<PAGE>
Pursuant to Rule 424(b)(2)
File No. 333-36939
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted without delivery of a final prospectus supplement and
accompanying prospectus. This Prospectus Supplement and the accompanying
Prospectus shall not constitute an offer to sell or the solicitation of an offer
to buy nor shall there be any sale of these securities in any State in which
such offer, solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED APRIL 3, 1998
PROSPECTUS SUPPLEMENT
(To Prospectus dated February 6, 1998)
$1,086,404,142.65
CHASE MANHATTAN AUTO OWNER TRUST 1998-B
$1,053,800,000.00 ASSET BACKED NOTES
$ 32,604,142.65 ASSET BACKED CERTIFICATES
CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION
SELLER AND SERVICER
The Chase Manhattan Auto Owner Trust 1998-B (the 'TRUST') will be created
pursuant to a Trust Agreement to be dated as of April 1, 1998 between Chase
Manhattan Bank USA, National Association (the 'SELLER') and Wilmington Trust
Company, as Owner Trustee. The Trust will issue four classes of Asset Backed
Notes (collectively, the 'NOTES') in the respective aggregate principal amounts
set forth below pursuant to an Indenture to be dated as of April 1, 1998 between
the Trust and Norwest Bank Minnesota, National Association, as Indenture
Trustee. The Trust will also issue Asset Backed Certificates (the 'CERTIFICATES'
and, together with the Notes, the 'SECURITIES') in the aggregate principal
amount set forth below. The assets of the Trust will include a pool of motor
vehicle retail installment sales contracts, purchase money
(continued on the following page)
- --------------------------------------------------------------------------------
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, OR ANY
AFFILIATE THEREOF. 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 SUPPLEMENT OR THE 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' IN THIS PROSPECTUS SUPPLEMENT COMMENCING
ON PAGE S-8 AND COMMENCING ON PAGE 13 OF THE ACCOMPANYING PROSPECTUS.
-------------------------------------------------------
<TABLE>
<CAPTION>
AGGREGATE UNDERWRITING
PRINCIPAL INTEREST FINAL SCHEDULED PRICE TO DISCOUNT AND
AMOUNT RATE(1) DISTRIBUTION DATE PUBLIC(2) COMMISSION
<S> <C> <C> <C> <C> <C>
CLASS A-1 NOTES $ 250,000,000.00 % MAY 10, 1999 % %
CLASS A-2 NOTES $ 200,000,000.00 % JUNE 15, 2000 % %
CLASS A-3 NOTES $ 321,000,000.00 % OCTOBER 15, 2001 % %
CLASS A-4 NOTES $ 282,800,000.00 % FEBRUARY 17, 2003 % %
CERTIFICATES $ 32,604,142.65 % OCTOBER 15, 2004 % %
TOTAL $1,086,404,142.65 $ $
<CAPTION>
PROCEEDS TO
SELLERS(3)
<S> <C>
CLASS A-1 NOTES %
CLASS A-2 NOTES %
CLASS A-3 NOTES %
CLASS A-4 NOTES %
CERTIFICATES %
TOTAL $
</TABLE>
(1) Certificate Rate, in the case of Certificates.
(2) Plus accrued interest, if any, from April , 1998.
(3) Before deduction of expenses estimated at $620,000.00.
-----------------------------------------------------------
This Prospectus Supplement may be used by Chase Securities Inc., an affiliate of
the Seller and a subsidiary of The Chase Manhattan Corporation, in connection
with offers and sales related to market-making transactions in the Notes and the
Certificates. 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 Notes and Certificates 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 April , 1998 (the 'CLOSING DATE') through the facilities of
The Depository Trust Company ('DTC'), Cedel Bank, societe anonyme ('CEDEL') or
the Euroclear System ('EUROCLEAR') in the case of the Notes, or DTC, in the case
of the Certificates, in each case against payment therefor in immediately
available funds.
Underwriters of the Notes
CHASE SECURITIES INC.
CREDIT SUISSE FIRST BOSTON
MERRILL LYNCH & CO.
SALOMON SMITH BARNEY
Underwriter of the Certificates
CHASE SECURITIES INC.
THE DATE OF THIS PROSPECTUS SUPPLEMENT IS APRIL , 1998.
<PAGE>
(included from prior page)
notes and other notes secured by new and used automobiles and light-duty trucks,
certain monies received thereunder (the 'RECEIVABLES') on and after April 1,
1998 (the 'CUTOFF DATE'), security interests in the vehicles financed thereby,
amounts on deposit in certain accounts and proceeds from claims 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 or, if such day is not a Business Day, the next
succeeding Business Day (each, a 'DISTRIBUTION DATE'), commencing May 15, 1998.
Principal of the Notes will be payable on each Distribution Date to the
extent described herein, except that no principal payments will be made on any
class of Notes until all Notes with preceding class designations have been paid
in full. For example, no principal will be paid on the Class A-2 Notes until the
Class A-1 Notes have been paid in full, and no principal will be paid on the
Class A-3 Notes until the Class A-2 Notes have been paid in full.
The Certificates will represent fractional undivided interests in 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.
Each class of Notes will be payable in full on the Note Final Scheduled
Distribution Date (as defined herein) with respect to such class specified on
the cover page hereof. The Certificate Final Scheduled Distribution Date (as
defined herein) is also specified on the cover page hereof. 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 A-4 Notes
and the Certificates will be subject to prepayment in whole, but not in part, on
any Distribution Date on which Chase Manhattan Bank USA, National Association,
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 10% or less of the Original 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 and the Reserve Account, as described herein.
The Securities initially will be represented by Notes and Certificates
registered in the name of Cede & Co., 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. Definitive Notes or Definitive
Certificates will be available only under the limited circumstances described
herein.
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT THE
OFFERING OF THE NOTES AND THE CERTIFICATES. ADDITIONAL INFORMATION IS CONTAINED
IN THE PROSPECTUS, AND PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE NOTES OR THE
CERTIFICATES MAY NOT BE CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
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.
ii
<PAGE>
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 Supplement and a Prospectus or this Prospectus Supplement and a
Prospectus encoded in an electronic format.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain of the matters discussed under the captions 'The Receivables
Pool--Delinquencies and Loan Loss Information' and 'Weighted Average Life of the
Securities' in this Prospectus Supplement may constitute forward-looking
statements within the meaning of Section 27A 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.
iii
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[This page intentionally left blank]
<PAGE>
SUMMARY OF TERMS
This Summary of Terms is qualified in its entirety by reference to the
detailed information appearing elsewhere herein and in the Prospectus. Certain
capitalized terms used in this Summary are defined elsewhere in this Prospectus
Supplement on the pages indicated in the 'Index of Terms' or, to the extent not
defined herein, have the meanings assigned to such terms in the Prospectus.
<TABLE>
<S> <C>
ISSUER.................. The Chase Manhattan Auto Owner Trust 1998-B (the
'TRUST' or the 'ISSUER'), a Delaware business trust
created pursuant to a trust agreement (as amended and
supplemented, the 'TRUST AGREEMENT'), dated as of April
1, 1998, between the Seller and the Owner Trustee.
SELLER.................. Chase Manhattan Bank USA, National Association ('CHASE
USA'), a national banking association headquartered in
Delaware and a wholly-owned subsidiary of The Chase
Manhattan Corporation (in such capacity, the 'SELLER'
or individually, the 'BANK').
SERVICER................ Chase USA (in such capacity, the 'SERVICER').
INDENTURE TRUSTEE....... Norwest Bank Minnesota, National Association, as
trustee under the Indenture (the 'INDENTURE TRUSTEE').
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 Bank and its affiliates may have
normal banking relationships with the Indenture Trustee
and its affiliates.
OWNER TRUSTEE........... Wilmington Trust Company, 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 Bank and its
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 $250,000,000.00 (the 'CLASS A-1
NOTES').
Class A-2 % Asset Backed Notes in the aggregate
principal amount of $200,000,000.00 (the 'CLASS A-2
NOTES').
Class A-3 % Asset Backed Notes in the aggregate
principal amount of $321,000,000.00 (the 'CLASS A-3
NOTES').
Class A-4 % Asset Backed Notes in the aggregate
principal amount of $282,800,000.00 (the 'CLASS A-4
NOTES' and, together with the Class A-1 Notes, the
Class A-2 Notes and the Class A-3 Notes, the 'NOTES').
The Notes will be issued by the Trust pursuant to an
Indenture to be dated as of April 1, 1998 (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 in the Prospectus.
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 and in the Prospectus. See
'Description of the Notes--General' and 'Certain
Information Regarding the Securities-- Book-Entry
Registration' in the Prospectus.
THE CERTIFICATES........ % Asset Backed Certificates with an initial Certificate
Balance of $32,604,142.65. The Certificates will
represent fractional undivided interests in the Trust
and will be issued pursuant to the Trust Agreement.
</TABLE>
S-1
<PAGE>
<TABLE>
<S> <C>
The Certificates will be available for purchase in
minimum denominations of $1,000 and integral multiples
of $1,000 in excess thereof. The Certificateholders
will not be entitled to receive Definitive
Certificates, except in the limited circumstances
described in the Prospectus. 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 and in the Prospectus. See
'Description of the Certificates-- General' and
'Certain Information Regarding the
Securities--Book-Entry Registration' in the Prospectus.
No beneficial interest in a Certificate may be held
directly or indirectly by a Foreign Investor.
Purchasers of Certificates and their assignees will be
deemed to represent (i) that the beneficial owners of
such Certificates are not Foreign Investors and (ii)
that they are not a Plan and that no assets of a Plan
were used to acquire the Certificates.
The rights of Certificateholders to receive
distributions with respect to the Certificates will be
subordinated to the rights of the Noteholders to
receive interest on and principal of the Notes in the
manner described herein.
THE TRUST............... The Trust is a business trust created under the laws of
Delaware pursuant to the Trust Agreement. The
activities of the Trust are limited by the terms of the
Trust Agreement to acquiring, owning and managing the
Receivables, issuing and making payments on the Notes
and Certificates and other activities related thereto.
The assets of the Trust will include (i) the
Receivables, (ii) all monies received thereunder on and
after the Cutoff Date, (iii) 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, (iv) security
interests in the Financed Vehicles, (v) the Seller's
proceeds from the exercise of the Seller's recourse
rights against Dealers, (vi) proceeds from claims on
certain insurance policies, (vii) rights with respect
to repossessed Financed Vehicles and (viii) any and all
proceeds of the foregoing.
THE RECEIVABLES......... The Receivables will consist of retail installment
sales contracts and purchase money notes and other
notes secured by new and used automobiles and light-
duty trucks (the 'FINANCED VEHICLES'). On the Closing
Date, the Seller will transfer Receivables having an
aggregate Principal Balance of approximately
$1,086,404,142.65, as of the Cutoff Date, to the Trust
in exchange for the Securities pursuant to a Sale and
Servicing Agreement to be dated as of April 1, 1998 (as
amended and supplemented from time to time, the 'SALE
AND SERVICING AGREEMENT'), among the Trust, the Seller
and the Servicer. See 'Description of the Transfer and
Servicing Agreements' herein and in the Prospectus.
The Receivables have been selected from the contracts
owned by the Bank which satisfy the criteria specified
in the Sale and Servicing Agreement described herein
and in the Prospectus. See 'The Receivables Pool'
herein and 'The Receivables Pools' in the Prospectus.
No Receivable will have a scheduled maturity that,
after giving prospective effect to any permitted
extensions or deferrals, would be later than September
30, 2004 (the 'FINAL SCHEDULED MATURITY DATE'). As of
the Cutoff Date, the weighted average remaining
maturity of the Receivables was approximately 55.66
months and the weighted average original maturity of
the Receivables was approximately 56.68 months. As of
the Cutoff Date, approximately 50.88% of the Original
Pool Balance were secured by new Financed Vehicles and
the remainder were secured by used Financed Vehicles.
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
</TABLE>
S-2
<PAGE>
<TABLE>
<S> <C>
Collection Period, after giving effect to all payments
received from Obligors and Repurchase Amounts to be
remitted by the Servicer or the Seller, as the case may
be, for such Collection Period and all losses realized
on Receivables liquidated during such Collection
Period. The aggregate Principal Balance of the
Receivables as of the Cutoff Date (the 'ORIGINAL POOL
BALANCE') was $1,086,404,142.65.
TERMS OF THE NOTES...... The principal terms of the Notes are described below:
Distribution Dates. Payments of interest and principal
on 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 May 15, 1998;
provided, however, that, for purposes of making payment
of interest and the final payment of principal on the
Class A-1 Notes, the May 1999 Distribution Date with
respect to the Class A-1 Notes will be May 10, 1999.
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 (a 'RECORD DATE'). A 'BUSINESS DAY' is a day on
which banks located in New York, New York, Wilmington,
Delaware and Minneapolis, Minnesota are open for the
purpose of conducting a commercial banking business.
Interest Rates. Each class of Notes will bear interest
at the fixed rate per annum specified for such class on
the cover page hereof. The interest rate for each class
of Notes is referred to herein as an 'INTEREST RATE.'
Interest. Interest on the outstanding principal amount
of 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
(which will be 25 days with respect to the Interest
Accrual Period for the May 1999 Distribution Date).
Interest on the Notes of each other class 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
generally will equal 100% of the Principal
Distributable Amount for such Distribution Date until
the Notes have been paid in full and will be calculated
by the Servicer in the manner described under
'Description of the Transfer and Servicing
Agreements--Distributions.'
No principal payments will be made on any class of
Notes until all Notes with preceding class designations
have been paid in full. For example, no principal
payments will be made on the Class A-2 Notes until the
Class A-1 Notes have
</TABLE>
S-3
<PAGE>
<TABLE>
<S> <C>
been paid in full, and no principal payments will be
made on the Class A-3 Notes until the Class A-2 Notes
have been paid in full. Notwithstanding the foregoing,
if an Event of Default occurs and the Notes are
accelerated, each class of Notes will be paid pro rata
on the basis of their respective unpaid principal
amounts.
The outstanding principal amount of each class of
Notes, to the extent not previously paid, will be
payable on the Distribution Date specified for such
class on the cover page hereof (each, a 'NOTE FINAL
SCHEDULED DISTRIBUTION DATE') from funds available
therefor as described herein (including amounts on
deposit in the Reserve Account).
Optional Redemption. After the Class A-1 Notes, Class
A-2 Notes and Class A-3 Notes have been paid in full,
the Class A-4 Notes 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 10% or
less of the Original Pool Balance, at a redemption
price equal to the unpaid principal amount of the Class
A-4 Notes plus accrued and unpaid interest thereon. See
'Description of the Notes--Optional Redemption' herein.
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 May 15, 1998. 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 will be subordinated to payment of
interest on the Notes. If an Event of Default shall
occur and the Notes are accelerated, distributions in
respect of the Certificates will be subordinated in
priority of payment to payment of interest and
principal on the Notes. See 'Description of the
Notes--the Indenture' in the Prospectus. 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 on 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 equal to the Certificateholders' Principal
Distributable Amount for such Distribution Date, to the
extent of funds available therefor as described herein.
The Certificateholders' Principal Distributable Amount
for each Distribution Date generally will equal 100% of
the Principal Distributable Amount (after payment of
any outstanding Notes in full) and will be calculated
by the Servicer in the manner described under
'Description of the Transfer and Servicing
Agreements--Distributions' herein.
The outstanding principal amount, if any, of the
Certificates is expected to be paid in full on the
October 15, 2004 Distribution Date (the 'CERTIFICATE
FINAL SCHEDULED DISTRIBUTION DATE,' and together with
the Note Final Scheduled Distribution Dates, each a
'FINAL SCHEDULED DISTRIBUTION DATE').
</TABLE>
S-4
<PAGE>
<TABLE>
<S> <C>
Optional Prepayment. If the Servicer exercises its
option to purchase the Receivables, which can occur
after the Class A-1 Notes, the Class A-2 Notes and the
Class A-3 Notes have been paid in full, following the
last day of any Collection Period as of which the Pool
Balance declines to 10% 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 A-4 Notes will be redeemed
simultaneously with the Certificates. See 'Description
of the Certificates--Optional Prepayment' herein.
RESERVE ACCOUNT......... A reserve account (the 'RESERVE ACCOUNT') will be
pledged by the Trust to the Indenture Trustee as
collateral for the Notes. The Reserve Account will be
funded with an initial deposit by the Seller of cash or
Permitted Investments having an aggregate value of
$16,296,062.14 (1.50% of the Original Pool Balance)
(the 'RESERVE ACCOUNT INITIAL DEPOSIT'). In addition,
on each Distribution Date, any amounts on deposit in
the Collection Account with respect to the preceding
Collection Period after payments to the Servicer and
the Administrator 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 Seller.
On or prior to each Deposit Date, the Indenture Trustee
will withdraw funds from the Reserve Account, to the
extent of the funds therein, to the extent (x) the sum
of the amounts required to be distributed to
Noteholders, Certificateholders, the Servicer and the
Administrator on the related Distribution Date exceeds
(y) the Total Distribution Amount for such Distribution
Date. If the amount in the Reserve Account is reduced
to zero and, in the case of the Noteholders, to the
extent the subordination of amounts distributable to
Certificateholders is insufficient, Noteholders and
Certificateholders will bear the credit and other risks
associated with ownership of the Receivables, including
the risk that the Trust may not have a perfected
security interest in the Financed Vehicles. See
'Description of the Transfer and Servicing
Agreements--Subordination of Certificateholders; The
Reserve Account' herein and 'Certain Legal Aspects of
the Receivables' in the Prospectus.
SPECIFIED RESERVE
ACCOUNT BALANCE....... On any Distribution Date, the specified reserve account
balance (the 'SPECIFIED RESERVE ACCOUNT BALANCE') will
equal 3.00% (6.00% 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) $8,148,031.07 (0.75% of the Original Pool
Balance) and (ii) such Pool Balance. The Specified
Reserve Account Balance with respect to any
Distribution Date may be reduced to a lesser amount as
determined by the Seller, provided that such reduction
does not adversely affect the rating of any class of
Notes or the Certificates by a Rating Agency.
</TABLE>
S-5
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<TABLE>
<S> <C>
COLLECTION ACCOUNT;
PRIORITY OF
PAYMENTS.............. The Servicer will be required to cause all collections
and other amounts constituting the Total Distribution
Amount to be deposited into 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 Seller and the Servicer to the extent
described in 'Description of the Transfer and Servicing
Agreements--Net Deposits' in the Prospectus, except
upon the occurrence of certain conditions described in
'Description of the Transfer and Servicing
Agreements--Collections' in the Prospectus. 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 funds on
deposit in the Collection Account and to apply such
funds on each Distribution Date to the following (in
the priority indicated): (i) the Servicing Fee,
together with any unpaid Servicing Fees from prior
Distribution Dates (if not deducted from the Servicer's
remittance as described herein), (ii) the
Administration Fee, together with any unpaid
Administration Fees from prior Distribution Dates,
(iii) the Noteholders' Interest Distributable Amount
into the Note Distribution Account, (iv) the
Certificateholder's Interest Distributable Amount into
the Certificate Distribution Account (except as
described below), (v) the Noteholders' Principal
Distributable Amount into the Note 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 Certificateholders will not be
entitled to receive any distributions in respect of the
Certificates until the Notes have been paid in full.
SERVICING FEE........... The Servicer shall receive a Servicing Fee for each
Collection Period, payable on each Distribution Date,
in an amount equal to the sum of (i) the product of
one-twelfth of the Servicing Fee Rate and the Pool
Balance as of the close of business on the last day of
the second Collection Period preceding the Collection
Period in which such Distribution Date occurs (the
'SETTLEMENT DATE') (or, in the case of the first such
Distribution Date, the Original Pool Balance) and (ii)
any Late Fees paid by the Obligors during the related
Collection Period. A 'COLLECTION PERIOD' with respect
to a Distribution Date will be the calendar month
preceding the calendar month in which such Distribution
Date occurs. In addition, the Servicing Fee will
include Investment Earnings on amounts on deposit in
the Collection Account. See 'Description of the
Transfer and Servicing Agreements--Servicing
Compensation and Payment of Expenses' herein and
'Description of the Transfer and Servicing
Agreements--Servicing Compensation and Payment of
Expenses' and '--Net Deposits' in the Prospectus.
ADMINISTRATION
AGREEMENT............. The Chase Manhattan Bank, in its capacity as
administrator (the 'ADMINISTRATOR'), will enter into an
agreement (the 'ADMINISTRATION AGREEMENT') with the
Trust and the Indenture Trustee. As compensation for
the performance of the Administrator's obligations
under the Administration Agreement, the Administrator
will be entitled to a monthly administration fee in an
amount equal to $1,000 (the 'ADMINISTRATION FEE').
Chase USA has agreed to perform certain of the duties
of the Administrator set forth in the Administration
Agreement and to reimburse and indemnify the
Administrator for all expenses or liabilities the
Administrator may incur as a result of its entering
into the Administration Agreement. See 'Description of
the Transfer and Servicing Agreements--Administration
Agreement' herein.
</TABLE>
S-6
<PAGE>
<TABLE>
<S> <C>
TAX STATUS.............. Upon issuance of the Securities, Simpson Thacher &
Bartlett, special counsel to the Seller, 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
for United States federal income tax purposes. 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' and 'Certain State 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 in 'ERISA
Considerations' herein and in the Prospectus, 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, on behalf of
or with Plan Assets. See 'ERISA Considerations' herein
and in the Prospectus. By its acceptance of a
Certificate, each Certificateholder 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 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 the Class A-1 Notes be rated in the highest
short-term rating category and that the Notes of each
other class be rated in the highest long-term rating
category, in each case by at least two nationally
recognized statistical rating organizations (each, a
'RATING AGENCY'). There can be no assurance that any of
these ratings will not be lowered or withdrawn entirely
if, in the sole judgment of the related Rating Agency,
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 'A'
category, or its equivalent, by at least two Rating
Agencies. There can be no assurance that any of these
ratings will not be lowered or withdrawn entirely if,
in the sole judgment of the related Rating Agency,
circumstances in the future so warrant. See 'Risk
Factors--Ratings of the Securities' herein.
</TABLE>
S-7
<PAGE>
RISK FACTORS
Investors should consider, among other things, the matters discussed under
'Risk Factors' in the Prospectus and the following risk factors in connection
with purchases 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 offered
hereby, but none of them is 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 offered hereby.
TRUST'S RELATIONSHIP TO THE SELLER AND THE SERVICER
Neither the Seller nor the Servicer is generally obligated to make any
payments in respect of the Securities or the Receivables. In addition, if Chase
USA were to cease acting as Servicer, delays in processing payments on the
Receivables and information in respect thereof could occur and result in delays
in payments to the Securityholders. See 'Description of the Transfer and
Servicing Agreements--Sale and Assignment of Receivables' in the Prospectus.
SUBORDINATION; LIMITED ASSETS
Distributions of principal on the Certificates will be subordinated to
payments of interest and principal due on the Notes. The Certificateholders will
not receive any distributions of interest with respect to an Interest Accrual
Period until the full amount of interest on the Notes due 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.
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 and,
if and to the extent available on each Distribution Date to cover shortfalls in
distributions of interest and principal on the Notes and the Certificates,
amounts on deposit in the Reserve Account. However, funds deposited in the
Reserve Account are limited in amount, and the amount required to be maintained
on deposit therein will be reduced as the Pool Balance declines. If the amount
on deposit in the Reserve Account is exhausted, and, in the case of the
Noteholders, to the extent the subordination of amounts distributable to
Certificateholders is insufficient, the Trust will depend solely on current
distributions on the Receivables to make payments on the Notes and the
Certificates. The Securities will not be insured or guaranteed by the Bank, the
Servicer, the Owner Trustee, the Indenture Trustee or any affiliate thereof.
RATINGS OF THE SECURITIES
It is a condition to the issuance of the Securities that the Class A-1
Notes be rated in the highest short-term rating category and that the Notes of
each other class be rated in the highest long-term rating category, and that the
Certificates be rated at least in the 'A' category, or its equivalent, in each
case by at least two Rating Agencies. A rating is not a recommendation to
purchase, hold or sell Securities, inasmuch as such rating does not comment as
to market price or suitability for a particular investor. The ratings of the
Securities address the likelihood of the timely payment of interest on and
ultimate payment of principal of the Securities pursuant to their respective
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 if, in the
sole judgement of the related Rating Agency, circumstances in the future so
warrant.
S-8
<PAGE>
GEOGRAPHIC CONCENTRATION OF RECEIVABLES
Based on the Original Pool Balance, 25.15% and 19.22% of the Receivables
were originated by or through a Dealer (in the case of Receivables which are not
Direct Receivables) located in, or had Obligors (in the case of Direct
Receivables) who reside in, Texas and California, respectively. Because of this
geographic concentration, losses on the Receivables may be more sensitive to the
economies of Texas and California than would be the case if there were more
geographic diversification. An economic downturn in Texas or California may have
an adverse effect on the ability of Obligors in either such state to meet their
payment obligations under the Receivables.
