indicated in such national publications or 85% if the related boat was
manufactured by Genmar. In the case of used boats, Chase Marine Finance
generally financed Marine Loans on which an Obligor made a down payment of at
least 20% of the amount financed (or 15% if the related boat was manufactured by
Genmar).
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<PAGE>
In addition, whether a Boat was new or used, Chase Marine Finance also
financed credit life/accident/health insurance and service warranties under a
Marine Loan. The maximum permitted terms for Marine Loans were greater for new
boats than for used boats, and in each case increased as the amount financed
increased.
Insurance Procedures
Each Receivable requires the Obligor to obtain fire, theft and
collision insurance or comprehensive and collision insurance with respect to the
related Boat. The Dealer Agreements include a representation and warranty that
each Boat had such insurance at the time of origination of the Marine Loan.
Since Obligors may choose their own insurers to provide the required coverage,
the specific terms and conditions of their policies may vary. Prior to August
__, 1997, in the event an Obligor did not maintain adequate insurance coverage
and the outstanding balance and months remaining to maturity on the Marine Loan
were greater than $5,000 and 15 months, respectively, Chase Marine Finance
purchased a collateral protection insurance policy on behalf of the Obligor. The
Obligor was billed monthly by Chase Marine Finance for such policy. The
principal balance of a small percentage of the Receivables will include the
outstanding amount of premiums of collateral protection insurance purchased by
Chase Marine Finance on behalf of Obligors on or prior to the Cutoff Date.
Although insurance will continue to be required pursuant to the terms of the
Receivables, after August __, 1997, none of the Sellers or CITSF as Servicer
will purchase collateral protection insurance on behalf of Obligors, verify if
such insurance is being maintained by the Obligor on the related Boat or be
obligated to pursue any remedies under any Receivable or applicable law as a
result of such 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 headquartered in New York, New York, 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 $___ billion,
total liabilities were approximately $___ billion and total stockholders' equity
was approximately $___ billion.
Chase USA, a wholly-owned subsidiary of the Corporation, is a national
banking association and as such is subject to the primary supervision of the
Office of the Comptroller of the Currency, and is also a member of the Federal
Reserve System. 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 $____
billion, total liabilities were approximately $____ billion and total
stockholders' equity was approximately $____ billion.
Neither Chase nor Chase USA is currently originating Marine 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.
33
<PAGE>
CITSF originates, purchases, sells and services conditional sales
contracts for marine products, manufactured housing, recreational vehicles and
other consumer goods throughout the United States. CITSF has been a lender to
the marine industry for more than 5 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 marine contracts from dealers on
an individual basis, CITSF makes bulk purchases of marine contracts. These bulk
purchases may be from the portfolios of other lending institutions or finance
companies or the portfolios of other entities that purchase and hold marine
contracts.
As of June 30, 1997, CITSF serviced for itself and others approximately
_______ contracts (consisting primarily of recreational vehicle, home equity,
marine and manufactured housing contracts), representing an outstanding balance
of approximately $____ billion. Of this portfolio, approximately ________
contracts (representing approximately $____ billion outstanding balance)
consisted of marine contracts. CITSF entered into an agreement in 1996 to
service additional manufactured housing contracts for an unaffiliated third
party, which increased substantially the total number of contracts serviced by
CITSF.
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 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. While these secured lending activities reduce the risk of
losses from extending credit, CIT's results of operations can also be affected
by other factors, including general economic conditions, competitive conditions,
the level and stability of interest rates, concentration of credit risk and
government regulation and supervision. CIT does not finance the development or
construction of commercial real estate. 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. As of ________, 1997, CIT's total assets were
approximately $____________, total liabilities were approximately $____________
and total stockholder's equity was approximately $____________.
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 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 is designated by the Corporation. The Stockholders Agreement
also contains restrictions with respect to the transfer of the stock of CIT to
third parties.
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<PAGE>
Asset Service Center
Through its Asset Service Center, CITSF services marine, recreational
vehicle, manufactured housing, home equity, and other consumer loans. CITSF
services all of the marine loans it originates or purchases, whether on an
individual basis or in bulk (except those it has sold to third parties on a
servicing released basis). CITSF is actively seeking arrangements pursuant to
which it will service marine loans held by other entities, including loans which
were not purchased by CITSF or sold to such other entities by CITSF, 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, where such loans have been
sold, remitting principal and interest payments to the holders thereof, to the
extent such holders are entitled thereto. Collections procedures include
repossession and resale of boats 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 boat
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, and
thereafter to diligently pursue the resale of such boat if the market is
favorable. The Asset Service Center has developed a nationwide network of
remarketing sources to facilitate resale efforts on such repossessions.
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 as of the date of the Servicing
Transfer Agreement (except as described herein)(which policies and practices
with respect to the Receivables may be changed with 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.
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 marine 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 is not
made, a manual review of the marine 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 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 marine loan continues to be
delinquent for 60 days (regardless of whether contact had been made), such
marine loan is assigned to a specific "late stage" collector until resolution. A
field visit is scheduled at this time. The Servicer will employ the same means
to cure delinquencies on the Receivables as it did as of the date of the
Servicing Transfer Agreements for marine loans it services for itself, including
deferments and reschedulings such means, with respect to the Receivables, may be
changed with CFMC's consent. Chase Marine Finance's collection procedures were
substantially the same as those of the Servicer, although CITSF's individual
collectors have more discretion than Chase Marine Finance's individual
collectors had in determining what actions are appropriate at different stages
of delinquency. Chase Marine Finance's collection procedures at the initial
stages of delinquency also used a combination of automatic dialing and letters,
except that Chase Marine Finance customarily assigned a delinquent account to a
specific late stage collector at 26 days delinquent (with field visits ordered
after 60 days delinquent).
CITSF implements repossession procedures when it is evident to it that
the obligor can no longer make payment on the marine loan or if the related
financed boat is at risk. Repossessions are generally conducted by third parties
who are engaged in the business of repossessing boats for secured parties. After
repossession, the obligor generally has an additional 10 to 30 days to redeem
the boat before the boat 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
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<PAGE>
recommendations from field personnel, although a boat will typically be sent to
auction before attempting a retail sale (in contrast to Chase Marine Finance,
which utilized varying remarketing methods in its discretion).
Losses may occur in connection with delinquent marine loans and can
arise in several ways, including the inability to locate the boat or the
obligor, because of a discharge of the obligor in a bankruptcy proceeding, or
because of depreciation of the related financed boat. Generally, CITSF
recognizes losses on marine loans when the loan is 180 days past due; however,
this is not a requirement, and the charge-off decision with respect to the
Receivables will be subject to the Servicer's discretion. 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. The loss recognition and collection policies and practices of the Servicer
with respect to the Receivables may change over time in accordance with CITSF's
business judgment, with the consent of CFMC.
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
in effect as of the date of the Servicing Transfer Agreements (except as
described herein), as described more fully in "Description of the Transfer and
Servicing Agreements--Modification of Receivables" herein. CITSF's servicing
practices and procedures with respect to the Receivables may be changed with the
consent of CFMC.
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 ___% of each of the original principal amount of each class of Notes
and the original Certificate Balance and (ii) Chase USA receiving ___% of each
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 Boats 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. Prepayments may also result from demands under the Reserve Account
with respect to Liquidated Receivables.
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 Boat securing a Receivable without the
related Seller's consent. The rate of prepayment of the Marine Loans 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 Marine Loans. 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 Marine Loan for an Obligor, so long as the proceeds of
such refinanced loan would be used to prepay such existing Marine Loan in full
and any such refinanced loan is evidenced by a new promissory note. Any such
loan thus created by a refinancing
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<PAGE>
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.
No principal payments will be made on the Class A-2 Notes until
all Class A-1 Notes have been paid in full, no principal payments will
be made on the Class A-3 Notes until the Class A-2 Notes have been paid
in full, and no principal payments will be made on the Class B Notes until
the Class A 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
balance 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 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 Certificateholders may be less than described above.
If an Event of Default has occurred and the maturity of the Notes has
been accelerated, the Class B Noteholders will not be entitled to receive any
payments in respect of their Class B Notes until the Class A Notes have been
paid in full, and the Certificateholders will not be entitled to receive any
distributions in respect of their Certificates until the Class B 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
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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; however, no Monthly Advances will be made in respect of
principal of a Paid-Ahead Simple Interest Receivable, and such Monthly Advance
will not result in any excess interest collections with respect to such
Paid-Ahead Simple Interest Receivable which could otherwise have been applied to
liquidation losses or to fund the Reserve Account.
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 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 ___% of the number of Receivables
were Paid-Ahead Simple Interest Receivables with at least one scheduled monthly
payment having been paid-ahead. The Chase Marine Finance Portfolio has
historically included Marine 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 additional scheduled payments
made in such Collection Period will be deposited into the Paid-Ahead 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 deposited
into the Paid-Ahead Account, no shortfalls of interest or principal will result
therefrom.
Chase Marine Finance maintains certain records of the historical
prepayment experience of the Chase Marine 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.
CPR Tables
Prepayments on Marine Loans can be measured relative to a prepayment
standard or model. The model used in this Prospectus is based on a constant
prepayment rate ("CPR"). CPR is determined by the percentage of principal
outstanding at the beginning of a period that prepays during that period, stated
as an annualized rate. The CPR prepayment model, like any prepayment model, does
not purport to be either an historical description of prepayment experience or a
prediction of the anticipated rate of prepayment.
The tables captioned "Percent of Initial Note Principal Balance at
Various CPR Percentages" and "Percent of Initial Certificate Balance at Various
CPR Percentages" (each a "CPR Table") have been prepared on the basis of the
characteristics of the Receivables. Each CPR Table assumes that (a) the
Receivables prepay in full at the
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specified monthly CPR, with no defaults, 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 CPR 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 CPR's.
The tables also assume that the Receivables have been aggregated into
_____ hypothetical pools with all of the Receivables within each such pool
having the following characteristics:
Weighted Average
Contract Rate
Pool ---------------------
----
.............................................
.............................................
.............................................
.............................................
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 CPR 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 CPR. Moreover, the diverse terms of the Receivables within
each of the _____ hypothetical pools could produce slower or faster principal
distributions than indicated in each CPR Table at the various constant
percentages of CPR 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.
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Percent of Initial Note Principal Balance at Various ____ Percentages
<TABLE>
<CAPTION>
Class A-1 Notes Class A-2 Notes
--------------------------------------- ---------------------------------------
Assumed CPR Percentage(2) Assumed CPR Percentage(2)
--------------------------------------- --------------------------------------
--% ---% --% --% --% --% --% --%
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Distribution Dates
Closing Date...................................
October 15, 1997...............................
November 15, 1997..............................
December 15, 1997..............................
January 15, 1998...............................
February 15, 1998..............................
March 15, 1998.................................
April 15, 1998.................................
May 15, 1998...................................
June 15, 1998..................................
July 15, 1998..................................
August 15, 1998................................
September 15, 1998.............................
October 15, 1998...............................
November 15, 1998..............................
December 15, 1998..............................
January 15, 1999...............................
February 15, 1999..............................
March 15, 1999.................................
April 15, 1999.................................
May 15, 1999...................................
June 15, 1999..................................
July 15, 1999..................................
August 15, 1999................................
September 15, 1999.............................
October 15, 1999...............................
November 15, 1999..............................
December 15, 1999..............................
January 15, 2000...............................
February 15, 2000..............................
March 15, 2000.................................
April 15, 2000.................................
May 15, 2000...................................
June 15, 2000..................................
July 15, 2000..................................
August 15, 2000................................
Weighted Average Life (years)(1)...............
</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.
(2) An asterisk "*" means a percent of initial Note principal balance of
more than zero and less than 0.5%.
The CPR 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 ____ Percentages
<TABLE>
<CAPTION>
Class A-3 Notes Class B Notes
--------------------------------------- ---------------------------------------
Assumed CPR Percentage(2) Assumed CPR Percentage(2)
--------------------------------------- --------------------------------------
--% ---% --% --% --% --% --% --%
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Distribution Dates
Closing Date...................................
September 15, 1998.............................
September 15, 1999.............................
September 15, 2000.............................
September 15, 2001.............................
September 15, 2002.............................
September 15, 2003.............................
September 15, 2004.............................
September 15, 2005.............................
September 15, 2006.............................
September 15, 2007.............................
September 15, 2008.............................
September 15, 2009.............................
September 15, 2010.............................
Weighted Average Life (years)(1)...............
</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.
(2) An asterisk "*" means a percent of initial Note principal balance of
more than zero and less than 0.5%.
The ____ 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 Certificate Principal Balance at Various CPR Percentages
<TABLE>
<CAPTION>
Certificates
------------------------------------------------------------------
Assumed CPR Percentage(2)
------------------------------------------------------------------
--% --% --% --%
<S> <C> <C> <C> <C>
Distribution Dates
Closing Date.......................................
September 15, 1998.................................
September 15, 1999.................................
September 15, 2000.................................
September 15, 2001.................................
September 15, 2002.................................
September 15, 2003.................................
September 15, 2004.................................
September 15, 2005.................................
September 15, 2006.................................
September 15, 2007.................................
September 15, 2008.................................
September 15, 2009.................................
September 15, 2010.................................
Weighted Average Life (years)(1)...................
</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.
(2) An asterisk "*" means a percent of initial Certificate Balance of more
than zero and less than 0.5%.
The CPR 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.
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<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 thereof, 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 of the
Certificates. 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 of the Certificates, as the
case may be. A Noteholder's portion of the aggregate outstanding principal
balance of the related class of Notes is the product of (i) the original
denomination of such Noteholder's Note and (ii) the applicable Note Pool Factor.
A Certificateholder's portion of the aggregate outstanding Certificate Balance
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 related fixed per annum Interest Rate and will be payable to
the Noteholders of record monthly on each Distribution Date, commencing _____
__, 1997. Interest on the outstanding principal amount of each class of Notes
will accrue at the related 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 the Class A-2 Notes, Class A-3 Notes and
Class B Notes. Interest payments on the Notes will generally be derived from the
Available Amount and, in the case of the Class B Notes, the remaining Available
Amount after payment of the Class A Noteholders' Interest Distributable Amount.
See "Description of the Transfer and Servicing Agreements--Distributions" and
"--Subordination of the Class B Notes and Certificates; Reserve Account" herein.
Interest payments to all classes of Class A Noteholders will have the
same priority. Under certain circumstances, the amount available for interest
payments on the Class A Notes could be less than the amount of interest payable
on the Class A Notes on any Distribution Date, in which case each class of Class
A Noteholders
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<PAGE>
will receive their ratable share (based upon the aggregate amount of interest
due to such class of Class A Noteholders) of the aggregate amount available to
be distributed in respect of interest on the Class A Notes.
Interest on the Class B Notes will not be paid on any Distribution Date
until all accrued and unpaid interest on the Class A Notes has been paid in
full. In addition, if an Event of Default has occurred and the Notes have been
accelerated, the Class B Noteholders will not be entitled to any payment of
interest on or principal of the Class B Notes until the Class A Notes have been
paid in full.
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 and the
Noteholders' Interest Distributable Amount.
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; and (iv) to the principal balance of the Class B Notes until the principal
balance of the Class B Notes is reduced to zero. Notwithstanding the foregoing,
if an Event of Default has occurred and the Notes have been accelerated, the
Noteholders' Principal Distributable Amount shall be applied to the repayment of
principal on each class of Class A Notes pro rata on the basis of their
respective unpaid principal amounts, and the Class B Noteholders will not be
entitled to receive any payment of interest on or principal of the Class B Notes
until the Class A Notes have been paid in full. The principal balance of the
Class A-1 Notes, to the extent not previously paid, will be due on the Class A-1
Final Scheduled Distribution Date, the principal balance of the Class A-2 Notes,
to the extent not previously paid, will be due on the Class A-2 Final Scheduled
Distribution Date, the principal balance of the Class A-3 Notes, to the extent
not previously paid, will be due on the Class A-3 Final Scheduled Distribution
Date, and the principal balance of the Class B Notes, to the extent not
previously paid, will be due on the Class B Final Scheduled Distribution Date.
The actual date on which the aggregate outstanding principal amount of any class
of Notes is paid may be earlier than the respective Note Final Scheduled
Distribution Dates set forth above based on a variety of factors, including
those described under "Weighted Average Life of the Securities" herein.
Optional Redemption
On any Distribution Date after the Class A-1 Notes, the Class A-2 Notes
and the Class A-3 Notes have been paid in full, the Class B Notes will be
redeemed in whole, but not in part, 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, as described herein under
"Description of the Transfer and Servicing Agreements--Termination." The
redemption price will be equal to the unpaid principal amount of the Class B
Notes plus accrued and unpaid interest thereon. Any outstanding Certificates
will be prepaid simultaneously with the redemption of the Class B Notes.
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;
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<PAGE>
(iii) reduce the percentage of the aggregate 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 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
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 of modifying in any manner
the rights of the Noteholders; provided that such action will not materially
adversely affect the interest of any such Noteholder.
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 at least 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 amounts
available to be deposited in the Note Distribution Account (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 should occur and be 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 Controlling 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 Controlling Notes then outstanding.
"Controlling Notes" means all classes of Class A Notes voting together
as a single class until the Class A Notes have been paid in full, and then
"Controlling Notes" means the Class B Notes.
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) the 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 or interest on any Notes, and the Indenture
Trustee determines that the proceeds of Receivables would not be sufficient on
an
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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 the Noteholders representing at least
66-2/3% of the aggregate principal amount of the Controlling 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 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, the
Noteholders representing not less than a majority of the aggregate principal
amount of the Controlling 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 the Noteholders representing not less than a
majority of the aggregate principal amount of the Controlling Notes then
outstanding may, in certain cases, waive any default with respect thereto,
except a default in the payment of principal or interest or a default in respect
of a covenant or provision of the Indenture that cannot be modified without the
waiver or consent of all the Noteholders representing 100% of the aggregate
principal amount of the Controlling 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) the
Noteholders representing at least 25% of the aggregate principal amount of the
Controlling 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 the
Noteholders representing at least 50% of the aggregate principal amount of the
Controlling 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 or the District of Columbia, (ii) such entity expressly assumes the
Trust's obligation to make due and punctual payments of principal 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 of the Notes or the Certificates by any Rating
Agency then in effect 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 such
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
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effectiveness of the Indenture to be impaired or permit any person to be
released from any covenants or obligations with respect to the Notes under the
Indenture except as may be expressly permitted 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, 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, in which event the
Sellers will be obligated to appoint a successor indenture trustee. The Sellers
may also 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. In such circumstances, the Sellers 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.
Pursuant to the Trust Indenture Act of 1939, as amended, the Indenture
Trustee will be deemed to have a conflict of interest and be required to resign
as trustee for either the Class A Notes or the Class B Notes if an Event of
Default occurs under the Indenture. In these circumstances, the Indenture will
require that, within 90 days of ascertaining such Event of Default, the
Indenture Trustee will resign as Indenture Trustee for the Class A Notes or the
Class B Notes and provide for a successor indenture trustee to be appointed for
one or both of the Class A Notes and Class B Notes, as applicable, in order that
there be separate trustees for each of the Class A Notes and the Class B Notes.
So long as any amounts remain unpaid with respect to the Class A Notes, only the
indenture trustee for the Class A Noteholders will have the right to exercise
remedies under the Indenture (but the Class B Noteholders will be entitled to
their share of any proceeds of enforcement, subject to the subordination of the
Class B Notes to the Class A Notes as described herein), and only the Class A
Noteholders will have the right to direct or consent to any action to be taken,
including sale of the Receivables, until the Class A Notes are paid in full
(except as described herein). Upon repayment of the Class A Notes in full, all
rights to exercise remedies under the Indenture will transfer to the indenture
trustee for the Class B Notes. Any resignation of the original Indenture Trustee
as described above with respect to any class of Notes will become effective only
upon the appointment of a successor trustee for such class of Notes and such
successor's acceptance of such appointment.