THE TRUST
GENERAL
The Issuer, Chase Manhattan Auto Owner Trust 1998-B, is a business trust
created under the laws of the State of Delaware pursuant to the Trust Agreement
for the transaction described in this Prospectus Supplement. 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 therefor, (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
the 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 the Certificates are outstanding. While management of the
Seller believes that the loss and delinquency experience contained herein for
recent periods are representative of past performance of Motor Vehicle Loans in
the Chase Auto Finance Portfolio, there is no assurance that such performance is
indicative of the future performance of the Receivables, since future
performance is dependent, among other things, on general economic conditions and
economic conditions in the geographical areas in which the Obligors reside
including, for example, unemployment rates.
The Certificate Balance represents the equity in the Trust. The Notes and
the Certificates will be transferred to the Seller 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 the Receivables and all monies received thereunder on and after the Cutoff
Date. The Trust property will also include: (i) such amounts as from time to
time may be held in one or more Trust Accounts established and maintained
pursuant to the Sale and Servicing Agreement, as described herein; (ii) security
interests in the Financed Vehicles; (iii) proceeds from the exercise of the
Seller's recourse rights against Dealers (as described in the Prospectus under
'The Receivables Pools--Origination and Servicing of Motor Vehicle Loans'); (iv)
proceeds from claims on theft and physical damage, credit life and credit
disability insurance policies covering the Financed Vehicles or the Obligors, as
the case may be, to the extent that such insurance policies relate to the
Receivables; (v) rights with respect to any repossessed Financed Vehicles and
(vi) any and all proceeds of the foregoing. 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' in
the Prospectus. 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 Securityholders by the
Reserve Account is insufficient, and, in the case of the Noteholders, to the
extent the subordination of amounts distributable to Certificateholders is
insufficient, the Trust will look only to the Obligors on the Receivables and
the proceeds from the repossession and sale of Financed Vehicles that secure
Defaulted Receivables. In such event, certain factors, such as the Trust's not
having a first priority perfected security interest in some of the Financed
Vehicles, may affect the Trust's ability to realize on the collateral securing
the Receivables, and thus may reduce the proceeds to be distributed to
Securityholders with respect to the Securities. See 'Description of the Transfer
and Servicing
S-9
<PAGE>
Agreements--Distributions' and '--Subordination of Certificateholders; Reserve
Account' herein and 'Certain Legal Aspects of the Receivables' in the
Prospectus.
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 have
taken place on such date:
Class A-1 Notes...................................... $ 250,000,000.00
Class A-2 Notes...................................... 200,000,000.00
Class A-3 Notes...................................... 321,000,000.00
Class A-4 Notes...................................... 282,800,000.00
Certificates......................................... 32,604,142.65
-----------------
Total.............................................. $1,086,404,142.65
=================
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. The Seller and its affiliates may maintain
normal commercial banking relations with the Owner Trustee and its affiliates.
THE RECEIVABLES POOL
The Receivables represent Motor Vehicle Loans from the portfolio of the
Seller that, in addition to satisfying the criteria set forth in the Prospectus
under 'The Receivables Pools--General':
(a) have a remaining maturity, as of the Cutoff Date, of at least 8
months and not more than 72 months;
(b) are secured by new Financed Vehicles that had an original maturity
of at least 12 months and not more than 78 months, or by used Financed
Vehicles that had an original maturity of at least 12 months and not more
than 72 months;
(c) are fully-amortizing fixed rate simple interest or actuarial
contracts that provide for level scheduled monthly payments over their
respective remaining terms and have an annual contract rate of interest (a
'CONTRACT RATE') of at least 6.0% and not more than 20.00%;
(d) have remaining principal balances, as of the Cutoff Date, of at
least $2,000 and not greater than $100,000;
(e) have no payment that is delinquent for more than 30 days past due
as of the Cutoff Date; and
(f) are not Motor Vehicle Loans (i) whose related Obligor resides in
the State of Alabama (in the case of Direct Receivables) or (ii) originated
by or through a Dealer located in the State of Alabama (in the case of
Receivables which are not Direct Receivables) or Motor Vehicle Loans the
subject of a previous securitization.
The Receivables were selected from the Motor Vehicle Loans in the portfolio
of the Seller that met the above criteria. For administrative reasons, the
Seller selected from the Motor Vehicle Loans in its portfolio all otherwise
eligible Motor Vehicle Loans originated since August 1, 1997, which were
segregated and held for sale by the Seller. Approximately 50.88% of the Original
Pool Balance were secured by new Financed Vehicles, and approximately 49.12% of
the Original Pool Balance were secured by used Financed Vehicles. 91.96% of the
Original Pool Balance are Simple Interest Receivables and 8.04% of the Original
Pool Balance are Actuarial Receivables. An insignificant number of the
Receivables provide for recourse to the Dealer in the event of default by the
Obligor.
Approximately 0.48% of the Original Pool Balance were made directly by the
Originating Bank to Obligors without involvement of Dealers (collectively, the
'DIRECT RECEIVABLES') using Chase Auto Finance underwriting criteria and have
been serviced consistent with Chase Auto Finance's servicing policies and
S-10
<PAGE>
practices. The Direct Receivables originated by Chase, as Originating Bank, will
be transferred to the Seller on or prior to the Closing Date.
The Seller may not substitute other Motor Vehicle Loans from its portfolio,
or any other motor vehicle receivables, for the Receivables at any time during
the term of the Sale and Servicing Agreement. See 'The Receivables
Pools--General' and 'Weighted Average Life of the Securities' in the Prospectus
and 'Weighted Average Life of the Securities' herein for a description of how
prepayments made under Simple Interest Receivables and Actuarial Receivables are
allocated.
The Original Pool Balance equals the aggregate Principal Balance of the
Receivables as of the Cutoff Date. The Principal Balance of each Actuarial
Receivable as of the Cutoff Date included at least 30 days of accrued and unpaid
interest and included 60 days of accrued and unpaid interest to the extent that
such Actuarial Receivable was past due as of the Cutoff Date. As a result, the
yield on the Receivables Pool from time to time will be less than the weighted
average Contract Rate of the Receivables. In addition, the yield on a delinquent
Actuarial Receivable will be less than the applicable Contract Rate since
interest on such Actuarial Receivable will accrue on its scheduled balance, not
its Adjusted Contract Value.
The composition of the Receivables, distribution by Contract Rate of the
Receivables and the geographic distribution of the Receivables, in each case as
of the Cutoff Date, are set forth in the following tables.
COMPOSITION OF THE RECEIVABLES
<TABLE>
<CAPTION>
NEW FINANCED USED FINANCED
VEHICLES VEHICLES TOTAL
--------------- --------------- -----------------
<S> <C> <C> <C>
Aggregate Principal Balance.................... $552,795,921.82 $533,608,220.83 $1,086,404,142.65
Number of Receivables.......................... 28,935 37,557 66,492
Average Principal Balance...................... $ 19,104.75 $ 14,207.96 $ 16,338.87
Average Original Balance....................... $ 19,344.83 $ 14,373.70 $ 16,536.96
Weighted Average Contract Rate................. 8.43% 9.73% 9.07%
Contract Rate (Range).......................... 6.00% to 19.90% 6.75% to 20.00% 6.00% to 20.00%
Weighted Average Original Term................. 57.16 months 56.19 months 56.68 months
Original Term (Range).......................... 12 to 78 months 12 to 72 months 12 to 78 months
Weighted Average Remaining Term................ 56.12 months 55.18 months 55.66 months
Remaining Term (Range)......................... 10 to 72 months 8 to 72 months 8 to 72 months
</TABLE>
S-11
<PAGE>
DISTRIBUTION BY CONTRACT RATE OF THE RECEIVABLES
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF ORIGINAL
CONTRACT RATE RANGE RECEIVABLES PRINCIPAL BALANCE POOL BALANCE
- -------------------------------------------------------------- ----------- ----------------- ----------------
<S> <C> <C> <C>
6.0% to below 6.5%.......................................... 4 $ 71,942.05 0.01%
6.5% to below 7.0%.......................................... 535 $ 8,761,085.63 0.81%
7.0% to below 7.5%.......................................... 7,599 $ 135,222,220.50 12.45%
7.5% to below 8.0%.......................................... 9,837 $ 179,430,615.41 16.52%
8.0% to below 8.5%.......................................... 6,421 $ 114,355,985.04 10.53%
8.5% to below 9.0%.......................................... 11,521 $ 202,589,030.18 18.65%
9.0% to below 9.5%.......................................... 4,348 $ 70,327,014.04 6.47%
9.5% to below 10.0%.......................................... 8,715 $ 137,240,517.83 12.63%
10.0% to below 10.5%.......................................... 3,217 $ 47,035,363.59 4.33%
10.5% to below 11.0%.......................................... 5,092 $ 73,717,145.47 6.79%
11.0% to below 11.5%.......................................... 1,725 $ 23,590,037.64 2.17%
11.5% to below 12.0%.......................................... 2,655 $ 35,128,051.76 3.23%
12.0% to below 12.5%.......................................... 1,238 $ 16,328,804.12 1.50%
12.5% to below 13.0%.......................................... 1,448 $ 18,340,019.59 1.69%
13.0% to below 13.5%.......................................... 617 $ 7,258,136.06 0.67%
13.5% to below 14.0%.......................................... 686 $ 7,928,885.22 0.73%
14.0% to below 14.5%.......................................... 260 $ 2,998,729.92 0.28%
14.5% to below 15.0%.......................................... 234 $ 2,552,336.57 0.23%
15.0% to below 15.5%.......................................... 131 $ 1,317,819.88 0.12%
15.5% to below 16.0%.......................................... 84 $ 865,995.68 0.08%
16.0% to below 16.5%.......................................... 19 $ 273,253.38 0.03%
16.5% to below 17.0%.......................................... 45 $ 455,314.19 0.04%
17.0% to below 17.5%.......................................... 12 $ 112,118.32 0.01%
17.5% to below 18.0%.......................................... 9 $ 90,410.49 0.01%
18.0% to below 18.5%.......................................... 20 $ 193,447.47 0.02%
18.5% to below 19.0%.......................................... 9 $ 90,517.53 0.01%
19.0% to below 19.5%.......................................... 2 $ 14,796.03 0.00%
19.5% to below 20.0%.......................................... 5 $ 70,830.58 0.01%
20.0%......................................................... 4 $ 43,718.48 0.00%
------ ----------------- ------
Total(1)...................................................... 66,492 $1,086,404,142.65 100.00%
====== ================= ======
</TABLE>
------------------
(1) Percentages may not add to 100.00% due to rounding.
S-12
<PAGE>
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES(1)
<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF ORIGINAL
STATE RECEIVABLES PRINCIPAL BALANCE POOL BALANCE
- ----------------------------------------------------------------- ----------- ----------------- ------------
<S> <C> <C> <C>
Arizona.......................................................... 1,110 $ 18,644,228.34 1.72%
Arkansas......................................................... 848 $ 13,211,014.13 1.22%
California....................................................... 11,590 $ 208,840,581.50 19.22%
Colorado......................................................... 256 $ 4,546,172.48 0.42%
Connecticut...................................................... 2,954 $ 42,533,954.05 3.92%
Delaware......................................................... 430 $ 6,547,144.11 0.60%
District of Columbia............................................. 13 $ 268,859.18 0.02%
Florida.......................................................... 4,079 $ 61,903,768.41 5.70%
Georgia.......................................................... 2,238 $ 37,603,661.72 3.46%
Hawaii........................................................... 28 $ 377,836.32 0.03%
Idaho............................................................ 33 $ 619,660.59 0.06%
Illinois......................................................... 733 $ 14,347,090.32 1.32%
Indiana.......................................................... 200 $ 3,311,097.40 0.30%
Iowa............................................................. 304 $ 4,927,753.29 0.45%
Kansas........................................................... 82 $ 1,469,385.29 0.14%
Kentucky......................................................... 124 $ 1,881,034.97 0.17%
Louisiana........................................................ 1,093 $ 17,983,853.11 1.66%
Maine............................................................ 173 $ 2,565,992.94 0.24%
Maryland......................................................... 492 $ 8,089,772.93 0.74%
Massachusetts.................................................... 1,751 $ 26,403,210.44 2.43%
Michigan......................................................... 1,606 $ 25,313,252.65 2.33%
Minnesota........................................................ 418 $ 6,411,836.26 0.59%
Mississippi...................................................... 202 $ 3,233,431.13 0.30%
Missouri......................................................... 1,127 $ 18,282,730.85 1.68%
Montana.......................................................... 28 $ 400,002.33 0.04%
Nebraska......................................................... 118 $ 1,834,362.90 0.17%
Nevada........................................................... 389 $ 6,873,928.32 0.63%
New Hampshire.................................................... 370 $ 5,004,141.58 0.46%
New Jersey....................................................... 2,807 $ 46,717,524.69 4.30%
New Mexico....................................................... 234 $ 3,885,515.81 0.36%
New York......................................................... 6,165 $ 92,351,964.60 8.50%
North Carolina................................................... 1,396 $ 22,320,952.62 2.05%
North Dakota..................................................... 5 $ 95,906.82 0.01%
Ohio............................................................. 587 $ 9,300,471.14 0.86%
Oklahoma......................................................... 1,223 $ 19,219,869.00 1.77%
Oregon........................................................... 413 $ 6,635,678.31 0.61%
Pennsylvania..................................................... 1,180 $ 17,462,588.75 1.61%
Rhode Island..................................................... 148 $ 2,035,552.48 0.19%
South Carolina................................................... 366 $ 5,441,620.61 0.50%
South Dakota..................................................... 52 $ 836,551.98 0.08%
Tennessee........................................................ 319 $ 6,258,460.19 0.58%
Texas............................................................ 16,379 $ 273,264,517.31 25.15%
Utah............................................................. 62 $ 979,607.00 0.09%
Vermont.......................................................... 522 $ 6,928,438.18 0.64%
Virginia......................................................... 1,198 $ 19,220,243.43 1.77%
Washington....................................................... 333 $ 5,369,597.74 0.49%
West Virginia.................................................... 14 $ 198,236.17 0.02%
Wisconsin........................................................ 300 $ 4,451,088.28 0.41%
------ ----------------- ------
Total............................................................ 66,492 $1,086,404,142.65 100.00%
====== ================= ======
</TABLE>
(Footnotes on next page)
S-13
<PAGE>
(Footnotes from previous page)
- ------------------
(1) Based on location of the related Obligor (in the case of Direct Receivables)
or the Dealer from which the related Motor Vehicle Loan was acquired or
through which it was made (in the case of Receivables which are not Direct
Receivables).
(2) Percentages may not add to 100.00% due to rounding.
DELINQUENCY AND LOAN LOSS INFORMATION
The following tables set forth information with respect to delinquencies,
loan losses and recoveries for the Chase Auto Finance Portfolio as of the dates
indicated and for each of the one-year periods ended December 31, 1997, 1996,
1995, 1994 and 1993. Higher net charge-offs for the one-year periods ended
December 31, 1996 and December 31, 1997, respectively, reflect economic
conditions affecting consumer debt generally. In addition, higher net
charge-offs for the one-year period ended December 31, 1997 reflect a slowing in
the growth rate of the Chase Auto Finance Portfolio, which has magnified net
charge-offs as a percentage of Period End Outstanding Principal Amount and
Average Outstanding Principal Amount. The portions of the Chase Auto Finance
Portfolio that provide for payments based upon a variable rate of interest or
that are Final Payment Receivables are included in the following tables, but
Motor Vehicle Loans of such type are not included in the Trust. Chase Auto
Finance does not maintain separate records that distinguish among the
delinquency and loan loss experience for Motor Vehicle Loans that provide for
payments based upon a fixed rate of interest (such as the Receivables) and those
that provide for payments based upon a variable rate of interest nor does it
maintain records of the delinquency and loan loss experience that excludes such
experience for Final Payment Receivables. The Seller believes that the
delinquency and loan loss experience with respect to the types of Motor Vehicle
Loans included in the Trust is not materially different from the performance of
the Chase Auto Finance Portfolio set forth below.
Approximately 0.48% of the Original Pool Balance are Direct Receivables.
The delinquency and loan loss experience for Direct Receivables are not included
in the performance of the Chase Auto Finance Portfolio set forth below. The
Seller believes that the delinquency and loan loss experience for Direct
Receivables has not been materially different from the performance of the Chase
Auto Finance Portfolio set forth below.
The principal amounts of those Motor Vehicle Loans in the Chase Auto
Finance Portfolio that provide for payments based upon the actuarial method
included in the following tables include accrued and unpaid interest and unpaid
late fees.
See 'The Receivables Pools--General' and '--Delinquency and Loan Loss
Information' in the Prospectus for a description of the composition of the Chase
Auto Finance Portfolio.
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. No assurance can be given that the
delinquency and loan loss information of the Trust with respect to the
Receivables in the future will be similar to that set forth below. In
particular, due to the recent assumption by the Bank from an affiliate of
relationships with a large number of Dealers located in Texas, Receivables
originated by Dealers located in Texas constitute a greater percentage of the
Receivables in the Trust than they have historically constituted a percentage of
the Chase Auto Finance Portfolio.
S-14
<PAGE>
DELINQUENCY EXPERIENCE(1)(2)
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-----------------------------------------------------------------------------------------------
1997 1996 1995 1994
----------------------- ---------------------- ---------------------- ----------
NUMBER NUMBER NUMBER
DOLLARS OF DOLLARS OF DOLLARS OF DOLLARS
(000'S) LOANS (000'S) LOANS (000'S) LOANS (000'S)
----------- ------- ---------- ------- ---------- ------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Outstanding Principal
Amount.................... $11,114,504 938,495 $9,842,364 832,993 $7,451,714 628,009 $6,028,312
=========== ======= ========== ======= ========== ======= ==========
Delinquencies(3)(4)
30-59 Days................ $ 153,761 12,937 $ 127,722 10,879 $ 78,499 7,054 $ 52,963
60-89 Days................ 39,329 3,448 31,153 2,739 15,866 1,513 9,740
90 Days or More........... 24,322 2,190 18,031 1,590 8,654 786 5,353
=========== ====== ========== ====== ========== ===== ==========
TOTAL Delinquencies......... $ 217,412 18,575 $ 176,906 15,208 $ 103,019 9,353 $ 68,056
Repossession Inventory(5)... 30,374 1,944 21,755 1,421 7,290 443 2,444
=========== ====== ========== ====== ========== ===== ==========
TOTAL Delinquencies &
Repossession Inventory.... $ 247,786 20,519 $ 198,661 16,629 $ 110,309 9,796 $ 70,500
=========== ====== ========== ====== ========== ===== ==========
Delinquencies(3)(4)(6)
30-59 Days................ 1.38% 1.30% 1.05% 0.88%
60-89 Days................ 0.35% 0.32% 0.21% 0.16%
90 Days or More........... 0.22% 0.18% 0.12% 0.09%
----------- ---------- ---------- ----------
TOTAL Delinquencies(6)(7)... 1.96% 1.80% 1.38% 1.13%
Repossession Inventory(6)... 0.27% 0.22% 0.10% 0.04%
----------- ---------- ---------- ----------
TOTAL Delinquencies &
Repossession
Inventory(6)(7)........... 2.23% 2.02% 1.48% 1.17%
----------- ---------- ---------- ----------
</TABLE>
1993
----------------------
NUMBER NUMBER
OF DOLLARS OF
LOANS (000'S) LOANS
------- ---------- -------
Outstanding Principal
Amount.................... 516,621 $4,540,693 378,857
======= ========== =======
Delinquencies(3)(4)
30-59 Days................ 5,704 $ 41,294 3,761
60-89 Days................ 1,202 9,311 1,049
90 Days or More........... 761 4,176 421
======= ========== =======
TOTAL Delinquencies......... 7,667 $ 54,781 5,231
Repossession Inventory(5)... 273 3,232 335
======= ========== =======
TOTAL Delinquencies &
Repossession Inventory.... 7,940 $ 58,013 5,566
======= ========== =======
Delinquencies(3)(4)(6)
30-59 Days................ 0.91%
60-89 Days................ 0.21%
90 Days or More........... 0.09%
----------
TOTAL Delinquencies(6)(7)... 1.21%
Repossession Inventory(6)... 0.07%
----------
TOTAL Delinquencies &
Repossession
Inventory(6)(7)........... 1.28%
----------
- ------------------
(1) The delinquency experience presented does not include experience with
respect to Direct Receivables.
(2) As of December 31, 1997, approximately 0.81% of the aggregate principal
balance of Motor Vehicle Loans in the portfolio presented were Chase
Maryland Loans.
(3) Delinquencies include principal amounts.
(4) The period of delinquency is based on the number of days payments are
contractually past due.
(5) As of December 31, 1994 and earlier, amounts shown in repossession inventory
represent loans which have been written down to the fair market value of the
collateral, but where the related financed vehicles have not yet been sold.
As of December 31, 1995 and later, amounts shown in repossession inventory
represent the total outstanding principal balance of the loans at such
times.
(6) As a percent of outstanding principal in dollars.
(7) Percentages representing TOTAL Delinquencies and TOTAL Delinquencies &
Repossession Inventory may not equal the sum of the components thereof due
to rounding.
S-15
<PAGE>
LOAN LOSS EXPERIENCE(1)(2)
(DOLLARS IN 000'S)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------
1997 1996 1995 1994 1993
------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Number of Loans(3)............ 938,495 832,993 628,009 516,621 378,857
Period End Outstanding
Principal Amount............ $ 11,114,504 $ 9,842,364 $ 7,451,714 $ 6,028,312 $ 4,540,693
Average Outstanding Principal
Amount(4)................... $ 10,630,360 $ 9,153,306 $ 6,572,006 $ 5,104,644 $ 3,999,579
Number of Repossessions....... 5,834 3,719 1,863 1,590 2,064
Number of Gross Charge-Offs... 7,524 5,076 2,633 2,348 2,879
Gross Charge-Offs(5).......... $ 57,017 $ 29,461 $ 11,765 $ 10,639 $ 14,923
Gross Charge-Offs as a % of
Period End Outstanding
Principal Amount(5)......... 0.51% 0.30% 0.16% 0.18% 0.33%
Gross Charge-Offs as a % of
Average Outstanding
Principal Amount(5)......... 0.54% 0.32% 0.18% 0.21% 0.37%
Recoveries(6)................. $ (10,622) $ (7,554) $ (3,869) $ (4,700) $ (4,648)
Net Charge-Offs(7)............ $ 46,395 $ 21,908 $ 7,896 $ 5,939 $ 10,275
Net Charge-Offs as a % of
Period End Outstanding
Principal Amount(7)......... 0.42% 0.22% 0.11% 0.10% 0.23%
Net Charge-Offs as a % of
Average Outstanding
Principal Amount(7)......... 0.44% 0.24% 0.12% 0.12% 0.26%
</TABLE>
- ------------------
(1) The loan loss experience presented does not include experience with respect
to Direct Receivables.
(2) As of December 31, 1997, approximately 0.81% of the aggregate principal
balance of Motor Vehicle Loans in the portfolio presented were Chase
Maryland Loans.
(3) Number of loans as of period end.
(4) The average for each period presented was computed by taking a simple
average of monthly average outstanding principal amounts for such period.
(5) Amount charged off is remaining principal balance less proceeds from sale of
repossessed vehicles.
(6) Recoveries generally include amounts received with respect to loans
previously charged-off, except for proceeds realized in connection with the
sale of the repossessed vehicles.
(7) Net Charge-Offs mean gross charge-offs minus recoveries of loans previously
charged-off. Net Charge-Offs may not equal the difference of the components
thereof due to rounding.
S-16
<PAGE>
CHASE USA
Information regarding the Seller and the Servicer is set forth under 'Chase
USA' in the Prospectus. At December 31, 1997, Chase USA's total assets were
approximately $31.8 billion, total liabilities were approximately $28.7 billion
and total stockholder's equity was approximately $3.1 billion.
USE OF PROCEEDS
After the deposit of the Reserve Account Initial Deposit and the deduction
of estimated expenses, the net proceeds to be received by the Seller from the
sale of Securities will be added to its general funds.
WEIGHTED AVERAGE LIFE OF THE SECURITIES
Information regarding certain maturity and prepayment considerations with
respect to the Securities is set forth under 'Weighted Average Life of
Securities' in the Prospectus. Amounts paid-ahead on Actuarial Receivables will
not be deposited in a Paid-Ahead Account.
No principal payments will be made on any class of Notes until all Notes
with preceding class designations have been paid in full. For example, no
principal payments will be made on the Class A-2 Notes until the Class A-1 Notes
have been paid in full, and no principal payments will be made on the Class A-3
Notes until the Class A-2 Notes have been paid in full. In addition, no
principal payments on the Certificates will be made until the Notes have been
paid in full. See 'Description of the Notes--Payments of Principal' and
'Description of the Certificates--Distributions of Principal Payments' herein.
As the rate of payment of principal of each class of the 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, as applicable, 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.
If the Reserve Account is exhausted and losses on the Receivables occur,
the amount of interest distributed to the Securityholders may be less than
described above. If an Event of Default has occurred and the maturity of the
Notes has been accelerated, the Certificateholders will not be entitled to
receive any distributions in respect of their Certificates until the Notes have
been paid in full.
Subject to the conditions set forth herein under the heading 'Description
of the Transfer and Servicing Agreements--Servicing 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 the
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.
Under a program sponsored by Saturn Corporation ('SATURN') and its related
Dealers, purchasers of a new Saturn vehicle have the right to return their cars
to the related Dealer for any reason within 30 days of purchase or 1,500 miles
of use and receive a refund of the purchase price. 1.61% of the Original Pool
Balance are Receivables originated in March which are secured by Financed
Vehicles manufactured by Saturn (the 'SATURN RECEIVABLES'). In the event the
Obligor under a Saturn Receivable returns the related Financed Vehicle for
refund, such Receivable will be prepaid, prepayments on the Notes will result
and the weighted average life of the Notes and the Certificates may be
decreased.
Chase Auto Finance maintains certain records of the historical prepayment
experience of certain portions of the Chase Auto Finance Portfolio. The Seller
believes 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
S-17
<PAGE>
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.
Prepayments on motor vehicle receivables can be measured relative to a
prepayment standard or model. The model used in this Prospectus Supplement, the
Absolute Prepayment Model ('ABS'), represents an assumed rate of prepayment each
month relative to the original number of receivables in a pool of receivables.
ABS further assumes that all the receivables are the same size and amortize at
the same rate and that each receivable in each month of its life will either be
paid as scheduled or be prepaid in full. For example, in a pool of receivables
originally containing 10,000 receivables, a 1% ABS rate means that 100
receivables prepay each month. ABS does not purport to be an historical
description of prepayment experience or a prediction of the anticipated rate of
prepayment of any pool of receivables, including the Receivables.
The tables captioned 'Percent of Initial Note Principal Balance at Various
ABS Percentages' and 'Percent of Initial Certificate Balance at Various ABS
Percentages' (each, an 'ABS TABLE') have been prepared on the basis of the
characteristics of the Receivables. Each ABS Table assumes that (a) the
Receivables prepay in full at the specified constant percentage of ABS monthly,
with no defaults, losses or repurchases, (b) each scheduled monthly payment on
the Receivables is made on the last day of each month and each month has 30
days, (c) payments on the Notes and distributions on the Certificates are made
on each Distribution Date (and each such date is assumed to be the 15th day of
each applicable month), (d) the balance in the Reserve Account on each
Distribution Date is equal to the Specified Reserve Account Balance and (e) the
Servicer does not exercise its option to purchase the Receivables. The
Receivables Pool has an assumed cutoff date of the Cutoff Date. The ABS Table
indicates the projected weighted average life of each class of Notes and the
Certificates and sets 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 shown at various constant ABS percentages.
The ABS Tables also assume that (i) the Receivables have been aggregated
into hypothetical pools with all of the Receivables within each such pool having
the following characteristics and that (ii) the level scheduled monthly payment
for each such pool (which is based on its principal balance, weighted average
Contract Rate, weighted average original term to maturity and weighted average
remaining term to maturity as of the Cutoff Date) will be such that each pool
will be fully amortized by the end of its remaining term to maturity.
<TABLE>
<CAPTION>
REMAINING WEIGHTED WEIGHTED
TERM TO WEIGHTED AVERAGE AVERAGE
MATURITY AVERAGE ORIGINAL TERM REMAINING TERM
RANGE AGGREGATE CONTRACT TO MATURITY TO MATURITY
POOL (IN MONTHS) PRINCIPAL BALANCE RATE (IN MONTHS) (IN MONTHS)
- ----- ----------- ----------------- --------- ------------- --------------
<S> <C> <C> <C> <C> <C>
1 0-24 $ 11,175,903.15 8.67% 23 22
2 25-36 $ 56,647,408.10 8.95% 36 35
3 37-48 $ 163,481,709.78 9.22% 48 47
4 49-60 $ 824,596,657.59 9.01% 60 59
5 61-72 $ 30,502,464.03 10.10% 70 69
-----------------
$1,086,404,142.65
=================
</TABLE>
The information included in the following tables represents forward-looking
statements and involves risks and uncertainties that could cause actual results
to differ materially from those in the forward-looking statements. The actual
characteristics and performance of the Receivables will differ from the
assumptions used in constructing each ABS Table. The assumptions used are
hypothetical and have been provided only to give a general sense of how the
principal cash flows might behave under varying prepayment scenarios. For
example, it is very unlikely that the Receivables will prepay at a constant
level of ABS until maturity or that all of the Receivables will prepay at the
same level of ABS. Moreover, the diverse terms of Receivables within each of the
five hypothetical pools could produce slower or faster principal distributions
than indicated in each ABS Table at the various constant percentages of ABS
specified, even if the original and remaining terms to maturity of the
Receivables are as assumed. Any difference between such assumptions and the
actual characteristics and performance of the Receivables, or actual prepayment
experience, will affect the percentages of initial balances outstanding over
time and the weighted average lives of each class of the Notes and the
Certificates.
S-18
<PAGE>
PERCENT OF INITIAL NOTE PRINCIPAL BALANCE AT VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
CLASS A-1 NOTES CLASS A-2 NOTES
-------------------------------- --------------------------------
ASSUMED ABS PERCENTAGE(2) ASSUMED ABS PERCENTAGE(2)
-------------------------------- --------------------------------
DISTRIBUTION DATES 0.50% 1.00% 1.50% 2.00% 0.50% 1.00% 1.50% 2.00%
- ---------------------------------------------- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Closing Date.................................. 100 100 100 100 100 100 100 100
May 15, 1998.................................. 91 89 87 85 100 100 100 100
June 15, 1998................................. 83 78 74 70 100 100 100 100
July 15, 1998................................. 74 68 61 55 100 100 100 100
August 15, 1998............................... 65 57 49 40 100 100 100 100
September 15, 1998............................ 57 47 36 26 100 100 100 100
October 15, 1998.............................. 48 36 24 12 100 100 100 100
November 15, 1998............................. 40 26 12 0 100 100 100 97
December 15, 1998............................. 31 16 * 0 100 100 100 80
January 15, 1999.............................. 23 6 0 0 100 100 85 64
February 15, 1999............................. 14 0 0 0 100 94 71 47
March 15, 1999................................ 6 0 0 0 100 82 57 31
April 15, 1999................................ 0 0 0 0 97 70 42 15
May 15, 1999.................................. 0 0 0 0 86 57 29 0
June 15, 1999................................. 0 0 0 0 75 45 15 0
July 15, 1999................................. 0 0 0 0 65 33 2 0
August 15, 1999............................... 0 0 0 0 55 22 0 0
September 15, 1999............................ 0 0 0 0 44 10 0 0
October 15, 1999.............................. 0 0 0 0 34 0 0 0
November 15, 1999............................. 0 0 0 0 23 0 0 0
December 15, 1999............................. 0 0 0 0 13 0 0 0
January 15, 2000.............................. 0 0 0 0 3 0 0 0
February 15, 2000............................. 0 0 0 0 0 0 0 0
March 15, 2000................................ 0 0 0 0 0 0 0 0
April 15, 2000................................ 0 0 0 0 0 0 0 0
May 15, 2000.................................. 0 0 0 0 0 0 0 0
June 15, 2000................................. 0 0 0 0 0 0 0 0
July 15, 2000................................. 0 0 0 0 0 0 0 0
August 15, 2000............................... 0 0 0 0 0 0 0 0
September 15, 2000............................ 0 0 0 0 0 0 0 0
October 15, 2000.............................. 0 0 0 0 0 0 0 0
November 15, 2000............................. 0 0 0 0 0 0 0 0
December 15, 2000............................. 0 0 0 0 0 0 0 0
January 15, 2001.............................. 0 0 0 0 0 0 0 0
February 15, 2001............................. 0 0 0 0 0 0 0 0
March 15, 2001................................ 0 0 0 0 0 0 0 0
April 15, 2001................................ 0 0 0 0 0 0 0 0
Weighted Average Life (years)(1).............. 0.53 0.44 0.37 0.32 1.41 1.18 1.00 0.86
</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 ABS TABLES HAVE BEEN PREPARED BASED ON THE ASSUMPTIONS DESCRIBED ABOVE
(INCLUDING THE ASSUMPTIONS REGARDING THE CHARACTERISTICS AND PERFORMANCE OF THE
RECEIVABLES WHICH WILL DIFFER FROM THE ACTUAL CHARACTERISTICS AND PERFORMANCE
THEREOF) AND SHOULD BE READ IN CONJUNCTION THEREWITH.
S-19
<PAGE>
PERCENT OF INITIAL NOTE PRINCIPAL BALANCE AT VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
CLASS A-3 NOTES CLASS A-4 NOTES
-------------------------------- --------------------------------
ASSUMED ABS PERCENTAGE ASSUMED ABS PERCENTAGE
-------------------------------- --------------------------------
DISTRIBUTION DATES 0.50% 1.00% 1.50% 2.00% 0.50% 1.00% 1.50% 2.00%
- ---------------------------------------------- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Closing Date.................................. 100 100 100 100 100 100 100 100
May 15, 1998.................................. 100 100 100 100 100 100 100 100
June 15, 1998................................. 100 100 100 100 100 100 100 100
July 15, 1998................................. 100 100 100 100 100 100 100 100
August 15, 1998............................... 100 100 100 100 100 100 100 100
September 15, 1998............................ 100 100 100 100 100 100 100 100
October 15, 1998.............................. 100 100 100 100 100 100 100 100
November 15, 1998............................. 100 100 100 100 100 100 100 100
December 15, 1998............................. 100 100 100 100 100 100 100 100
January 15, 1999.............................. 100 100 100 100 100 100 100 100
February 15, 1999............................. 100 100 100 100 100 100 100 100
March 15, 1999................................ 100 100 100 100 100 100 100 100
April 15, 1999................................ 100 100 100 100 100 100 100 100
May 15, 1999.................................. 100 100 100 100 100 100 100 100
June 15, 1999................................. 100 100 100 90 100 100 100 100
July 15, 1999................................. 100 100 100 81 100 100 100 100
August 15, 1999............................... 100 100 93 72 100 100 100 100
September 15, 1999............................ 100 100 85 63 100 100 100 100
October 15, 1999.............................. 100 99 77 54 100 100 100 100
November 15, 1999............................. 100 92 69 46 100 100 100 100
December 15, 1999............................. 100 85 61 38 100 100 100 100
January 15, 2000.............................. 100 78 54 29 100 100 100 100
February 15, 2000............................. 95 71 46 22 100 100 100 100
March 15, 2000................................ 89 64 39 14 100 100 100 100
April 15, 2000................................ 83 58 32 7 100 100 100 100
May 15, 2000.................................. 77 51 26 0 100 100 100 100
June 15, 2000................................. 70 45 19 0 100 100 100 92
July 15, 2000................................. 64 39 12 0 100 100 100 84
August 15, 2000............................... 58 32 6 0 100 100 100 77
September 15, 2000............................ 52 26 0 0 100 100 100 70
October 15, 2000.............................. 46 20 0 0 100 100 93 63
November 15, 2000............................. 40 14 0 0 100 100 87 57
December 15, 2000............................. 34 8 0 0 100 100 80 50
January 15, 2001.............................. 28 3 0 0 100 100 74 44
February 15, 2001............................. 22 0 0 0 100 96 68 39
March 15, 2001................................ 16 0 0 0 100 90 62 33
April 15, 2001................................ 10 0 0 0 100 84 56 28
</TABLE>
- ------------------
THE ABS TABLES HAVE BEEN PREPARED BASED ON THE ASSUMPTIONS DESCRIBED ABOVE
(INCLUDING THE ASSUMPTIONS REGARDING THE CHARACTERISTICS AND PERFORMANCE OF THE
RECEIVABLES WHICH WILL DIFFER FROM THE ACTUAL CHARACTERISTICS AND PERFORMANCE
THEREOF) AND SHOULD BE READ IN CONJUNCTION THEREWITH.
S-20
<PAGE>
PERCENT OF INITIAL NOTE PRINCIPAL BALANCE AT VARIOUS ABS PERCENTAGES (CONTINUED)
<TABLE>
<CAPTION>
CLASS A-3 NOTES CLASS A-4 NOTES
-------------------------------- --------------------------------
ASSUMED ABS PERCENTAGE(2) ASSUMED ABS PERCENTAGE(2)
-------------------------------- --------------------------------
DISTRIBUTION DATES 0.50% 1.00% 1.50% 2.00% 0.50% 1.00% 1.50% 2.00%
- ---------------------------------------------- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
May 15, 2001.................................. 5 0 0 0 100 79 51 24
June 15, 2001................................. 0 0 0 0 99 73 46 19
July 15, 2001................................. 0 0 0 0 93 67 41 15
August 15, 2001............................... 0 0 0 0 87 62 37 11
September 15, 2001............................ 0 0 0 0 81 57 32 8
October 15, 2001.............................. 0 0 0 0 75 52 28 4
November 15, 2001............................. 0 0 0 0 69 47 24 1
December 15, 2001............................. 0 0 0 0 63 42 20 0
January 15, 2002.............................. 0 0 0 0 57 37 16 0
February 15, 2002............................. 0 0 0 0 51 32 13 0
March 15, 2002................................ 0 0 0 0 45 27 10 0
April 15, 2002................................ 0 0 0 0 40 24 7 0
May 15, 2002.................................. 0 0 0 0 36 20 4 0
June 15, 2002................................. 0 0 0 0 31 17 2 0
July 15, 2002................................. 0 0 0 0 26 13 0 0
August 15, 2002............................... 0 0 0 0 22 10 0 0
September 15, 2002............................ 0 0 0 0 17 7 0 0
October 15, 2002.............................. 0 0 0 0 12 3 0 0
November 15, 2002............................. 0 0 0 0 8 * 0 0
December 15, 2002............................. 0 0 0 0 3 0 0 0
January 15, 2003.............................. 0 0 0 0 0 0 0 0
February 15, 2003............................. 0 0 0 0 0 0 0 0
March 15, 2003................................ 0 0 0 0 0 0 0 0
April 15, 2003................................ 0 0 0 0 0 0 0 0
May 15, 2003.................................. 0 0 0 0 0 0 0 0
June 15, 2003................................. 0 0 0 0 0 0 0 0
July 15, 2003................................. 0 0 0 0 0 0 0 0
August 15, 2003............................... 0 0 0 0 0 0 0 0
September 15, 2003............................ 0 0 0 0 0 0 0 0
October 15, 2003.............................. 0 0 0 0 0 0 0 0
November 15, 2003............................. 0 0 0 0 0 0 0 0
December 15, 2003............................. 0 0 0 0 0 0 0 0
January 15, 2004.............................. 0 0 0 0 0 0 0 0
Weighted Average Life (years)(1).............. 2.49 2.15 1.85 1.60 3.93 3.62 3.21 2.77
</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 ABS TABLES HAVE BEEN PREPARED BASED ON THE ASSUMPTIONS DESCRIBED ABOVE
(INCLUDING THE ASSUMPTIONS REGARDING THE CHARACTERISTICS AND PERFORMANCE OF THE
RECEIVABLES WHICH WILL DIFFER FROM THE ACTUAL CHARACTERISTICS AND PERFORMANCE
THEREOF) AND SHOULD BE READ IN CONJUNCTION THEREWITH.
S-21
<PAGE>
PERCENT OF INITIAL CERTIFICATE BALANCE AT VARIOUS ABS PERCENTAGES
<TABLE>
<CAPTION>
CERTIFICATES
--------------------------------
ASSUMED ABS PERCENTAGE
--------------------------------
DISTRIBUTION DATES 0.50% 1.00% 1.50% 2.00%
- -------------------------------------------------------------------------------- ----- ----- ----- -----
<S> <C> <C> <C> <C>
Closing Date.................................................................... 100 100 100 100
May 15, 1998.................................................................... 100 100 100 100
June 15, 1998................................................................... 100 100 100 100
July 15, 1998................................................................... 100 100 100 100
August 15, 1998................................................................. 100 100 100 100
September 15, 1998.............................................................. 100 100 100 100
October 15, 1998................................................................ 100 100 100 100
November 15, 1998............................................................... 100 100 100 100
December 15, 1998............................................................... 100 100 100 100
January 15, 1999................................................................ 100 100 100 100
February 15, 1999............................................................... 100 100 100 100
March 15, 1999.................................................................. 100 100 100 100
April 15, 1999.................................................................. 100 100 100 100
May 15, 1999.................................................................... 100 100 100 100
June 15, 1999................................................................... 100 100 100 100
July 15, 1999................................................................... 100 100 100 100
August 15, 1999................................................................. 100 100 100 100
September 15, 1999.............................................................. 100 100 100 100
October 15, 1999................................................................ 100 100 100 100
November 15, 1999............................................................... 100 100 100 100
December 15, 1999............................................................... 100 100 100 100
January 15, 2000................................................................ 100 100 100 100
February 15, 2000............................................................... 100 100 100 100
March 15, 2000.................................................................. 100 100 100 100
April 15, 2000.................................................................. 100 100 100 100
May 15, 2000.................................................................... 100 100 100 100
June 15, 2000................................................................... 100 100 100 100
July 15, 2000................................................................... 100 100 100 100
August 15, 2000................................................................. 100 100 100 100
September 15, 2000.............................................................. 100 100 100 100
October 15, 2000................................................................ 100 100 100 100
November 15, 2000............................................................... 100 100 100 100
December 15, 2000............................................................... 100 100 100 100
January 15, 2001................................................................ 100 100 100 100
February 15, 2001............................................................... 100 100 100 100
March 15, 2001.................................................................. 100 100 100 100
April 15, 2001.................................................................. 100 100 100 100
May 15, 2001.................................................................... 100 100 100 100
</TABLE>
- ------------------
THE ABS TABLES HAVE BEEN PREPARED BASED ON THE ASSUMPTIONS DESCRIBED ABOVE
(INCLUDING THE ASSUMPTIONS REGARDING THE CHARACTERISTICS AND PERFORMANCE OF THE
RECEIVABLES WHICH WILL DIFFER FROM THE ACTUAL CHARACTERISTICS AND PERFORMANCE
THEREOF) AND SHOULD BE READ IN CONJUNCTION THEREWITH.
S-22
<PAGE>
PERCENT OF INITIAL CERTIFICATE BALANCE AT VARIOUS ABS PERCENTAGES (CONTINUED)
<TABLE>
<CAPTION>
CERTIFICATES
--------------------------------
ASSUMED ABS PERCENTAGE(2)
--------------------------------
DISTRIBUTION DATES 0.50% 1.00% 1.50% 2.00%
- -------------------------------------------------------------------------------- ----- ----- ----- -----
<S> <C> <C> <C> <C>
June 15, 2001................................................................... 100 100 100 100
July 15, 2001................................................................... 100 100 100 100
August 15, 2001................................................................. 100 100 100 100
September 15, 2001.............................................................. 100 100 100 100
October 15, 2001................................................................ 100 100 100 100
November 15, 2001............................................................... 100 100 100 100
December 15, 2001............................................................... 100 100 100 85
January 15, 2002................................................................ 100 100 100 63
February 15, 2002............................................................... 100 100 100 43
March 15, 2002.................................................................. 100 100 100 26
April 15, 2002.................................................................. 100 100 100 12
May 15, 2002.................................................................... 100 100 100 0
June 15, 2002................................................................... 100 100 100 0
July 15, 2002................................................................... 100 100 99 0
August 15, 2002................................................................. 100 100 81 0
September 15, 2002.............................................................. 100 100 65 0
October 15, 2002................................................................ 100 100 51 0
November 15, 2002............................................................... 100 100 38 0
December 15, 2002............................................................... 100 78 26 0
January 15, 2003................................................................ 90 53 17 0
February 15, 2003............................................................... 51 30 8 0
March 15, 2003.................................................................. 12 7 2 0
April 15, 2003.................................................................. 11 6 1 0
May 15, 2003.................................................................... 10 5 1 0
June 15, 2003................................................................... 8 5 1 0
July 15, 2003................................................................... 7 4 * 0
August 15, 2003................................................................. 6 3 * 0
September 15, 2003.............................................................. 5 2 * 0
October 15, 2003................................................................ 4 2 0 0
November 15, 2003............................................................... 2 1 0 0
December 15, 2003............................................................... 1 1 0 0
January 15, 2004................................................................ 0 0 0 0
Weighted Average Life (years)(1)................................................ 4.92 4.83 4.58 3.86
</TABLE>
- ------------------
(1) The weighted average life of a Certificate is determined by (i) multiplying
the amount of each principal payment of such Certificate by the number of
years from the date of the issuance of such Certificate to the Distribution
Date on which it is made, (ii) adding the results and (iii) dividing the sum
by the initial principal balance of such Certificate.
(2) An asterisk '*' means a percent of initial Certificate principal balance of
more than zero and less than 0.5%.
THE ABS TABLES HAVE BEEN PREPARED BASED ON THE ASSUMPTIONS DESCRIBED ABOVE
(INCLUDING THE ASSUMPTIONS REGARDING THE CHARACTERISTICS AND PERFORMANCE OF THE
RECEIVABLES WHICH WILL DIFFER FROM THE ACTUAL CHARACTERISTICS AND PERFORMANCE
THEREOF) AND SHOULD BE READ IN CONJUNCTION THEREWITH.
S-23
<PAGE>
DESCRIPTION OF THE NOTES
GENERAL
The Notes will be issued pursuant to the terms of the Indenture, a form of
which has been filed as an exhibit to the Registration Statement. A copy of the
Indenture will be filed with the Commission following the issuance of the
Securities. The following, as well as other pertinent information included
elsewhere in this Prospectus Supplement and in the Prospectus, 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 the provisions of the Notes and the Indenture. The following summary
supplements the description of the general terms and provisions of the Notes of
any given series and the related Indenture set forth in the Prospectus, to which
description reference is hereby made. Norwest Bank Minnesota, National
Association, a national banking association with its corporate trust offices
located at 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
Bank and its affiliates.
PAYMENTS OF INTEREST
Each class of the Notes offered hereby will constitute Fixed Rate
Securities as such term is defined under 'Certain Information Regarding the
Securities--Fixed Rate Securities' in the Prospectus. Interest on the principal
balances of each class of Notes will accrue at the related per annum Interest
Rate and will be payable to the Noteholders monthly on each Distribution Date,
commencing May 15, 1998. 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 (which will be 25
days with respect to the Interest Accrual Period for the May 1999 Distribution
Date), and on the basis of a 360-day year of twelve 30-day months with respect
to the Notes of each other class. Interest payments on the Notes will generally
be derived from the Total Distribution Amount and the amounts, if any, on
deposit in the Reserve Account remaining after the payment of the Servicing Fee
and the Administration Fee. See 'Description of the Transfer and Servicing
Agreements--Distributions' and '--Subordination of Certificateholders; Reserve
Account' herein.
Interest payments to all classes of Noteholders will have the same
priority. Under certain circumstances, the amount available for interest
payments could be less than the amount of interest payable on the Notes on any
Distribution Date, in which case each class of Noteholders will receive their
ratable share (based upon the aggregate amount of interest due to such class of
Noteholders) of the aggregate amount available to be distributed in respect of
interest on the Notes.
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 Total
Distribution Amount and the amounts, if any, on deposit in the Reserve Account
remaining after the payment of the Servicing Fee, the Administration Fee, the
Noteholders' Interest Distributable Amount and the Certificateholders' 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 A-4 Notes until the principal
balance of the Class A-4 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 Notes pro rata on the basis of their
respective unpaid principal amounts. The principal balance of the Notes of
S-24
<PAGE>
each class, to the extent not previously paid, will be due on the Final
Scheduled Distribution Date with respect to such class specified on the cover
page hereof. The actual date on which the aggregate outstanding principal amount
of any class of Notes is paid may be earlier than the applicable Final Scheduled
Distribution Date based on a variety of factors, including those described under
'Weighted Average Life of the Securities' herein and in the Prospectus.
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 A-4 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 10% or
less of the Original Pool Balance, as described in the Prospectus under
'Description of the Transfer and Servicing Agreements--Termination.' The
redemption price will be equal to the unpaid principal amount of the Class A-4
Notes plus accrued and unpaid interest thereon.
DESCRIPTION OF THE CERTIFICATES
GENERAL
The Certificates will be issued pursuant to the terms of the Trust
Agreement, a form of which has been filed as an exhibit to the Registration
Statement. A copy of the Trust Agreement will be filed with the Commission
following the issuance of the Securities. The following, as well as other
pertinent information included elsewhere in this Prospectus Supplement and in
the Prospectus, 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. The following summary supplements the
description of the general terms and provisions of the Certificates of any given
series and the related Trust Agreement set forth in the Prospectus, to which
description reference is hereby made.
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 assets of a Plan were used to acquire the Certificates. See 'Certain
Federal Income Tax Consequences' herein and 'ERISA Considerations' herein and in
the Prospectus.
DISTRIBUTION OF INTEREST INCOME
On each Distribution Date, commencing May 15, 1998, 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. The
Certificates will constitute Fixed Rate Securities, as such term is defined
under 'Certain Information Regarding the Securities--Fixed Rate Securities' in
the Prospectus. 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 Total
Distribution Amount and amounts, if any, on deposit in the Reserve Account
remaining after the payment of the Servicing Fee, the Administration Fee and the
Noteholders' Interest Distributable Amount. See 'Description of the Transfer and
Servicing Agreements--Distributions' and '--Subordination of the Certificates;
Reserve Account' herein.