In addition, the Indenture Trustee shall agree that if for any reason
it shall cease to be an approved trustee under the Ship Mortgage Act, it shall
immediately give notice thereof to the Servicer and shall cause a successor
indenture trustee to be appointed. Norwest Bank Minnesota, National Association,
has agreed in the Indenture that if it must resign as described in the preceding
sentence and the successor indenture trustee is not an eligible successor
servicer under the Sale and Servicing Agreement, Norwest Bank Minnesota,
National Association, shall continue to be obligated to act as a successor
servicer upon the occurrence of an Event of Servicing Termination
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as described herein under "Description of the Transfer and Servicing
Agreements--Rights Upon Events of Servicing Termination." In any such
circumstances, the Servicer will be obligated to appoint a successor indenture
trustee. Any such successor indenture trustee must be an approved trustee under
the Ship Mortgage Act and, unless Norwest Bank Minnesota, National Association
is obligated to serve as successor servicer under the Sale and Servicing
Agreement, any such successor indenture trustee must also be an eligible
servicer or an affiliate of an eligible servicer, which eligible servicer is
willing to act as servicer upon a servicing transfer.
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" herein and "ERISA
Considerations" herein.
Distribution of Interest Income
On each Distribution Date, commencing _____ __, 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 Noteholders'
Distributable Amount and from amounts, if any, on deposit in the Reserve
Account. See "Description of the Transfer and Servicing
Agreement--Distributions" and "--Subordination of the Class B Notes and
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 and
principal on the Notes due with respect to such Interest Accrual Period has been
deposited in the Note Distribution Account. If an Event of Default shall occur
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). If the Servicer exercises
its option to purchase the Receivables when the then outstanding Pool Balance
declines to 5% or less of the Cutoff Date Pool Balance, Certificateholders will
receive an amount in respect of the Certificates equal to the outstanding
Certificate Balance 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.
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 Noteholders' Distributable Amount and the
Certificateholders'
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Interest Distributable Amount and from amounts, if any, on deposit in the
Reserve Account. Notwithstanding the foregoing, if an Event of Default has
occurred and the Notes have been 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 Class B Notes and
Certificates; Reserve Account" herein.
Optional Prepayment
If the Servicer exercises its option to purchase the Receivables after
the last day of a Collection Period on which the Pool Balance declines to 5% or
less of the Cutoff Date Pool Balance, Certificateholders will receive an amount
in respect of the Certificates equal to the Certificate Balance then outstanding
together with accrued interest at the Certificate Rate, which distribution shall
effect early retirement of the Certificates. Any outstanding Class B Notes will
be redeemed simultaneously with the prepayment 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 and withdrawals from the Reserve 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. 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
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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 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.
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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 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.
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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 system through DTC or (iii) after the occurrence of an Event of
Default or an Event of Servicing Termination with respect to the Securities,
holders representing at least 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.
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Three or more Certificateholders or one or more Certificateholders
representing at least 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.
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
principal with respect to each class of Notes and to the Certificate
Balance of the Certificates and the derivation of such amounts;
(ii) the amount of the distribution allocable to
interest on or with respect to each class of Notes and the
Certificates;
(iii) amount of the Servicing Fee paid, 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 for the Certificates, 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 Losses for the year to date;
(vii) the Class A Noteholders' Interest Carryover
Shortfall, the Class A Noteholders' Principal Carryover Shortfall,
the Class B Noteholders' Interest Carryover Shortfall, the Class B
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.
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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 of the Certificates, 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.
The Paying Agent, on behalf of the Trust, 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 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.
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 Agreement (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
On or before the Closing Date, the Sellers will transfer and assign in
consideration of the receipt of the Securities, without recourse, to the Trust
pursuant to a Sale and Servicing Agreement their entire interest in the
Receivables, certain related property and the proceeds thereof, including, among
other things, their respective security interests in the related Boats. On or
prior to the Closing Date, the Chase Financial Receivables will be sold by CFAC
and CFHI to Chase USA pursuant to a purchase agreement (the "Purchase
Agreement"). 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 "--Plan of Distribution" 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 Boats thereto, which representations and warranties will
include, among others, the following: (i) each Receivable (A) was initiated 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 Boat; (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 (including the District of
Columbia) or without the involvement of a Dealer for the retail financing of a
Boat, and in each case was fully and properly executed by the parties thereto;
(iv) (A) in the case of Receivables 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) no counterclaim or
defense, including the defense of usury, and no such right has been asserted
with respect to any Receivable; (viii) the Obligor on each Receivable is
required to maintain
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physical damage insurance covering the related Boat in accordance with Chase
Marine Finance's normal requirements; (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 Chase USA under the Purchase Agreement, in the
case of a Chase Financial Receivable, or the transfer of the Receivable to the
Trust pursuant to the Sale and Servicing Agreement, (B) the ownership of the
Receivables 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 Boat 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
related Originator in the Boat covered thereby (or in the case Bulk Purchase
Receivables, the related originating entity), such security interest is
assignable by the related originating entity, if any, the related Originator and
the Seller to the Trust, and all necessary action with respect to such
Receivable has been taken to perfect the security interest in the related Boat
in favor of the related Originator (or in the case Bulk Purchase Receivables,
the related originating entity), and, in the case of an Assigned U.S. Documented
Receivable, all necessary action with respect to such Receivable will be taken
within 120 days of the Closing Date to assign the security interest in the
related Boat to the Trust and then to the Indenture Trustee; (xiii) all parties
to each Receivable had capacity to execute such Receivable; (xiv) no Receivable
has been sold, assigned or pledged by the related Seller to any person other
than the Trust and, prior to the transfer of the Receivables by the Sellers to
the Trust, the related Seller had good and marketable title to each Receivable,
free and clear of any lien, encumbrance, equity, loan, pledge, charge, claim or
security interest, and the related Seller was the sole owner and had full right
to transfer such Receivable to the Trust; (xv) as of the Cutoff Date, there was
no default, breach, violation or event permitting acceleration under any
Receivable and no 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 the Sellers have not waived any of the foregoing
(except for payment delinquencies permitted); (xvi) there are no liens or claims
which have been filed for work, labor or materials affecting a Boat 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 the stated 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, immediately 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) all of the right, title and interest
of the related Seller in the Receivable has been validly sold, transferred and
assigned to the Trust, and all filings necessary to evidence such sale, transfer
and conveyance have been made in all appropriate jurisdictions; (xxv) each
Receivable satisfies the other criteria specified above under "The Receivables
Pool" herein; (xxvi) each Receivable was until the Servicing Transfer serviced
by CFMC; and (xxvii) 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, such Seller, unless it has cured the
failed criterion, will repurchase such Receivable from the Trust at a price
equal to the unpaid principal balance owed by the Obligor thereof plus interest
thereon at the respective Contract Rate of interest through the last day of the
month of repurchase (the "Repurchase
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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 at 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 in respect of the Trust for the failure of
a Receivable to meet any of the criteria set forth in the Sale and Servicing
Agreement.
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 marine loans owned or serviced
by the Servicer, CFMC or any of their respective affiliates. Custody of the
Receivables files may be held by CFMC, the Servicer, any of their respective
affiliates, or a third party together with files for marine loans or other loans
owned by Chase Marine Finance and 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 and the servicing of the Receivables by CITSF. See
"Certain Legal Aspects of the Receivables" herein.
Accounts
The Servicer will establish the Collection 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. The Sellers will establish the Reserve Account in the
name of the Owner Trustee on behalf of the Certificateholders. Each of such
accounts are collectively referred to herein as the "Trust Accounts." Each of
the Collection Account, the Paid-Ahead Account, the Note Distribution Account
and the Certificate Distribution Account will be established initially with the
trust department of Chase, and the Reserve Account will be established initially
with the trust department of the Owner Trustee. 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 Class B Notes and 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, the Indenture Trustee, 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 the related Rating
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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, net of losses and investment expenses (collectively, "Investment
Earnings"), shall be paid to the Sellers.
Paid-Ahead Precomputed Receivables
Early payments by or on behalf of Obligors on Paid-Ahead Precomputed
Receivables which do not constitute scheduled payments, full prepayments, nor
certain partial prepayments that result in a reduction of the Obligor's periodic
payment below the scheduled payment as of the Cutoff Date will be deposited into
the Paid-Ahead Account until such time as the paid-ahead payment falls due.
Until such time as payments are transferred from the Paid-Ahead Account 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. 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 with respect to Paid-Ahead
Precomputed Receivables may be retained by the Servicer until the applicable
Deposit Date. As provided in the Servicing Transfer Agreements, pending deposit
into the Paid-Ahead Account, collections will be transferred by the Servicer to
CFMC and held by CFMC on behalf of the Servicer until the Deposit Date.
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 collected by the Servicer after
the Cutoff Date.
In addition, the Servicing Transfer Agreements provide that CFMC may be
required to pay to CITSF, or, in the alternative, CITSF may be required to pay
to CFMC, a fee based on the performance of the Receivables. If the ratio
(expressed as a percentage) of (x) the 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 1.00%,
CFMC is required to pay to CITSF an additional fee of up to 0.80% per annum of
the average monthly Pool Balance, and if such ratio exceeds 1.00%, CITSF is
required to pay to CFMC an amount up to 0.20% per annum of the average monthly
Pool Balance (in each case depending on the actual 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 pay 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 Net Liquidation Proceeds and any recoveries on such
Liquidated Receivable.
Payments to the Servicer of such amounts will compensate the Servicer
for performing the functions of a third party servicer of Marine 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 Boats in cases of Obligor default
and handling the foreclosure or other liquidation of the Boat 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 Administrator under the 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 expenses up to $1,000 per
defaulted Receivable and legal fees up to $1,000 per defaulted Receivable or, in
each case, such higher amounts as CFMC shall agree to from time to
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time. The Servicer is not required to incur nor is CFMC required to reimburse
any additional such expenses in excess of such amounts. CFMC has also agreed to
pay the Servicer reasonable compensation and reimburse it for its expenses if
the Servicer takes action beyond its agreed-upon scope in servicing the
Receivables. In accordance with the Sale and Servicing Agreement, the Servicer
will be entitled to receive from Net Liquidation Proceeds of Liquidated
Receivables recoupment of its out-of-pocket expenses, but only to the extent
that Net Liquidation Proceeds exceed the principal balance of the related
Liquidated Receivable.
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 marine loans owned by it in effect as of the date of the Servicing
Transfer Agreements (except as otherwise specified 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 marine loans
that it services for itself in effect as of the date of the Servicing Transfer
Agreements (except as otherwise specified herein). Such practices and procedures
may be changed with respect to the Receivables with the consent of CFMC. The
Servicer may change such procedures with respect to the Receivables with the
consent of CFMC. 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 Boat
securing such Receivable at a public or private sale, 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.
In accordance with the Servicing Transfer Agreements, CFMC has retained
the right to direct the Servicer with respect to loss mitigation strategies, to
require the Servicer to initiate repossession actions or to direct the Servicer
to refrain from repossessing Boats, in each case based upon reasonable criteria
communicated in writing to CITSF from time to time. Such instructions may result
in the Servicer taking actions different from actions it otherwise would take in
accordance with its customary servicing policies and procedures. 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 in
connection with a non-repossession sale 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 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, the
Servicing Transfer Agreements require a manual review of the Receivable to
determine the appropriate course of action, which may be continued phone calls
and/or 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
Boat, 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, 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.
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The Servicer shall keep in force throughout the term of the Transfer
and Servicing Agreements (i) at such time as the long-term debt of its parent is
rated less than "A" by Standard & Poor's or less than "A3" by Moody's, a policy
or policies of insurance covering errors and omissions for failure to maintain
insurance as required by the Transfer and Servicing Agreements and (ii) a
fidelity bond. Such policy or policies and such fidelity bond shall have such
deductibles, and be in such form and amount as is generally customary among
persons which service a portfolio of marine loans having an aggregate principal
amount of $100 million or more and which are generally regarded as servicers
acceptable to institutional investors.
Purchase by the Servicer
A breach of certain covenants made by the Servicer in the Transfer and
Servicing Agreements that materially adversely affects the Trust's interest in
any Receivable will require the Servicer to purchase such Receivable 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. Such
covenants will obligate the Servicer not to, except as expressly provided in the
Sale and Servicing Agreement and in accordance with the terms of such Receivable
and applicable law, (i) release the Boat securing each Receivable from the
security interest granted by such Receivable, (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 Boat, or extend or forgive payments on
a Receivable, and (iv) fail to comply with the provisions of any insurance
policy covering a Receivable, if the failure to comply would impair the
protection or benefit to be afforded by such insurance policy.
Modification of Receivables
Consistent with its customary servicing procedures in effect as of the
date of the Servicing Transfer Agreements (except as described herein)(which as
applied to the Receivables may be changed with CFMC's consent), 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. 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 receiving a greater amount of collections than the Net Liquidation
Proceeds that would result from repossessing and liquidating the related Boat.
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 will deposit all payments on or with respect to the
Receivables and all proceeds of Receivables collected on or with respect to the
Receivables and all proceeds of Receivables collected during each Collection
Period into the Collection Account not later than two Business Days after
receipt. Notwithstanding the foregoing, the Servicer may make such deposits into
the Collection Account monthly on the Deposit Date following the last day of
each 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, either a short-term debt rating of P-1 or a long-term debt rating of
at least A2 by Moody's (the "Required Servicer Ratings"), or (ii) the Servicer
obtains a letter of credit, surety bond or insurance policy (the "Servicer
Letter of Credit") 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
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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 will be transferred by the Servicer to CFMC and held by CFMC
for the Servicer's benefit until the Deposit Date. See "Risk Factors--Risk of
Commingling."
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.
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 purchased by a Seller or the Servicer pursuant to the
Sale and Servicing Agreement, (b) Investment Earnings on funds deposited in the
Collection Account, the Reserve Account and the Paid-Ahead Account, (c) amounts
to be reimbursed to the Servicer in respect of nonrecoverable Monthly Advances,
and (d) Net Liquidation Proceeds of any Liquidated Receivable to the extent such
proceeds exceed its Stated Principal Balance.
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 shall 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,
the Servicer shall be reimbursed for such Monthly Advance from collections on
all Receivables. 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. See
"Description of the Transfer and Servicing Agreements--Monthly Advances" herein.
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 for, or with respect to, a Collection Period net of
distributions to be made to the Sellers (to the extent of Investment Earnings),
or to the Servicer (including, without limitation, the Servicer Payment and
amounts to be deducted in the definition of "Available Amount" 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 to the
Sellers directly any Investment Earnings on funds deposited in the Collection
Account, the Reserve Account or the Paid-Ahead Account.
Distributions
Deposits to Collection Account. On or before the third Business Day
prior to a Distribution Date (or, if such day is not a Business Day, the
preceding Business Day), the Servicer will inform the Indenture Trustee, the
Owner Trustee and the Paying Agent of the following amounts: (i) the Available
Amount, the Principal Distribution Amount, and the Available Amount for the next
succeeding Distribution Date; (ii) the aggregate Repurchase Amount, if any, of
Receivables to be repurchased by a Seller or purchased by the Servicer with
respect to the
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preceding Collection Period; (iii) the amount to be withdrawn from the Reserve
Account on the next succeeding Deposit Date; (iv) the Class A Noteholders'
Interest Distributable Amount, the Class B Noteholders' Interest Distributable
Amount, 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 to be deposited in the Paid-Ahead Account and any
amounts to be withdrawn therefrom 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 Owner 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 and any
recoveries of Liquidated Receivables), (ii) the Repurchase Amounts for any
Receivable repurchased by the Sellers as a result of breaches of certain
representations and warranties or purchased by the Servicer as a result of
breaches of certain covenants and (iii) any Monthly Advances made by the
Servicer (to the extent such Repurchase Amounts or Monthly Advances 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
taxes advanced by the Servicer in respect of Boats that are reimbursable to the
Servicer under the Sale and Servicing Agreement, (ii) any amounts incorrectly
deposited in the Collection Account, (iii) net investment earnings on the funds
in the Collection Account 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) all payments of principal (including
all Principal Prepayments applied during the related Collection Period as
described below) made on each Receivable during the related Collection Period,
(ii) the Stated 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 Stated 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 Prepayments with respect to Simple Interest
Receivables will be treated as collections for the Collection Period in which
they are received, and Principal Prepayments with respect to Precomputed
Receivables shall be deposited into the Paid-Ahead Account and treated as
collections for the Collection Period in which the related scheduled payment was
due.
The "Stated Principal Balance" of a Receivable for any Collection
Period is its unpaid principal balance at the end of the related Collection
Period, but 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 Boat or otherwise, but in any event a
Receivable shall 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 Boat. "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 and applied upon receipt to reduce the outstanding principal amount of such
Receivable prior to the date or dates on which such principal amount is
scheduled to be paid. "Net Liquidation Proceeds" means the monies collected
(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,
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(ii) other expenses customarily deducted from sales proceeds in connection with
sales or other dispositions of boats and (iii) collection agency fees.
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, in
the following order of priority (except under the limited circumstances provided
herein):
(i) to the Servicer, the Servicer Payment for the preceding
Collection Period and all unpaid Servicing Fees from prior Collection
Periods, to the extent such amounts are not deducted from the
Servicer's remittance to the Collection Account;
(ii) to the Note Distribution Account, the Class A
Noteholders' Interest Distributable Amount;
(iii) to the Note Distribution Account, the Class B
Noteholders' 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 in the Certificate
Distribution Account, the Certificateholders' Interest Distributable
Amount (unless the Notes have been accelerated as described herein);
(vi) to the Owner Trustee for deposit in the Certificate
Distribution Account, the Certificateholders' Principal Distributable
Amount; and
(vii) to the Reserve Account, any remaining portion of the
Available Amount.
On each Distribution Date, Certificateholders will also be entitled to
receive amounts withdrawn from the Reserve Account and deposited into the
Certificate Distribution Account. See "--Subordination of the Class B Notes and
the Certificates; Reserve Account."
Notwithstanding the foregoing, if an Event of Default has occurred and
the Notes have been accelerated, the Class B Noteholders will not be entitled to
receive any distributions in respect of their Class B Notes until the Class A
Notes have been paid in full, and 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" of the Certificates shall be an amount equal to
$_____________ (approximately ____% 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.
"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 in the Certificate
Distribution Account on such preceding
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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 payments 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 in 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.
"Class A Noteholders' Interest Carryover Shortfall" means, for any
Distribution Date, the excess of (i) the Class A Noteholders' Interest
Distributable Amount for the preceding Distribution Date, over (ii) the amount
in respect of interest that was actually paid to the Class A Noteholders on such
preceding Distribution Date, plus interest on the amount of interest due but not
paid to the Class A Noteholders on the preceding Distribution Date, to the
extent permitted by law, at the respective Interest Rates borne by the Class A
Notes for the related Interest Accrual Period.
"Class A Noteholders' Interest Distributable Amount" means, for any
Distribution Date, the sum of (x) the Class A Noteholders' Monthly Interest
Distributable Amount for all classes of Class A Notes for such Distribution Date
and (y) the Class A Noteholders' Interest Carryover Shortfall for such
Distribution Date.
"Class A Noteholders' Monthly Interest Distributable Amount" means, for
any Distribution Date, in the case of each class of Class A Notes, interest
accrued during the related Interest Accrual Period at the related Interest Rate
on the outstanding principal balance of the Class A Notes of such class on such
Distribution Date (or, in the case of the first Distribution Date, on the
Closing Date).