The Certificateholders will not receive any distributions of interest with
respect to an Interest Accrual Period until the full amount of interest on the
Notes due with respect to such Interest Accrual Period has been deposited in the
Note Distribution Account. If an Event of Default shall occur and the Notes are
accelerated, distribution of all amounts on the Certificates will be
subordinated to payment of principal of the Notes.
S-25
<PAGE>
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 10% or less of the Original Pool Balance, Certificateholders will
receive an amount in respect of the Certificates equal to the 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' in the Prospectus.
Distributions with respect to principal payments will generally be derived from
the Total Distribution Amount and amounts, if any, on deposit in the Reserve
Account remaining after the payment of the Servicing Fee, the Administration
Fee, the Noteholders' Interest Distributable Amount, the Certificateholders'
Interest Distributable Amount and the Noteholders' Principal Distributable
Amount. 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 Certificateholders; Reserve
Account' herein. The Certificate Balance, to the extent not previously
distributed, will be distributable on the Final Scheduled Distribution Date with
respect to the Certificates specified on the cover page hereof.
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 10% or
less of the Original 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. Any outstanding Class A-4 Notes
will be redeemed simultaneously with the Certificates. See 'Description of the
Transfer and Servicing Agreements--Termination' in the Prospectus.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following, as well as other information included elsewhere in this
Prospectus Supplement and in the Prospectus, summarizes the material terms of
the Sale and Servicing Agreement, the Trust Agreement and the Administration
Agreement (collectively, the 'TRANSFER AND SERVICING AGREEMENTS'). A form of
each of the Transfer and Servicing Agreements has been filed as an exhibit to
the Registration Statement. A copy of each of the Transfer and Servicing
Agreements will be filed with the Commission following the issuance of the
Securities. 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 in the Prospectus, to which description reference is hereby made.
ACCOUNTS
The Servicer will establish the Collection 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 Seller will establish the Reserve Account in the name of the Indenture
Trustee on behalf of the Noteholders and the Certificateholders. Each of such
accounts will be a 'TRUST ACCOUNT' as described under 'Description of the
Transfer and Servicing Agreements--Accounts' in the Prospectus. Each of the
Collection Account, the Note Distribution Account and the Certificate
Distribution Account will be established initially with the trust department of
Chase. 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
S-26
<PAGE>
Securityholders in the manner provided in the Transfer and Servicing Agreements.
See '--Subordination of Certificateholders; Reserve Account' below.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Servicer will be entitled to receive the Servicing Fee for each
Collection Period payable on each Distribution Date. The 'SERVICING FEE RATE'
with respect to the Servicing Fee for the Servicer will be 1% per annum, and the
'SERVICING FEE' for any Collection Period shall equal an amount equal to the sum
of (i) the product of one-twelfth of the Servicing Fee Rate and the Pool Balance
as of the close of business on the related Settlement Date (or, in the case of
the first Distribution Date, the Original Pool Balance) and (ii) any Late Fees
paid by the Obligors during the related Collection Period. 'LATE FEES' shall
mean, collectively, any late charges, credit-related extension fees or other
administrative fees or similar charges allowed by applicable law with respect to
the Receivables. In addition, the Servicing Fee will also include Investment
Earnings on amounts on deposit in the Collection Account.
The amount of the Servicing Fee was determined in light of the duties of
the Servicer under the Transfer and Servicing Agreements as well as with a view
toward providing the Servicer with a reasonable profit. See 'Description of the
Transfer and Servicing Agreements--Servicing Compensation and Payment of
Expenses' and '--Net Deposits' in the Prospectus.
SERVICING PROCEDURES
The Servicer will service the Receivables and will make reasonable efforts
to collect all payments due with respect to the Receivables and, in a manner
consistent with the Sale and Servicing Agreement and with the terms of the
Receivables, will follow such collection and servicing procedures as it follows
with respect to comparable new or used automobile receivables that it services
for itself and that are consistent with prudent industry standards. In addition,
among other things, the Sale and Servicing Agreement will provide that the
Servicer may not change the amount of any Receivable (except with respect to a
prepayment of a scheduled payment that does not result in a deferral of any
other scheduled payment), decrease the Contract Rate of any Receivable, or
extend any Receivable beyond the Final Scheduled Maturity Date.
In the event that the Servicer fails to comply with the foregoing terms of
the Sale and Servicing Agreement and such failure materially and adversely
affects the interests of the Securityholders in a Receivable, it will be
required to purchase the affected Receivable at a price equal to the Repurchase
Amount as of the last day of the Collection Period on which it became aware or
receives written notice from the Indenture Trustee or the Owner Trustee of such
failure. The purchase obligation will constitute the sole remedy available to
the Securityholders, the Trust or the Indenture Trustee for any such uncured
breach.
The Bank will offer certain Obligors or classes of Obligors on an annual
basis a one month noncredit related extension of a regularly scheduled payment
otherwise due under a Receivable. The Sale and Servicing Agreement establishes
criteria governing such extensions.
See 'Description of the Transfer and Servicing Agreements--Servicing
Procedures' in the Prospectus.
DISTRIBUTIONS
Deposits to Collection Account. On or before the 10th day of each month
(or, if such 10th 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 Interest, the Available
Principal, the Principal Distribution Amount and the Total Distribution Amount
for the next succeeding Distribution Date; (ii) the aggregate Repurchase Amount
of Receivables to be repurchased by the Seller or purchased by the Servicer with
respect to the preceding Collection Period; (iii) the amount to be withdrawn
from the Reserve Account on the next succeeding Deposit Date; (iv) the
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 Servicing Fee; (vi) the Administration Fee and (vii)
the amount to be deposited in the Reserve Account and the amount to be
distributed to the Seller therefrom on such Distribution Date.
S-27
<PAGE>
On or before each Deposit Date, the Servicer will cause all collections and
other amounts constituting the Total Distribution Amount for the related
Distribution Date to be deposited into the Collection Account together with any
amounts withdrawn by the Indenture Trustee from the Reserve Account on such
Deposit Date. If the Class A-1 Notes are outstanding after the April 1999
Distribution Date, there will be a separate Deposit Date in May 1999 with
respect to the Final Scheduled Distribution Date for the Class A-1 Notes.
The 'TOTAL DISTRIBUTION AMOUNT' for any Distribution Date will be the sum
of Available Interest and Available Principal for such Distribution Date. The
Total Distribution Amount for any Distribution Date will exclude all payments
and proceeds (including any Liquidation Proceeds and any amounts received from
Dealers with respect to Receivables) of (i) any Receivables the Repurchase
Amount of which has been included in the Total Distribution Amount for a prior
Distribution Date and (ii) Investment Earnings on the Collection Account and any
Late Fees.
Deposits to the Distribution Accounts. On each Distribution Date
(including, certain of the following allocations, on the Final Scheduled
Distribution Date for the Class A-1 Notes if the Class A-1 Notes are
outstanding), the Servicer shall instruct the Indenture Trustee or the Paying
Agent to make the following distributions, to the extent of the sum of the Total
Distribution Amount and any amounts withdrawn from the Reserve Account then on
deposit in the Collection Account, in the following order of priority (except
under the limited circumstances provided herein):
(i) to the Servicer, the Servicing Fee 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 Administrator, the Administration Fee for such
Distribution Date and all unpaid Administration Fees from prior
Distribution Dates;
(iii) to the Note Distribution Account, the Noteholders' Interest
Distributable Amount;
(iv) 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);
(v) to the Note Distribution Account, the Noteholders' Principal
Distributable Amount;
(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 Total
Distribution Amount.
For purposes hereof, the following terms shall have the following meanings:
'ADJUSTED CONTRACT VALUE' of an Actuarial Receivable, as of the close of
business on the last day of any Collection Period, means the excess of the
Contract Value of such Actuarial Receivable at the close of business on such
date over the Carryover Scheduled Interest Payment on such Actuarial Receivable
for such Collection Period.
'AVAILABLE INTEREST' means, for any Distribution Date, the sum of (i) with
respect to each Simple Interest Receivable, that portion of Collections on such
Simple Interest Receivable received during the related Collection Period
allocated to interest, (ii) with respect to each Actuarial Receivable, the
lesser of (A) the amount of Collections received during the related Collection
Period on such Actuarial Receivable and (B) the Scheduled Interest Payment on
such Actuarial Receivable for such Collection Period and (iii) with respect to
each Receivable repurchased by the Seller or purchased by the Servicer under an
obligation that arose during the related Collection Period, that portion of the
Repurchase Amount received with respect to such Repurchased Receivable that
would have been treated as Available Interest if the Obligor thereof had prepaid
such Receivable in full on the date as of which such Receivable was repurchased
or purchased.
'AVAILABLE PRINCIPAL' means, for any Distribution Date, the sum of (i) with
respect to each Simple Interest Receivable, that portion of Collections on such
Simple Interest Receivable received during the related Collection Period
allocated to the principal balance of such Simple Interest Receivable, (ii) with
respect to each Actuarial Receivable, the lesser of (A) the excess, if any, of
(x) the amount of Collections received during the related Collection Period on
such Actuarial Receivable over (y) the Scheduled Interest Payment on such
Actuarial
S-28
<PAGE>
Receivable for such Collection Period and (B) the amount (not less than zero)
equal to (x) the Adjusted Contract Value of such Receivable as of the close of
business on the last day of the Collection Period preceding the Collection
Period immediately preceding such Distribution Date less (y) the Adjusted
Contract Value of such Receivable as of the close of business on the last day of
the Collection Period immediately preceding such Distribution Date and (iii)
with respect to each Receivable repurchased by the Seller or purchased by the
Servicer under an obligation that arose during the related Collection Period,
that portion of the Repurchase Amount received with respect to such Repurchased
Receivable that would have been treated as Available Principal if the Obligor
thereof had prepaid such Receivable in full on the date as of which such
Receivable was repurchased or purchased.
'CARRYOVER SCHEDULED INTEREST PAYMENT' on any Actuarial Receivable means,
for any Collection Period, the excess, if any, of (i) the Scheduled Interest
Payment on such Actuarial Receivable for such Collection Period over (ii) the
amount of Collections received during such Collection Period on such Actuarial
Receivable.
'CERTIFICATE BALANCE' of the Certificates shall be an amount equal to
$32,604,142.65 (approximately 3.00% of the Original 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 Total Distribution 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 (a) for the
initial Distribution Date, zero, and (b) for any other Distribution Date, the
excess of the Certificateholders' Interest Distributable Amount for the
preceding Distribution Date over the amount in respect of interest actually
deposited in the Certificate Distribution Account on such preceding Distribution
Date, plus interest on such excess, to the extent permitted by law, at the
Certificate Rate from and including such preceding Distribution Date to, but
excluding the current Distribution Date.
'CERTIFICATEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT' means, for any
Distribution Date, the sum of the Certificateholders' Monthly Interest
Distributable Amount for such Distribution Date and the Certificateholders'
Interest Carryover Shortfall for such Distribution Date.
'CERTIFICATEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE AMOUNT' means, for any
Distribution Date, one month's interest (or, in the case of the first
Distribution Date, interest accrued from and including the Closing Date to but
excluding such Distribution Date) at the Certificate Rate on the Certificate
Balance on the immediately preceding Distribution Date (or, in the case of the
first Distribution Date, the Certificate Balance on the Closing Date), after
giving effect to all 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 actually deposited in the Certificate
Distribution Account on such
S-29
<PAGE>
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 Issuer 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, in either case, after
giving effect to any required distribution of the Noteholders' Principal
Distributable Amount to the Note Distribution Account.
'CONTRACT VALUE' of an Actuarial Receivable, as of any date of
determination, means the amount (excluding any Late Fees with respect to such
Actuarial Receivable) that would have been payable by the Obligor thereof if
such Obligor were to prepay such Actuarial Receivable in full as of such date.
'NOTEHOLDERS' DISTRIBUTABLE AMOUNT' means, for any Distribution Date, the
sum of the Noteholders' Principal Distributable Amount and the Noteholders'
Interest Distributable Amount for all classes of Notes.
'NOTEHOLDERS' INTEREST CARRYOVER SHORTFALL' means, for any class of Notes,
(a) for the initial Distribution Date, zero, and (b) for any other Distribution
Date, the excess of (i) the Noteholders' Interest Distributable Amount for the
preceding Distribution Date for such class of Notes, over (ii) the amount in
respect of interest actually deposited in the Note Distribution Account on such
preceding Distribution Date, plus interest on the amount of interest due but not
paid to Noteholders of such class on the preceding Distribution Date, to the
extent permitted by law, at the applicable Interest Rate borne by such class of
the Notes for the related Interest Accrual Period.
'NOTEHOLDERS' INTEREST DISTRIBUTABLE AMOUNT' means, for any Distribution
Date for any class of Notes, the sum of (x) the Noteholders' Monthly Interest
Distributable Amount for such class of Notes for such Distribution Date and (y)
the Noteholders' Interest Carryover Shortfall for such class of Notes for such
Distribution Date.
'NOTEHOLDERS' MONTHLY INTEREST DISTRIBUTABLE AMOUNT' means, for any
Distribution Date, in the case of each class of Notes, interest accrued during
the related Interest Accrual Period at the related Interest Rate on the
outstanding principal balance of the Notes of such class on such Distribution
Date (or, in the case of the first Distribution Date, on the Closing Date).
'NOTEHOLDERS' MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT' means, for any
Distribution Date, prior to the Distribution Date on which the Notes have been
paid in full, 100% of the Principal Distribution Amount, and for the
Distribution Date on which the Notes are paid in full, the portion of the
Principal Distribution Amount required to pay the Notes in full.
'NOTEHOLDERS' PRINCIPAL CARRYOVER SHORTFALL' means, for any Distribution
Date, the excess of (x) the Noteholders' Principal Distributable Amount for the
preceding Distribution Date over (y) the amount in respect of principal actually
deposited in the Note Distribution Account on such Distribution Date.
'NOTEHOLDERS' PRINCIPAL DISTRIBUTABLE AMOUNT' means, for any Distribution
Date, the sum of (i) the Noteholders' Monthly Principal Distributable Amount for
such Distribution Date and (ii) the Noteholders' Principal Carryover Shortfall
for such Distribution Date; provided, that the Noteholders' Principal
Distributable Amount shall not exceed the outstanding principal balance of the
Notes. In addition, on the Note Final Scheduled Distribution Date of each class
of Notes, the principal required to be deposited in the Note Distribution
Account will include the amount necessary (after giving effect to other amounts
to be deposited in the Note Distribution Account on such Distribution Date and
allocable to principal) to reduce the outstanding principal balance of the
related class of Notes to zero.
'PRINCIPAL BALANCE' of a Receivable, as of any date of determination, means
(i) with respect to a Simple Interest Receivable, the amount financed thereunder
minus that portion of all payments received on or prior to
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such date allocable to principal and (ii) with respect to an Actuarial
Receivable, the Adjusted Contract Value thereof on such date.
The 'PRINCIPAL DISTRIBUTION AMOUNT' means, for any Distribution Date, the
sum of the following amounts, without duplication, for such Distribution Date:
(i) Available Principal and (ii) Aggregate Net Losses.
'SCHEDULED INTEREST PAYMENT' on any Actuarial Receivable means, for any
Collection Period, the sum of (i) the Carryover Scheduled Interest Payment, if
any, on such Actuarial Receivable for the immediately preceding Collection
Period and (ii) that portion of the payment scheduled to be made by the Obligor
during the Collection Period immediately following such Collection Period on
such Actuarial Receivable that is allocable to interest using the actuarial
method.
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 in respect of their Certificates until the Notes have
been paid in full.
SUBORDINATION OF CERTIFICATEHOLDERS; RESERVE ACCOUNT
The rights of the Certificateholders to receive distributions with respect
to the Receivables generally will be subordinated to the rights of the
Noteholders in the event of defaults and delinquencies on the Receivables as
provided in the Sale and Servicing Agreement. The protection afforded to the
Noteholders through subordination will be effected both by the preferential
right of the Noteholders to receive current distributions with respect to the
Receivables and by the establishment of the Reserve Account. The Reserve Account
will be funded with an initial deposit by the Seller of cash or Permitted
Investments having an aggregate 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 Total Distribution Amount remaining
after the payment of the Servicing Fee, the Administration Fee, 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 to the Seller.
Under the Sale and Servicing Agreement, on each Deposit Date, the Indenture
Trustee is required to demand a withdrawal from the amounts on deposit in the
Reserve Account, up to the Available Reserve Account Amount, in an amount equal
to the excess, if any, of the sum of the Noteholders' Distributable Amount and
the Certificateholders' Distributable Amount for the related Distribution Date
over the Total Distribution Amount for such Distribution Date (after the payment
of the Servicing Fee and the Administration Fee for such Distribution Date).
Amounts so withdrawn will be deposited in the Collection Account.
On each Distribution Date, the amount available in the Reserve Account (the
'AVAILABLE RESERVE ACCOUNT AMOUNT') will equal the lesser of (i) the amount on
deposit in the Reserve Account and (ii) the Specified Reserve Account Balance.
The aggregate amount withdrawn from the Reserve 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
3.00% of the Pool Balance as of the related Settlement Date, but in any event
will not be less than the lesser of (i) $8,148,031.07 (0.75% of the Original
Pool Balance) and (ii) such Pool Balance; provided, that the Specified Reserve
Account Balance will be calculated using a percentage of 6.00% on any
Distribution Date (beginning with the July 1998 Distribution Date) for which the
Average Net Loss Ratio exceeds 1.75% or the Average Delinquency Percentage
exceeds 1.75%.
'AGGREGATE NET LOSSES' means, for any Distribution Date, the amount equal
to (i) the aggregate Principal Balance of all Receivables that became Defaulted
Receivables during the related Collection Period minus (ii) the Liquidation
Proceeds allocable to principal collected during such Collection Period with
respect to any Defaulted 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.
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'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 Defaulted Receivables, relating
to Financed Vehicles that have been repossessed), as of the close of business on
the last day of the Collection Period immediately preceding such Distribution
Date, determined in accordance with the Servicer's normal practices, such sum
expressed as a percentage of the Pool Balance as of the close of business on the
last day of such Collection Period.
'LIQUIDATION PROCEEDS' means with respect to any Receivable, (i) insurance
proceeds, (ii) the monies collected during a Collection Period from whatever
source on a Defaulted Receivable and (iii) proceeds of a Financed Vehicle sold
after repossession, in each case, net of any liquidation expenses and payments
required by law to be remitted to the Obligor.
'NET LOSS RATIO' means, for any Distribution Date, an amount expressed as a
percentage, equal to (i) the Aggregate Net Losses for such Distribution Date,
divided by (ii) the average of the Pool Balances on each of the related
Settlement Date and the last day of the related Collection Period.
The Specified Reserve Account Balance may be reduced to a lesser amount as
determined by the Seller; provided, that such reduction may not adversely affect
any rating of the Securities by a Rating Agency. Upon distribution to the Seller
of amounts from the Reserve Account, the Securityholders will not have any
rights in, or claims to, such amounts.
The subordination of the Certificates and the Reserve Account 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. In addition, the Reserve Account is intended
to enhance the likelihood of receipt by Certificateholders of the full amount of
principal and interest due them and to decrease the likelihood that the
Certificateholders will experience losses. However, in certain circumstances,
the Reserve Account could be depleted. If the amount required to be withdrawn
from the Reserve Account to cover shortfalls in collections on the Receivables
exceeds the amount of available cash in the Reserve Account, Noteholders or
Certificateholders could incur losses or a temporary shortfall in the amounts
distributed to the Noteholders or the Certificateholders could result, which
could, in turn, increase the average life of the Notes or the Certificates. Such
shortfalls may result from, among other things, Aggregate Net Losses on the
Receivables or the failure by the Servicer to make any remittance under the Sale
and Servicing Agreement.
ADMINISTRATION AGREEMENT
Chase, as the Administrator, will enter into the Administration Agreement
with the Trust and the Indenture Trustee pursuant to which the Administrator
will agree to provide the notices and to perform on behalf of the Trust certain
other administrative functions. As compensation for the performance of the
Administrator's obligations under the Administration Agreement, the
Administrator will be entitled to receive the Administration 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. Chase USA will enter into a
side agreement with the Administrator pursuant to which Chase USA will agree to
perform certain of the duties of the Administrator set forth in the
Administration Agreement and to reimburse and indemnify the Administrator for
all expenses or liabilities the Administrator may incur as a result of its
entering into the Administration Agreement.
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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.
federal 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. 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 Seller
('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 possible
effects of the classification of the Trust as a partnership for U.S. federal
income tax purposes for investors generally and related 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, 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.
For purposes of the following discussion, except as otherwise provided
herein, the terms 'NOTEHOLDER' and 'CERTIFICATEHOLDER' refer, respectively, to
the beneficial owner of a Note or Certificate. In addition, the discussion below
assumes that Noteholders and Certificateholders will hold their Notes and
Certificates as 'capital assets' within the meaning of Section 1221 of the Code.
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, based in part upon a
representation of the Seller, that the nature of the Trust's income exempts it
from the rule that certain publicly traded partnerships are taxable as
corporations.
The Seller 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 Seller, and the Notes being
debt of the partnership. However, the proper characterization of the arrangement
involving the Trust, the Certificateholders, the Noteholders and the Seller is
not clear.
A variety of alternative characterizations are possible. For example,
because the Certificates have certain features characteristic of debt, the
Certificates might be considered debt of the Seller 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
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below under the caption 'Tax Consequences to Certificateholders.' The following
discussion assumes that, for U.S. federal income tax purposes, (i) the Trust is
properly classified as a partnership (other than a publicly traded partnership),
(ii) the Notes will be treated as debt of this partnership and (iii) the
Certificates 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. It is anticipated that the Notes will be
sold for an amount equal to their stated principal amount or at de minimis
discount from such stated principal amount and, consequently, 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 gain attributable to 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 stated 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 (except to the extent that such amount realized is
attributable to accrued, unpaid interest which will be taxable as such) 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 or partnership organized in or under the laws of the
United States or any political subdivision thereof, (iii) an estate, the income
of which is includible in gross income for 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 court within the United
States and one or more U.S. persons 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 the Seller, (ii) is not a 'controlled foreign corporation'
with respect to which the Trust or the 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 generally will be
required with respect to any gain realized by a Foreign Investor upon the
sale, exchange or retirement of a Note provided that, in the case of any
gain representing accrued interest, the conditions described in (a) above
are satisfied.
To satisfy the requirement referred to in (a)(iii) above, the beneficial
owner of such Note, or a financial institution holding the Note on behalf of
such owner, must provide, in accordance with specified procedures, the
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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. Under recently finalized
Treasury regulations (the 'FINAL REGULATIONS'), the statement requirement
referred to in (a)(iii) above may also be satisfied with other documentary
evidence for interest paid after December 31, 1999, with respect to an offshore
account or through certain foreign intermediaries.
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.
Under the Final Regulations, Foreign Investors generally will be required to
provide an IRS Form W-8 in lieu of an IRS Form 1001 or an IRS Form 4224,
although alternative documentation may be applicable in certain situations.
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 or (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.
Special rules may apply to certain Foreign Investors, such as 'controlled
foreign corporations', 'passive foreign investment companies' and 'foreign
personal holding companies', that are subject to special treatment under the
Code. Such Foreign Investors should consult their own tax advisors to determine
the U.S. federal, state and local and other tax consequences that may be
relevant to their decision to purchase Notes.
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
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of a trade or business in the United States, or after December 31, 1999, if such
nominee, custodian, agent or broker is a foreign partnership, in which one or
more United States persons, in the aggregate, own more than 50% of the income or
capital interests in the partnership or if the partnership is engaged in 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.
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. Assuming that the Trust
is treated as a partnership for U.S. federal income tax purposes, the treatment
of the Notes as equity interests in the Trust could have adverse tax
consequences to 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 for U.S. federal income tax purposes, (i) the
Trust will be treated as a partnership (other than a publicly traded
partnership), (ii) the Notes will be treated as debt of this partnership and
(iii) the Certificates represent equity interests in such partnership.
Partnership Taxation. As a partnership, the Trust will not be subject to
U.S. federal income tax. Rather, each Certificateholder will be required
separately to 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 Late 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. 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 Seller. All deductions
and losses also will be allocated to the Seller.
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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 (and also under the rules applicable to the tax treatment of
guaranteed payments, which is the Trust's primary U.S. federal income tax
reporting position), Certificateholders will realize income equal to the entire
Certificate Rate 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. The Seller anticipates that the Receivables
transferred to the Trust will not have been issued with OID. In such case, 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 when such a constructive termination
occurs. Consequently, the Trust may be subject to certain tax penalties and may
incur additional expenses if it is required to comply with those requirements.
Disposition of Certificates. Generally, subject to a number of specific
exceptions, 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 tax
treatment or special reporting requirements. In order to avoid this tax
treatment and the resulting special tax reporting requirements related thereto,
the Trust will elect to include market discount in income as it accrues.
S-37
<PAGE>
If a Certificateholder is required to recognize an aggregate amount of
income 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.
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 Certificateholder'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.
The Seller 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
S-38
<PAGE>
returns and, consequently, to adjustments of items not related to the
Certificateholder's allocable share of the income and losses of the Trust.
Tax Consequences to Foreign Certificateholders. Under the terms of the
Trust Agreement, the Certificates may not be acquired by or for the account of
an individual or entity that is not a U.S. person as defined in Section
7701(a)(30) of the Code, and any transfer of a Certificate to a person that is
not a U.S. person shall be void. Moreover, the Trust 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 above discussion does not address the tax treatment of the Trust, the
Notes, the Certificates, Noteholders or Certificateholders under any state tax
laws. Prospective investors are urged to consult with their own tax advisors
regarding the state tax treatment of the Trust as well as any state tax
consequences to them, particularly in the case of financial institutions, of
purchasing, holding and disposing of Notes or Certificates.
ERISA CONSIDERATIONS
THE NOTES
The Employee Retirement Income Security Act of 1974, as amended ('ERISA'),
and Section 4975 of the Code, impose certain requirements on employee benefit
plans and certain other plans and arrangements, including individual retirement
accounts and annuities, Keogh plans and certain collective investment funds or
insurance company general or separate accounts in which such plans, accounts or
arrangements are invested, that are subject to the fiduciary responsibility
provisions of ERISA and/or Section 4975 of the Code (collectively, 'PLANS'), and
on persons who are fiduciaries with respect to Plans, in connection with the
investment of 'plan assets' of any Plan ('PLAN ASSETS'). ERISA generally imposes
on Plan fiduciaries certain general fiduciary requirements, including those of
investment prudence and diversification and the requirement that a Plan's
investments be made in accordance with the documents governing the Plan.
Generally, any person who has discretionary authority or control respecting the
management or disposition of Plan Assets, and any person who provides investment
advice with respect to such assets for a fee, is a fiduciary with respect to
such Plan Assets.
Subject to the considerations described below, the Notes are eligible for
purchase with Plan Assets of any Plan.
Title I of 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 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 Seller, the Servicer, the Indenture Trustee, the
Owner Trustee, any Certificateholder or any other parties 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 the availability of any prohibited
transaction exemption, which may be available
S-39
<PAGE>
with respect to such purchase. Exemptions which may be available include U.S.
Department of Labor ('DOL') Prohibited Transaction Class 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 DOL Regulation Section 2510.3-101 (the 'PLAN ASSET
REGULATION'), the purchase with Plan Assets of equity interests in the Trust
could, in certain circumstances, cause the Receivables and other assets of the
Trust to be deemed Plan Assets of the investing Plan which, in turn, would
subject the Trust and its assets to the fiduciary responsibility provisions of
ERISA and the prohibited transaction provisions of ERISA and Section 4975 of the
Code. Nevertheless, because the Notes (a) should be treated as indebtedness
under local law and debt, rather than equity, for tax purposes (see 'Certain
Federal Income Tax 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
Seller, 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.
S-40
<PAGE>
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 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.
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 and refer to this Prospectus Supplement and the Prospectus for guidance
regarding the ERISA Considerations applicable to the Securities offered hereby.
For further information see 'ERISA Considerations' in the Prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting agreement
(the 'NOTE UNDERWRITING AGREEMENT'), the Seller has agreed to sell to the
underwriters named below (the 'NOTE UNDERWRITERS'), and each of the Note
Underwriters has severally agreed to purchase, the principal amount of 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 A-4 NOTES
- ----------------------------------- ------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Chase Securities Inc............... $ $ $ $
Credit Suisse First Boston
Corporation......................
Merrill Lynch, Pierce, Fenner &
Smith Incorporated...............
Salomon Brothers Inc...............
------------------ ------------------ ------------------ ------------------
Total......................... $ 250,000,000.00 $ 200,000,000.00 $ 321,000,000.00 $ 282,800,000.00
================= ================= ================= =================
</TABLE>
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 Seller has been advised
by the Note Underwriters that they propose initially to offer the Class A-1
Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes to the
public at the 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 A-4 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 A-4 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 Seller has 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
S-41
<PAGE>
Seller has 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.
The Indenture Trustee and the Owner Trustee (on behalf of the Trust) may,
from time to time, invest the funds in the Collection Account and the Reserve
Account in Permitted Investments acquired from any of the Underwriters.
Chase Securities Inc., on behalf of the Note Underwriters and as
Certificate Underwriter, 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 any of the Underwriters 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 Supplement and the Prospectus may be used by Chase
Securities Inc., an affiliate of the Seller 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. Chase Securities Inc. is among the Underwriters participating in the
initial distribution of the Securities.
The Seller 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 Seller by Simpson Thacher & Bartlett, New York, New York and
certain other legal matters will be passed upon for the Seller by David Kotkin,
Esq., a Vice President and Assistant General Counsel of Chase and Chase Auto
Finance, and for the Underwriters by Gibson, Dunn & Crutcher LLP, New York, New
York. From time to time Simpson Thacher & Bartlett and Gibson, Dunn & Crutcher
LLP provide legal services to the Seller and its affiliates.
S-42
<PAGE>
INDEX OF TERMS
<TABLE>
<CAPTION>
TERM PAGE
- ---------------------------------------------------------------------- --------
<S> <C>
ABS................................................................... S-18
ABS Table............................................................. S-18
Adjusted Contract Value............................................... S-28
Administration Agreement.............................................. S-6
Administration Fee.................................................... S-6
Administrator......................................................... S-6
Aggregate Net Losses.................................................. S-32
Available Interest.................................................... S-28
Available Principal................................................... S-28
Available Reserve Account Amount...................................... S-31
Average Delinquency Percentage........................................ S-31
Average Net Loss Ratio................................................ S-32
Bank.................................................................. S-1
Business Day.......................................................... S-3
Carryover Scheduled Interest Payment.................................. S-29
Cedel................................................................. i
Certificate Balance................................................... S-29
Certificate Final Scheduled Distribution Date......................... S-4
Certificate Rate...................................................... S-4
Certificate Underwriter............................................... S-41
Certificate Underwriting Agreement.................................... S-41
Certificateholder..................................................... S-33
Certificateholders.................................................... S-4
Certificateholders' Distributable Amount.............................. S-29
Certificateholders' Interest Carryover Shortfall...................... S-29
Certificateholders' Interest Distributable Amount..................... S-29
Certificateholders' Monthly Interest Distributable Amount............. S-29
Certificateholders' Monthly Principal Distributable Amount............ S-29
Certificateholders' Principal Carryover Shortfall..................... S-29
Certificateholders' Principal Distributable Amount.................... S-30
Certificates.......................................................... i
Chase USA............................................................. S-1
Class A-1 Notes....................................................... S-1
Class A-2 Notes....................................................... S-1
Class A-3 Notes....................................................... S-1
Class A-4 Notes....................................................... S-1
Closing Date.......................................................... i
Code.................................................................. S-33
Collection Account.................................................... S-6
Collection Period..................................................... S-6
Contract Rate......................................................... S-10
Contract Value........................................................ S-30
Cutoff Date........................................................... ii
Delinquency Percentage................................................ S-32
Direct Receivables.................................................... S-10
Disqualified Persons.................................................. S-39
Distribution Date..................................................... ii
DOL................................................................... S-40
DTC................................................................... i
ERISA................................................................. S-39
Euroclear............................................................. i
</TABLE>
S-43
<PAGE>
<TABLE>
<CAPTION>
TERM PAGE
- ---------------------------------------------------------------------- --------
<S> <C>
FDIC.................................................................. i
Federal Tax Counsel................................................... S-33
Final Regulations..................................................... S-35
Final Scheduled Distribution Date..................................... S-4
Final Scheduled Maturity Date......................................... S-2
Financed Vehicles..................................................... S-2
Foreign Investor...................................................... S-34
General Account Regulations........................................... S-40
Global Certificates................................................... S-A-1
Global Notes.......................................................... S-A-1
Global Securities..................................................... S-A-1
Indenture............................................................. S-1
Indenture Trustee..................................................... S-1
Interest Accrual Period............................................... S-3
Interest Rate......................................................... S-3
IRS................................................................... S-33
Issuer................................................................ S-1
Late Fees............................................................. S-27
Liquidation Proceeds.................................................. S-32
Net Loss Ratio........................................................ S-32
Note Final Scheduled Distribution Date................................ S-4
Note Underwriters..................................................... S-41
Note Underwriting Agreement........................................... S-41
Noteholder............................................................ S-33
Noteholders........................................................... S-3
Noteholders' Distributable Amount..................................... S-30
Noteholders' Interest Carryover Shortfall............................. S-30
Noteholders' Interest Distributable Amount............................ S-30
Noteholders' Monthly Interest Distributable Amount.................... S-30
Noteholders' Monthly Principal Distributable Amount................... S-30
Noteholders' Principal Carryover Shortfall............................ S-30
Noteholders' Principal Distributable Amount........................... S-30
Notes................................................................. i, S-1
Original Pool Balance................................................. S-3
Owner Trustee......................................................... S-1
Parties in Interest................................................... S-39
Paying Agent.......................................................... S-26
Plan Asset Regulation................................................. S-40
Plan Assets........................................................... S-39
Plans................................................................. S-39
Pool Balance.......................................................... S-2
Principal Balance..................................................... S-30
Principal Distribution Amount......................................... S-31
Rating Agency......................................................... S-7
Receivables........................................................... ii
Receivables Pool...................................................... S-9
Record Date........................................................... S-3
Reserve Account....................................................... S-5
Reserve Account Initial Deposit....................................... S-5
Sale and Servicing Agreement.......................................... S-2
Saturn................................................................ S-17
Saturn Receivables.................................................... S-17
Scheduled Interest Payment............................................ S-31
</TABLE>
S-44
<PAGE>
<TABLE>
<CAPTION>
TERM PAGE
- ---------------------------------------------------------------------- --------
<S> <C>
Securities............................................................ i
Securityholders....................................................... S-4
Seller................................................................ i, S-1
Servicer.............................................................. ii, S-1
Servicing Fee......................................................... S-27
Servicing Fee Rate.................................................... S-27
Settlement Date....................................................... S-6
Specified Reserve Account Balance..................................... S-5
Total Distribution Amount............................................. S-28
Transfer and Servicing Agreements..................................... S-26
Trust................................................................. i, S-1
Trust Account......................................................... S-26
Trust Agreement....................................................... S-1
Underwriters.......................................................... S-41
Underwriting Agreements............................................... S-41
U.S................................................................... S-33
</TABLE>
S-45
<PAGE>
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<PAGE>
ANNEX A
GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Chase
Manhattan Auto Trust 1998-B Class A-1 % Asset Backed Notes, Class A-2
% Asset Backed Notes, Class A-3 % Asset Backed Notes and Class A-4
% Asset Backed Notes (collectively, 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 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.
S-A-2
<PAGE>
Finally, day traders that use Cedel or Euroclear and that purchase Global
Notes from DTC Participants for delivery to Cedel Participants or Euroclear
Participants should note that these trades would automatically fail on the sale
side unless affirmative action were taken. At least three techniques should be
readily available to eliminate this potential problem:
(a) borrowing through Cedel or Euroclear for one day (until the
purchase side of the day trade is reflected in their Cedel or Euroclear
accounts) in accordance with the clearing system's custom procedures;
(b) borrowing the Global Notes in the U.S. from a DTC Participant no
later than one day prior to settlement, which would give the Global Notes
sufficient time to be reflected in their Cedel or Euroclear account in
order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the trade
so that the value date for the purchase from the DTC Participant is at
least one day prior to the value date for the sale to the Cedel Participant
or Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
GLOBAL NOTES
A beneficial owner of Global Notes holding securities through Cedel or
Euroclear (or through DTC if the holder has an address outside the U.S.) will be
subject to the 30% U.S. withholding tax that generally applies to payments of
interest (including original issue discount) on registered debt issued by U.S.
Persons, unless (i) each clearing system, bank or other financial institution
that holds customers' securities in the ordinary course of its trade or business
in the chain of intermediaries between such beneficial owner and the U.S. entity
required to withhold tax complies with applicable certification requirements and
(ii) such beneficial owner takes one of the following steps to obtain an
exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of the
Global 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
Global 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
S-A-3
<PAGE>
clearing agency). Form W-8 and Form 1001 are effective for three calendar
years and Form 4224 is effective for one calendar year.
The term 'U.S. Person' means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States or any political subdivision thereof, (iii) an estate the income
of which is includible in gross income for United States tax purposes regardless
of its source or (iv) a trust if a court within the United States is able to
exercise primary supervision over the administration of such trust and one or
more United States persons 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>
PROSPECTUS
CHASE MANHATTAN AUTO TRUSTS
ASSET BACKED NOTES
ASSET BACKED CERTIFICATES
AUTOMOBILE LOAN PASS-THROUGH CERTIFICATES
CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION
SELLER AND SERVICER
-----------------------------------------------------------
The Asset Backed Notes (the 'NOTES') and the Asset Backed Certificates and the
Automobile Loan Pass-Through Certificates (collectively, the 'CERTIFICATES' and,
together with the Notes, the 'SECURITIES') described herein may be sold from
time to time in one or more series, in amounts, at prices and on terms to be
determined at the time of sale and to be set forth in a supplement to this
Prospectus (a 'PROSPECTUS SUPPLEMENT'). Each series of Securities, which may
include one or more classes of Notes and/or one or more classes of Certificates,
will be issued by a trust to be formed on or before the issuance date for that
series (each, a 'TRUST'). Each Trust will be formed pursuant to either a Trust
Agreement to be entered into among Chase Manhattan Bank USA, National
Association ('CHASE USA'), a national banking association headquartered in
Delaware (in such capacity, the 'SELLER'), and the owner trustee specified in
the related Prospectus Supplement or a Pooling and Servicing Agreement to be
entered into among the trustee specified in the related Prospectus Supplement,
the Seller and Chase USA, as Servicer (in such capacity, the 'SERVICER'). If a
series of Securities includes Notes, such Notes will be issued and secured
pursuant to an Indenture between the related Trust and the indenture trustee
specified in the related Prospectus Supplement and will represent indebtedness
of the related Trust. The Certificates of a series will represent fractional
undivided interests in the related Trust. The related Prospectus Supplement will
specify which class or classes of Notes, if any, and which class or classes of
Certificates, if any, of the related series are being offered thereby.
The property of each Trust will include a pool of retail installment sales
contracts and purchase money notes or other notes secured by new or used
automobiles or light-duty trucks, certain monies due or received thereunder on
and after the applicable Cutoff Date set forth in the related Prospectus
Supplement, security interests in the vehicles financed thereby, proceeds from
claims on certain insurance policies and certain other property, all as
described herein and in the related Prospectus Supplement. In addition, if so
specified in the related Prospectus Supplement, the property of a Trust will
include monies on deposit in a trust account (the 'PRE-FUNDING ACCOUNT') which
will be used to purchase additional retail installment sales contracts and
purchase money loans and related property from the Seller from time to time
during the period (the 'FUNDING PERIOD') specified in the related Prospectus
Supplement.
Except as otherwise provided in the related Prospectus Supplement, each class of
Securities of any series will represent the right to receive a specified amount
of payments of principal and interest on the related Receivables, at the rates,
on the dates and in the manner described herein and in the related Prospectus
Supplement. If a series includes multiple classes of securities, the rights of
one or more classes of Securities to receive payments may be senior or
subordinate to the rights of one or more of the other classes of such series to
the extent described herein
(continued on the following page)
------------------------------------------------------
ANY NOTES OF A SERIES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES OF A SERIES
REPRESENT BENEFICIAL INTERESTS IN, THE RELATED TRUST ONLY AND DO NOT REPRESENT
OBLIGATIONS OF OR INTERESTS IN THE CHASE MANHATTAN BANK, CHASE MANHATTAN BANK
USA, NATIONAL ASSOCIATION OR ANY AFFILIATE THEREOF. NO NOTE OR CERTIFICATE OF
ANY SERIES IS A DEPOSIT AND NO SUCH NOTE OR CERTIFICATE 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' IN THIS PROSPECTUS COMMENCING ON PAGE 13
HEREIN AND SET FORTH UNDER THE HEADING 'RISK FACTORS' IN THE RELATED PROSPECTUS
SUPPLEMENT.
Retain this Prospectus for future reference. This Prospectus may not be used to
consummate sales of securities offered hereby unless accompanied by a Prospectus
Supplement.
THE DATE OF THIS PROSPECTUS IS FEBRUARY 6, 1998.
<PAGE>
(continued from previous page)
and in the related Prospectus Supplement. Distributions on Certificates of a
class may be subordinated to distributions to be made on Certificates of a
different class of the same series or to payments due on any related Notes to
the extent described herein and in the related Prospectus Supplement. A series
may include one or more classes of Notes and/or Certificates which differ as to
the timing and priority of payment, interest rate or amount of distributions in
respect of principal or interest or both. A series may include one or more
classes of Notes and/or Certificates entitled to distributions in respect of
principal with disproportionate, nominal or no interest distributions, or to
interest distributions, with disproportionate, nominal or no distribution in
respect of principal. The rate of payment in respect of principal of any class
of Notes and distributions in respect of the Certificate Balance (as defined
herein) of any class of Certificates will depend on the priority of payment of
such class and the rate and timing of payments (including prepayments, defaults,
liquidations and repurchases of Receivables) on the related Receivables. A rate
of payment lower than that anticipated may affect the weighted average life of
each class of Securities in the manner described herein and in the related
Prospectus Supplement.
Each series or classes of Securities offered hereby will be rated in one of
the four highest rating categories by at least one nationally recognized
statistical rating organization.
AVAILABLE INFORMATION
Chase USA has filed with the Securities and Exchange Commission (the
'COMMISSION') a Registration Statement (together with all amendments and
exhibits thereto, referred to herein as the 'REGISTRATION STATEMENT') under the
Securities Act of 1933, as amended (the 'SECURITIES ACT'), with respect to the
Notes and the Certificates offered pursuant to this Prospectus. For further
information, reference is made to the Registration Statement and any reports and
other documents incorporated herein by reference as described below under
'Incorporation of Certain Documents by Reference,' which may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549; and at the Commission's regional
offices at Citicorp 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 Servicer, on behalf of each Trust, will also 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 Seller may be viewed. The Internet address of
such World Wide Web site is http://www.sec.gov.
REPORTS TO SECURITYHOLDERS
Unless otherwise provided in the related Prospectus Supplement, unless and
until Definitive Securities are issued, unaudited monthly and annual reports
containing information concerning each Trust and prepared by the Servicer will
be sent on behalf of each Trust only to Cede & Co. ('CEDE'), as the nominee of
The Depository Trust Company ('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. The Seller does not intend 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 by the Servicer with the Commission, on behalf of each
Trust, 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 in
this Prospectus
2
<PAGE>
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 which also is
or is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Chase Manhattan Bank, an affiliate of 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 or in any related Prospectus Supplement 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: Investor Relations.
Telephone requests for such copies should be directed to the Servicer at (212)
270-6000.
3
<PAGE>
TABLE OF CONTENTS
<TABLE>
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<S> <C>
SUMMARY OF PROSPECTUS................................................... 6
RISK FACTORS............................................................ 13
Certain Legal Aspects................................................. 13
Trust's Relationship to the Seller, the Servicer and their
Affiliates......................................................... 14
Subordination......................................................... 14
Limited Assets........................................................ 14
Maturity and Prepayment Considerations................................ 15
Risk of Commingling................................................... 15
Risks Associated with Subsequent Receivables and the Pre-Funding
Account............................................................ 15
Rights of Noteholders and Certificateholders.......................... 16
THE TRUSTS.............................................................. 16
THE RECEIVABLES POOLS................................................... 17
General............................................................... 17
Delinquency and Loan Loss Information................................. 19
Origination and Servicing of Motor Vehicle Loans...................... 20
Underwriting of Motor Vehicle Loans................................... 21
Insurance and Collection Procedures................................... 22
WEIGHTED AVERAGE LIFE OF THE SECURITIES................................. 23
POOL FACTORS AND TRADING INFORMATION.................................... 25
USE OF PROCEEDS......................................................... 25
CHASE USA............................................................... 26
DESCRIPTION OF THE NOTES................................................ 26
General............................................................... 26
Principal and Interest on the Notes................................... 26
The Indenture......................................................... 27
Certain Covenants..................................................... 29
The Indenture Trustee................................................. 30
DESCRIPTION OF THE CERTIFICATES......................................... 31
General............................................................... 31
Distributions of Principal and Interest............................... 31
The Trustee........................................................... 31
CERTAIN INFORMATION REGARDING THE SECURITIES............................ 32
Fixed Rate Securities................................................. 32
Floating Rate Securities.............................................. 32
Indexed Securities.................................................... 33
Book-Entry Registration............................................... 33
Definitive Securities................................................. 36
List of Securityholders............................................... 37
Reports to Securityholders............................................ 37
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS.................... 39
Sale and Assignment of Receivables.................................... 39
Accounts.............................................................. 40
Servicing Procedures.................................................. 42
Collections........................................................... 42
Servicing Compensation and Payment of Expenses........................ 43
Advances.............................................................. 43
</TABLE>
4
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<TABLE>
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<S> <C>
Distributions......................................................... 43
Credit and Cash Flow Enhancement...................................... 44
Net Deposits.......................................................... 45
Statements to Trustees and Trust...................................... 45
Evidence as to Compliance............................................. 46
Certain Matters Regarding the Servicer................................ 46
Events of Servicing Termination....................................... 47
Rights Upon Event of Servicing Termination............................ 48
Waiver of Past Defaults............................................... 48
Amendment............................................................. 49
Payment of Notes...................................................... 49
Termination........................................................... 49
Administration Agreement.............................................. 50
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES................................ 51
General............................................................... 51
Security Interests in the Financed Vehicles........................... 51
Enforcement of Security Interests in Vehicles......................... 52
Other Matters......................................................... 53
Repurchase Obligation................................................. 53
ERISA CONSIDERATIONS.................................................... 53
PLAN OF DISTRIBUTION.................................................... 54
RATINGS................................................................. 55
LEGAL MATTERS........................................................... 55
INDEX OF TERMS.......................................................... 56
</TABLE>
5
<PAGE>
SUMMARY OF PROSPECTUS
The following Summary of Prospectus is qualified in its entirety by
reference to the detailed information appearing elsewhere in this Prospectus and
by reference to the information with respect to the Securities of any series
contained in the related Prospectus Supplement to be prepared and delivered in
connection with the offering of such Securities. Certain capitalized terms used
in this summary are defined elsewhere in this Prospectus on the pages indicated
in the 'Index of Terms.'
<TABLE>
<S> <C>
ISSUER................... The issuer (the 'ISSUER') with respect to each series
of Securities, shall be the Trust to be formed
pursuant to either a Trust Agreement (as amended and
supplemented from time to time, a 'TRUST AGREEMENT')
between the Owner Trustee for such Trust and the
Seller, or a Pooling and Servicing Agreement (as
amended and supplemented from time to time, the
'POOLING AND SERVICING AGREEMENT') among the Trustee
for such Trust, the Seller and the Servicer.
CHASE AUTO FINANCE....... Chase Manhattan Bank USA, National Association, a
national banking association headquartered in Delaware
which is a wholly-owned subsidiary of The Chase
Manhattan Corporation (the 'CORPORATION'), together
with its affiliates, is engaged in the automotive
financing and automotive loan servicing business. In
July 1996, The Chase Manhattan Bank, N.A. ('CHASE
N.A.') and Chemical Bank, both wholly-owned
subsidiaries of the Corporation, merged (the
'MERGER'), with Chemical Bank continuing as the
surviving corporation under the name 'The Chase
Manhattan Bank' ('CHASE').
As used in this Prospectus and in any Prospectus
Supplement, the term 'CHASE AUTO FINANCE' will be
deemed to refer to the automotive financing and
automotive loan servicing business of Chase, its
predecessors and its affiliates, and such term will
not include (unless otherwise specified) the
automotive financing and automotive loan servicing
business of Chemical Bank prior to the Merger.
SELLER................... Chase USA (in such capacity, the 'SELLER' or the
'BANK'). See 'Chase USA' herein.
SERVICER................. Chase USA (in such capacity, the 'SERVICER').
TRUSTEE.................. The entity named as 'TRUSTEE' in the related
Prospectus Supplement, which shall include the 'OWNER
TRUSTEE' with respect to any Certificates issued
pursuant to a Trust Agreement and the 'TRUSTEE' with
respect to any Certificates issued pursuant to a
Pooling and Servicing Agreement.
INDENTURE TRUSTEE........ With respect to Notes issued by a Trust pursuant to an
Indenture, the entity named as 'INDENTURE TRUSTEE' in
the related Prospectus Supplement.
DENOMINATIONS............ Each class of Securities of a series will be issued in
the minimum denominations set forth in the related
Prospectus Supplement. Each Security will represent a
percentage interest (a 'PERCENTAGE INTEREST') in the
Securities of the related class determined by dividing
the original dollar amount (or notional principal
amount, in the case of Securities entitled to interest
only and assigned a notional principal amount)
represented by such Security by the original aggregate
principal balance of such class (or original aggregate
Notional Principal Amount, if applicable).
REGISTRATION OF
SECURITIES............... Each or any class of Securities of a series may be
issued in definitive form or may initially be
represented by one or more certificates ('BOOK-ENTRY
SECURITIES') registered in the name of Cede, the
nominee of DTC, and available
</TABLE>
6
<PAGE>
<TABLE>
<S> <C>
only in the form of book-entries on the records of
DTC, participating members thereof ('PARTICIPANTS')
and other entities, such as banks, brokers, dealers
and trust companies, that clear through or maintain
custodial relationships with a Participant, either
directly or indirectly ('INDIRECT PARTICIPANTS').