"Class A Noteholders' Principal Carryover Shortfall" means, for any
Distribution Date, the excess of (x) the Class A Noteholders' Principal
Distributable Amount for the preceding Distribution Date over (y) the amount in
respect of principal that was actually deposited in the Note Distribution
Account in respect of the Class A Noteholders on such preceding Distribution
Date.
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"Class B Noteholders' Interest Carryover Shortfall" means, for any
Distribution Date, the excess of (i) the Class B Noteholders' Interest
Distributable Amount for the preceding Distribution Date, over (ii) the amount
in respect of interest that was actually paid to the Class B Noteholders on such
preceding Distribution Date, plus interest on the amount of interest due but not
paid to the Class B Noteholders on the preceding Distribution Date, to the
extent permitted by law, at the Interest Rate borne by the Class B Notes for the
related Interest Accrual Period.
"Class B Noteholders' Interest Distributable Amount" means, for any
Distribution Date, the sum of (x) the Class B Noteholders' Monthly Interest
Distributable Amount for such Distribution Date and (y) the Class B Noteholders'
Interest Carryover Shortfall for such Distribution Date.
"Class B Noteholders' Monthly Interest Distributable Amount" means, for
any Distribution Date, interest accrued during the related Interest Accrual
Period at the related Interest Rate on the outstanding principal balance of the
Class B Notes on such Distribution Date (or, in the case of the first
Distribution Date, on the Closing Date).
"Class B Noteholders' Principal Carryover Shortfall" means, for any
Distribution Date, the excess of (x) the Class B Noteholders' Principal
Distributable Amount for the preceding Distribution Date over (y) the amount in
respect of principal that was actually deposited in the Note Distribution
Account in respect of the Class B Noteholders on such preceding Distribution
Date.
"Noteholders' Distributable Amount" means, for any Distribution
Date, the sum of the Noteholders' Principal Distributable Amount and the
Noteholders' Interest Distributable Amount.
"Noteholders' Interest Distributable Amount" means, for any
Distribution Date, the sum of (x) the Class A Noteholders' Interest
Distributable Amount and (y) the Class B Noteholders' Interest Distributable
Amount.
"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 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 Class B Notes and Certificates; Reserve Account
The rights of the Class B Noteholders to be paid interest and
principal generally will be subordinated to the rights of the Class A
Noteholders in the event of defaults and delinquencies on the Receivables as
provided in the Sale and Servicing Agreement. The protection afforded to the
Class A Noteholders through subordination of the Class B Notes and the
Certificates will be effected by the preferential right of the Class A
Noteholders to be paid principal, and following the occurrence of an Event of
Default and acceleration of the Notes, interest and principal. Subject to the
rights of the Class A Noteholders, the protection afforded to the Class B
Noteholders through subordination will be effected by the preferential right of
the Class B Noteholders (relative to the Certificateholders) to be paid interest
and principal.
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 only credit enhancement for
the Certificates is the Reserve Account. The Reserve Account will be funded with
an initial deposit by the Sellers of cash or Permitted
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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 Trust Agreement.
Under the Sale and Servicing Agreement, on each Deposit Date, the Owner
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 Certificateholders' Distributable Amount for the
related Distribution Date over the Available Amount for such Distribution Date
remaining after the payment of the Servicer Payment and the Noteholders'
Distributable Amount for such Distribution Date. Amounts so withdrawn will be
deposited in the Certificate Distribution 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 Account on any Deposit
Date may not exceed the Available Reserve Account Amount with respect to the
related Distribution Date.
The Specified Reserve Account Balance on any Distribution Date will
equal ___% of the Pool Balance as of the related Settlement Date, but in no
event will be less than the lesser of (i) ___% of the Cutoff Date Pool Balance
and (ii) the Certificate Balance then outstanding. Notwithstanding the
foregoing, if on any Distribution Date (x) the Average Net Loss Ratio exceeds
___% with respect to the first through the sixth Distribution Dates, ___% with
respect to the seventh through the fifteenth Distribution Dates and ___% with
respect to the Distribution Dates thereafter, or (y) the Average Delinquency
Percentage exceeds ___%, then the Specified Reserve Account Balance shall be an
amount equal to ___% of the Pool Balance as of the related Settlement Date
(subject to the limitations in the immediately preceding sentence); provided
that, the Specified Reserve Account Balance will revert back to the amounts
specified in the first sentence above if, for any three consecutive Collection
Periods, clauses (x) and (y) above are not triggered. The Specified Reserve
Account Balance will never be greater than the Certificate Balance then
outstanding. In no circumstances will the Sellers be required to deposit any
amounts in the Reserve Account other than the initial Reserve Account Initial
Deposit to be made on the Closing Date.
"Aggregate Net Losses" means, for any Distribution Date, the amount
equal to (i) the aggregate Stated 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 Boats 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.
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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, the Noteholders will not have any
rights in, or claims to, such amounts.
The subordination of amounts distributable to the Certificateholders,
and, in the case of the Class A Noteholders, the subordination of the amounts
distributable to Class B Noteholders, 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
Class A Noteholders and the Class B Noteholders. The Reserve Account will not be
available to provide a source of funds to make payments of interest on and
principal of the Notes. 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, Certificateholders could incur losses or a temporary shortfall
in the amounts distributed to the Certificateholders could result, which could,
in turn, increase the average life of the 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.
Administration Agreement
CITSF, as the Administrator, will enter into the Administration
Agreement with the Trust and the Indenture Trustee pursuant to which the
Administrator will agree on behalf of the Trust to provide the notices and to
perform certain other administrative functions required by the Transfer and
Servicing Agreements and the Indenture. Compensation for the performance of the
Administrator's obligations under the Administration Agreement will be included
in the Servicing Fee.
The Administration Agreement provides that the Administrator may act
directly or through its agents or attorneys pursuant to agreements entered into
with any of them, and that the 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 the 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 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.
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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 Trustee or 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 may terminate
all rights and obligations of the Servicer thereunder at any time after a
calendar year during which Losses with respect to the Receivables exceeded 1.20%
of the average of the month-end principal balances of the Receivables for such
calendar year so long as Chase, Chase USA, CFMC or another party 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 further 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 the Collection 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
Controlling 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 (which determination shall be made, in the case of
Certificateholders, without regard to whether funds are available from funds on
deposit in the Reserve Account) 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
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Indenture Trustee and the Servicer by Noteholders representing not less than 25%
of the aggregate principal amount of the Controlling Notes then outstanding (so
long as Notes are outstanding) or, if no Notes are outstanding,
Certificateholders ; (iii) the entry of a decree or order by a court or agency
or supervisory authority having jurisdiction in the premises for the appointment
of a conservator, receiver or liquidator for the Servicer in any insolvency,
readjustment of debt, marshalling of assets and liabilities, or similar
proceedings, or for the winding up or liquidation of its affairs, and the
continuance of any such decree or order is unstayed and effective for 60
consecutive days; or (iv) the consent by the Servicer to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities, or similar proceedings of or relating to
the Servicer or of or relating to substantially all of its property, or the
Servicer admits in writing its inability to pay its debts generally as they
become due, files a petition to take advantage of any applicable insolvency or
reorganization statute, makes an assignment for the benefit of its creditors, or
voluntarily suspends payment of its obligations. The holders of Securities
evidencing not less than a majority of the voting interests thereof may waive
certain defaults by the Servicer in the performance of its obligations as
described herein.
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
Controlling 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
the Indenture Trustee or a successor servicer appointed by the Indenture Trustee
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 the Owner Trustee or Indenture
Trustee is unwilling or unable to so act, it may appoint, or petition a court of
competent jurisdiction for the appointment of, a successor Servicer to act as
successor to the outgoing Servicer. The Owner Trustee or Indenture Trustee 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 Controlling 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 Controlling
Noteholders have the ability, as limited above, to waive defaults by the
Servicer that could in certain instances materially adversely affect the Class B
Notes and/or the Certificateholders. No such waiver will impair such
Noteholders' or 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
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then outstanding, if any, and the Certificateholders representing not less than
a majority of the Certificate Balance of such Certificates then outstanding, for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of such Transfer and Servicing Agreements or of modifying
in any manner the rights of 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.
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 then outstanding Pool Balance with respect
to the Receivables held by the Trust is 5% or less of the Cutoff Date Pool
Balance, all the remaining Receivables at a price equal to the aggregate of the
Repurchase Amounts thereof as the end of such Collection Period.
Any outstanding Notes will be redeemed concurrently with the purchase
events specified above and 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, and with respect to the Chase Financial Receivables, Ohio, to give
notice of Chase USA's, 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 Marine 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 constitute 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 its related
Receivables 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.
On or prior to the Closing Date, the Chase Financial Receivables will
be sold by CFAC and CFHI to Chase USA pursuant to the Purchase Agreement. CFAC
and CFHI will warrant to Chase USA in the Purchase Agreement that the sales of
the Chase Financial Receivables to Chase USA are absolute sales of such
Receivables to Chase USA. In addition, each of CFAC, CFHI and Chase USA will
treat the Purchase Agreement as a sale of the Chase Financial Receivables to
Chase USA, and CFAC and CFHI will take all actions that are required to perfect
Chase USA's ownership interest in such Receivables by filing UCC-1 financing
statements with the appropriate governmental authorities in the State of Ohio.
Notwithstanding the foregoing, if CFAC or CFHI were to become a debtor in a
bankruptcy case and a creditor or trustee-in-bankruptcy of CFAC or CFHI or CFAC
or CFHI were to take the position that the sale of the Receivables to Chase USA
should be recharacterized as a pledge of such Receivables to secure a borrowing
of CFAC or CFHI, then delays in payments of collections of the Chase Financial
Receivables to the Trust could occur or (should the court rule in favor of any
such trustee, debtor or creditor) reductions in the amount of such payments, or
a reduction in the amount of the Chase Financial Receivables securing such a
borrowing, could result. If the transactions contemplated in the Purchase
Agreement are treated as a sale, the Chase Financial Receivables would not be
part of the bankruptcy estate of CFAC or CFHI and would not be available to the
related creditors.
However, the U.S. Court of Appeals for the Tenth Circuit issued its
opinion in Octagon Gas Systems, Inc. v. Rimmer (In re Meridian Reserve, Inc.)
(decided May 27, 1993) in which it concluded (noting that its position is in
contrast to that taken by another court) that accounts receivable sold by the
debtor prior to the filing for bankruptcy remain property of the debtor's
bankruptcy estate. Although the Chase Financial Receivables are likely to be
viewed as "chattel paper," as defined in the UCC, rather than as accounts, the
rationale behind the Octagon
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ruling is equally applicable to chattel paper. The circumstances under which the
Octagon ruling would apply are not fully known, and the extent to which the
Octagon decision will be followed in other courts or outside the Tenth Circuit
is not certain. If the holding in the Octagon case were applied in bankruptcy of
CFAC or CFHI, however, even if the transfers of the Chase Financial Receivables
to Chase USA were treated as sales, the Chase Financial Receivables would be
part of the bankruptcy estate of CFAC or CFHI and would be subject to claims of
certain creditors and delays and reductions in payments to the Trust and holders
of the Securities, or a reduction in the amount of Receivables supporting the
Securities, could result.
Security Interests in the Boats
The Receivables represent marine retail installment sale contracts,
purchase money notes and other notes that evidence the credit sale of Boats to
Obligors. The Receivables also constitute personal property security agreements
and include grants of security interests in the Boats under the UCC and, as
described herein, federal law. When originated, each Receivable included a
security interest in the Boat financed thereby, such interest was perfected
under state law and, in the case of Boats believed by Chase RV Finance to be
U.S. Documentable Boats, under federal law. Generally, security interests in
boats may be perfected in one of three ways: in "title" states, a security
interest is perfected by notation of the secured party's lien on the certificate
of title issued by an applicable state motor vehicle department or other
appropriate state agency; in other states, a security interest may be perfected
by filing a UCC-1 financing statement, although a purchase money lien in
consumer goods is perfected without any filing requirement. However, if such
boat is a qualified for documentation with the United States Coast Guard under
the Ship Mortgage Act of 1920, as amended (the "Ship Mortgage Act"), a preferred
mortgage (a "Preferred Mortgage") may be obtained under the Ship Mortgage Act by
recording the mortgage with the Coast Guard and endorsing the secured party's
lien on the certificate of documentation. Vessels of at least five net tons
qualify for documentation under federal law (the "U.S. Documentable Boats"),
although such documentation is discretionary if the vessel is being used solely
for recreational purposes. If the boat is documented under the Ship Mortgage
Act, however, the boat becomes a "vessel of the United States," and the
exclusive method for perfecting a security interest in a "vessel of the United
States" is to comply with federal law. Accordingly, a Preferred Mortgage
supersedes a security interest perfected under state law.
Chase Marine Finance has taken or has caused to be taken all actions
necessary under the laws of the state in which the related Boats were numbered
at the time of origination of the Receivable and, with respect to the Boats it
believed to be U.S. Documentable Boats, under the Ship Mortgage Act to perfect
its security interests in such Boats. Chase Marine Finance's policy also
required perfection under applicable state law even in cases where a Preferred
Mortgage would ultimately be obtained. Chase Marine Finance generally followed
what it believed to be prudent practice by only filing Preferred Mortgages with
respect to Marine Loans having original principal balances of $75,000 or more or
having related Boats of 27 feet or more in length, although there can be no
assurance that such practice accurately identified all Boats which were U.S.
Documentable Boats. In the event that Chase Marine Finance failed, due to
clerical errors, to effect perfection of the security interest in a Boat (for
example, by complying with the UCC rather than the applicable certificate of
title statute, or by failing to effect notation and delivery on a certificate of
title, or by failing to comply with the Ship Mortgage Act or applicable Coast
Guard regulations), the Originator would not have a perfected first priority
security interest in such Boat. 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 if
the related originating entity did not have a perfected first priority security
interest in such Boat.
Pursuant to the terms of the Sale and Servicing Agreement, each Seller
will assign its security interest in the individual Boats to the Trust and the
Trust will assign a security interest in the Boats to the Indenture Trustee.
However, with respect to security interests in Boats perfected under state law,
because of the administrative burden and expense, none of the Sellers or the
Owner Trustee will amend the certificates of title to identify the Trust or the
Indenture Trustee as the new secured party, nor will either such entity execute
and file any transfer instruments with the appropriate governmental authorities
(including, among other instruments, UCC-3 assignments). In most states, the
assignment of a Receivables together with the security interest is an effective
conveyance of such security interest without amendment of any lien noted on the
related certificates of title 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 as owner of the Receivable
against creditors of the Obligor. In addition, certificates of title or UCC-1
financing statements have not and will not be modified to reflect any name
changes from mergers
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or otherwise of any secured party of record. In certain states, in the absence
of such amendment and delivery or execution and filing of transfer instruments
with the appropriate governmental authorities, the related Seller (if not the
second party of record), the Trust and/or the Indenture Trustee may not have a
perfected security interest in the related Financed Vehicle.
With respect to those Receivables originated by an affiliate of CFAC or
CFHI or their respective predecessors (in the case of the Chase Financial
Receivables) or those Receivable acquired by an Originator or a Seller from an
unaffiliated entity (in the case of Bulk Purchase Receivables), the liens noted
on the certificates of title or the UCC-1 financing statements with respect to
the related Boats will remain in the name of the originating entity in whose
name the security interest was originally recorded and have not and will not
have been amended to reflect CFAC's or CFHI's or the related Seller's ownership
of the security interest in the related Boats.
The Sellers have agreed to cause the documentation for any U.S.
Documentable Boat related to a Receivable having an original principal balance
of $50,000 or more (the "Assigned U.S. Documentable Receivables") to be endorsed
to identify the Trust and the Indenture Trustee as new secured parties pursuant
to a bulk filing of assignments of Preferred Mortgages with the United States
Coast Guard. Pursuant to the Sale and Servicing Agreement, such endorsements are
required to be made by the 120th day following the Closing Date. The Sellers
believe that such endorsements should be effective to assign a perfected
security interest in the related U.S. Documentable Boats to the Trust and the
Indenture Trustee. However, due to the administrative burden and expense of
determining which Receivables having original principal balances of less than
$50,000 were secured by U.S. Documentable Boats, assignments of the Preferred
Mortgages relating to such Receivables (the "Unassigned U.S Documentable
Receivables") will not be made. The Sellers will file assignments of Ship
Mortgages with respect to Assigned U.S. Documentable Receivables representing %
of the Cutoff Date Principal Balance. There can be no assurance, however, that
the Sellers' security interests in all U.S. Documentable Boats related to the
Receivables will be validly assigned to the Trust and the Indenture Trustee.
With respect to any Unassigned U.S. Documentable Receivables, or in the event
the Sellers' assignment of its security interests with respect the Assigned U.S
Documentable Receivables is not effective, the Trust will not have a perfected
security interest in the related U.S Documentable Boats, and the only recourse
of the Trust with respect to third parties would be against the related Obligors
on an unsecured basis or against the related Seller pursuant to its repurchase
obligation.
Because under federal law no assignment of a Preferred Mortgage is
valid against a third party without notice until the assignment is filed, under
the terms of the Ship Mortgage Act, in the absence of filing such assignment,
the Sellers (with respect to the Chase Financial Receivables), the Trust and the
Indenture Trustee may not have a perfected security interest in the related U.S.
Documentable Boat until assignments are filed.
Except as described above, in the absence of fraud or forgery by a boat
owner or administrative error by state recording officials, the notation of the
lien of the Originator on the certificate of title will be sufficient to protect
the Trust against the rights of subsequent purchasers of a Boat or subsequent
lenders who take a security interest in the Boat. If there are any Boats as to
which the Originator has failed to perfect the security interest assigned to a
Trust (i) such security interest would be subordinate to, among others, holders
of perfected security interests and (ii) subsequent purchasers of such Boats
would take possession free and clear of such security interest. There also
exists a risk in not identifying the Trust or the Indenture Trustee as the new
secured party on the certificate of title or executing and filing of transfer
instruments that, through fraud or negligence, the security interest of the
Trust or Indenture Trustee could be released.
A security interest perfected by a Preferred Mortgage has a nationwide
scope and no further action is necessary when an Obligor or the related Boat
moves or relocates. Security interests perfected under state law may have to be
re-registered if the Obligor moves to a state other than the state in which such
security interest is originally perfected and, in addition, if such security
interest is perfected under the UCC, a new filing must be made under the UCC in
order to continue such perfected security interest. Under the laws of most
states, a perfected security interest in a Boat continues for four months after
the Boat 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 Boat in the new state. A majority of states generally require surrender of
a certificate of title to re-register a Boat. Accordingly, the Servicer must
surrender possession if it holds the certificate of title to such Boat or, in
the case of Boats originally registered in a state which provides for notation
of lien but not possession of the certificate of title by the holder of the
security interest in the related Boat, the Servicer would receive notice of
surrender if the security interest in the Boat is noted on the certificate
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of title. Accordingly, the Servicer should have the opportunity to re-perfect
the security interest in the Boat in the state of relocation. In states that do
not require a certificate of title for registration of a Boat, re-registration
could defeat perfection. In the ordinary course of servicing its portfolio of
marine 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 Boat, the Servicer must
surrender possession of the certificate of title or will receive notice as a
result of its 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 Boats.
Under the laws of many states, certain possessory liens for repairs
performed on a Boat and storage, as well as certain rights in favor of federal
and state governmental authorities arising from the use of a boat 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. As noted above, a Preferred Mortgage supersedes a perfected state
law security interest. However, under the Ship Mortgage Act, a Preferred
Mortgage is subordinate to preferred maritime liens. Each Seller will represent
in the Sale and Servicing Agreement that it has no knowledge of any such liens
with respect to any Boat 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 Interest in Boats
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 Boats securing the Receivables. The actual repossession may be contracted
out to third party contractors. Under the UCC and laws applicable in most
states, a creditor can repossess a boat 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. The UCC 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 sale.