Securities representing Book-Entry Securities will be
issued in definitive form only under the limited
circumstances described herein and in the related
Prospectus Supplement. With respect to the Book-Entry
Securities, all references herein to 'HOLDERS' or
'SECURITYHOLDERS' shall reflect the rights of owners
of the Book-Entry Securities as they may indirectly
exercise such rights through DTC and Participants
(including Cedel and Euroclear), except as otherwise
specified herein. See 'Certain Information Regarding
the Securities--Book-Entry Registration' and
'--Definitive Securities' herein.
THE NOTES................ A series of Securities may include one or more classes
of Notes, which will be issued pursuant to an
Indenture between the related Trust and the Indenture
Trustee (as amended and supplemented from time to
time, an 'INDENTURE'). The related Prospectus
Supplement will specify which class or classes, if
any, of Notes of the related series are being offered
thereby.
Unless otherwise specified in the related Prospectus
Supplement, each class of Notes will have a stated
principal amount and will bear interest at a specified
rate or rates (with respect to each class of Notes,
the 'INTEREST RATE'). Each class of Notes may have a
different Interest Rate, which may be a fixed,
variable or adjustable Interest Rate, or any
combination of the foregoing. The related Prospectus
Supplement will specify the Interest Rate for each
class of Notes, or the method for determining the
Interest Rate.
With respect to a series that includes two or more
classes of Notes, each class may differ as to the
timing and priority of payments, seniority, Interest
Rate or amount of payments of principal or interest,
and payments of principal or interest in respect of
any such class or classes may or may not be made upon
the occurrence of specified events or on the basis of
collections from designated portions of the related
Receivables Pool.
In addition, a series may include one or more classes
of Notes ('STRIP NOTES') entitled to (i) principal
payments with disproportionate, nominal or no interest
payments or (ii) interest payments with
disproportionate, nominal or no principal payments.
If the Servicer exercises its option to purchase the
Receivables of a Trust (or, if not, and to the extent
provided in the related Prospectus Supplement, if
satisfactory bids for the purchase of such Receivables
are received), in the manner and on the respective
terms and conditions described herein under
'Description of the Transfer and Servicing
Agreements--Termination,' the outstanding Notes will
be redeemed as set forth in the related Prospectus
Supplement. In addition, if the related Prospectus
Supplement provides that the property of a Trust will
include a Pre-Funding Account, one or more classes of
the outstanding Notes will be subject to partial
redemption on or immediately following the end of the
related Funding Period in an amount and manner
specified in the related Prospectus Supplement. In the
event of such partial redemption, the Noteholders may
be entitled to receive a prepayment premium from the
related Trust, in the amount and to the extent
provided in the related Prospectus Supplement.
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THE CERTIFICATES......... A series of Securities may include one or more classes
of Certificates. The related Prospectus Supplement
will specify which class or classes, if any, of the
Certificates are being offered thereby.
Unless otherwise specified in the related Prospectus
Supplement, each class of Certificates will have a
stated Certificate Balance specified in the related
Prospectus Supplement (the 'CERTIFICATE BALANCE') and
will accrue interest on such Certificate Balance at a
specified rate (with respect to each class of
Certificates, the 'PASS THROUGH RATE'). Each class of
Certificates may have a different Pass Through Rate,
which may be a fixed, variable or adjustable Pass
Through Rate, or any combination of the foregoing. The
related Prospectus Supplement will specify the Pass
Through Rate for each class of Certificates or the
method for determining the Pass Through Rate.
With respect to a series that includes two or more
classes of Certificates, each class may differ as to
timing and priority of distributions, seniority,
allocations or losses, Pass Through Rate or amount of
distributions in respect of principal or interest and
distributions in respect of principal or interest in
respect of any such class or classes may or may not be
made upon the occurrence of specified events or on the
basis of collections from designated portions of the
Receivables Pool.
In addition, a series may include one or more classes
of Certificates ('STRIP CERTIFICATES') entitled to (i)
distributions in respect of principal with
disproportionate, nominal or no interest distributions
or (ii) interest distributions with disproportionate,
nominal or no distributions in respect of principal.
If a series of Securities includes classes of Notes
and Certificates, distributions in respect of the
Certificates may be subordinated to distributions to
be made on Certificates of a different class of the
same series or to payments due on any related Notes to
the extent specified in the related Prospectus
Supplement.
If the Servicer exercises its option to purchase the
Receivables of a Trust (or, if not, and to the extent
provided in the related Prospectus Supplement, if
satisfactory bids for the purchase of such Receivables
are received), in the manner and on the respective
terms and conditions described herein under
'Description of the Transfer and Servicing
Agreements--Termination,' Certificateholders will
receive as a prepayment an amount in respect of the
Certificates as specified in the related Prospectus
Supplement. In addition, if the related Prospectus
Supplement provides that the property of a Trust will
include a Pre-Funding Account, Certificateholders may
receive a partial prepayment of principal on or
immediately following the end of the related Funding
Period in an amount and manner specified in the
related Prospectus Supplement. In the event of such
partial prepayment, the Certificateholders may be
entitled to receive a prepayment premium from the
related Trust, in the amount and to the extent
provided in the related Prospectus Supplement.
The Securities of a series may include one or more
classes of Certificates and/or one or more classes of
Notes.
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THE TRUST PROPERTY....... The property of each Trust will include a pool of
Motor Vehicle Loans, including rights to receive
certain monies due or received thereunder on or after
the related Cutoff Date, security interests in the
vehicles financed thereby (the 'FINANCED VEHICLES'),
amounts on deposit in certain accounts and the
proceeds thereof and any proceeds from claims on
certain related insurance policies, as described
herein and in the related Prospectus Supplement. On or
before the Closing Date specified in the related
Prospectus Supplement with respect to a Trust, the
Seller will, if so specified in such Prospectus
Supplement, sell or transfer Motor Vehicle Loans (the
'INITIAL RECEIVABLES') having an aggregate principal
balance specified in the related Prospectus Supplement
as of the date specified therein to such Trust
pursuant to either a Sale and Servicing Agreement
among the Seller, the Servicer and such Trust (as
amended and supplemented from time to time, the 'SALE
AND SERVICING AGREEMENT') or the related Pooling and
Servicing Agreement. The property of each Trust will
also include amounts on deposit in certain trust
accounts, including any Collection Account, Cash
Collateral Account, Pre-Funding Account, Reserve
Account, Yield Supplement Account, Paid-Ahead Account
and any other account identified in the related
Prospectus Supplement.
To the extent provided in the related Prospectus
Supplement, from time to time during the funding
period specified in the related Prospectus Supplement
(the 'FUNDING PERIOD'), the Seller will be obligated
(subject only to the availability thereof) to sell,
and the related Trust will be obligated to purchase
(subject to the satisfaction of certain conditions
described in the applicable Sale and Servicing
Agreement or Pooling and Servicing Agreement),
additional Motor Vehicle Loans (the 'SUBSEQUENT
RECEIVABLES') and the related property having an
aggregate principal balance approximately equal to the
amount (the 'PRE-FUNDING AMOUNT') on deposit in the
related Pre-Funding Account on the related Closing
Date.
The Receivables to be held by each Trust will be
selected from the Motor Vehicle Loans owned or to be
owned by the Seller based on the criteria set forth in
the related Sale and Servicing Agreement or Pooling
and Servicing Agreement, as applicable, and described
herein and in the related Prospectus Supplement.
CREDIT AND CASH FLOW
ENHANCEMENT.............. If and to the extent specified in the related
Prospectus Supplement, credit enhancement with respect
to a Trust or any class or classes of Securities may
include any one or more of the following:
subordination of one or more other classes of
Securities, a Cash Collateral Guaranty secured by a
Cash Collateral Account, a Reserve Account, Yield
Supplement Agreements or Accounts, over-
collateralization, letters of credit, credit or
liquidity facilities, surety bonds, guaranteed
investment contracts, swaps or other interest rate
protection agreements, repurchase obligations, other
agreements with respect to third party payments or
other support, cash deposits or other arrangements.
The amount of any credit enhancement may be limited or
have exclusions from coverage and may decline over
time or under certain circumstances, all as specified
in the related Prospectus Supplement. See 'Description
of the Transfer and Servicing Agreements--Credit and
Cash Flow Enhancement' herein.
Cash Collateral Guaranty. If specified in the related
Prospectus Supplement with respect to any Trust
classified as a grantor trust, the related Trustee
will have the right to demand payments under a cash
collateral guaranty (the 'CASH COLLATERAL GUARANTY')
under certain circumstances as described herein and in
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the related Prospectus Supplement. Each Cash
Collateral Guaranty will be secured by a Cash
Collateral Account, which will be held in the name of
a Cash Collateral Trustee, as specified in the related
Prospectus Supplement. The related Prospectus
Supplement will specify whether the Cash Collateral
Account will be funded on the date of issuance of the
related series of Securities solely from the proceeds
of a loan to be made by a cash collateral depositor
(the 'CASH COLLATERAL DEPOSITOR') pursuant to a Loan
Agreement, from a deposit by the Seller, or by a
combination thereof. To the extent specified in the
related Prospectus Supplement, funds in the related
Cash Collateral Account will thereafter be
supplemented by the deposit of amounts remaining on
any Distribution Date after making all other
distributions required on such date. Amounts drawn
under the Cash Collateral Guaranty will be available
to cover shortfalls in amounts due to the holders of
those classes of Securities specified in the related
Prospectus Supplement in the manner and under the
circumstances specified therein. The related
Prospectus Supplement will also specify to whom and
the manner and circumstances under which amounts on
deposit in the Cash Collateral Account (after giving
effect to all required distributions to be made by the
related Trust) in excess of the Required Cash
Collateral Amount (as defined in the related
Prospectus Supplement) will be distributed.
Reserve Account. If specified in the related
Prospectus Supplement with respect to any Trust not
classified as a grantor trust, a Reserve Account will
be funded on the date of issuance of the related
series of Securities, and if the related series has a
Funding Period, will also be funded on each Subsequent
Transfer Date. The related Prospectus Supplement will
specify whether the Reserve Account will be funded
solely from the proceeds of a loan or loans to be made
by a Cash Collateral Depositor pursuant to a Loan
Agreement, from a deposit or deposits by the Seller,
or by a combination thereof. To the extent specified
in the related Prospectus Supplement, funds in the
related Reserve Account will thereafter be
supplemented by the deposit of amounts remaining on
any Distribution Date or Payment Date after making all
other distributions required on such date. Amounts in
a Reserve Account will be available to cover
shortfalls in amounts due to the holders of those
classes of Securities specified in the related
Prospectus Supplement in the manner and under the
circumstances specified therein. The related
Prospectus Supplement will also specify to whom and
the manner and circumstances under which amounts on
deposit in the related Reserve Account (after giving
effect to all required distributions to be made by the
related Trust) in excess of the Specified Reserve
Account Balance (as defined in the related Prospectus
Supplement) will be distributed.
Demands under a Cash Collateral Guaranty will be
funded solely from amounts, if any, on deposit in the
related Cash Collateral Account. If the amount
deposited in such Cash Collateral Account or in any
Reserve Account is reduced to zero, the related
Securityholders will bear directly the credit and
other risks associated with ownership of the related
Receivables.
Yield Supplement Account; Yield Supplement
Agreement. If specified in the related Prospectus
Supplement, the Seller or a third party will enter
into a yield supplement agreement (as amended and
supplemented from time to time, a 'YIELD SUPPLEMENT
AGREEMENT') and/or establish a yield supplement
account (a 'YIELD SUPPLEMENT ACCOUNT') with the
related Indenture Trustee or related Trustee for the
benefit of the holders of the related Securities. A
Yield Supplement Agreement or a Yield Supplement
Account will be designed to provide payments to the
Securityholders in respect of Receivables the Contract
Rate of which is less than the Required Rate (as such
term is defined in the
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related Prospectus Supplement, the 'REQUIRED RATE'). A
Yield Supplement Account may be an asset of the
obligor under the related Yield Supplement Agreement
holding funds to secure the obligation of such obligor
to make payments under such Yield Supplement Agreement
or, in the case of a Trust that is not classified as a
grantor trust, may be an asset of the Trust from which
cash may periodically be withdrawn to provide payments
to the Securityholders.
TRANSFER AND SERVICING
AGREEMENTS............... With respect to each Trust, the Seller will assign to
such Trust, without recourse, the Seller's entire
interest in the related Receivables pursuant to a Sale
and Servicing Agreement or a Pooling and Servicing
Agreement. The rights and benefits of any Trust under
a Sale and Servicing Agreement will be assigned to the
related Indenture Trustee as collateral for the Notes
of the related series. The Servicer will agree with
respect to each Trust to be responsible for servicing,
managing, maintaining custody of and making
collections on the Receivables.
Unless otherwise provided in the related Prospectus
Supplement, the Seller will be obligated to repurchase
any Receivable if (a) such Receivable does not meet
any of the criteria set forth in the related Sale and
Servicing Agreement or Pooling and Servicing
Agreement, as applicable, and (b) such failure
materially and adversely affects the interests of the
holders of the related series of Securities in such
Receivable, unless the Seller has cured the failure to
meet the related criterion following the discovery by
or notice to the Seller of such failure. See
'Description of the Transfer and Servicing
Agreements--Sale and Assignment of Receivables'
herein.
Unless otherwise provided and to the extent set forth
in the related Prospectus Supplement, the Servicer
will be entitled to receive a fee for servicing the
Receivables of each Trust equal to a specified
percentage of the aggregate principal balance of the
related Receivables Pool plus any Late Fees collected
from Obligors during the related Collection Period. In
addition, to the extent set forth in the related
Prospectus Supplement, the Servicing Fee will also
include investment earnings on amounts on deposit in
the Trust Accounts. See 'Description of the Transfer
and Servicing Agreements--Servicing Compensation and
Payment of Expenses' herein and the corresponding
section in the related Prospectus Supplement.
ADVANCES................. If the Pooling and Servicing Agreement or Sale and
Servicing Agreement, as applicable, related to any
series provides that the Servicer may or is required
to make advances with respect to due and unpaid
amounts with respect to all or certain of the
Receivables, the related Prospectus Supplement shall
specify the terms and conditions pursuant to which
such Advances may or are required to be made.
TAX STATUS............... Unless the Prospectus Supplement specifies that the
related Trust will be classified as a grantor trust
and, except as otherwise provided in such Prospectus
Supplement, upon the issuance of the related series of
Securities, Simpson Thacher & Bartlett, special
counsel to the Seller ('FEDERAL TAX COUNSEL'), will
deliver an opinion to the effect that, for federal
income tax purposes: (i) any Notes of such series will
be treated as debt and (ii) such Trust will not be
characterized as an association (or a publicly traded
partnership) taxable as a corporation. Alternative
characterizations of such Trust and such Certificates
are possible, but would not result in materially
adverse tax consequences to Certificateholders.
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If the Prospectus Supplement specifies that the
related Trust will be classified as a grantor trust
and except as otherwise provided in such Prospectus
Supplement, upon the issuance of the related series of
Certificates, Federal Tax Counsel will deliver an
opinion to the effect that such Trust will be treated
as a grantor trust for federal income tax purposes and
not as an association (or other entity) taxable as a
corporation.
Each such opinion of Federal Tax Counsel referred to
in the preceding two paragraphs will be filed with the
Commission as an Exhibit to a Current Report filed on
Form 8-K.
Investors should consult their own tax advisors to
determine the federal, state, local and other tax
consequences of the purchase, ownership and
disposition of Securities of any series. See 'Certain
Federal Income Tax Consequences' and 'Certain State
Tax Consequences' in the related Prospectus
Supplement.
ERISA CONSIDERATIONS..... A fiduciary of any employee benefit plan or other plan
subject to ERISA or Section 4975 of the Code should
carefully review with its legal advisors whether the
purchase or holding of any class of Securities could
give rise to a transaction prohibited or not otherwise
permissible under ERISA or the Code. Certain classes
of Securities may not be acquired by any employee
benefit plan or other plan subject to ERISA or Section
4975 of the Code, as specified in the related
Prospectus Supplement. See 'ERISA Considerations'
herein and in the related Prospectus Supplement.
RATINGS OF THE
SECURITIES............... Each Prospectus Supplement will specify the ratings
upon which the issuance of each series of Securities
will be conditioned. See 'Ratings' herein.
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RISK FACTORS
CERTAIN LEGAL ASPECTS
In connection with each sale of Receivables to a Trust, the Seller will
assign its security interest in each individual Financed Vehicle to such Trust.
However, due to administrative burden and expense, neither the Seller nor the
related Trustee will amend the certificates of title to the Financed Vehicles to
identify the Trust or any related Indenture Trustee as the new secured party. In
addition, with respect to any security interests in Financed Vehicles acquired
by the Seller from an affiliated entity, the related certificates of title to
such Financed Vehicles will not be amended to identify the Seller as new secured
party before assignment to any Trust. In a majority of states, 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, and the new secured party succeeds to the
Originating Bank's rights as the secured party as against creditors of the
Obligor. In certain states, in the absence of such amendment and delivery, the
Seller, the related Trust and/or any related Indenture Trustee may not have a
perfected security interest in the related Financed Vehicle. Unless otherwise
specified in the related Prospectus Supplement, the Seller will be obligated to
repurchase any Receivable sold to a Trust as to which the Seller has represented
that the Originating Bank has a first perfected security interest in the
Financed Vehicle securing such Receivable, if a breach of such representation
shall materially adversely affect the interest of the related Securityholders in
such Receivable and if a breach of such representation shall not have been
cured. If such Trust does not have a perfected security interest in a Financed
Vehicle, the only recourse of such Trust vis-a-vis third parties would be
against the related Obligor on an unsecured basis or (if the Originating Bank
did not have a perfected security interest in such Financed Vehicle) against the
Seller pursuant to its repurchase obligation.
If a Trust does not have a perfected security interest in a Financed
Vehicle, its ability to realize on such Financed Vehicle in the event of a
default may be adversely affected. To the extent the security interest is
perfected, such Trust will have a prior claim over subsequent purchasers of such
Financed Vehicles and holders of subsequently perfected security interests.
However, under the laws of many states, certain possessory liens for repairs and
storage, as well as certain rights in favor of federal and state governmental
authorities arising from the use of a motor vehicle in connection with illegal
activities, may take priority even over a perfected security interest. Certain
federal tax liens may have priority over the lien of a secured party. In
addition, through fraud or negligence, a Trust could lose the priority of its
security interest or its security interest in a Financed Vehicle. Neither the
Seller nor the Servicer will have an obligation to repurchase a Receivable as to
which any of the aforementioned occurrences result in such Trust's losing the
priority of its security interest or its security interest in such Financed
Vehicle after the date such security interest was conveyed to such Trust (other
than through fraud or negligence of the Seller or the Servicer).
The Seller intends that each transfer of Receivables by it to a Trust under
a Sale and Servicing Agreement or a Pooling and Servicing Agreement constitutes
a sale. In the event that the 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 the Seller has granted a security interest in the Receivables to a
Trust and that interest was validly perfected before the Seller's insolvency and
was not taken in contemplation of insolvency or with the intent to hinder, delay
or defraud the Seller or its creditors, that security interest would not be
subject to avoidance by the FDIC as receiver of the Seller. Positions taken by
the FDIC staff prior to the passage of FIRREA do not suggest that the FDIC, if
appointed receiver of the Seller, would interfere with the timely transfer to
the Trust of payments collected on the related Receivables. If, however, the
FDIC were to assert a contrary position, or were to require the 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 the Seller as
provided under the FDIA, delays in payments on the related Securities and
possible reductions in the amount of those payments could occur.
With respect to any Notes, unless otherwise specified in the related
Prospectus Supplement, if an Event of Default occurs, the Indenture Trustee or
the holders of not less than a majority of the aggregate principal amount of the
Notes may declare the principal of the Notes to be immediately due and payable,
and, if the Notes have been accelerated, the Indenture Trustee may institute or
be required to institute proceedings to collect amounts due or exercise its
remedies as a secured party (including foreclosure or sale of the Receivables).
The proceeds
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from any such sale will be treated as collections on the Receivables and
deposited in the Collection Account of such Trust. If the proceeds from the sale
of the trust assets and any amounts on deposit in any related Trust Account and
any amounts available from any credit enhancement are not sufficient to pay the
Notes and any Certificates of the related series in full, the amount of
principal returned to Noteholders and any Certificateholders will be reduced and
some or all of such Noteholders and Certificateholders will incur a loss.
Because neither interest nor principal may be distributed to Certificateholders
upon a sale of the Receivables following an Event of Default and acceleration of
the Notes under the Indenture until all the Notes have been paid in full, the
interests of Noteholders and Certificateholders may conflict, and the exercise
by the Indenture Trustee of its right to sell the Receivables or exercise other
remedies under the Indenture and applicable law may cause the Certificateholders
to suffer a loss of all or part of their investment. See 'Description of the
Notes--The Indenture' and 'Description of the Transfer and Servicing
Agreements--Rights Upon Event of Servicing Termination' herein.
TRUST'S RELATIONSHIP TO THE SELLER, THE SERVICER AND THEIR AFFILIATES
None of the Seller, the Servicer or their affiliates is generally obligated
to make any payments in respect of any Notes, any Certificates or the
Receivables of a given Trust.
However, in connection with the sale of Receivables by the Seller to a
given Trust, the Seller will make representations and warranties with respect to
the characteristics of such Receivables and, in certain circumstances, the
Seller may be required to repurchase Receivables with respect to which such
representations and warranties have been breached. See 'Description of the
Transfer and Servicing Agreements--Sale and Assignment of Receivables' herein.
In addition, under certain circumstances, the Servicer may be required to
purchase Receivables. See 'Description of the Transfer and Servicing
Agreements--Servicing Procedures' herein. Moreover, if the Bank were to cease
acting as the Servicer, delays in processing payments on the Receivables and
information in respect thereof could occur and result in delays in payments to
the Securityholders.
SUBORDINATION
To the extent specified in the related Prospectus Supplement, payments of
interest and/or principal on the Securities of any class of a series
('SUBORDINATED SECURITIES') may be subordinated in priority of payment to
interest and/or principal due on one or more other classes of Securities of such
series (the 'SENIOR SECURITIES'). For such series, the related Securityholders
will not receive any distributions with respect to a Distribution Date until the
full amount of interest on and/or principal of the related Senior Securities
distributable on such Distribution Date has been allocated to the Senior
Securities.
LIMITED ASSETS
Each Trust will not have, nor is it permitted or expected to have, any
significant assets or sources of funds other than the Receivables and, to the
extent provided in the related Prospectus Supplement, a Pre-Funding Account, a
Reserve Account, a Cash Collateral Guaranty, a Yield Supplement Agreement, a
Yield Supplement Account and any other credit enhancement. The Notes of any
series will represent obligations solely of, and the Certificates of any series
will represent interests solely in, the related Trust and neither the Notes nor
the Certificates of any series will be insured or guaranteed by the Seller, the
Servicer, any Trustee, any Indenture Trustee, any of their affiliates or any
other person or entity. Consequently, Securityholders of any series must rely
for repayment upon payments on the related Receivables and, if and to the extent
available, amounts available under the Cash Collateral Guaranty (if any), the
Yield Supplement Agreement (if any), amounts on deposit in the Pre-Funding
Account (if any), the Yield Supplement Account (if any) and the Reserve Account
(if any) and any other credit enhancement, all as specified in the related
Prospectus Supplement.
If the protection provided to any Securityholders of a given class of a
series by the subordination of the related Subordinated Securities, if any, and
by any Reserve Account, Cash Collateral Guaranty, Yield Supplement Agreement,
Yield Supplement Account or other credit enhancement for such class and series
is insufficient, such Securityholders would have to look principally to the
Obligors on the related Receivables and the proceeds from the repossession and
sale of Financed Vehicles that secure Defaulted Receivables. In such event,
certain factors, such as the applicable Trust not having perfected security
interests in the Financed Vehicles
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in all states, may affect the Servicer's ability to repossess and sell the
collateral securing the Receivables, and thus may reduce the proceeds to be
distributed to the holders of the Securities of such series. See 'Description of
the Transfer and Servicing Agreements--Distributions,' '--Credit and Cash Flow
Enhancement' and 'Certain Legal Aspects of the Receivables' herein.
MATURITY AND PREPAYMENT CONSIDERATIONS
The weighted average life of any series of Notes and any series of
Certificates will generally be influenced by the rate at which the principal
balances of the related 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. If a Prospectus Supplement provides that the property of
the related Trust will include a Pre-Funding Account, the related Securities
will be subject to partial redemption on or immediately following the end of the
Funding Period in an amount and in the manner specified in the related
Prospectus Supplement. If provided in any Prospectus Supplement, prepayments may
also result from demands under any Cash Collateral Guaranty, Reserve Account or
other enhancement related to such series with respect to Defaulted Receivables.
See 'Description of the Transfer and Servicing Agreements--Sale and Assignment
of Receivables.' Any reinvestment risks resulting from a faster or slower
incidence of prepayment of Receivables held by a given Trust will be borne
entirely by the Securityholders of the related series of Securities. See also
'Description of the Transfer and Servicing Agreements--Termination' regarding
the Servicer's option to purchase the Receivables of a given Receivables Pool.
In addition, Chase Auto Finance may, on a case-by-case basis, permit
extensions with respect to the Due Dates of payments on Motor Vehicle Loans in
accordance with its normal and customary servicing practices and procedures. See
'Pooling and Servicing Agreement--Servicing Procedures' in the related
Prospectus Supplement or 'Description of the Transfer and Servicing
Agreements--Servicing Procedures' herein. Any such deferrals or extensions may
increase the weighted average life of the related Securities. However, the
Servicer will not be permitted to grant any such deferral or extension if as a
result the final scheduled payment on a Receivable would fall after the Final
Scheduled Maturity Date unless the Servicer repurchases the affected Receivable.
RISK OF COMMINGLING
With respect to each Trust, the Servicer will deposit all payments on the
related Receivables (from whatever source) and all proceeds of such Receivables
collected during each Collection Period into the Collection Account of such
Trust. For so long as the Seller is the Servicer and the Seller satisfies
certain requirements for making deposits less frequently than daily, the
Servicer will not be required to deposit such amounts in the Collection Account
of such Trust until on or before the related Deposit Date. Pending deposit into
such Collection Account, collections may be invested by the Servicer at its own
risk and for its own benefit and will not be segregated from funds of the
Servicer. If the Servicer were unable to remit such funds, the applicable
Securityholders might incur a loss. To the extent set forth in the related
Prospectus Supplement, 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 related Trust to secure timely remittances of collections on the related
Receivables and the payment of the aggregate Repurchase Amount with respect to
Receivables purchased by the Servicer.
RISK ASSOCIATED WITH SUBSEQUENT RECEIVABLES AND THE PRE-FUNDING ACCOUNT
If so specified in the related Prospectus Supplement, the Seller will be
obligated to sell, and the related Trust will be obligated to purchase,
Subsequent Receivables from time to time during the Funding Period specified in
the related Prospectus Supplement. The ability of the Seller to generate
Subsequent Receivables to be conveyed to such Trust will affect the amount on
deposit in the related Pre-Funding Account which is not applied to the
conveyance of Subsequent Receivables during the Funding Period. Amounts on
deposit in any Pre-Funding Account may be invested only in Permitted
Investments. Subsequent Receivables may be originated at a later date using
credit criteria different from those which were applied to any Initial
Receivables and may be of a different credit quality and seasoning. In addition,
following the transfer of Subsequent Receivables to the applicable Trust, the
characteristics of the entire pool of Receivables included in such Trust may
vary from those of the Initial Receivables transferred to such Trust. As a
result, it is possible that the credit quality of the Receivables in a Trust, as
a whole, may decline as a result of the inclusion of Subsequent Receivables and
may
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result in a higher rate of payment to the applicable Securityholders as a result
of an increased level of defaults on such Receivables. Securityholders will bear
all reinvestment risk associated with a higher than expected rate of payment on
the Securities. In addition, a higher than expected rate of payment may result
in a reduction in the yield to maturity of any class of Securities to which such
payments are distributed. To the extent that amounts on deposit in the
Pre-Funding Account have not been fully applied to the conveyance of Subsequent
Receivables to a Trust by the end of the Funding Period and such amount exceeds
the applicable amount described in the related Prospectus Supplement, the
holders of Securities issued by the related Trust will receive, on the
Distribution Date or Payment Date on or immediately following the last day of
the applicable Funding Period, a prepayment of principal in an amount equal to
the amount remaining in the Pre-Funding Account following the purchase of any
Subsequent Receivables on or immediately preceding such Distribution Date or
Payment Date. It is anticipated that the principal balance of Subsequent
Receivables sold to a Trust will not be exactly equal to the amount on deposit
in the Pre-Funding Account, and that therefore there will be at least a nominal
amount of principal prepaid to the holders of the Securities issued by such
Trust. Holders of Securities issued by such Trust will bear the reinvestment
risk associated with any such distribution of amounts on deposit in the
Pre-Funding Account after the termination of the applicable Funding Period. Any
such distribution will have the effect of a prepayment on the related
Receivables and may result in a reduction in the yield to maturity of any class
of Securities to which such amounts are distributed.
RIGHTS OF NOTEHOLDERS AND CERTIFICATEHOLDERS
In general, with respect to any Trust issuing Notes, the holders of any
Certificates issued by such Trust may direct the related 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
such Trust, including in such pledge the rights of the Trust under the related
Sale and Servicing Agreement, the related 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 related
Trustee to take any action which conflicts with the provisions of any of the
related Transfer and Servicing Agreements. Each Indenture will specifically
prohibit the related Trustee from taking any action which would impair the
related Indenture Trustee's security interest in the related Trust property and
will require the related Trustee to obtain the consent of the related Indenture
Trustee or the holders of not less than a majority of the aggregate principal
amount of the Notes issued by such Trust before modifying, amending,
supplementing, waiving or terminating any related Transfer and Servicing
Agreement or any provision of any related Transfer and Servicing Agreement.
Therefore, until a series of Notes have been paid in full, the ability to direct
the related Trust with respect to certain actions permitted to be taken under
the related Transfer and Servicing Agreements rests with the related Indenture
Trustee and the Noteholders instead of the Certificateholders. In addition, in
certain circumstances, Noteholders of Subordinated Securities will not be
entitled to take or direct any actions until the related Senior Securities have
been paid in full. See 'Description of the Notes--The Indenture Trustee' herein.
THE TRUSTS
With respect to each series of Securities, the Seller will establish a
separate Trust pursuant to a Trust Agreement or a Pooling and Servicing
Agreement, as applicable, for the purpose of conducting the activities described
herein and in the related Prospectus Supplement. The property of each Trust will
include (i) a pool (a 'RECEIVABLES POOL') of motor vehicle retail installment
sales contracts, purchase money notes and other notes ('MOTOR VEHICLE LOANS')
and all payments due or received thereunder (the 'RECEIVABLES') from the related
obligors (the 'OBLIGORS') on and after the related Cutoff Date specified in the
related Prospectus Supplement (a 'CUTOFF DATE'); (ii) such amounts as from time
to time may be held in separate trust accounts established and maintained
pursuant to the related Sale and Servicing Agreement or Pooling and Servicing
Agreement and the proceeds of such accounts, as described herein and in the
related Prospectus Supplement; (iii) security interests in the Financed
Vehicles; (iv) the rights to proceeds as a result of the Seller's exercise of
its recourse rights against Dealers (as described herein under 'The Receivables
Pools--Origination and Servicing of Motor Vehicle Loans'); (v) an assignment of
the rights of the Seller to receive proceeds from claims on theft and physical
damage, credit life and credit disability insurance policies covering the
Financed Vehicles or the Obligors, as the case may be, to the extent that such
insurance policies relate to the Receivables; (vi) the rights with respect to
any
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Financed Vehicle that has been repossessed by the Servicer on behalf of the
related Trust; and (vii) any and all proceeds of the foregoing. To the extent
specified in the related Prospectus Supplement, a Pre-Funding Account, Cash
Collateral Guaranty, Cash Collateral Account, Reserve Account, Yield Supplement
Agreement, Yield Supplement Account or other form of credit enhancement may be a
part of the property of any given Trust or may not be included in the property
of the Trust but be held by another trust or a trustee for the benefit of
holders of the related Securities.
On or before the related Closing Date, the Seller will sell the Initial
Receivables of the related Receivables Pool to the related Trust to the extent,
if any, specified in the related Prospectus Supplement. To the extent so
provided in the related Prospectus Supplement, Subsequent Receivables will be
conveyed to the related Trust as frequently as daily during the Funding Period.
Any Subsequent Receivables so conveyed will also be assets of the related Trust,
subject to the prior rights of the related Indenture Trustee and the
Noteholders, if any, therein.
The principal offices of each Trust and related Trustee will be specified
in the related Prospectus Supplement.
THE RECEIVABLES POOLS
GENERAL
As described herein, Chase USA, together with its affiliates, is currently
engaged in the automotive financing and automotive loan servicing business. As
used in this Prospectus and in any Prospectus Supplement, the term 'CHASE AUTO
FINANCE' will be deemed to refer to the automotive financing and servicing
business of Chase, its predecessors and its affiliates, and such term shall not
include (unless otherwise specified) the automotive financing and automotive
loan servicing business of Chemical Bank prior to the Merger, and the term
'ORIGINATING BANK' shall be deemed to refer to Chase N.A., Chase and Chase USA
or any of their respective affiliates in its capacity as originator of the Motor
Vehicle Loans.
The Motor Vehicle Loans are motor vehicle retail installment sales
contracts relating to new or used automobiles and light-duty trucks purchased
from Dealers who regularly originate and sell such contracts to the Originating
Bank pursuant to Assignments. Motor Vehicle Loans also include purchase money
loans secured by financed vehicles made by the Originating Bank directly or
pursuant to arrangements with Dealers in accordance with approved Dealer
agreements. The Receivables to be held by each Trust will be selected from the
portfolio of Motor Vehicle Loans owned or to be owned by the Seller for
inclusion in a Receivables Pool. Selection will be based upon several criteria,
including that, unless otherwise provided in the related Prospectus Supplement,
each Receivable (i) was acquired from or made through a Dealer located in the
United States or made directly by the Originating Bank without involvement of a
Dealer, (ii) is secured by a Financed Vehicle that, as of the related Cutoff
Date, had not been repossessed without reinstatement, (iii) has not been
identified on the computer files of the Seller as relating to an Obligor who was
in a bankruptcy proceeding as of the related Cutoff Date, (iv) (if not a Final
Payment Receivable) provides for fully amortizing level scheduled monthly
payments (except for the last payment, which may be different from the level
payments) and for accrual of interest at a fixed rate (the 'CONTRACT RATE')
according to the simple interest or actuarial method, (v) is an Actuarial
Receivable or a Simple Interest Receivable (either of which may be a Final
Payment Receivable) and (vi) satisfies the other criteria, if any, set forth in
the related Sale and Servicing Agreement or Pooling and Servicing Agreement, as
applicable, and in the related Prospectus Supplement. The Seller will not use
any selection procedures that it believes to be materially adverse to the
Securityholders of any series in selecting the related Receivables.
'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
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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' herein.
'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 annual contract rate of
interest on the loan multiplied by the unpaid principal balance of the loan, and
an amount of principal equal to the remainder of the monthly payment.
'FINAL PAYMENT RECEIVABLES' are either Actuarial Receivables or Simple
Interest Receivables which provide for a final scheduled payment which is
greater than the scheduled monthly payments. A Final Payment Receivable provides
for amortization of the loan over a series of fixed level payment monthly
installments like an Actuarial Receivable or a Simple Interest Receivable, but
also requires a final scheduled payment due after payment of such monthly
installments which may be satisfied by (i) payment in full in cash of such
amount, (ii) transfer of the financed vehicle to the Seller provided certain
conditions are satisfied or (iii) refinancing the final scheduled payment in
accordance with certain conditions. With respect to any Final Payment
Receivables included in a Trust, only the principal and interest payments due
prior to the final scheduled payment and not the final scheduled payment will be
included in such Trust; the final scheduled payment will be retained by the
Seller. However, in the case of a Trust that is not classified as a grantor
trust, the Seller will have the option to transfer the final scheduled payments
with respect to the related Final Payment Receivables to such Trust and to cause
such Trust to issue certificates representing interests in such final scheduled
payments or notes secured by such final scheduled payments.
All of the Receivables will be prepayable at any time without penalty to
the Obligor and will contain due on sale provisions. If a Simple Interest
Receivable is prepaid, the Obligor is required to pay interest only to the date
of prepayment, rather than receive a rebate. 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.
In the case of the liquidation of a Receivable or repossession of a
Financed Vehicle, amounts recovered will be applied in accordance with Chase
Auto Finance's normal and customary servicing practices and procedures. Chase
Auto Finance reserves the right to change its policy with respect to the
application of amounts recovered from a liquidated Receivable or a repossessed
Financed Vehicle.
Information with respect to each Receivables Pool will be set forth in the
related Prospectus Supplement, including, to the extent appropriate, the
composition of the Receivables, the distribution by annual contract rate of
interest and by the states of origination of the Receivables, the portion of
such Receivables Pool consisting of Actuarial Receivables, Simple Interest
Receivables (and the portion thereof consisting of Final Payment Receivables)
and the portion of such Receivables Pool secured by new vehicles and by used
vehicles.
If the related Prospectus Supplement provides for a Pre-Funding Account,
each Subsequent Receivable of the related Trust must satisfy the eligibility
criteria specified in the related Pooling and Servicing Agreement or Sale and
Servicing Agreement, as applicable, at the time of its addition. However, except
for such criteria, there will be no required characteristics of such Subsequent
Receivables. Therefore, following the transfer of Subsequent Receivables to the
related Trust, the characteristics of the entire related Receivables Pool
included in such Trust may vary from those of the Initial Receivables.
Subsequent Receivables may be originated at a later date using credit
criteria different from those which were applied to any Initial Receivables and
may be of a different credit quality and seasoning. In addition, following the
transfer of Subsequent Receivables to the applicable Trust, the characteristics
of the entire pool of Receivables included in such Trust may vary from those of
the Initial Receivables transferred to such Trust. See 'Risk Factors--Risks
Associated with Subsequent Receivables and the Pre-Funding Account.' If the
Prospectus Supplement provides for a Pre-Funding Account, the Prospectus
Supplement will also describe the effects including Subsequent Receivables may
have on the Receivables Pool included in the related Trust. If a Trust includes
Subsequent Receivables, regular periodic reports regarding the Subsequent
Receivables will be included
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under Item 5 in each Current Report filed by or on behalf of such Trust on Form
8-K with the Commission pursuant to the Exchange Act.
DELINQUENCY AND LOAN LOSS INFORMATION
Certain information concerning the delinquencies, loan losses and
recoveries for the portfolio of indirect Motor Vehicle Loans owned or serviced
by Chase Auto Finance (the 'CHASE AUTO FINANCE PORTFOLIO') as of the dates and
for the periods set forth in the related Prospectus Supplement will be set forth
therein. There can be no assurance that the delinquency and loan loss experience
on any Receivables Pool will be comparable to prior experience or to such
information.
Pursuant to a merger, as of January 1, 1993, Chase N.A. commenced servicing
Motor Vehicle Loans originated by Chase N.A.'s affiliate, Chase Lincoln First
Bank, National Association ('CHASE LINCOLN BANK'). The Motor Vehicle Loans
included in a Trust will not include loans originated by Chase Lincoln Bank
(collectively, 'CHASE LINCOLN LOANS') but the delinquency and loan loss
experience with respect to the Chase Auto Finance Portfolio (the 'PORTFOLIO
EXPERIENCE') presented in the related Prospectus Supplement will include data
with respect to Chase Lincoln Loans. The Seller believes, however, that the
delinquency and loan loss experience of the Chase Lincoln Loans will not be
materially different from the Portfolio Experience set forth in the related
Prospectus Supplement.
From February 1993 through April 1995, Chase N.A. or Chase N.A.'s
affiliates serviced Motor Vehicle Loans for The Chase Manhattan Bank of
Connecticut, National Association ('CHASE CONNECTICUT BANK'), which loans
(collectively, 'CHASE CONNECTICUT LOANS') were originated using materially the
same Dealer Agreements, underwriting criteria and servicing standards as those
for Chase Auto Finance's Motor Vehicle Loans. As of May 1, 1995, Chase
Connecticut Bank was merged into Chase N.A. The Motor Vehicle Loans included in
a Trust will not include Chase Connecticut Loans, but the Portfolio Experience
presented in the related Prospectus Supplement will include data with respect to
Chase Connecticut Loans for the year ended December 31, 1993 and thereafter. The
Seller believes, however, that the delinquency and loan loss experience for
Chase Connecticut Loans will not be materially different from the Portfolio
Experience set forth in the related Prospectus Supplement.
On December 1, 1995, Chase N.A. purchased substantially the entire Motor
Vehicle Loan portfolio originated by its affiliate, The Chase Manhattan Private
Bank (Florida), National Association ('CHASE FLORIDA BANK'). The purchase
involved approximately 41,000 loans originated principally through Dealers
located in Florida ('CHASE FLORIDA LOANS'), with such loans having an aggregate
outstanding principal balance at the time of purchase of approximately $400
million. The Motor Vehicle Loans included in a Trust will not include Chase
Florida Loans, but the Portfolio Experience presented in the related Prospectus
Supplement will include data with respect to Chase Florida Loans. Chase Florida
Loans were originated using materially the same Dealer Agreements, underwriting
criteria and servicing standards as those for Chase Auto Finance's Motor Vehicle
Loans. The Seller believes that the delinquency and loan loss experience for
Chase Florida Loans will not be materially different from the Portfolio
Experience set forth in the related Prospectus Supplement.
In September 1995, Chase N.A. purchased substantially all outstanding Motor
Vehicle Loans originated by The Chase Manhattan Bank of Maryland ('CHASE
MARYLAND LOANS'). Although the Motor Vehicle Loans included in a Trust will not
include Chase Maryland Loans, the Portfolio Experience presented in the related
Prospectus Supplement for the period commencing October 1, 1995 will include
data with respect to Chase Maryland Loans. The Seller believes that the
delinquency and loan loss experience for Chase Auto Finance's entire portfolio
of Motor Vehicle Loans for any period presented in a Prospectus Supplement
without inclusion of any Chase Maryland Loans would not be materially different
from the Portfolio Experience set forth in such Prospectus Supplement.
To the extent specified in the related Prospectus Supplement, the Motor
Vehicle Loans included in a Trust may include loans made directly by the
Originating Bank to Obligors without involvement of Dealers ('DIRECT
RECEIVABLES'). However, the Portfolio Experience set forth in the related
Prospectus Supplement will not include delinquency and loan loss experience for
Direct Receivables. The Seller believes that the delinquency and loan loss
experience for Direct Receivables will not be materially different from the
Portfolio Experience set forth in the related Prospectus Supplement.
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ORIGINATION AND SERVICING OF MOTOR VEHICLE LOANS
The Originating Bank purchases motor vehicle retail installment sales
contracts relating to new or used automobiles from automobile dealers
('DEALERS') who regularly originate such contracts pursuant to the terms of
approved Dealer agreements and Assignments, and the Originating Bank also makes
purchase money loans secured by financed vehicles directly or pursuant to
arrangements with Dealers in accordance with approved Dealer agreements. Dealer
agreements and Assignments related to motor vehicle retail installment sales
contracts, and Dealer agreements related to purchase money loans are
collectively referred to herein as 'DEALER AGREEMENTS.' The Originating Bank
purchases such contracts from Dealers pursuant to Assignments (the
'ASSIGNMENTS'). Dealer Agreements are entered into with Dealers based upon a
financial review of each Dealer, and in some cases, the reputation and prior
experience of Chase Auto Finance with such Dealer and its key management.
Generally, Dealers who sell new financed vehicles are franchised by the
manufacturer of the financed vehicles.
The Originating Bank currently makes or purchases Motor Vehicle Loans
involving Dealers throughout the United States, except Alaska. Each Dealer makes
representations and warranties to the Originating Bank with respect to the Motor
Vehicle Loans, the obligors on the Motor Vehicle Loans and the security
interests in the financed vehicles relating thereto, which representations and
warranties typically include, among others, that (i) to the best of the Dealer's
knowledge, (a) no statements made or furnished to Chase Auto Finance by the
obligor, the Dealer or any other person are untrue or incomplete, (b) the
obligor has not financed any down payment for the financed vehicle, (c) the
obligor is a bona fide applicant having legal capacity to contract for a Motor
Vehicle Loan, (d) the signature of the obligor on all documents is genuine and
(e) the amount stated in the Motor Vehicle Loan to be due will in fact be due
and payable at the time or times provided therein free of any claims, defenses,
setoffs or counterclaims; (ii) the Dealer has verified the obligor's
identification; (iii) the Dealer had indefeasible title to the financed vehicle
immediately prior to the purchase by the obligor, and had the right and
authority to sell the vehicle to the obligor, free and clear of all liens and
encumbrances; (iv) the Dealer will secure and perfect for the Originating Bank a
security interest in the financed vehicle free and clear of any liens or
encumbrances; and (v) the description of the financed vehicle in the Motor
Vehicle Loan is true and complete and the financed vehicle will be or has been
duly delivered to and accepted without revocation by the obligor. Generally,
these representations and warranties do not relate to the creditworthiness of
the obligors or the collectibility of the Motor Vehicle Loans. Upon breach of
any representation or warranty made by a Dealer, the Originating Bank has a
right of recourse against such Dealer to require it to purchase or repurchase
such Motor Vehicle Loan. Generally, in determining whether to exercise any right
of recourse, Chase Auto Finance considers the prior performance of the Dealer
and other business and commercial factors. The Servicer will be obligated to
enforce such rights with respect to Dealer Agreements relating to the Motor
Vehicle Loans in accordance with Chase Auto Finance's customary practices, and
the right to any proceeds received upon such enforcement will be conveyed to the
related Trust under the related Pooling and Servicing Agreement or Sale and
Servicing Agreement, as applicable. The Seller will make no representations as
to the financial condition of such Dealers to which the 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.
The Originating Bank makes direct Motor Vehicle Loans to obligors at its
branches or by phone without the involvement of Dealers. Since there are no
Dealers involved in the origination of these Motor Vehicle Loans, however, no
Dealer representations and warranties are made with respect to these Motor
Vehicle Loans. Each Motor Vehicle Loan requires that each obligor secure and
perfect for the Originating Bank a security interest in the financed vehicle
free and clear of any liens or encumbrances. The obligor on each Motor Vehicle
Loan made directly by the Originating Bank is responsible for insuring
compliance with this requirement. Neither the Originating Bank, the Seller nor
the Servicer verifies or will verify whether such obligors satisfy this
requirement.
The Servicer will service all of the Motor Vehicle Loans consistent with
Chase Auto Finance's servicing policies and practices. The servicing functions
performed by the Servicer or any of its affiliates on a centralized basis will
include the payment of Motor Vehicle Loan proceeds to Dealers, customer service,
document file and computerized record keeping, vehicle titles processing and
automated collections. Other servicing functions are generally regionalized and
are and will be performed by the several regional support offices called Dealer
Service Centers ('DSCS'). The servicing functions performed by the DSCs include
certain aspects of Dealer liaison,
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Dealer sales, customer service, credit underwriting, documentation reviews,
optical imaging and collections as well as other such services. The servicing
policies and practices of Chase Auto Finance may change over time in accordance
with the Bank's business judgment.
UNDERWRITING OF MOTOR VEHICLE LOANS
Each applicant for a Motor Vehicle Loan is evaluated individually by the
appropriate DSC based on uniform underwriting standards developed by Chase Auto
Finance. These underwriting standards are intended to assess the applicant's
ability to repay such Motor Vehicle Loan and the adequacy of the financed
vehicle as collateral, based upon a review of the information contained in a
loan application form that generally lists the applicant's income, deposit
accounts, liabilities, credit history, employment history and a description of
the financed vehicle intended to secure the Motor Vehicle Loan. Among the
criteria considered in evaluating the individual applications are (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 Auto 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; (iv) a loan to value ratio test taking into account
the age, type and market value of the financed vehicle; and (v) a credit bureau
score.
The amount advanced under any Motor Vehicle Loan generally will not exceed
(i) for a new financed vehicle, the manufacturer's suggested retail price or
(ii) for a used financed vehicle, 110% of the 'average trade' value stated in
the most recently published National Automobile Dealer's Association Official
Used Car Price Guide (Eastern Edition) plus taxes and title and license fees on
the financed vehicle. However, the maximum amount advanced for Motor Vehicle
Loans is often less than such amounts depending on a number of factors,
including the length of the Motor Vehicle Loan term and the model and year of
the financed vehicle. These adjustments are made to insure that the financed
vehicle constitutes adequate collateral to secure the Motor Vehicle Loan. In
addition, whether a financed vehicle is new or used, Chase Auto Finance will
also finance credit life/accident/health insurance and service warranties under
a Motor Vehicle Loan. Chase Auto Finance's general policy has been to reject
applications for Motor Vehicle Loans whose applicants' debt service to gross
monthly income ratios exceed 40%.
Since July 1988, an empirically based credit scoring process has been used
by Chase Auto Finance to objectively index the applicant's creditworthiness.
This scoring process was created using historical information
from the data base of Motor Vehicle Loans owned and serviced by Chase Auto
Finance. Through credit scoring, Chase Auto Finance evaluates credit profiles in
order to satisfactorily quantify credit risk. The credit scoring process entails
the use of statistics to correlate common characteristics with credit risk. The
credit scoring process used by Chase Auto Finance is periodically reviewed to
ensure its validity. In addition to Chase Auto Finance's scoring process, since
July 1992, Chase Auto Finance has used consumer reporting agency scores to
assist in the underwriting process. In February 1993, Chase Auto Finance
implemented an automated approval and declination process for certain
applications based on selection criteria that was statistically derived from the
data base of Motor Vehicle Loans owned and serviced by Chase Auto Finance.
Except for the applications that are automatically approved or denied, each
application is reviewed by a credit analyst. Except for the applications that
are automatically approved or denied, Chase Auto Finance's scoring process and
consumer reporting agency scores are intended to provide a basis for lending
decisions, but are not meant to supersede the judgment of the credit analyst.