In the event of such repossession and resale of a Boat, 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 UCC 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 boat securing such debtor's loan. However, some
states 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 or resell collateral or enforce a
deficiency judgment. Certain other factors, including the value of a Boat, may
limit the amount realized on the sale of the Boat as collateral to an amount
less than the amount due on the Receivable.
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
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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 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 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" (generally, property held for investment)
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.
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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 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] Sellers, (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.
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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 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 will apply to certain payment 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). A 31% U.S. backup withholding tax will apply to such payments if
the U.S. person fails to provide a taxpayer identification number or
certification of foreign or other exempt status or 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 or the proceeds
from a sale that are not subject to backup withholding under the current
regulations. Under proposed Treasury
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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.
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 Administration 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 Seller.
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,
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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 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 to
a capital loss upon the retirement of the Certificates. The deductibility of
capital losses is subject to limitations.
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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 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.
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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 tax consequences to Noteholders or Certificateholders in
all of the other state and local taxing jurisdictions. Noteholders and
Certificateholders 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 Notes and/or Certificates.
Tax Consequences with Respect to the Notes
_________________________, 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.
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
80
<PAGE>
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 thereby.
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, e.g., 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) and 84-14 (relating to transactions determined
by independent "qualified professional asset managers"). A purchaser of the
Notes should be aware, however, that even if the conditions specified in one or
more of those exemptions 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
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<PAGE>
indebtedness under local law and debt, rather than equity, for tax purposes (see
"Certain Federal Income Tax Considerations--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 indebtedness, and have no substantial equity features, 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 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
82
<PAGE>
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 Notes and Certificates to the Sellers, with (i) Chase receiving
___% of each of the original principal amount of each class of Notes and the
original Certificate Balance and (ii) Chase USA receiving ___% of each of the
original principal amount of each class of Notes and the original Certificate
Balance.
Subject to the terms and conditions set forth in an Underwriting
Agreement (the "Note Underwriting Agreement"), the Sellers have agreed to sell
to the underwriters named below (the "Note Underwriters"), and each of the Note
Underwriters has agreed to purchase, the principal amount of the Notes set forth
opposite its name below.
<TABLE>
<CAPTION>
Principal Amount Principal Amount Principal Amount Principal Amount
Note Underwriters of Class A-1 Notes of Class A-2 Notes of Class A-3 Notes of Class B Notes
- ----------------- ------------------ ------------------ ------------------ ----------------
<S> <C> <C> <C> <C>
</TABLE>
Chase Securities Inc.
In the Note Underwriting Agreement, the several Note Underwriters have
agreed, subject to the terms and conditions therein, to purchase all the Notes
offered hereby if any of such Notes are purchased. The Sellers have been advised
by the Note Underwriters that they propose initially to offer the Notes to the
public at the prices set forth on the cover page hereof, and to certain dealers
at such price less a concession not in excess of _____% of the principal amount
of the Class A-1 Notes, _____% of the principal amount of the Class A-2 Notes,
_____% of the principal amount of the Class A-3 Notes and _____% of the
principal amount of the Class B Notes. The Note Underwriters may allow, and such
dealers may reallow, a concession not in excess of _____% of the principal
amount of the Class A-1 Notes, _____% of the principal amount of the Class A-2
Notes, _____% of the principal amount of the Class A-3 Notes and _____% of the
principal amount of the Class B Notes to certain other dealers. After the
initial public offering, such prices and such concessions may be changed.
Subject to the terms and conditions set forth in an underwriting
agreement (the "Certificate Underwriting Agreement" and, together with the Note
Underwriting Agreement, the "Underwriting Agreements"), the Sellers have agreed
to sell to Chase Securities Inc. (the "Certificate Underwriter" and, together
with the Note Underwriters, the "Underwriters"), and Chase Securities Inc. has
agreed to purchase, the entire principal amount of the Certificates.
In the Certificate Underwriting Agreement, the Certificate Underwriter
has agreed, subject to the terms and conditions therein, to purchase all of the
Certificates offered hereby if any of such Certificates are purchased. The
Sellers have been advised by the Certificate Underwriter that it proposes
initially to offer the Certificates to the public at the price set forth on the
cover page hereof, and to certain dealers at such price less a concession not in
excess of _____% of the principal amount of the Certificates. The Certificate
Underwriter may allow, and such dealers may reallow, a concession not in excess
of _____% of the principal amount of the Certificates to certain other dealers.
After the initial public offering, such price and such concession may be
changed.
83
<PAGE>
The Indenture Trustee and the Owner Trustee (on behalf of the Trust)
may, from time to time, invest the funds in the Collection Account in Permitted
Investments. The Owner Trustee (on behalf of the Trust and for the benefit of
the Certificateholders) may, from time to time, invest funds in 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, once 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 Chase Manhattan 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 will indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended,
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. From time to time Simpson Thacher & Bartlett and Orrick,
Herrington & Sutcliffe LLP provide legal services to the Sellers and their
affiliates.
84
<PAGE>
INDEX OF TERMS
Term Page
- ---- ----
"Fed" basis ..........................................................27
Actuarial Receivables.................................................29
Administration Agreement..............................................11
Administrative Fees...................................................57
Administrator.........................................................11
Aggregate Net Losses..................................................65
Applicable Trustee....................................................50
Asset Service Center..................................................34
Available Amount......................................................61
Available Reserve Account Amount......................................65
Average Delinquency Percentage........................................65
Average Net Loss Ratio................................................65
Banks..................................................................1
Base Interest Amount...................................................9
Boats..................................................................3
Bulk Purchase Receivables.............................................31
Business Day...........................................................5
CBC...................................................................34
CBC Holding...........................................................34
Cede...................................................................3
Cedel..............................................................2, 51
Cedel Participants....................................................51
Certificate Balance...................................................62
Certificate Final Scheduled Distribution Date..........................8
Certificate Pool Factor...............................................43
Certificate Rate.......................................................7
Certificate Underwriter...............................................83
Certificate Underwriting Agreement....................................83
Certificateholder.............................................50, 53, 74
Certificateholders.....................................................7
Certificateholders' Distributable Amount..............................62
Certificateholders' Interest Carryover Shortfall......................62
Certificateholders' Interest Distributable Amount.....................63
Certificateholders' Monthly Interest Distributable Amount.............63
Certificateholders' Monthly Principal Distributable Amount............63
Certificateholders' Principal Carryover Shortfall.....................63
Certificateholders' Principal Distributable Amount....................63
Certificates...........................................................3
CFAC...................................................................4
CFHI...................................................................4
CFMC...................................................................1
Chase..................................................................1
Chase Financial Receivables............................................4
Chase Marine Finance...............................................1, 29
Chase Marine Finance Portfolio........................................25
Chase USA..............................................................1
Chase USA (New York)..................................................30
Chase/Chemical Merger.................................................30
CIT....................................................................1
CITNY.................................................................30
CITSF...............................................................3, 1
85
<PAGE>
Term Page
- ---- ----
Class A Noteholders' Interest Carryover Shortfall.....................63
Class A Noteholders' Interest Distributable Amount....................63
Class A Noteholders' Monthly Interest Distributable Amount............63
Class A Notes..........................................................3
Class A-1 Final Scheduled Distribution Date............................6
Class A-1 Notes........................................................3
Class A-2 Final Scheduled Distribution Date............................6
Class A-2 Notes........................................................3
Class A-3 Final Scheduled Distribution Date............................6
Class A-3 Notes........................................................3
Class B Final Scheduled Distribution Date..............................6
Class B Noteholders' Interest Carryover Shortfall.....................64
Class B Noteholders' Interest Distributable Amount....................64
Class B Noteholders' Monthly Interest Distributable Amount............64
Class B Notes..........................................................3
Clearing agency.......................................................49
Clearing corporation..................................................49
Closing Date...........................................................2
Code..................................................................74
Collection Account....................................................10
Collection Period .....................................................8
Commission.............................................................4
Controlling Notes ....................................................45
Cooperative...........................................................51
Corporation.........................................................2, 1
CPR...................................................................38
CPR Table.............................................................38
Cutoff Date............................................................3
Dealer Agreements ....................................................30
Dealers...............................................................30
Definitive Certificates...............................................52
Definitive Notes......................................................52
Definitive Securities.................................................52
Delinquency Percentage................................................65
Deposit Date..........................................................57
Depositaries..........................................................49
Direct Receivables....................................................30
Distribution Date .....................................................3
DKB...................................................................34
DTC....................................................................2
Due Date..............................................................29
Eligible Deposit Account..............................................56
ERISA.................................................................80
Euroclear..........................................................2, 51
Euroclear Operator....................................................51
Euroclear Participants................................................51
Events of Default.....................................................45
Events of Servicing Termination.......................................67
Exchange Act...........................................................4
FDIA..................................................................15
FDIC...................................................................1
Federal Tax Counsel...................................................74
Final Scheduled Maturity Date..........................................4
FIRREA................................................................15
86
<PAGE>
Term Page
- ---- ----
Foreign Investor......................................................75
FTC Rule..............................................................73
General Account Regulations...........................................82
Indenture..............................................................2
Indenture Trustee .....................................................2
Indirect Receivables..................................................30
Interest Accrual Period................................................5
Interest Rates.........................................................5
Investment Earnings...................................................57
IRS...................................................................74
Issuer.................................................................1
Liquidated Receivable.................................................61
Loss..................................................................57
Losses................................................................67
Low quality assets....................................................30
Marine Loans..........................................................18
MHC...................................................................34
Military Reservist Relief Act.........................................55
Monthly Advance....................................................9, 60
Moody's...............................................................12
Net Liquidation Proceeds..............................................61
Net Loss Ratio........................................................65
New Boat..............................................................20
Note Final Scheduled Distribution Date.................................6
Note Pool Factor......................................................43
Note Underwriters ....................................................83
Note Underwriting Agreement...........................................83
Noteholder....................................................50, 52, 74
Noteholders............................................................5
Noteholders' Distributable Amount.....................................64
Noteholders' Interest Carryover Shortfall.............................64
Noteholders' Interest Distributable Amount............................64
Noteholders' Monthly Principal Distributable Amount...................64
Noteholders' Principal Carryover Shortfall........................63, 64
Noteholders' Principal Distributable Amount...........................64
Notes..................................................................3
Obligor................................................................9
OID...................................................................75
Oklahoma Tax Counsel..................................................80
Original Pool Balance..................................................4
Originator............................................................30
Outstanding Principal Amount......................................27, 28
Owner Trustee..........................................................2
Paid-Ahead Period ....................................................37
Paid-Ahead Precomputed Receivable.....................................38
Paid-Ahead Simple Interest Receivable.................................37
Participants...........................................................3
Paying Agent..........................................................56
Payment Shortfall .....................................................9
Permitted Investments.................................................56
Plan Asset Regulation.................................................81
Plan Assets...........................................................81
Plans.................................................................81
Pool Balance...........................................................4
87
<PAGE>
Term Page
- ---- ----
Precomputed Receivables...............................................29
Prepayments...........................................................36
Principal Distribution Amount.........................................61
Principal Prepayment..................................................61
Purchase Agreement................................................16, 54
Qualified Institution.................................................56
Qualified Trust Institution...........................................56
Rating Agency.........................................................12
Receivables...........................................................19
Receivables Pool......................................................18
Record Date............................................................5
Regional Centers......................................................31
Registration Statement.................................................4
Relief Act Reduction..................................................55
Repurchase Amount ....................................................55
Repurchased Receivable................................................61
Required Servicer Ratings.............................................59
Reserve Account........................................................8
Reserve Account Initial Deposit........................................8
Risk Factors...........................................................1
Rule of 78's..........................................................29
Rule of 78's Receivables..............................................29
Rules.................................................................50
Sale and Servicing Agreement...........................................4
Schedule of Receivables...............................................54
Securities.............................................................3
Securities Act.........................................................4
Securityholder........................................................50
Securityholders........................................................7
Sellers................................................................1
Servicer............................................................3, 1
Servicer Letter of Credit.............................................59
Servicer Payment..................................................11, 58
Servicing Fee.........................................................10
Servicing Fee Rate....................................................10
Servicing Transfer.....................................................1
Servicing Transfer Agreements..........................................2
Settlement Date.......................................................11
Simple interest.......................................................29
Simple Interest Receivables...........................................29
Soldiers' and Sailors' Civil Relief Act...............................55
Specified Reserve Account Balance......................................8
Standard & Poor's ................................................12, 59
Stated Principal Balance..............................................61
Stockholders Agreement................................................34
Terms and Conditions..................................................51
Transfer Agent and Registrar..........................................52
Transfer and Servicing Agreements.....................................54
Trust..................................................................1
Trust Accounts........................................................56
Trust Agreement........................................................1
U.S. .................................................................74
U.S. Documentable Boats...............................................71
UCC...................................................................70
88
<PAGE>
Term Page
- ---- ----
Underwriters..........................................................83
Underwriting Agreements...............................................83
Used Boat.............................................................20
89
<PAGE>
ANNEX A
GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Chase
Manhattan Marine Trust 1997-A Class A-1 _____% Asset Backed Notes, Class A-2
_____% Asset Backed Notes, Class A-3 _____% Asset Backed Notes and Class B
_____% Asset Backed Notes (the "Global Notes") and _____% 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.
S-A-1
<PAGE>
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. 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
S-A-2
<PAGE>
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 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.
S-A-3
<PAGE>
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 includable 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 institutions that hold 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.
S-A-4
<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 Underwriter.
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
Prospectus .....................................................................
Summary of Terms................................................................
Risk Factors....................................................................
The Trust.......................................................................
The Receivables Pool............................................................
Chase and Chase USA ............................................................
The CIT Group/Sales Financing, Inc., Servicer ..................................
Use of Proceeds ................................................................
Weighted Average Life of the Securities ........................................
Pool Factors and Trading Information ...........................................
Description of the Notes .......................................................
Description of the Certificates.................................................
Certain Information Regarding the Securities....................................
Description of the Transfer and Servicing Agreements............................
Certain Legal Aspects of the Receivables .......................................
Legal Investment................................................................
Certain Federal Income Tax Consequences.........................................
Certain State Tax Consequences..................................................
ERISA Considerations............................................................
Underwriting....................................................................
Legal Matters...................................................................
Index of Terms..................................................................
Annex A.........................................................................
Until _______, 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
$________________
Chase Manhattan Marine Owner Trust 1997-A
$__________________ ______ % Class A-1
Asset Backed Notes
$__________________ ______ % Class A-2
Asset Backed Notes
$__________________ ______ % Class A-3
Asset Backed Notes
$__________________ ______ % Class B
Asset Backed Notes
$__________________ ______ %
Asset Backed Certificates
Chase Manhattan Bank USA, N.A.
The Chase Manhattan Bank
Sellers
The CIT Group/Sales Financing, Inc.
Servicer
Underwriter of the Notes
Chase Securities Inc.
Underwriter of the Certificates
Chase Securities Inc.
_______________________, 1997
===============================================================================
S-A-5
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Estimated expenses in connection with the offering of the Securities being
registered hereunder (other than underwriting discounts and commissions) are
estimated as follow:
Registration Fee.............................. $304.00
Legal Fees and Expenses....................... *
Accounting Fees and Expenses.................. *
Blue Sky Fees and Expenses.................... *
Rating Agency Fees............................ *
Trustee's Fees and Expenses................... *
Printing ..................................... *
Miscellaneous................................. *
-------
Total ................................... *
=======
* To be filed by Amendment
Item 15. Indemnification of Directors and Officers.
In addition to the indemnification provisions set forth below,
directors and officers liability insurance policies presently exist that insure
directors and officers of Chase Manhattan Bank USA, National Association, a
national banking association having its principal executive offices in
Wilmington, Delaware ("Chase USA") and The Chase Manhattan Bank, a New York
banking corporation having its principal executive offices in New York, New York
("Chase"), their parent and certain of their subsidiaries. The policies cover
losses for which Chase USA, Chase, their parent and certain of their
subsidiaries shall be required or permitted by law to indemnify directors and
officers and which result from claims made against such directors or officers
based upon the commission of wrongful acts in the performance of their duties.
The policies also cover losses that the directors or officers must pay as the
result of claims brought against them based upon the commission of wrongful acts
in the performance of their duties and for which they are not indemnified by
Chase USA, Chase, their parent or any of those subsidiaries. The losses covered
by the policies are subject to certain exclusions and do not include fines or
penalties imposed by law or other matters deemed uninsurable under the law. The
policies contain self-insured retention provisions.
Chase USA: Article TENTH of the Articles of Association of Chase USA
("Chase USA") provide that any person who was or is made a party or is
threatened to be made a party to or is otherwise involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"proceeding"), by reason of the fact that he or she is or was a director or
officer of Chase USA or is or was serving at the request of Chase USA as a
director, officer, employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including service with respect to an
employee benefit plan (an "indemnitee"), whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee or agent
or in any other capacity while serving as a director, officer, employee or
agent, shall be indemnified and held harmless by Chase USA to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits Chase USA to provide broader indemnification rights
than permitted prior thereto), against all expense, liability and loss
(including attorneys' fees, judgments, fines, ERISA excise taxes or penalties
and amounts paid in settlement) reasonably incurred or suffered by such
indemnitee in connection therewith and such indemnification shall continue as to
an indemnitee who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the indemnitee's heirs, executors and
administrators; provided, however, that, except as provided in the second
following paragraph with respect to proceedings to enforce rights to
indemnification, Chase USA shall indemnify any such indemnitee in connection
with a proceeding (or part thereof) initiated by such indemnitee only if such
proceeding (or part thereof) was authorized by the board of directors of Chase
USA.
The rights to indemnification described in the immediately preceding
paragraph shall include the right to be paid by Chase USA the expenses incurred
in defending any proceeding for which such right to indemnification is
applicable in advance of its final disposition (hereinafter an "advancement of
expenses"); provided, however, that, if the Delaware General Corporation Law
requires, an advancement of expenses incurred by an indemnitee in his or her
capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such indemnitee, including, without limitation,
service to an employee benefit plan) shall be made only upon delivery to Chase
USA of an undertaking (hereinafter an "undertaking"), by or on behalf of such
indemnitee, to repay all amounts so advanced if it shall ultimately be
determined by final judicial decision from which there is no further right to
appeal (hereinafter a "final adjudication") that such indemnitee is not entitled
to be indemnified for such expenses under such Article TENTH or otherwise.
The rights to indemnification and to the advancement of expenses
described in the two preceding paragraphs are contract rights. If a claim under
either of such paragraphs is not paid in full by Chase USA within sixty days
after a written claim has been received by Chase USA (except in the case of a
claim for an advancement of expenses, in which case the applicable period shall
be twenty days), the indemnitee may at any time thereafter bring suit against
Chase USA to recover the unpaid amount of the claim. If successful in whole or
in part in any such
II-1
<PAGE>
suit, or in a suit brought by Chase USA to recover an advancement of expenses
pursuant to the terms of an undertaking, the indemnitee shall be entitled to be
paid also the expense of prosecuting or defending such suit. In any suit brought
by the indemnitee to enforce a right to indemnification under such Article TENTH
(but not in a suit brought by the indemnitee to enforce a right to an
advancement of expenses) it shall be a defense that, and in any suit by Chase
USA to recover an advancement of expenses pursuant to the terms of an
undertaking, Chase USA shall be entitled to recover such expense upon a final
adjudication that, the indemnitee has not met any applicable standard for
indemnification set forth in the Delaware General Corporation Law. Neither the
failure of Chase USA (including its board of directors, independent legal
counsel, or its stockholders) to have made a determination prior to the
commencement of such suit that indemnification of the indemnitee is proper in
the circumstances because the indemnitee has met the applicable standard of
conduct set forth in the Delaware General Corporation Law, nor an actual
determination by Chase USA (including its board of directors, independent legal
counsel, or its stockholders) that the indemnitee has not met such applicable
standard of conduct, shall create a presumption that the indemnitee has not met
such applicable standard of conduct or, in the case of such a suit brought by
the indemnitee, be a defense to such suit. In any suit brought by the indemnitee
to enforce a right to indemnification or to an advancement of expenses under
such Article TENTH, or by Chase USA to recover an advancement of expenses
pursuant to the terms of an undertaking, the burden of proving that the
indemnitee is not entitled to be indemnified, or to such advancement of
expenses, under such Article TENTH or otherwise shall be on Chase USA.
Article TENTH of Chase USA's Articles of Association also provides that
the foregoing right of indemnification or reimbursement shall not be exclusive
of other rights to which any person may be entitled under any statute, Articles
of Association, by-law, agreement, or vote of stockholders or disinterested
stockholders or otherwise. Section 145 of the Delaware General Corporation Law
provides that a Delaware corporation must indemnify a director or officer who
has defended successfully, on the merits or otherwise, any proceeding against
him or any claim, matter or issue therein, for reasonable expenses actually
incurred in such defense.
Article 7 of the Business Corporation Law of the State of New York,
Sections 721 through 726, provides, under certain circumstances, for
indemnification of directors and officers of a corporation who are made or
threatened to be made, a party to an action or proceeding (other than one by or
in the right of a corporation to procure a judgment in its favor), whether civil
or criminal, by reason of their service as an officer or director of a
corporation against judgments, fines, amounts paid in settlement and reasonable
expenses, including attorneys' fees actually and necessarily incurred as a
result of such action or proceeding or any appeal therein. Article 7 of the New
York Business Corporation Law also provides that the statutory indemnification
provisions are nonexclusive, but prohibits indemnification if a judgment or
other final adjudication adverse to the director or officer of a corporation
establishes that the officer's or director's acts were committed in bad faith or
were the result of active and deliberate dishonesty and were material to the
cause of action so adjudicated, or that such director or officer personally
gained in fact a financial profit or other advantage to which the officer or
director was not legally entitled, or that would be inconsistent with the laws
of the jurisdiction of incorporation (in the case of corporations formed under
the laws of any jurisdiction other than New York), the corporation's certificate
of incorporation, by-laws, resolutions or other proper corporate action or any
court settlement.
Chase: Article VII of Chase's By-Laws provides that Chase shall, to the
fullest extent permitted by applicable law as then in effect, indemnify any
person (the "indemnitee") who was or is involved in any manner (including,
without limitation, as a party or a witness), or is threatened to be made so
involved, in any threatened pending or completed investigation, claim, action,
suit or proceeding, whether civil, administrative or investigative (including,
without limitation, any action , suit or proceeding by or in the right of Chase
to procure a judgment in its favor) (a "proceeding") by reason of the fact that
he is or was a director, officer, employee or agent of Chase, or is or was
serving at the request of Chase as a director, officer or employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against all expense (including attorney's fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by him in connection with
such proceeding. Article VII provides that the foregoing indemnification shall
be a contract right and shall include the right to receive payment in advance of
any expenses incurred by the indemnitee in connection with such proceeding,
consistent with the provisions of applicable law as then in effect.
Article VII further provides that Chase may enter into contracts with
any director, officer, employee or agent of Chase in furtherance of the
provisions thereof and may create a trust fund, grant a security interest or use
other means (including, without limitation a letter of credit) to ensure the
payment of such amounts as may be necessary to effect indemnification under
Article VII.
Article VII expressly provides that the right of indemnification and
advancement of expenses thereunder shall not be exclusive of any other rights to
which a person seeking indemnification may otherwise be entitled, under any
statute, by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office.
II-2
<PAGE>
Item 16. Exhibits.
(a) Exhibits:
1.1(A) -- Note Underwriting Agreement (Notes).*
1.1(B) -- Certificate Underwriting Agreement (Certificates).*
3.1(A) -- Articles of Association of Chase USA.*
3.1(B) -- Restated Organization Certificate of Chase.*
3.2(A) -- By-laws of Chase USA.*
3.2(B) -- By-laws of Chase.*
4.1 -- Sale and Servicing Agreement.*
4.2 -- Indenture.*
4.3(A) -- Certificate of Trust.*
4.3(B) -- Trust Agreement.*
4.4 -- Administration Agreement.*
5.1 -- Opinion of Simpson Thacher & Bartlett with respect
to legality.*
8.1 -- Opinion of Simpson Thacher & Bartlett with respect to
U.S. federal tax matters.*
8.2 -- Opinion with respect to Oklahoma state tax matters.*
10.1 -- Servicing Agreement.*
23.1 -- Consent of Simpson Thacher & Bartlett (included as part of
Exhibit 5.1).*
23.2 -- Consent of Simpson Thacher & Bartlett (included
as part of Exhibit 8.1).*
24.1(A) -- Powers of Attorney of directors
and officers of Chase USA.**
24.1(B) -- Powers of Attorney of directors
and officers of Chase.**
25.1 -- Statement of Eligibility of Trustee on
Form T-1 (bound separately).*
* To be filed by Amendment
** Filed herewith
(b) Financial Statements:
Not applicable.
Item 17. Undertakings.
The undersigned Registrant hereby undertakes that:
(a) That, for purposes of determining any liability under the Act, each
filing of a Registrant's annual report pursuant to Section 13(a) or
15(d) of the Exchange Act (and, where applicable, each filing of a
employee benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act) with respect to any Trust that is incorporated by
reference in the Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(b) To provide to the Underwriters at the closing specified in the
Underwriting Agreement certificates in such denominations and
registered in such names as required by the Underwriters to permit
prompt delivery to each purchaser.
(c) That, insofar as indemnification for liabilities arising under the Act
may be permitted to directors, offices and controlling persons of a
Registrant pursuant to the foregoing provisions, or otherwise, the
Registrants have been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Act and is therefore unenforceable. In the event that
a claim for indemnification against such liabilities (other than
payment by a Registrant of expenses incurred or paid by a director,
officer or controlling person of such Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, such Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of
such issue.
(d) (1) That, for purposes of determining any liability under the
Act, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule
430A and contained in the form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under
the Act shall be deemed to be part of the registration
statement as of the time it was declared effective.
(2) That, for the purpose of determining any liability under the
Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering
of such securities at the time shall be deemed to be the
initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES FOR CHASE USA
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Wilmington, State of Delaware, on July 28, 1997.
CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION
By:/s/ KEITH SCHUCK
-------------------------------
Keith Schuck
Controller
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on July 28, 1997 by the following persons
in the capacities indicated.
Signature Title
- --------- -----
*
- ----------------------------- Chairman of the Board and Director and Chief
Donald L. Boudreau Executive Officer
*
- ----------------------------- President and Director
Michael J. Barrett
*
- ----------------------------- Director
Luke S. Hayden
*
- ----------------------------- Director
John J. Hehir, Jr.
*
- ----------------------------- Director
William H. Hoefling
*
- ----------------------------- Director
Kevin T. Hurley
*
- ----------------------------- Director
Thomas Jacob
*
- ----------------------------- Director
John M. Nuzum, Jr.
/s/ KEITH SCHUCK
- ----------------------------- Controller (Principal Accounting Officer
Keith Schuck and Principal Financial Officer)
*
- ----------------------------- Director
Michael Urkowitz
* The undersigned, by signing his name hereto, does hereby sign this
Registration Statement on behalf of the above-indicated directors and
officers of the Registrant pursuant to powers of attorney signed by such
officers and directors.
By:/s/ KEITH SCHUCK
-----------------------------
Keith Schuck
Attorney-in-Fact
<PAGE>
SIGNATURES FOR CHASE
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on August 1, 1997.
THE CHASE MANHATTAN BANK
By:/s/ DEBORAH L. DUNCAN
-----------------------------
Deborah L. Duncan
Executive Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on August 1, 1997 by the following
persons in the capacities indicated.
Signature Title
- --------- -----
*
- -------------------------- Chairman of the Board and Director and Chief
Walter V. Shipley Executive Officer
*
- -------------------------- Director
Frank A. Bennack Jr.
*
- -------------------------- Director
Susan V. Berresford
*
- -------------------------- Director
M. Anthony Burns
- -------------------------- Director
H. Laurance Fuller
*
- -------------------------- Director
Melvin R. Goodes
*
- -------------------------- Director
William H. Gray, III
*
- -------------------------- Director
George V. Grune
*
- -------------------------- Director and Vice Chairman of the Board
William B. Harrison Jr.
*
- -------------------------- Director
Harold S. Hook
- -------------------------- Director
Helene L. Kaplan
*
- -------------------------- Director, President and Chief Operating Officer
Thomas G. Labrecque
*
- -------------------------- Director
Henry B. Schacht
*
- -------------------------- Controller (Principal Accounting Officer)
Joseph L. Sclafani
* The undersigned, by signing his name hereto, does hereby sign this
Registration Statement on behalf of the above-indicated directors and
officers of the Registrant pursuant to powers of attorney signed by such
officers and directors.
By:/s/ DEBORAH L. DUNCAN
----------------------------
Deborah L. Duncan
Executive Vice President
<PAGE>
SIGNATURES FOR CHASE
- -------------------------- Director
Andrew C. Sigler
*
- -------------------------- Director
John R. Stafford
*
- -------------------------- Executive Vice President (Principal Financial
Peter J. Tobin Officer)
*
- -------------------------- Director
Marina v.N. Whitman
* The undersigned, by signing his name hereto, does hereby sign this
Registration Statement on behalf of the above-indicated directors and
officers of the Registrant pursuant to powers of attorney signed by such
officers and directors.
By:/s/ DEBORAH L. DUNCAN
-------------------------------
Deborah L. Duncan
Attorney-in-Fact
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Sequentially
Number Exhibit Numbered Page
- ------ -------- -------------
<S> <C> <C> <C>
1.1(A) -- Note Underwriting Agreement.*
1.1(B) -- Certificate Underwriting Agreement.*
3.1(A) -- Articles of Association of Chase USA.*
3.1(B) -- Restated Organization Certificate of Chase.*
3.2(A) -- By-laws of Chase USA.*
3.2(B) -- By-laws of Chase.*
4.1 -- Sale and Servicing Agreement.*
4.2 -- Indenture.*
4.3(A) -- Certificate of Trust.*
4.3(B) -- Trust Agreement.*
4.4 -- Administration Agreement.*
5.1 -- Opinion of Simpson Thacher & Bartlett with respect to legality.*
8.1 -- Opinion of Simpson Thacher & Bartlett with respect to federal tax matters.*
8.2 -- Opinion with respect to Oklahoma state tax matters.*
10.1 -- Servicing Agreement.*
23.1 -- Consent of Simpson Thacher & Bartlett (included as part of Exhibit 5.1).*
23.2 -- Consent of Simpson Thacher & Bartlett (included as part of Exhibit 8.1).*
24.1(A) -- Powers of Attorney of directors and officers of Chase USA.**
24.1(B) -- Powers of Attorney of directors and officers of Chase.**
25.1 -- Statement of Eligibility of Trustee on Form T-1 (bound separately).*
</TABLE>
- ----------
* To be filed by Amendment.
** Filed herewith.
II-7
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the person whose signature appears
below, in his or her capacity as an officer or a member of the Board of
Directors of CHASE MANHATTAN BANK, USA, NATIONAL ASSOCIATION (the "Bank") hereby
constitutes and appoints Donald L. Boudreau, Deborah L. Duncan, Michael
Urkowitz, John Hehir, Thomas Jacob, William Hoefling, Keith W. Schuck, Barbara
Toppeta and Andrew Semmelman, and each of them severally, with full power of
substitution in the premises, his or her true and lawful attorneys and agents to
execute in his or her name, place and stead (in any such capacity) a
registration statement (a "Registration Statement") of the Bank on Form S-3 for
the registration under the Securities Act of 1933 of one or more series of
asset-backed securities ("Asset-Backed Securities") to be issued by one or more
trusts to be formed by the Bank representing fractional undivided owners
interests in, or debt obligations secured by, retail installment sales,
contracts, purchase money notes or other notes secured by ship mortgages or
other security interests in ships or boats and originated or acquired by the
Bank and its subsidiaries and affiliates, and other related assets, which shall
include such information and disclosure as such attorney-in-fact shall approve,
such approval to be conclusively evidenced by the execution thereof by such
attorney-in-fact, and any and all amendments (including post-effective
amendments) thereto, and all instruments necessary or appropriate in connection
therewith, and to file the same with the Securities and Exchange Commission
("Commission"), and to appear on behalf of the Bank before the Commision or
elsewhere, in connection with any matters relating to the registration of the
Asset-Backed Securities, each of said attorneys and agents to have power to act
with or without the others, and to have full power and authority to do and
perform in the name and on behalf of each of such officers or directors, and any
of them, every act whatsoever necessary or advisable to be done by the
undersigned in connection with the issuance of any such Asset-Backed Securities
pursuant to the resolutions of the Board of Directors of the Bank, adopted on
February 26, 1997.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of July 14, 1997.
/s/ DONALD L. BOUDREAU
----------------------
Donald L. Boudreau
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the person whose signature appears
below, in his or her capacity as an officer or a member of the Board of
Directors of CHASE MANHATTAN BANK, USA, NATIONAL ASSOCIATION (the "Bank") hereby
constitutes and appoints Donald L. Boudreau, Deborah L. Duncan, Michael
Urkowitz, John Hehir, Thomas Jacob, William Hoefling, Keith W. Schuck, Barbara
Toppeta and Andrew Semmelman, and each of them severally, with full power of
substitution in the premises, his or her true and lawful attorneys and agents to
execute in his or her name, place and stead (in any such capacity) a
registration statement (a "Registration Statement") of the Bank on Form S-3 for
the registration under the Securities Act of 1933 of one or more series of
asset-backed securities ("Asset-Backed Securities") to be issued by one or more
trusts to be formed by the Bank representing fractional undivided owners
interests in, or debt obligations secured by, retail installment sales,
contracts, purchase money notes or other notes secured by ship mortgages or
other security interests in ships or boats and originated or acquired by the
Bank and its subsidiaries and affiliates, and other related assets, which shall
include such information and disclosure as such attorney-in-fact shall approve,
such approval to be conclusively evidenced by the execution thereof by such
attorney-in-fact, and any and all amendments (including post-effective
amendments) thereto, and all instruments necessary or appropriate in connection
therewith, and to file the same with the Securities and Exchange Commission
("Commission"), and to appear on behalf of the Bank before the Commision or
elsewhere, in connection with any matters relating to the registration of the
Asset-Backed Securities, each of said attorneys and agents to have power to act
with or without the others, and to have full power and authority to do and
perform in the name and on behalf of each of such officers or directors, and any
of them, every act whatsoever necessary or advisable to be done by the
undersigned in connection with the issuance of any such Asset-Backed Securities
pursuant to the resolutions of the Board of Directors of the Bank, adopted on
February 26, 1997.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of July 14, 1997.
/s/ MICHAEL J. BARRETT
----------------------
Michael J. Barrett
2
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the person whose signature appears
below, in his or her capacity as an officer or a member of the Board of
Directors of CHASE MANHATTAN BANK, USA, NATIONAL ASSOCIATION (the "Bank") hereby
constitutes and appoints Donald L. Boudreau, Deborah L. Duncan, Michael
Urkowitz, John Hehir, Thomas Jacob, William Hoefling, Keith W. Schuck, Barbara
Toppeta and Andrew Semmelman, and each of them severally, with full power of
substitution in the premises, his or her true and lawful attorneys and agents to
execute in his or her name, place and stead (in any such capacity) a
registration statement (a "Registration Statement") of the Bank on Form S-3 for
the registration under the Securities Act of 1933 of one or more series of
asset-backed securities ("Asset-Backed Securities") to be issued by one or more
trusts to be formed by the Bank representing fractional undivided owners
interests in, or debt obligations secured by, retail installment sales,
contracts, purchase money notes or other notes secured by ship mortgages or
other security interests in ships or boats and originated or acquired by the
Bank and its subsidiaries and affiliates, and other related assets, which shall
include such information and disclosure as such attorney-in-fact shall approve,
such approval to be conclusively evidenced by the execution thereof by such
attorney-in-fact, and any and all amendments (including post-effective
amendments) thereto, and all instruments necessary or appropriate in connection
therewith, and to file the same with the Securities and Exchange Commission
("Commission"), and to appear on behalf of the Bank before the Commision or
elsewhere, in connection with any matters relating to the registration of the
Asset-Backed Securities, each of said attorneys and agents to have power to act
with or without the others, and to have full power and authority to do and
perform in the name and on behalf of each of such officers or directors, and any
of them, every act whatsoever necessary or advisable to be done by the
undersigned in connection with the issuance of any such Asset-Backed Securities
pursuant to the resolutions of the Board of Directors of the Bank, adopted on
February 26, 1997.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of July 14, 1997.
/s/ LUKE S. HAYDEN
------------------
Luke S. Hayden
3
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the person whose signature appears
below, in his or her capacity as an officer or a member of the Board of
Directors of CHASE MANHATTAN BANK, USA, NATIONAL ASSOCIATION (the "Bank") hereby
constitutes and appoints Donald L. Boudreau, Deborah L. Duncan, Michael
Urkowitz, John Hehir, Thomas Jacob, William Hoefling, Keith W. Schuck, Barbara
Toppeta and Andrew Semmelman, and each of them severally, with full power of
substitution in the premises, his or her true and lawful attorneys and agents to
execute in his or her name, place and stead (in any such capacity) a
registration statement (a "Registration Statement") of the Bank on Form S-3 for
the registration under the Securities Act of 1933 of one or more series of
asset-backed securities ("Asset-Backed Securities") to be issued by one or more
trusts to be formed by the Bank representing fractional undivided owners
interests in, or debt obligations secured by, retail installment sales,
contracts, purchase money notes or other notes secured by ship mortgages or
other security interests in ships or boats and originated or acquired by the
Bank and its subsidiaries and affiliates, and other related assets, which shall
include such information and disclosure as such attorney-in-fact shall approve,
such approval to be conclusively evidenced by the execution thereof by such
attorney-in-fact, and any and all amendments (including post-effective
amendments) thereto, and all instruments necessary or appropriate in connection
therewith, and to file the same with the Securities and Exchange Commission
("Commission"), and to appear on behalf of the Bank before the Commision or
elsewhere, in connection with any matters relating to the registration of the
Asset-Backed Securities, each of said attorneys and agents to have power to act
with or without the others, and to have full power and authority to do and
perform in the name and on behalf of each of such officers or directors, and any
of them, every act whatsoever necessary or advisable to be done by the
undersigned in connection with the issuance of any such Asset-Backed Securities
pursuant to the resolutions of the Board of Directors of the Bank, adopted on
February 26, 1997.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of July 14, 1997.
/s/ JOHN J. HEHIR, JR.
----------------------
John J. Hehir, Jr.
4
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the person whose signature appears
below, in his or her capacity as an officer or a member of the Board of
Directors of CHASE MANHATTAN BANK, USA, NATIONAL ASSOCIATION (the "Bank") hereby
constitutes and appoints Donald L. Boudreau, Deborah L. Duncan, Michael
Urkowitz, John Hehir, Thomas Jacob, William Hoefling, Keith W. Schuck, Barbara
Toppeta and Andrew Semmelman, and each of them severally, with full power of
substitution in the premises, his or her true and lawful attorneys and agents to
execute in his or her name, place and stead (in any such capacity) a
registration statement (a "Registration Statement") of the Bank on Form S-3 for
the registration under the Securities Act of 1933 of one or more series of
asset-backed securities ("Asset-Backed Securities") to be issued by one or more
trusts to be formed by the Bank representing fractional undivided owners
interests in, or debt obligations secured by, retail installment sales,
contracts, purchase money notes or other notes secured by ship mortgages or
other security interests in ships or boats and originated or acquired by the
Bank and its subsidiaries and affiliates, and other related assets, which shall
include such information and disclosure as such attorney-in-fact shall approve,
such approval to be conclusively evidenced by the execution thereof by such
attorney-in-fact, and any and all amendments (including post-effective
amendments) thereto, and all instruments necessary or appropriate in connection
therewith, and to file the same with the Securities and Exchange Commission
("Commission"), and to appear on behalf of the Bank before the Commision or
elsewhere, in connection with any matters relating to the registration of the
Asset-Backed Securities, each of said attorneys and agents to have power to act
with or without the others, and to have full power and authority to do and
perform in the name and on behalf of each of such officers or directors, and any
of them, every act whatsoever necessary or advisable to be done by the
undersigned in connection with the issuance of any such Asset-Backed Securities
pursuant to the resolutions of the Board of Directors of the Bank, adopted on
February 26, 1997.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of July 14, 1997.
/s/ WILLIAM H. HOEFLING
-----------------------
William H. Hoefling
5
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the person whose signature appears
below, in his or her capacity as an officer or a member of the Board of
Directors of CHASE MANHATTAN BANK, USA, NATIONAL ASSOCIATION (the "Bank") hereby
constitutes and appoints Donald L. Boudreau, Deborah L. Duncan, Michael
Urkowitz, John Hehir, Thomas Jacob, William Hoefling, Keith W. Schuck, Barbara
Toppeta and Andrew Semmelman, and each of them severally, with full power of
substitution in the premises, his or her true and lawful attorneys and agents to
execute in his or her name, place and stead (in any such capacity) a
registration statement (a "Registration Statement") of the Bank on Form S-3 for
the registration under the Securities Act of 1933 of one or more series of
asset-backed securities ("Asset-Backed Securities") to be issued by one or more
trusts to be formed by the Bank representing fractional undivided owners
interests in, or debt obligations secured by, retail installment sales,
contracts, purchase money notes or other notes secured by ship mortgages or
other security interests in ships or boats and originated or acquired by the
Bank and its subsidiaries and affiliates, and other related assets, which shall
include such information and disclosure as such attorney-in-fact shall approve,
such approval to be conclusively evidenced by the execution thereof by such
attorney-in-fact, and any and all amendments (including post-effective
amendments) thereto, and all instruments necessary or appropriate in connection
therewith, and to file the same with the Securities and Exchange Commission
("Commission"), and to appear on behalf of the Bank before the Commision or
elsewhere, in connection with any matters relating to the registration of the
Asset-Backed Securities, each of said attorneys and agents to have power to act
with or without the others, and to have full power and authority to do and
perform in the name and on behalf of each of such officers or directors, and any
of them, every act whatsoever necessary or advisable to be done by the
undersigned in connection with the issuance of any such Asset-Backed Securities
pursuant to the resolutions of the Board of Directors of the Bank, adopted on
February 26, 1997.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of July 14, 1997.
/s/ KEVIN T. HURLEY
-------------------
Kevin T. Hurley
6
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the person whose signature appears
below, in his or her capacity as an officer or a member of the Board of
Directors of CHASE MANHATTAN BANK, USA, NATIONAL ASSOCIATION (the "Bank") hereby
constitutes and appoints Donald L. Boudreau, Deborah L. Duncan, Michael
Urkowitz, John Hehir, Thomas Jacob, William Hoefling, Keith W. Schuck, Barbara
Toppeta and Andrew Semmelman, and each of them severally, with full power of
substitution in the premises, his or her true and lawful attorneys and agents to
execute in his or her name, place and stead (in any such capacity) a
registration statement (a "Registration Statement") of the Bank on Form S-3 for
the registration under the Securities Act of 1933 of one or more series of
asset-backed securities ("Asset-Backed Securities") to be issued by one or more
trusts to be formed by the Bank representing fractional undivided owners
interests in, or debt obligations secured by, retail installment sales,
contracts, purchase money notes or other notes secured by ship mortgages or
other security interests in ships or boats and originated or acquired by the
Bank and its subsidiaries and affiliates, and other related assets, which shall
include such information and disclosure as such attorney-in-fact shall approve,
such approval to be conclusively evidenced by the execution thereof by such
attorney-in-fact, and any and all amendments (including post-effective
amendments) thereto, and all instruments necessary or appropriate in connection
therewith, and to file the same with the Securities and Exchange Commission
("Commission"), and to appear on behalf of the Bank before the Commision or
elsewhere, in connection with any matters relating to the registration of the
Asset-Backed Securities, each of said attorneys and agents to have power to act
with or without the others, and to have full power and authority to do and
perform in the name and on behalf of each of such officers or directors, and any
of them, every act whatsoever necessary or advisable to be done by the
undersigned in connection with the issuance of any such Asset-Backed Securities
pursuant to the resolutions of the Board of Directors of the Bank, adopted on
February 26, 1997.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of July 14, 1997.
/s/ THOMAS JACOB
----------------
Thomas Jacob
7
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the person whose signature appears
below, in his or her capacity as an officer or a member of the Board of
Directors of CHASE MANHATTAN BANK, USA, NATIONAL ASSOCIATION (the "Bank") hereby
constitutes and appoints Donald L. Boudreau, Deborah L. Duncan, Michael
Urkowitz, John Hehir, Thomas Jacob, William Hoefling, Keith W. Schuck, Barbara
Toppeta and Andrew Semmelman, and each of them severally, with full power of
substitution in the premises, his or her true and lawful attorneys and agents to
execute in his or her name, place and stead (in any such capacity) a
registration statement (a "Registration Statement") of the Bank on Form S-3 for
the registration under the Securities Act of 1933 of one or more series of
asset-backed securities ("Asset-Backed Securities") to be issued by one or more
trusts to be formed by the Bank representing fractional undivided owners
interests in, or debt obligations secured by, retail installment sales,
contracts, purchase money notes or other notes secured by ship mortgages or
other security interests in ships or boats and originated or acquired by the
Bank and its subsidiaries and affiliates, and other related assets, which shall
include such information and disclosure as such attorney-in-fact shall approve,
such approval to be conclusively evidenced by the execution thereof by such
attorney-in-fact, and any and all amendments (including post-effective
amendments) thereto, and all instruments necessary or appropriate in connection
therewith, and to file the same with the Securities and Exchange Commission
("Commission"), and to appear on behalf of the Bank before the Commision or
elsewhere, in connection with any matters relating to the registration of the
Asset-Backed Securities, each of said attorneys and agents to have power to act
with or without the others, and to have full power and authority to do and
perform in the name and on behalf of each of such officers or directors, and any
of them, every act whatsoever necessary or advisable to be done by the
undersigned in connection with the issuance of any such Asset-Backed Securities
pursuant to the resolutions of the Board of Directors of the Bank, adopted on
February 26, 1997.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of July 14, 1997.
/s/ JOHN M. NUZUM, JR.
----------------------
John M. Nuzum, Jr.
8
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the person whose signature appears
below, in his or her capacity as an officer or a member of the Board of
Directors of CHASE MANHATTAN BANK, USA, NATIONAL ASSOCIATION (the "Bank") hereby
constitutes and appoints Donald L. Boudreau, Deborah L. Duncan, Michael
Urkowitz, John Hehir, Thomas Jacob, William Hoefling, Keith W. Schuck, Barbara
Toppeta and Andrew Semmelman, and each of them severally, with full power of
substitution in the premises, his or her true and lawful attorneys and agents to
execute in his or her name, place and stead (in any such capacity) a
registration statement (a "Registration Statement") of the Bank on Form S-3 for
the registration under the Securities Act of 1933 of one or more series of
asset-backed securities ("Asset-Backed Securities") to be issued by one or more
trusts to be formed by the Bank representing fractional undivided owners
interests in, or debt obligations secured by, retail installment sales,
contracts, purchase money notes or other notes secured by ship mortgages or
other security interests in ships or boats and originated or acquired by the
Bank and its subsidiaries and affiliates, and other related assets, which shall
include such information and disclosure as such attorney-in-fact shall approve,
such approval to be conclusively evidenced by the execution thereof by such
attorney-in-fact, and any and all amendments (including post-effective
amendments) thereto, and all instruments necessary or appropriate in connection
therewith, and to file the same with the Securities and Exchange Commission
("Commission"), and to appear on behalf of the Bank before the Commision or
elsewhere, in connection with any matters relating to the registration of the
Asset-Backed Securities, each of said attorneys and agents to have power to act
with or without the others, and to have full power and authority to do and
perform in the name and on behalf of each of such officers or directors, and any
of them, every act whatsoever necessary or advisable to be done by the
undersigned in connection with the issuance of any such Asset-Backed Securities
pursuant to the resolutions of the Board of Directors of the Bank, adopted on
February 26, 1997.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of July 14, 1997.
/s/ KEITH W. SCHUCK
-------------------
Keith W. Schuck
9
<PAGE>
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that the person whose signature appears
below, in his or her capacity as an officer or a member of the Board of
Directors of CHASE MANHATTAN BANK, USA, NATIONAL ASSOCIATION (the "Bank") hereby
constitutes and appoints Donald L. Boudreau, Deborah L. Duncan, Michael
Urkowitz, John Hehir, Thomas Jacob, William Hoefling, Keith W. Schuck, Barbara
Toppeta and Andrew Semmelman, and each of them severally, with full power of
substitution in the premises, his or her true and lawful attorneys and agents to
execute in his or her name, place and stead (in any such capacity) a
registration statement (a "Registration Statement") of the Bank on Form S-3 for
the registration under the Securities Act of 1933 of one or more series of
asset-backed securities ("Asset-Backed Securities") to be issued by one or more
trusts to be formed by the Bank representing fractional undivided owners
interests in, or debt obligations secured by, retail installment sales,
contracts, purchase money notes or other notes secured by ship mortgages or
other security interests in ships or boats and originated or acquired by the
Bank and its subsidiaries and affiliates, and other related assets, which shall
include such information and disclosure as such attorney-in-fact shall approve,
such approval to be conclusively evidenced by the execution thereof by such
attorney-in-fact, and any and all amendments (including post-effective
amendments) thereto, and all instruments necessary or appropriate in connection
therewith, and to file the same with the Securities and Exchange Commission
("Commission"), and to appear on behalf of the Bank before the Commision or
elsewhere, in connection with any matters relating to the registration of the
Asset-Backed Securities, each of said attorneys and agents to have power to act
with or without the others, and to have full power and authority to do and
perform in the name and on behalf of each of such officers or directors, and any
of them, every act whatsoever necessary or advisable to be done by the
undersigned in connection with the issuance of any such Asset-Backed Securities
pursuant to the resolutions of the Board of Directors of the Bank, adopted on
February 26, 1997.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of July 14, 1997.
/s/ MICHAEL URKOWITZ
--------------------
Michael Urkowitz
10
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below, in his or her capacity as an officer or member of the Board of Directors
of THE CHASE MANHATTAN BANK (the "Bank") and THE CHASE MANHATTAN CORPORATION
(the "Corporation"), hereby constitutes and appoints WALTER V. SHIPLEY, THOMAS
G. LABRECQUE, WILLIAM B. HARRISON, JR., PETER J. TOBIN, DEBORAH L. DUNCAN AND
ANTHONY J. HORAN, and each of them severally, with full power of substitution in
the premises, his or her true and lawful attorneys and agents to execute in his
or her name, place and stead (in any such capacity) any registration statement
(a "Registration Statement") of the Corporation, the Bank or any subsidiary or
affiliate of either, as appropriate, on Form S-11, Form S-1 or Form S-3 (or such
other form or forms as may be appropriate) for the registration under the
Securities Act of 1933 of one or more series of asset-backed securities
("Asset-Backed Securities") using any of the financial or other assets
originated or acquired by the Corporation, the Bank and their respective
subsidiaries and affiliates, including, but not limited to, commercial and
industrial loans, commercial and residential mortgage loans, consumer loans and
credit card or other consumer receivables, participations and interests in such
loans and/or receivables and financial instruments representing ownership of all
or a part of a pool or pools of such loans and/or receivables ("Assets"), which
Asset-Backed Securities shall consist of one or more of the following:
(i) debt obligations of the Bank, a subsidiary or affiliate of the
Corporation or the Bank, or any subsidiary or affiliated corporations,
partnerships, limited liability companies, trusts or other affiliated
or unaffiliated entities ("SPV's") of any of them, secured or to be
secured by identified Assets; (ii) fractional undivided ownership
interests in the corpus of a trust to which identified Assets have been
or will be conveyed; (iii) certificates representing a participation
interest in identified Assets or in a financial instrument acquired
with such Assets; (iv) interests in or obligations of a real estate
mortgage investment conduit (as defined in Section 860D of the Internal
Revenue Code of 1986 (the "Code") to which identified Assets will be
conveyed; (v) interests in or obligations of a financial asset
securitization investment trust (as defined in Section 1621 of the
Code) to which identified Assets will be conveyed; or (vi) interests in
an SPV formed by the Corporation, the Bank or one of their respective
subsidiaries or affiliates, to which identified Assets will be
conveyed,
and shall have such provisions as such attorney-in-fact shall approve, such
approval to be conclusively evidenced by the execution thereof by such
attorney-in-fact, and any and all amendments (including post-effective
amendments) thereto, and all instruments necessary or appropriate in connection
therewith, and to file the same with the Securities and Exchange Commission
("Commission"), and to appear on behalf of the Corporation or the Bank before
the Commission or elsewhere, in connection with any matters relating to the
registration of the Asset-Backed Securities, each of said attorneys and agents
to have power to act with or without the others, and to have full power and
authority to do and perform in the name and on behalf of each of such officers
or directors, and any of them, every act whatsoever necessary or advisable to be
done by the undersigned in connection with the issuance of any Asset-Backed
Securities pursuant to the resolutions of the respective Boards of Directors of
the Corporation and of the Bank, adopted in each case on February 18, 1997.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of August 1, 1997.
/s/ WALTER V. SHIPLEY
------------------------------------
Walter V. Shipley
Chairman of the Board and
Director and Chief Executive Officer
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below, in his or her capacity as an officer or member of the Board of Directors
of THE CHASE MANHATTAN BANK (the "Bank") and THE CHASE MANHATTAN CORPORATION
(the "Corporation"), hereby constitutes and appoints WALTER V. SHIPLEY, THOMAS
G. LABRECQUE, WILLIAM B. HARRISON, JR., PETER J. TOBIN, DEBORAH L. DUNCAN AND
ANTHONY J. HORAN, and each of them severally, with full power of substitution in
the premises, his or her true and lawful attorneys and agents to execute in his
or her name, place and stead (in any such capacity) any registration statement
(a "Registration Statement") of the Corporation, the Bank or any subsidiary or
affiliate of either, as appropriate, on Form S-11, Form S-1 or Form S-3 (or such
other form or forms as may be appropriate) for the registration under the
Securities Act of 1933 of one or more series of asset-backed securities
("Asset-Backed Securities") using any of the financial or other assets
originated or acquired by the Corporation, the Bank and their respective
subsidiaries and affiliates, including, but not limited to, commercial and
industrial loans, commercial and residential mortgage loans, consumer loans and
credit card or other consumer receivables, participations and interests in such
loans and/or receivables and financial instruments representing ownership of all
or a part of a pool or pools of such loans and/or receivables ("Assets"), which
Asset-Backed Securities shall consist of one or more of the following:
(i) debt obligations of the Bank, a subsidiary or affiliate of the
Corporation or the Bank, or any subsidiary or affiliated corporations,
partnerships, limited liability companies, trusts or other affiliated
or unaffiliated entities ("SPV's") of any of them, secured or to be
secured by identified Assets; (ii) fractional undivided ownership
interests in the corpus of a trust to which identified Assets have been
or will be conveyed; (iii) certificates representing a participation
interest in identified Assets or in a financial instrument acquired
with such Assets; (iv) interests in or obligations of a real estate
mortgage investment conduit (as defined in Section 860D of the Internal
Revenue Code of 1986 (the "Code") to which identified Assets will be
conveyed; (v) interests in or obligations of a financial asset
securitization investment trust (as defined in Section 1621 of the
Code) to which identified Assets will be conveyed; or (vi) interests in
an SPV formed by the Corporation, the Bank or one of their respective
subsidiaries or affiliates, to which identified Assets will be
conveyed,
and shall have such provisions as such attorney-in-fact shall approve, such
approval to be conclusively evidenced by the execution thereof by such
attorney-in-fact, and any and all amendments (including post-effective
amendments) thereto, and all instruments necessary or appropriate in connection
therewith, and to file the same with the Securities and Exchange Commission
("Commission"), and to appear on behalf of the Corporation or the Bank before
the Commission or elsewhere, in connection with any matters relating to the
registration of the Asset-Backed Securities, each of said attorneys and agents
to have power to act with or without the others, and to have full power and
authority to do and perform in the name and on behalf of each of such officers
or directors, and any of them, every act whatsoever necessary or advisable to be
done by the undersigned in connection with the issuance of any Asset-Backed
Securities pursuant to the resolutions of the respective Boards of Directors of
the Corporation and of the Bank, adopted in each case on February 18, 1997.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of August 1, 1997.
/s/ FRANK A. BENNACK, JR.
-------------------------
Frank A. Bennack, Jr.
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below, in his or her capacity as an officer or member of the Board of Directors
of THE CHASE MANHATTAN BANK (the "Bank") and THE CHASE MANHATTAN CORPORATION
(the "Corporation"), hereby constitutes and appoints WALTER V. SHIPLEY, THOMAS
G. LABRECQUE, WILLIAM B. HARRISON, JR., PETER J. TOBIN, DEBORAH L. DUNCAN AND
ANTHONY J. HORAN, and each of them severally, with full power of substitution in
the premises, his or her true and lawful attorneys and agents to execute in his
or her name, place and stead (in any such capacity) any registration statement
(a "Registration Statement") of the Corporation, the Bank or any subsidiary or
affiliate of either, as appropriate, on Form S-11, Form S-1 or Form S-3 (or such
other form or forms as may be appropriate) for the registration under the
Securities Act of 1933 of one or more series of asset-backed securities
("Asset-Backed Securities") using any of the financial or other assets
originated or acquired by the Corporation, the Bank and their respective
subsidiaries and affiliates, including, but not limited to, commercial and
industrial loans, commercial and residential mortgage loans, consumer loans and
credit card or other consumer receivables, participations and interests in such
loans and/or receivables and financial instruments representing ownership of all
or a part of a pool or pools of such loans and/or receivables ("Assets"), which
Asset-Backed Securities shall consist of one or more of the following:
(i) debt obligations of the Bank, a subsidiary or affiliate of the
Corporation or the Bank, or any subsidiary or affiliated corporations,
partnerships, limited liability companies, trusts or other affiliated
or unaffiliated entities ("SPV's") of any of them, secured or to be
secured by identified Assets; (ii) fractional undivided ownership
interests in the corpus of a trust to which identified Assets have been
or will be conveyed; (iii) certificates representing a participation
interest in identified Assets or in a financial instrument acquired
with such Assets; (iv) interests in or obligations of a real estate
mortgage investment conduit (as defined in Section 860D of the Internal
Revenue Code of 1986 (the "Code") to which identified Assets will be
conveyed; (v) interests in or obligations of a financial asset
securitization investment trust (as defined in Section 1621 of the
Code) to which identified Assets will be conveyed; or (vi) interests in
an SPV formed by the Corporation, the Bank or one of their respective
subsidiaries or affiliates, to which identified Assets will be
conveyed,
and shall have such provisions as such attorney-in-fact shall approve, such
approval to be conclusively evidenced by the execution thereof by such
attorney-in-fact, and any and all amendments (including post-effective
amendments) thereto, and all instruments necessary or appropriate in connection
therewith, and to file the same with the Securities and Exchange Commission
("Commission"), and to appear on behalf of the Corporation or the Bank before
the Commission or elsewhere, in connection with any matters relating to the
registration of the Asset-Backed Securities, each of said attorneys and agents
to have power to act with or without the others, and to have full power and
authority to do and perform in the name and on behalf of each of such officers
or directors, and any of them, every act whatsoever necessary or advisable to be
done by the undersigned in connection with the issuance of any Asset-Backed
Securities pursuant to the resolutions of the respective Boards of Directors of
the Corporation and of the Bank, adopted in each case on February 18, 1997.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of August 1, 1997.
/s/ SUSAN V. BERRESFORD
-----------------------
Susan V. Berresford
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below, in his or her capacity as an officer or member of the Board of Directors
of THE CHASE MANHATTAN BANK (the "Bank") and THE CHASE MANHATTAN CORPORATION
(the "Corporation"), hereby constitutes and appoints WALTER V. SHIPLEY, THOMAS
G. LABRECQUE, WILLIAM B. HARRISON, JR., PETER J. TOBIN, DEBORAH L. DUNCAN AND
ANTHONY J. HORAN, and each of them severally, with full power of substitution in
the premises, his or her true and lawful attorneys and agents to execute in his
or her name, place and stead (in any such capacity) any registration statement
(a "Registration Statement") of the Corporation, the Bank or any subsidiary or
affiliate of either, as appropriate, on Form S-11, Form S-1 or Form S-3 (or such
other form or forms as may be appropriate) for the registration under the
Securities Act of 1933 of one or more series of asset-backed securities
("Asset-Backed Securities") using any of the financial or other assets
originated or acquired by the Corporation, the Bank and their respective
subsidiaries and affiliates, including, but not limited to, commercial and
industrial loans, commercial and residential mortgage loans, consumer loans and
credit card or other consumer receivables, participations and interests in such
loans and/or receivables and financial instruments representing ownership of all
or a part of a pool or pools of such loans and/or receivables ("Assets"), which
Asset-Backed Securities shall consist of one or more of the following:
(i) debt obligations of the Bank, a subsidiary or affiliate of the
Corporation or the Bank, or any subsidiary or affiliated corporations,
partnerships, limited liability companies, trusts or other affiliated
or unaffiliated entities ("SPV's") of any of them, secured or to be
secured by identified Assets; (ii) fractional undivided ownership
interests in the corpus of a trust to which identified Assets have been
or will be conveyed; (iii) certificates representing a participation
interest in identified Assets or in a financial instrument acquired
with such Assets; (iv) interests in or obligations of a real estate
mortgage investment conduit (as defined in Section 860D of the Internal
Revenue Code of 1986 (the "Code") to which identified Assets will be
conveyed; (v) interests in or obligations of a financial asset
securitization investment trust (as defined in Section 1621 of the
Code) to which identified Assets will be conveyed; or (vi) interests in
an SPV formed by the Corporation, the Bank or one of their respective
subsidiaries or affiliates, to which identified Assets will be
conveyed,
and shall have such provisions as such attorney-in-fact shall approve, such
approval to be conclusively evidenced by the execution thereof by such
attorney-in-fact, and any and all amendments (including post-effective
amendments) thereto, and all instruments necessary or appropriate in connection
therewith, and to file the same with the Securities and Exchange Commission
("Commission"), and to appear on behalf of the Corporation or the Bank before
the Commission or elsewhere, in connection with any matters relating to the
registration of the Asset-Backed Securities, each of said attorneys and agents
to have power to act with or without the others, and to have full power and
authority to do and perform in the name and on behalf of each of such officers
or directors, and any of them, every act whatsoever necessary or advisable to be
done by the undersigned in connection with the issuance of any Asset-Backed
Securities pursuant to the resolutions of the respective Boards of Directors of
the Corporation and of the Bank, adopted in each case on February 18, 1997.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of August 1, 1997.
/s/ M. ANTHONY BURNS
--------------------
M. Anthony Burns
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below, in his or her capacity as an officer or member of the Board of Directors
of THE CHASE MANHATTAN BANK (the "Bank") and THE CHASE MANHATTAN CORPORATION
(the "Corporation"), hereby constitutes and appoints WALTER V. SHIPLEY, THOMAS
G. LABRECQUE, WILLIAM B. HARRISON, JR., PETER J. TOBIN, DEBORAH L. DUNCAN AND
ANTHONY J. HORAN, and each of them severally, with full power of substitution in
the premises, his or her true and lawful attorneys and agents to execute in his
or her name, place and stead (in any such capacity) any registration statement
(a "Registration Statement") of the Corporation, the Bank or any subsidiary or
affiliate of either, as appropriate, on Form S-11, Form S-1 or Form S-3 (or such
other form or forms as may be appropriate) for the registration under the
Securities Act of 1933 of one or more series of asset-backed securities
("Asset-Backed Securities") using any of the financial or other assets
originated or acquired by the Corporation, the Bank and their respective
subsidiaries and affiliates, including, but not limited to, commercial and
industrial loans, commercial and residential mortgage loans, consumer loans and
credit card or other consumer receivables, participations and interests in such
loans and/or receivables and financial instruments representing ownership of all
or a part of a pool or pools of such loans and/or receivables ("Assets"), which
Asset-Backed Securities shall consist of one or more of the following:
(i) debt obligations of the Bank, a subsidiary or affiliate of the
Corporation or the Bank, or any subsidiary or affiliated corporations,
partnerships, limited liability companies, trusts or other affiliated
or unaffiliated entities ("SPV's") of any of them, secured or to be
secured by identified Assets; (ii) fractional undivided ownership
interests in the corpus of a trust to which identified Assets have been
or will be conveyed; (iii) certificates representing a participation
interest in identified Assets or in a financial instrument acquired
with such Assets; (iv) interests in or obligations of a real estate
mortgage investment conduit (as defined in Section 860D of the Internal
Revenue Code of 1986 (the "Code") to which identified Assets will be
conveyed; (v) interests in or obligations of a financial asset
securitization investment trust (as defined in Section 1621 of the
Code) to which identified Assets will be conveyed; or (vi) interests in
an SPV formed by the Corporation, the Bank or one of their respective
subsidiaries or affiliates, to which identified Assets will be
conveyed,
and shall have such provisions as such attorney-in-fact shall approve, such
approval to be conclusively evidenced by the execution thereof by such
attorney-in-fact, and any and all amendments (including post-effective
amendments) thereto, and all instruments necessary or appropriate in connection
therewith, and to file the same with the Securities and Exchange Commission
("Commission"), and to appear on behalf of the Corporation or the Bank before
the Commission or elsewhere, in connection with any matters relating to the
registration of the Asset-Backed Securities, each of said attorneys and agents
to have power to act with or without the others, and to have full power and
authority to do and perform in the name and on behalf of each of such officers
or directors, and any of them, every act whatsoever necessary or advisable to be
done by the undersigned in connection with the issuance of any Asset-Backed
Securities pursuant to the resolutions of the respective Boards of Directors of
the Corporation and of the Bank, adopted in each case on February 18, 1997.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of August 1, 1997.
/s/ MELVIN R. GOODES
--------------------
Melvin R. Goodes
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below, in his or her capacity as an officer or member of the Board of Directors
of THE CHASE MANHATTAN BANK (the "Bank") and THE CHASE MANHATTAN CORPORATION
(the "Corporation"), hereby constitutes and appoints WALTER V. SHIPLEY, THOMAS
G. LABRECQUE, WILLIAM B. HARRISON, JR., PETER J. TOBIN, DEBORAH L. DUNCAN AND
ANTHONY J. HORAN, and each of them severally, with full power of substitution in
the premises, his or her true and lawful attorneys and agents to execute in his
or her name, place and stead (in any such capacity) any registration statement
(a "Registration Statement") of the Corporation, the Bank or any subsidiary or
affiliate of either, as appropriate, on Form S-11, Form S-1 or Form S-3 (or such
other form or forms as may be appropriate) for the registration under the
Securities Act of 1933 of one or more series of asset-backed securities
("Asset-Backed Securities") using any of the financial or other assets
originated or acquired by the Corporation, the Bank and their respective
subsidiaries and affiliates, including, but not limited to, commercial and
industrial loans, commercial and residential mortgage loans, consumer loans and
credit card or other consumer receivables, participations and interests in such
loans and/or receivables and financial instruments representing ownership of all
or a part of a pool or pools of such loans and/or receivables ("Assets"), which
Asset-Backed Securities shall consist of one or more of the following:
(i) debt obligations of the Bank, a subsidiary or affiliate of the
Corporation or the Bank, or any subsidiary or affiliated corporations,
partnerships, limited liability companies, trusts or other affiliated
or unaffiliated entities ("SPV's") of any of them, secured or to be
secured by identified Assets; (ii) fractional undivided ownership
interests in the corpus of a trust to which identified Assets have been
or will be conveyed; (iii) certificates representing a participation
interest in identified Assets or in a financial instrument acquired
with such Assets; (iv) interests in or obligations of a real estate
mortgage investment conduit (as defined in Section 860D of the Internal
Revenue Code of 1986 (the "Code") to which identified Assets will be
conveyed; (v) interests in or obligations of a financial asset
securitization investment trust (as defined in Section 1621 of the
Code) to which identified Assets will be conveyed; or (vi) interests in
an SPV formed by the Corporation, the Bank or one of their respective
subsidiaries or affiliates, to which identified Assets will be
conveyed,
and shall have such provisions as such attorney-in-fact shall approve, such
approval to be conclusively evidenced by the execution thereof by such
attorney-in-fact, and any and all amendments (including post-effective
amendments) thereto, and all instruments necessary or appropriate in connection
therewith, and to file the same with the Securities and Exchange Commission
("Commission"), and to appear on behalf of the Corporation or the Bank before
the Commission or elsewhere, in connection with any matters relating to the
registration of the Asset-Backed Securities, each of said attorneys and agents
to have power to act with or without the others, and to have full power and
authority to do and perform in the name and on behalf of each of such officers
or directors, and any of them, every act whatsoever necessary or advisable to be
done by the undersigned in connection with the issuance of any Asset-Backed
Securities pursuant to the resolutions of the respective Boards of Directors of
the Corporation and of the Bank, adopted in each case on February 18, 1997.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of August 1, 1997.
/s/ WILLIAM H. GRAY, III
------------------------
William H. Gray, III
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below, in his or her capacity as an officer or member of the Board of Directors
of THE CHASE MANHATTAN BANK (the "Bank") and THE CHASE MANHATTAN CORPORATION
(the "Corporation"), hereby constitutes and appoints WALTER V. SHIPLEY, THOMAS
G. LABRECQUE, WILLIAM B. HARRISON, JR., PETER J. TOBIN, DEBORAH L. DUNCAN AND
ANTHONY J. HORAN, and each of them severally, with full power of substitution in
the premises, his or her true and lawful attorneys and agents to execute in his
or her name, place and stead (in any such capacity) any registration statement
(a "Registration Statement") of the Corporation, the Bank or any subsidiary or
affiliate of either, as appropriate, on Form S-11, Form S-1 or Form S-3 (or such
other form or forms as may be appropriate) for the registration under the
Securities Act of 1933 of one or more series of asset-backed securities
("Asset-Backed Securities") using any of the financial or other assets
originated or acquired by the Corporation, the Bank and their respective
subsidiaries and affiliates, including, but not limited to, commercial and
industrial loans, commercial and residential mortgage loans, consumer loans and
credit card or other consumer receivables, participations and interests in such
loans and/or receivables and financial instruments representing ownership of all
or a part of a pool or pools of such loans and/or receivables ("Assets"), which
Asset-Backed Securities shall consist of one or more of the following:
(i) debt obligations of the Bank, a subsidiary or affiliate of the
Corporation or the Bank, or any subsidiary or affiliated corporations,
partnerships, limited liability companies, trusts or other affiliated
or unaffiliated entities ("SPV's") of any of them, secured or to be
secured by identified Assets; (ii) fractional undivided ownership
interests in the corpus of a trust to which identified Assets have been
or will be conveyed; (iii) certificates representing a participation
interest in identified Assets or in a financial instrument acquired
with such Assets; (iv) interests in or obligations of a real estate
mortgage investment conduit (as defined in Section 860D of the Internal
Revenue Code of 1986 (the "Code") to which identified Assets will be
conveyed; (v) interests in or obligations of a financial asset
securitization investment trust (as defined in Section 1621 of the
Code) to which identified Assets will be conveyed; or (vi) interests in
an SPV formed by the Corporation, the Bank or one of their respective
subsidiaries or affiliates, to which identified Assets will be
conveyed,
and shall have such provisions as such attorney-in-fact shall approve, such
approval to be conclusively evidenced by the execution thereof by such
attorney-in-fact, and any and all amendments (including post-effective
amendments) thereto, and all instruments necessary or appropriate in connection
therewith, and to file the same with the Securities and Exchange Commission
("Commission"), and to appear on behalf of the Corporation or the Bank before
the Commission or elsewhere, in connection with any matters relating to the
registration of the Asset-Backed Securities, each of said attorneys and agents
to have power to act with or without the others, and to have full power and
authority to do and perform in the name and on behalf of each of such officers
or directors, and any of them, every act whatsoever necessary or advisable to be
done by the undersigned in connection with the issuance of any Asset-Backed
Securities pursuant to the resolutions of the respective Boards of Directors of
the Corporation and of the Bank, adopted in each case on February 18, 1997.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of August 1, 1997.
/s/ GEORGE V. GRUNE
-------------------
George V. Grune
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below, in his or her capacity as an officer or member of the Board of Directors
of THE CHASE MANHATTAN BANK (the "Bank") and THE CHASE MANHATTAN CORPORATION
(the "Corporation"), hereby constitutes and appoints WALTER V. SHIPLEY, THOMAS
G. LABRECQUE, WILLIAM B. HARRISON, JR., PETER J. TOBIN, DEBORAH L. DUNCAN AND
ANTHONY J. HORAN, and each of them severally, with full power of substitution in
the premises, his or her true and lawful attorneys and agents to execute in his
or her name, place and stead (in any such capacity) any registration statement
(a "Registration Statement") of the Corporation, the Bank or any subsidiary or
affiliate of either, as appropriate, on Form S-11, Form S-1 or Form S-3 (or such
other form or forms as may be appropriate) for the registration under the
Securities Act of 1933 of one or more series of asset-backed securities
("Asset-Backed Securities") using any of the financial or other assets
originated or acquired by the Corporation, the Bank and their respective
subsidiaries and affiliates, including, but not limited to, commercial and
industrial loans, commercial and residential mortgage loans, consumer loans and
credit card or other consumer receivables, participations and interests in such
loans and/or receivables and financial instruments representing ownership of all
or a part of a pool or pools of such loans and/or receivables ("Assets"), which
Asset-Backed Securities shall consist of one or more of the following:
(i) debt obligations of the Bank, a subsidiary or affiliate of the
Corporation or the Bank, or any subsidiary or affiliated corporations,
partnerships, limited liability companies, trusts or other affiliated
or unaffiliated entities ("SPV's") of any of them, secured or to be
secured by identified Assets; (ii) fractional undivided ownership
interests in the corpus of a trust to which identified Assets have been
or will be conveyed; (iii) certificates representing a participation
interest in identified Assets or in a financial instrument acquired
with such Assets; (iv) interests in or obligations of a real estate
mortgage investment conduit (as defined in Section 860D of the Internal
Revenue Code of 1986 (the "Code") to which identified Assets will be
conveyed; (v) interests in or obligations of a financial asset
securitization investment trust (as defined in Section 1621 of the
Code) to which identified Assets will be conveyed; or (vi) interests in
an SPV formed by the Corporation, the Bank or one of their respective
subsidiaries or affiliates, to which identified Assets will be
conveyed,
and shall have such provisions as such attorney-in-fact shall approve, such
approval to be conclusively evidenced by the execution thereof by such
attorney-in-fact, and any and all amendments (including post-effective
amendments) thereto, and all instruments necessary or appropriate in connection
therewith, and to file the same with the Securities and Exchange Commission
("Commission"), and to appear on behalf of the Corporation or the Bank before
the Commission or elsewhere, in connection with any matters relating to the
registration of the Asset-Backed Securities, each of said attorneys and agents
to have power to act with or without the others, and to have full power and
authority to do and perform in the name and on behalf of each of such officers
or directors, and any of them, every act whatsoever necessary or advisable to be
done by the undersigned in connection with the issuance of any Asset-Backed
Securities pursuant to the resolutions of the respective Boards of Directors of
the Corporation and of the Bank, adopted in each case on February 18, 1997.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of August 1, 1997.
/s/ WILLIAM B. HARRISON JR.
---------------------------------------
William B. Harrison Jr.
Director and Vice Chairman of the Board
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below, in his or her capacity as an officer or member of the Board of Directors
of THE CHASE MANHATTAN BANK (the "Bank") and THE CHASE MANHATTAN CORPORATION
(the "Corporation"), hereby constitutes and appoints WALTER V. SHIPLEY, THOMAS
G. LABRECQUE, WILLIAM B. HARRISON, JR., PETER J. TOBIN, DEBORAH L. DUNCAN AND
ANTHONY J. HORAN, and each of them severally, with full power of substitution in
the premises, his or her true and lawful attorneys and agents to execute in his
or her name, place and stead (in any such capacity) any registration statement
(a "Registration Statement") of the Corporation, the Bank or any subsidiary or
affiliate of either, as appropriate, on Form S-11, Form S-1 or Form S-3 (or such
other form or forms as may be appropriate) for the registration under the
Securities Act of 1933 of one or more series of asset-backed securities
("Asset-Backed Securities") using any of the financial or other assets
originated or acquired by the Corporation, the Bank and their respective
subsidiaries and affiliates, including, but not limited to, commercial and
industrial loans, commercial and residential mortgage loans, consumer loans and
credit card or other consumer receivables, participations and interests in such
loans and/or receivables and financial instruments representing ownership of all
or a part of a pool or pools of such loans and/or receivables ("Assets"), which
Asset-Backed Securities shall consist of one or more of the following:
(i) debt obligations of the Bank, a subsidiary or affiliate of the
Corporation or the Bank, or any subsidiary or affiliated corporations,
partnerships, limited liability companies, trusts or other affiliated
or unaffiliated entities ("SPV's") of any of them, secured or to be
secured by identified Assets; (ii) fractional undivided ownership
interests in the corpus of a trust to which identified Assets have been
or will be conveyed; (iii) certificates representing a participation
interest in identified Assets or in a financial instrument acquired
with such Assets; (iv) interests in or obligations of a real estate
mortgage investment conduit (as defined in Section 860D of the Internal
Revenue Code of 1986 (the "Code") to which identified Assets will be
conveyed; (v) interests in or obligations of a financial asset
securitization investment trust (as defined in Section 1621 of the
Code) to which identified Assets will be conveyed; or (vi) interests in
an SPV formed by the Corporation, the Bank or one of their respective
subsidiaries or affiliates, to which identified Assets will be
conveyed,
and shall have such provisions as such attorney-in-fact shall approve, such
approval to be conclusively evidenced by the execution thereof by such
attorney-in-fact, and any and all amendments (including post-effective
amendments) thereto, and all instruments necessary or appropriate in connection
therewith, and to file the same with the Securities and Exchange Commission
("Commission"), and to appear on behalf of the Corporation or the Bank before
the Commission or elsewhere, in connection with any matters relating to the
registration of the Asset-Backed Securities, each of said attorneys and agents
to have power to act with or without the others, and to have full power and
authority to do and perform in the name and on behalf of each of such officers
or directors, and any of them, every act whatsoever necessary or advisable to be
done by the undersigned in connection with the issuance of any Asset-Backed
Securities pursuant to the resolutions of the respective Boards of Directors of
the Corporation and of the Bank, adopted in each case on February 18, 1997.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of August 1, 1997.
/s/ HAROLD S. HOOK
------------------
Harold S. Hook
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below, in his or her capacity as an officer or member of the Board of Directors
of THE CHASE MANHATTAN BANK (the "Bank") and THE CHASE MANHATTAN CORPORATION
(the "Corporation"), hereby constitutes and appoints WALTER V. SHIPLEY, THOMAS
G. LABRECQUE, WILLIAM B. HARRISON, JR., PETER J. TOBIN, DEBORAH L. DUNCAN AND
ANTHONY J. HORAN, and each of them severally, with full power of substitution in
the premises, his or her true and lawful attorneys and agents to execute in his
or her name, place and stead (in any such capacity) any registration statement
(a "Registration Statement") of the Corporation, the Bank or any subsidiary or
affiliate of either, as appropriate, on Form S-11, Form S-1 or Form S-3 (or such
other form or forms as may be appropriate) for the registration under the
Securities Act of 1933 of one or more series of asset-backed securities
("Asset-Backed Securities") using any of the financial or other assets
originated or acquired by the Corporation, the Bank and their respective
subsidiaries and affiliates, including, but not limited to, commercial and
industrial loans, commercial and residential mortgage loans, consumer loans and
credit card or other consumer receivables, participations and interests in such
loans and/or receivables and financial instruments representing ownership of all
or a part of a pool or pools of such loans and/or receivables ("Assets"), which
Asset-Backed Securities shall consist of one or more of the following:
(i) debt obligations of the Bank, a subsidiary or affiliate of the
Corporation or the Bank, or any subsidiary or affiliated corporations,
partnerships, limited liability companies, trusts or other affiliated
or unaffiliated entities ("SPV's") of any of them, secured or to be
secured by identified Assets; (ii) fractional undivided ownership
interests in the corpus of a trust to which identified Assets have been
or will be conveyed; (iii) certificates representing a participation
interest in identified Assets or in a financial instrument acquired
with such Assets; (iv) interests in or obligations of a real estate
mortgage investment conduit (as defined in Section 860D of the Internal
Revenue Code of 1986 (the "Code") to which identified Assets will be
conveyed; (v) interests in or obligations of a financial asset
securitization investment trust (as defined in Section 1621 of the
Code) to which identified Assets will be conveyed; or (vi) interests in
an SPV formed by the Corporation, the Bank or one of their respective
subsidiaries or affiliates, to which identified Assets will be
conveyed,
and shall have such provisions as such attorney-in-fact shall approve, such
approval to be conclusively evidenced by the execution thereof by such
attorney-in-fact, and any and all amendments (including post-effective
amendments) thereto, and all instruments necessary or appropriate in connection
therewith, and to file the same with the Securities and Exchange Commission
("Commission"), and to appear on behalf of the Corporation or the Bank before
the Commission or elsewhere, in connection with any matters relating to the
registration of the Asset-Backed Securities, each of said attorneys and agents
to have power to act with or without the others, and to have full power and
authority to do and perform in the name and on behalf of each of such officers
or directors, and any of them, every act whatsoever necessary or advisable to be
done by the undersigned in connection with the issuance of any Asset-Backed
Securities pursuant to the resolutions of the respective Boards of Directors of
the Corporation and of the Bank, adopted in each case on February 18, 1997.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of August 1, 1997.
/s/ THOMAS G. LABRECQUE
--------------------------
Thomas G. Labrecque
Director and President and
Chief Operating Officer
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below, in his or her capacity as an officer or member of the Board of Directors
of THE CHASE MANHATTAN BANK (the "Bank") and THE CHASE MANHATTAN CORPORATION
(the "Corporation"), hereby constitutes and appoints WALTER V. SHIPLEY, THOMAS
G. LABRECQUE, WILLIAM B. HARRISON, JR., PETER J. TOBIN, DEBORAH L. DUNCAN AND
ANTHONY J. HORAN, and each of them severally, with full power of substitution in
the premises, his or her true and lawful attorneys and agents to execute in his
or her name, place and stead (in any such capacity) any registration statement
(a "Registration Statement") of the Corporation, the Bank or any subsidiary or
affiliate of either, as appropriate, on Form S-11, Form S-1 or Form S-3 (or such
other form or forms as may be appropriate) for the registration under the
Securities Act of 1933 of one or more series of asset-backed securities
("Asset-Backed Securities") using any of the financial or other assets
originated or acquired by the Corporation, the Bank and their respective
subsidiaries and affiliates, including, but not limited to, commercial and
industrial loans, commercial and residential mortgage loans, consumer loans and
credit card or other consumer receivables, participations and interests in such
loans and/or receivables and financial instruments representing ownership of all
or a part of a pool or pools of such loans and/or receivables ("Assets"), which
Asset-Backed Securities shall consist of one or more of the following:
(i) debt obligations of the Bank, a subsidiary or affiliate of the
Corporation or the Bank, or any subsidiary or affiliated corporations,
partnerships, limited liability companies, trusts or other affiliated
or unaffiliated entities ("SPV's") of any of them, secured or to be
secured by identified Assets; (ii) fractional undivided ownership
interests in the corpus of a trust to which identified Assets have been
or will be conveyed; (iii) certificates representing a participation
interest in identified Assets or in a financial instrument acquired
with such Assets; (iv) interests in or obligations of a real estate
mortgage investment conduit (as defined in Section 860D of the Internal
Revenue Code of 1986 (the "Code") to which identified Assets will be
conveyed; (v) interests in or obligations of a financial asset
securitization investment trust (as defined in Section 1621 of the
Code) to which identified Assets will be conveyed; or (vi) interests in
an SPV formed by the Corporation, the Bank or one of their respective
subsidiaries or affiliates, to which identified Assets will be
conveyed,
and shall have such provisions as such attorney-in-fact shall approve, such
approval to be conclusively evidenced by the execution thereof by such
attorney-in-fact, and any and all amendments (including post-effective
amendments) thereto, and all instruments necessary or appropriate in connection
therewith, and to file the same with the Securities and Exchange Commission
("Commission"), and to appear on behalf of the Corporation or the Bank before
the Commission or elsewhere, in connection with any matters relating to the
registration of the Asset-Backed Securities, each of said attorneys and agents
to have power to act with or without the others, and to have full power and
authority to do and perform in the name and on behalf of each of such officers
or directors, and any of them, every act whatsoever necessary or advisable to be
done by the undersigned in connection with the issuance of any Asset-Backed
Securities pursuant to the resolutions of the respective Boards of Directors of
the Corporation and of the Bank, adopted in each case on February 18, 1997.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of August 1, 1997.
/s/ HENRY B. SCHACHT
--------------------
Henry B. Schacht
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below, in his or her capacity as an officer or member of the Board of Directors
of THE CHASE MANHATTAN BANK (the "Bank") and THE CHASE MANHATTAN CORPORATION
(the "Corporation"), hereby constitutes and appoints WALTER V. SHIPLEY, THOMAS
G. LABRECQUE, WILLIAM B. HARRISON, JR., PETER J. TOBIN, DEBORAH L. DUNCAN AND
ANTHONY J. HORAN, and each of them severally, with full power of substitution in
the premises, his or her true and lawful attorneys and agents to execute in his
or her name, place and stead (in any such capacity) any registration statement
(a "Registration Statement") of the Corporation, the Bank or any subsidiary or
affiliate of either, as appropriate, on Form S-11, Form S-1 or Form S-3 (or such
other form or forms as may be appropriate) for the registration under the
Securities Act of 1933 of one or more series of asset-backed securities
("Asset-Backed Securities") using any of the financial or other assets
originated or acquired by the Corporation, the Bank and their respective
subsidiaries and affiliates, including, but not limited to, commercial and
industrial loans, commercial and residential mortgage loans, consumer loans and
credit card or other consumer receivables, participations and interests in such
loans and/or receivables and financial instruments representing ownership of all
or a part of a pool or pools of such loans and/or receivables ("Assets"), which
Asset-Backed Securities shall consist of one or more of the following:
(i) debt obligations of the Bank, a subsidiary or affiliate of the
Corporation or the Bank, or any subsidiary or affiliated corporations,
partnerships, limited liability companies, trusts or other affiliated
or unaffiliated entities ("SPV's") of any of them, secured or to be
secured by identified Assets; (ii) fractional undivided ownership
interests in the corpus of a trust to which identified Assets have been
or will be conveyed; (iii) certificates representing a participation
interest in identified Assets or in a financial instrument acquired
with such Assets; (iv) interests in or obligations of a real estate
mortgage investment conduit (as defined in Section 860D of the Internal
Revenue Code of 1986 (the "Code") to which identified Assets will be
conveyed; (v) interests in or obligations of a financial asset
securitization investment trust (as defined in Section 1621 of the
Code) to which identified Assets will be conveyed; or (vi) interests in
an SPV formed by the Corporation, the Bank or one of their respective
subsidiaries or affiliates, to which identified Assets will be
conveyed,
and shall have such provisions as such attorney-in-fact shall approve, such
approval to be conclusively evidenced by the execution thereof by such
attorney-in-fact, and any and all amendments (including post-effective
amendments) thereto, and all instruments necessary or appropriate in connection
therewith, and to file the same with the Securities and Exchange Commission
("Commission"), and to appear on behalf of the Corporation or the Bank before
the Commission or elsewhere, in connection with any matters relating to the
registration of the Asset-Backed Securities, each of said attorneys and agents
to have power to act with or without the others, and to have full power and
authority to do and perform in the name and on behalf of each of such officers
or directors, and any of them, every act whatsoever necessary or advisable to be
done by the undersigned in connection with the issuance of any Asset-Backed
Securities pursuant to the resolutions of the respective Boards of Directors of
the Corporation and of the Bank, adopted in each case on February 18, 1997.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of August 1, 1997.
/s/ JOSEPH L. SCLAFANI
----------------------------
Joseph L. Sclafani
Principal Accounting Officer
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below, in his or her capacity as an officer or member of the Board of Directors
of THE CHASE MANHATTAN BANK (the "Bank") and THE CHASE MANHATTAN CORPORATION
(the "Corporation"), hereby constitutes and appoints WALTER V. SHIPLEY, THOMAS
G. LABRECQUE, WILLIAM B. HARRISON, JR., PETER J. TOBIN, DEBORAH L. DUNCAN AND
ANTHONY J. HORAN, and each of them severally, with full power of substitution in
the premises, his or her true and lawful attorneys and agents to execute in his
or her name, place and stead (in any such capacity) any registration statement
(a "Registration Statement") of the Corporation, the Bank or any subsidiary or
affiliate of either, as appropriate, on Form S-11, Form S-1 or Form S-3 (or such
other form or forms as may be appropriate) for the registration under the
Securities Act of 1933 of one or more series of asset-backed securities
("Asset-Backed Securities") using any of the financial or other assets
originated or acquired by the Corporation, the Bank and their respective
subsidiaries and affiliates, including, but not limited to, commercial and
industrial loans, commercial and residential mortgage loans, consumer loans and
credit card or other consumer receivables, participations and interests in such
loans and/or receivables and financial instruments representing ownership of all
or a part of a pool or pools of such loans and/or receivables ("Assets"), which
Asset-Backed Securities shall consist of one or more of the following:
(i) debt obligations of the Bank, a subsidiary or affiliate of the
Corporation or the Bank, or any subsidiary or affiliated corporations,
partnerships, limited liability companies, trusts or other affiliated
or unaffiliated entities ("SPV's") of any of them, secured or to be
secured by identified Assets; (ii) fractional undivided ownership
interests in the corpus of a trust to which identified Assets have been
or will be conveyed; (iii) certificates representing a participation
interest in identified Assets or in a financial instrument acquired
with such Assets; (iv) interests in or obligations of a real estate
mortgage investment conduit (as defined in Section 860D of the Internal
Revenue Code of 1986 (the "Code") to which identified Assets will be
conveyed; (v) interests in or obligations of a financial asset
securitization investment trust (as defined in Section 1621 of the
Code) to which identified Assets will be conveyed; or (vi) interests in
an SPV formed by the Corporation, the Bank or one of their respective
subsidiaries or affiliates, to which identified Assets will be
conveyed,
and shall have such provisions as such attorney-in-fact shall approve, such
approval to be conclusively evidenced by the execution thereof by such
attorney-in-fact, and any and all amendments (including post-effective
amendments) thereto, and all instruments necessary or appropriate in connection
therewith, and to file the same with the Securities and Exchange Commission
("Commission"), and to appear on behalf of the Corporation or the Bank before
the Commission or elsewhere, in connection with any matters relating to the
registration of the Asset-Backed Securities, each of said attorneys and agents
to have power to act with or without the others, and to have full power and
authority to do and perform in the name and on behalf of each of such officers
or directors, and any of them, every act whatsoever necessary or advisable to be
done by the undersigned in connection with the issuance of any Asset-Backed
Securities pursuant to the resolutions of the respective Boards of Directors of
the Corporation and of the Bank, adopted in each case on February 18, 1997.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of August 1, 1997.
/s/ JOHN R. STAFFORD
--------------------
John R. Stafford
Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below, in his or her capacity as an officer or member of the Board of Directors
of THE CHASE MANHATTAN BANK (the "Bank") and THE CHASE MANHATTAN CORPORATION
(the "Corporation"), hereby constitutes and appoints WALTER V. SHIPLEY, THOMAS
G. LABRECQUE, WILLIAM B. HARRISON, JR., PETER J. TOBIN, DEBORAH L. DUNCAN AND
ANTHONY J. HORAN, and each of them severally, with full power of substitution in
the premises, his or her true and lawful attorneys and agents to execute in his
or her name, place and stead (in any such capacity) any registration statement
(a "Registration Statement") of the Corporation, the Bank or any subsidiary or
affiliate of either, as appropriate, on Form S-11, Form S-1 or Form S-3 (or such
other form or forms as may be appropriate) for the registration under the
Securities Act of 1933 of one or more series of asset-backed securities
("Asset-Backed Securities") using any of the financial or other assets
originated or acquired by the Corporation, the Bank and their respective
subsidiaries and affiliates, including, but not limited to, commercial and
industrial loans, commercial and residential mortgage loans, consumer loans and
credit card or other consumer receivables, participations and interests in such
loans and/or receivables and financial instruments representing ownership of all
or a part of a pool or pools of such loans and/or receivables ("Assets"), which
Asset-Backed Securities shall consist of one or more of the following:
(i) debt obligations of the Bank, a subsidiary or affiliate of the
Corporation or the Bank, or any subsidiary or affiliated corporations,
partnerships, limited liability companies, trusts or other affiliated
or unaffiliated entities ("SPV's") of any of them, secured or to be
secured by identified Assets; (ii) fractional undivided ownership
interests in the corpus of a trust to which identified Assets have been
or will be conveyed; (iii) certificates representing a participation
interest in identified Assets or in a financial instrument acquired
with such Assets; (iv) interests in or obligations of a real estate
mortgage investment conduit (as defined in Section 860D of the Internal
Revenue Code of 1986 (the "Code") to which identified Assets will be
conveyed; (v) interests in or obligations of a financial asset
securitization investment trust (as defined in Section 1621 of the
Code) to which identified Assets will be conveyed; or (vi) interests in
an SPV formed by the Corporation, the Bank or one of their respective
subsidiaries or affiliates, to which identified Assets will be
conveyed,
and shall have such provisions as such attorney-in-fact shall approve, such
approval to be conclusively evidenced by the execution thereof by such
attorney-in-fact, and any and all amendments (including post-effective
amendments) thereto, and all instruments necessary or appropriate in connection
therewith, and to file the same with the Securities and Exchange Commission
("Commission"), and to appear on behalf of the Corporation or the Bank before
the Commission or elsewhere, in connection with any matters relating to the
registration of the Asset-Backed Securities, each of said attorneys and agents
to have power to act with or without the others, and to have full power and
authority to do and perform in the name and on behalf of each of such officers
or directors, and any of them, every act whatsoever necessary or advisable to be
done by the undersigned in connection with the issuance of any Asset-Backed
Securities pursuant to the resolutions of the respective Boards of Directors of
the Corporation and of the Bank, adopted in each case on February 18, 1997.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of August 1, 1997.
/s/ PETER J. TOBIN
-----------------------------
Peter J. Tobin
Executive Vice President
Principal Financial Officer
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below, in his or her capacity as an officer or member of the Board of Directors
of THE CHASE MANHATTAN BANK (the "Bank") and THE CHASE MANHATTAN CORPORATION
(the "Corporation"), hereby constitutes and appoints WALTER V. SHIPLEY, THOMAS
G. LABRECQUE, WILLIAM B. HARRISON, JR., PETER J. TOBIN, DEBORAH L. DUNCAN AND
ANTHONY J. HORAN, and each of them severally, with full power of substitution in
the premises, his or her true and lawful attorneys and agents to execute in his
or her name, place and stead (in any such capacity) any registration statement
(a "Registration Statement") of the Corporation, the Bank or any subsidiary or
affiliate of either, as appropriate, on Form S-11, Form S-1 or Form S-3 (or such
other form or forms as may be appropriate) for the registration under the
Securities Act of 1933 of one or more series of asset-backed securities
("Asset-Backed Securities") using any of the financial or other assets
originated or acquired by the Corporation, the Bank and their respective
subsidiaries and affiliates, including, but not limited to, commercial and
industrial loans, commercial and residential mortgage loans, consumer loans and
credit card or other consumer receivables, participations and interests in such
loans and/or receivables and financial instruments representing ownership of all
or a part of a pool or pools of such loans and/or receivables ("Assets"), which
Asset-Backed Securities shall consist of one or more of the following:
(i) debt obligations of the Bank, a subsidiary or affiliate of the
Corporation or the Bank, or any subsidiary or affiliated corporations,
partnerships, limited liability companies, trusts or other affiliated
or unaffiliated entities ("SPV's") of any of them, secured or to be
secured by identified Assets; (ii) fractional undivided ownership
interests in the corpus of a trust to which identified Assets have been
or will be conveyed; (iii) certificates representing a participation
interest in identified Assets or in a financial instrument acquired
with such Assets; (iv) interests in or obligations of a real estate
mortgage investment conduit (as defined in Section 860D of the Internal
Revenue Code of 1986 (the "Code") to which identified Assets will be
conveyed; (v) interests in or obligations of a financial asset
securitization investment trust (as defined in Section 1621 of the
Code) to which identified Assets will be conveyed; or (vi) interests in
an SPV formed by the Corporation, the Bank or one of their respective
subsidiaries or affiliates, to which identified Assets will be
conveyed,
and shall have such provisions as such attorney-in-fact shall approve, such
approval to be conclusively evidenced by the execution thereof by such
attorney-in-fact, and any and all amendments (including post-effective
amendments) thereto, and all instruments necessary or appropriate in connection
therewith, and to file the same with the Securities and Exchange Commission
("Commission"), and to appear on behalf of the Corporation or the Bank before
the Commission or elsewhere, in connection with any matters relating to the
registration of the Asset-Backed Securities, each of said attorneys and agents
to have power to act with or without the others, and to have full power and
authority to do and perform in the name and on behalf of each of such officers
or directors, and any of them, every act whatsoever necessary or advisable to be
done by the undersigned in connection with the issuance of any Asset-Backed
Securities pursuant to the resolutions of the respective Boards of Directors of
the Corporation and of the Bank, adopted in each case on February 18, 1997.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of August 1, 1997.
/s/ MARINA V.N. WHITMAN
-----------------------
Marina v.N. Whitman
Director