Motor Vehicle Loan approval at variance with standard credit guidelines has
occurred, both before and after implementation of the credit scoring process,
but generally has required concurrent approval of a second, designated senior
credit analyst or credit manager. Motor Vehicle Loans that do not comply with
all of Chase Auto Finance's guidelines must have strong compensating factors
that indicate a high ability of the applicant to repay the loan. Generally, if a
Motor Vehicle Loan is approved it is because the obligor has made a down payment
and the amount financed is lower than the maximum amount permitted by Chase Auto
Finance's guidelines.
Detailed analysis of Chase Auto Finance's portfolio is performed to
evaluate the effectiveness of the credit guidelines and scoring process. If
external economic factors, credit delinquencies or credit losses change, credit
guidelines are adjusted to maintain a level of asset quality deemed acceptable
by Chase Auto Finance's management. Each day, the credit manager and credit
supervisors of each DSC review a computer selected group of Motor Vehicle Loans
to ensure that credit analysts are following Chase Auto Finance's established
policies
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and procedures. Chase Auto Finance randomly reviews, on a quarterly basis, the
quality of the Motor Vehicle Loans and conducts quality audits to ensure
compliance with established policies and procedures. The credit underwriting
standards of Chase Auto Finance may change over time in accordance with the
Bank's business judgment.
INSURANCE AND COLLECTION PROCEDURES
Each Motor Vehicle Loan requires the obligor to obtain fire, theft and
collision insurance or comprehensive and collision insurance with respect to the
financed vehicle. The Dealer Agreements include a representation and warranty
that each financed vehicle has such insurance at the time of origination of the
Motor Vehicle Loan. If an obligor fails to maintain the required insurance,
Chase Auto Finance may, but is not obligated to, purchase limited collision and
comprehensive insurance (force placed insurance) to protect the interests of
Chase Auto Finance and the obligor and to charge the obligor for the cost of
such insurance.
Chase Auto Finance previously purchased force placed insurance, but stopped
this practice in August 1993, and no force placed insurance coverage is
currently in effect on any of Chase Auto Finance's Motor Vehicle Loans. No Trust
will include any Motor Vehicle Loans on which force placed insurance was ever
purchased for the related financed vehicle, nor will any such Trust include any
Motor Vehicle Loans with coverage commonly known as vendor's single interest and
non-filing insurance. Unless otherwise specified in the related Prospectus
Supplement, there will be no third party insurance of any kind covering this
risk for any of the Motor Vehicle Loans included in any Trust. In addition,
neither the Seller, the Originating Bank nor the Servicer, as applicable,
independently verifies or will verify whether obligors obtain or maintain the
required insurance either at or after the origination of a Motor Vehicle Loan.
Chase Auto Finance monitors its loss experience with respect to financed
vehicles that are not properly insured.
The Bank reserves the right to change its policies with respect to
insurance on financed vehicles in accordance with its business judgment.
As a result of a New York statutory change, for Motor Vehicle Loans
originated through New York Dealers on and after approximately June 30, 1995,
Chase Auto Finance agreed not to obligate the related obligor for the so-called
'GAP amount' in the event there is a total loss of the vehicle caused by its
theft, confiscation or physical damage. The 'GAP amount' that the obligor will
not be obligated to pay is the difference between the amount owed on the Motor
Vehicle Loan as of the date of the total loss and the sum of (1) any unpaid
monthly payments, unpaid late fees and other unpaid amounts due prior to the
date of the total loss, plus (2) the vehicle's actual cash value as of the date
of the total loss. If the obligor has maintained the insurance required under
the Motor Vehicle Loan, the vehicle's actual cash value shall have the same
meaning as under the insurance policy (inclusive of the deductible, which the
Motor Vehicle Loan specifies may be no higher than $500). If the obligor has not
maintained the insurance required under the Motor Vehicle Loan, the vehicle's
actual cash value shall mean the 'average trade' value of the vehicle in the
most recently published National Automobile Dealer's Association Official Used
Car Guide (Eastern Edition) as of the date of the total loss. Chase Auto Finance
will not maintain third party insurance of any kind against this risk, and Chase
Auto Finance does not have any data on its historical loss experience on this
risk.
Collection activities with respect to delinquent Motor Vehicle Loans will
be performed by the Servicer or its affiliates consistent with Chase Auto
Finance's servicing policies and practices. 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 10% of a scheduled monthly
payment remains unpaid.
An automated collection system is 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 Motor
Vehicle Loan delinquencies. Under current practices, contact by mail is made
with an obligor whose Motor Vehicle Loan has become 13 days delinquent and
personal telephone contact with the obligor is attempted on or after the 15th
day of delinquency. Generally, after a Motor Vehicle Loan continues to be
delinquent for 90 days, repossession procedures will have been implemented.
However, if (i) a Motor Vehicle Loan is deemed uncollectible, (ii) the financed
vehicle is deemed by collection personnel to be in danger of being damaged,
destroyed or made
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unavailable for repossession, or (iii) the obligor voluntarily surrenders the
financed vehicle, a repossession may occur without regard to length or existence
of payment delinquency. Repossessions are generally conducted by third parties
who are engaged in the business of repossessing vehicles for secured parties.
After repossession, the obligor generally has an additional 10 to 30 days to
redeem the financed vehicle before the financed vehicle is resold. Upon
repossession and sale of the financed vehicle, any deficiency remaining will be
pursued to the extent deemed practical and to the extent permitted by law.
Losses may occur in connection with delinquent Motor Vehicle Loans and can
arise in several ways, including the inability to locate the financed vehicle or
the obligor, or because of a discharge of the obligor in a bankruptcy
proceeding. Generally, losses on Motor Vehicle Loans are recognized, as
applicable, (a) during the calendar month in which a financed vehicle was or is
liquidated by Chase Auto Finance, if the liquidation takes place at or before
the calendar month in which more than 10% of a scheduled payment of the related
Motor Vehicle Loan becomes 150 days delinquent, (b) during the calendar month in
which more than 10% of a scheduled payment of a Motor Vehicle Loan becomes 150
days delinquent if Chase Auto Finance was or is not in possession of the related
financed vehicle by the end of such calendar month, (c) during the calendar
month in which a financed motor vehicle was or is liquidated by Chase Auto
Finance, if Chase Auto Finance came or comes into possession of the related
financed vehicle by the end of the calendar month in which more than 10% of a
scheduled payment on the related Motor Vehicle Loan becomes 150 days delinquent,
(d) such earlier time as Chase Auto Finance deems a Motor Vehicle Loan
uncollectible, or (e) at such other times or in such a manner as Chase Auto
Finance believed or believes is appropriate in accordance with its normal and
customary servicing practices and procedures; provided that such loss
recognition cannot be later than the calendar month in which more than 10% of a
scheduled payment on a Motor Vehicle Loan becomes 240 days delinquent. The loss
recognition and collection policies and practices of Chase Auto Finance may
change over time in accordance with the Bank's business judgment.
Chase Auto Finance may, on a case-by-case basis, permit extensions with
respect to the Due Dates of payments on Motor Vehicle Loans in accordance with
its normal and customary servicing practices and procedures, as will be
described more fully in the related Prospectus Supplement.
WEIGHTED AVERAGE LIFE OF THE SECURITIES
The weighted average life of the Notes, if any, and the Certificates, if
any, of any series will generally be influenced by the rate at which the
principal balances of the related Receivables are paid, which payment may be in
the form of scheduled amortization or prepayments. (For this purpose, the term
'prepayments' includes prepayments in full, partial prepayments, liquidations
due to default, as well as receipts of proceeds from theft and physical damage,
credit life and credit disability insurance policies covering the Financed
Vehicles and amounts received in connection with certain other Receivables
repurchased by the Seller or purchased by the Servicer for administrative
reasons). The Receivables are prepayable by the Obligors at any time. If a
Prospectus Supplement provides that the property of the related Trust will
include a Pre-Funding Account, the related Securities will be subject to partial
redemption on or immediately following the end of the Funding Period in an
amount and in the manner specified in the related Prospectus Supplement. If
provided in any Prospectus Supplement, prepayments may also result from demands
under any Cash Collateral Guaranty or from any Reserve Account or other
enhancement related to such series with respect to Defaulted 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 Financed Vehicle securing a Receivable without the
Seller's consent. The rate of prepayment of the Motor Vehicle Loans in any
Receivables Pool may also be influenced by programs offered by lenders
(including the Bank and its affiliates) that solicit or make available credit
that may be used by Obligors to prepay Motor Vehicle 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 Bank and its affiliates). The
Bank and its 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, each Sale and Servicing Agreement and
Pooling and Servicing Agreement will provide a covenant that the Servicer may
refinance an existing Motor Vehicle Loan for an Obligor, so long as the proceeds
of such refinanced loan would be used to prepay such existing Motor Vehicle Loan
in full and any such refinanced loan is evidenced by a new promissory note. Any
such loan thus created by a refinancing would not be the property of
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the related Trust. See 'Description of the Transfer and Servicing
Agreements--Termination' herein regarding the Servicer's option to purchase the
Receivables from a given 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 of a given series on
each Payment Date or Distribution Date, as applicable, since such amount will
depend, in part, on the amount of principal collected on the related 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 of a given series. The related Prospectus
Supplement may set forth certain additional information with respect to the
maturity and prepayment considerations applicable to the particular Receivables
Pool and the related series of Securities.
Chase Auto Finance maintains certain records of the historical prepayment
experience of certain portions of its portfolio of Motor Vehicle Loans. The
Seller believes 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.
In addition, under certain limited circumstances, extensions on a
Receivable may be granted. See the related Prospectus Supplement for a
description of the terms and conditions in accordance with which the Receivables
in a particular Trust may be modified. Any such deferrals or extensions may
increase the weighted average life of the related Securities.
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 such 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 then outstanding principal balance of such Paid-Ahead Simple
Interest Receivable. The Obligor's Paid-Ahead Simple Interest Receivable will
not be considered delinquent during the Paid-Ahead Period. The related
Prospectus Supplement will set forth any Advances required to be made by the
Servicer with respect to Paid-Ahead Simple Interest Receivables.
When the Obligor resumes his or her 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 prepaid, there may be extended periods of time
during which Receivables that are current are not amortizing.
Paid-Ahead Simple Interest Receivables in any Trust will affect the
weighted average life of the related 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 such Securities. In addition, to the extent the Servicer makes 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 Advances, the loss with respect
to such Receivable may be larger than would have been the case had such Advances
not been made.
The Chase Auto Finance Portfolio has historically included Motor Vehicle
Loans which have been prepaid 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 Actuarial 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 ACTUARIAL RECEIVABLE'), the additional scheduled payments
made in such
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Collection Period may be deposited into the Paid-Ahead Account, if any, for the
related Trust and applied on subsequent Deposit Dates as described in the
related Prospectus Supplement. See 'Description of the Transfer and Servicing
Agreements--Accounts.' To the extent paid-ahead amounts on Paid-Ahead Actuarial
Receivables are deposited into the Paid-Ahead Account, no shortfalls in payment
of interest or principal will result therefrom.
POOL FACTORS AND TRADING INFORMATION
The 'NOTE POOL FACTOR' for each class of Notes, if any, will be an
eight-digit decimal which 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 Payment Date
(after giving effect to payments to be made on such Payment Date), as a fraction
of the initial outstanding principal balance of such class of Notes. The
'CERTIFICATE POOL FACTOR' for each class of Certificates, if any, will be an
eight-digit decimal which the Servicer will compute prior to each distribution
with respect to such class of Certificates expressing the remaining Certificate
Balance of such class of Certificates, as of the applicable Distribution Date or
Payment Date (after giving effect to distributions to be made on such
Distribution Date or Payment Date), as a fraction of the initial Certificate
Balance of such class of Certificates. Each Note Pool Factor and each
Certificate Pool Factor will be 1.00000000 as of the related Cutoff Date for
such series of Securities 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 applicable class of Certificates, as
the case may be. A Noteholder's portion of the aggregate outstanding principal
balance of the related class of Notes is the product of (i) the original
denomination of such Noteholder's Note and (ii) the applicable Note Pool Factor.
A Certificateholder's portion of the aggregate outstanding Certificate Balance
for the related class of Certificates is the product of (a) the original
denomination of such Certificateholder's Certificate and (b) the applicable
Certificate Pool Factor.
Securityholders will receive monthly reports concerning payments received
on the Receivables, the Pool Balance (as such term is defined in the related
Prospectus Supplement, the 'POOL BALANCE'), each Certificate Pool Factor or Note
Pool Factor, as applicable, in each case related to such Trust, and various
other items of information specified in the related Prospectus Supplement. In
addition, Securityholders of record during any calendar year will be furnished
information for tax reporting purposes not later than the latest date permitted
by law. See 'Certain Information Regarding the Securities--Reports to
Securityholders' herein.
USE OF PROCEEDS
Unless the related Prospectus Supplement provides for other applications,
the net proceeds from the sale of the Securities of a given series (after making
the initial deposit into the related Reserve Account, Yield Supplement Account
or Cash Collateral Account, if any, or the deposit of the Pre-Funded Amount into
the related Pre-Funding Account, if any) will be added to the Seller's general
funds.
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CHASE USA
Chase USA, a wholly-owned subsidiary of the Corporation, is a national
banking association and member of the Federal Reserve System and is subject to
the primary supervision of the Office of the Comptroller of the Currency. Chase
USA's activities are primarily related to general consumer lending.
The Corporation is a bank holding company the principal bank subsidiary of
which is Chase, a New York State bank.
The principal executive office of Chase USA is located at 802 Delaware
Avenue, Wilmington, Delaware 19801 (telephone (302) 575-5000).
DESCRIPTION OF THE NOTES
GENERAL
With respect to each Trust that issues Notes, one or more classes of Notes
of the related series will be issued pursuant to the terms of an Indenture, a
form of which has been 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 in this Prospectus and in the related Prospectus
Supplement, describes the material terms of the Notes of any series, but does
not purport to be complete and is subject to, and is qualified in its entirety
by reference to, the provisions of such Notes and the related Indenture.
Unless otherwise specified in the related Prospectus Supplement, each class
of Notes will initially be represented by one or more Notes, in each case
registered in the name of a nominee of DTC (together with any successor
depository selected by the Trust (the 'DEPOSITORY'), except as set forth below.
PRINCIPAL AND INTEREST ON THE NOTES
The timing and priority of payment, seniority, Interest Rate and amount of
or method of determining payments of principal and interest on each class of
Notes of a given series will be described in the related Prospectus Supplement.
The right of holders of any class of Notes to receive payments of principal and
interest may be senior or subordinate to the rights of holders of any other
class or classes of Notes of such series, as described in the related Prospectus
Supplement. Unless otherwise provided in the related Prospectus Supplement,
payments of interest on the Notes of such series will be made prior to payments
of principal thereon. To the extent provided in the related Prospectus
Supplement, a series may include one or more classes of Strip Notes entitled to
(i) principal payments with disproportionate, nominal or no interest payments or
(ii) interest payments with disproportionate, nominal or no principal payments.
Each class of Notes may have a different Interest Rate, which may be a fixed,
variable or adjustable Interest Rate (and which may be zero for certain classes
of Strip Notes), or any combination of the foregoing. The related Prospectus
Supplement will specify the Interest Rate for each class of Notes of a given
series or the method for determining such Interest Rate. See also 'Certain
Information Regarding the Securities--Fixed Rate Securities' and '--Floating
Rate Securities' herein. One or more classes of Notes of a series may be
redeemable in whole or in part under the circumstances specified in the related
Prospectus Supplement, including at the end of any applicable Funding Period or
as a result of the Servicer's exercise of its option to purchase the related
Receivables Pool.
To the extent specified in the related Prospectus Supplement, one or more
classes of the related series of Notes may have fixed principal payment
schedules. Noteholders of such Notes would be entitled to receive as payments of
principal on any given Payment Date the applicable amounts set forth on such
schedule with respect to such Notes, in the manner and to the extent set forth
in the related Prospectus Supplement.
Unless the related Prospectus Supplement specifies that Notes of different
classes within a series will have different priorities, payments to Noteholders
of all classes within a series in respect of interest will have the same
priority. Under certain circumstances, the amount available for such payments
could be less than the amount of interest payable on the Notes on any of the
dates specified for payments in the related Prospectus Supplement (each, a
'PAYMENT DATE') in which case each class of Noteholders will receive its ratable
share (based upon the aggregate amount of interest due to each such class of
Noteholders) of the aggregate amount available to be
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distributed in respect of interest on the Notes of such series. See 'Description
of the Transfer and Servicing Agreements--Distributions' and '--Credit and Cash
Flow Enhancement' herein.
In the case of a series of Notes which includes two or more classes of
Notes, the sequential order and priority of payment in respect of principal and
interest of each such class, and any schedule or formula or other provisions
applicable to the determination thereof, will be set forth in the related
Prospectus Supplement. Payments in respect of principal and interest of any
class of Notes will be made on a pro rata basis among all the Noteholders of
such class.
To the extent specified in the related Prospectus Supplement, one or more
classes of the related series of Notes may be entitled to receive principal
payments prior to the receipt of principal payments by other classes of the
related series. If so provided in the related Prospectus Supplement, such class
or classes of Notes may have a final scheduled Payment Date of less than 397
days from the date of the related Prospectus Supplement and such class or
classes may have received a short-term rating by a Rating Agency that is in one
of the two highest short-term rating categories. The failure to pay such a class
of Notes on or prior to the related final Payment Date would constitute an Event
of Default under the related Indenture.
To the extent specified in the related Prospectus Supplement, one or more
classes of the related series of Notes may be designed to receive principal
payments using a predetermined principal balance schedule (a 'planned balance')
derived by assuming two constant prepayment rates for the related Receivables
Pool. The related Prospectus Supplement will set forth a schedule of the planned
balance of such a class of Notes for each Payment Date. Holders of such a class
of Notes will be entitled to receive principal payments in respect of a Payment
Date only to the extent necessary to reduce the principal balance of such Notes
to the amount set forth as the planned balance for such Payment Date.
To the extent specified in the related Prospectus Supplement, one or more
classes of the related series of Notes may be designed to receive principal
payments using a predetermined principal balance schedule (a 'targeted balance')
derived by assuming one constant prepayment rate for the related Receivables
Pool. The related Prospectus Supplement will set forth a schedule of the
targeted balance of such a class of Notes for each Payment Date. Holders of such
a class of Notes will be entitled to receive principal payments in respect of a
Payment Date only to the extent necessary to reduce the principal balance of
such Notes to the amount set forth as the targeted balance for such Payment
Date.
To the extent specified in the related Prospectus Supplement, one or more
classes of the related series of Notes may be designed to receive principal
payments on a Payment Date only if principal payments have been made on a
specified planned amortization class of Notes or targeted amortization class of
Notes, and to receive any excess payments over the amount required to reduce the
principal amount of the planned amortization class or targeted amortization
class to the planned or targeted balance for such Payment Date.
If the Servicer exercises its option to purchase the Receivables of a Trust
in the manner and on the respective terms and conditions described under
'Description of the Transfer and Servicing Agreements-- Termination' herein, the
related outstanding Notes will be prepaid as set forth in the related Prospectus
Supplement. In addition, if the related Prospectus Supplement provides that the
property of a Trust will include a Pre-Funding Account, the related outstanding
Notes may be subject to partial prepayment on or immediately following the end
of the related Funding Period in an amount and manner specified in the related
Prospectus Supplement. In the event of such partial prepayment, the Noteholders
of the related series may be entitled to receive a prepayment premium, in the
amount and to the extent provided in the related Prospectus Supplement.
THE INDENTURE
Modification of Indenture. With respect to each Trust that has issued
Notes pursuant to an Indenture, such Trust and the related Indenture Trustee
may, with the consent of the holders of a majority of the outstanding Notes of
the related series, execute a supplemental indenture to add provisions to,
change in any manner or eliminate any provisions of, the related Indenture, or
modify (except as provided below) in any manner the rights of the related
Noteholders.
Unless otherwise specified in the related Prospectus Supplement with
respect to a series of Notes, without the consent of the holder of each such
outstanding Note affected thereby, no supplemental indenture will: (i)
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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 related Indenture regarding payment; (iii) reduce
the percentage of the aggregate amount of the outstanding Notes of such series,
the consent of the holders of which is required (a) for any such supplemental
indenture or (b) for any waiver of compliance with certain provisions of the
related Indenture or of certain defaults thereunder and their consequences as
provided for in such Indenture; (iv) modify or alter the provisions of the
related Indenture regarding the voting of Notes held by the related Trust, any
other obligor on such Notes, the Seller or an affiliate of any of them; (v)
reduce the percentage of the aggregate outstanding amount of such Notes required
to direct the related Indenture Trustee to sell or liquidate the Receivables,
the consent of the holders 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 of such series; (vi) decrease the
percentage of the aggregate principal amount of such Notes required to amend the
sections of the related Indenture that specify the applicable percentage of
aggregate principal amount of the Notes of such series necessary to amend such
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 Payment 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 related Indenture with respect to any of the collateral for such
Notes or, except as otherwise permitted or contemplated in such Indenture,
terminate the lien of such Indenture on any such collateral or deprive the
holder of any such Note of the security afforded by the lien of such Indenture.
Unless otherwise provided in the related Prospectus Supplement, the related
Trust and the related Indenture Trustee may also enter into supplemental
indentures, without obtaining the consent of the Noteholders of the related
series, for the purpose of, among other things, adding any provisions to or
changing in any manner or eliminating any of the provisions of the related
Indenture or of modifying in any manner the rights of such Noteholders; provided
that such action will not materially and adversely affect the interest of any
such Noteholder.
Events of Default; Rights Upon Event of Default. With respect to the Notes
of a given series, unless otherwise specified in the related Prospectus
Supplement, 'EVENTS OF DEFAULT' under the related Indenture will consist of: (i)
a default in the payment of any interest on any such Note for a period of five
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
related Trust made in the related Indenture which default materially and
adversely affects the rights of the related Noteholders, and which default
continues for a period of 30 days after written notice thereof is given to such
Trust by the related Indenture Trustee or to such Trust and such Indenture
Trustee by the holders of at least 25% in principal amount of such 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 related Trust. However, the
amount of principal required to be paid to Noteholders of such series under the
related Indenture will generally be limited to amounts available to be deposited
in the related Note Distribution Account (absent acceleration of the Notes).
Therefore, unless otherwise specified in the related Prospectus Supplement, the
failure to pay principal on a class of Notes on any Payment Date generally will
not result in the occurrence of an Event of Default until the final scheduled
Payment Date for such class of Notes.
If an Event of Default should occur and be continuing with respect to the
Notes of any series, unless otherwise specified in the related Prospectus
Supplement, the related Indenture Trustee or holders of a majority in principal
amount of such Notes then outstanding may declare the principal of such Notes to
be immediately due and payable. Unless otherwise specified in the related
Prospectus Supplement, such declaration may, under certain circumstances, be
rescinded by the holders of a majority in principal amount of such Notes then
outstanding.
If the Notes of any series are declared to be due and payable following an
Event of Default with respect thereto, the related Indenture Trustee may
institute proceedings to collect amounts due or foreclose on the related Trust
property, exercise remedies as a secured party, sell the related Receivables or
elect to have the related Trust
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maintain possession of such Receivables and continue to apply collections on
such Receivables as if there had been no declaration of acceleration. Unless
otherwise specified in the related Prospectus Supplement, however, the related
Indenture Trustee is prohibited from selling the related Receivables following
an Event of Default, unless (i) the holders of all such outstanding Notes
consent to such sale, (ii) the proceeds of such sale are sufficient to pay in
full the principal and the accrued interest on such outstanding Notes 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 such Notes,
and such Indenture Trustee determines that the proceeds of Receivables would not
be sufficient on an ongoing basis to make all payments on such Notes as such
payments would have become due if such obligations had not been declared due and
payable, and such Indenture Trustee obtains the consent of the holders of
sixty-six and two-thirds percent of the aggregate outstanding principal amount
of such Notes.
If an Event of Default occurs and is continuing with respect to a series of
Notes, the related Indenture Trustee will be under no obligation to exercise any
of the rights or powers under the related Indenture at the request or direction
of any of the holders of such Notes, if such Indenture Trustee reasonably
believes it will not be adequately indemnified against the costs, expenses and
liabilities which might be incurred by it in complying with such request.
Subject to the provisions for indemnification and certain limitations contained
in the related Indenture, the holders of a majority in principal amount of the
outstanding Notes of a given series will have the right to direct the time,
method and place of conducting any proceeding or any remedy available to the
related Indenture Trustee, and the holders of a majority in principal amount of
such Notes then outstanding may, in certain cases, waive any default with
respect thereto, except a default in the payment of principal or interest or a
default in respect of a covenant or provision of such Indenture that cannot be
modified without the waiver or consent of all the holders of such outstanding
Notes.
Unless and to the extent the related Prospectus Supplement specifies other
circumstances in which a holder of a Note of a series will have the right to
institute the proceedings described below, no holder of such a Note will have
the right to institute any proceeding with respect to the related Indenture
unless (i) such holder has previously given written notice to the related
Indenture Trustee of a continuing Event of Default, (ii) the holders of not less
than 25% in principal amount of the outstanding Notes of such series have made
written request to such Indenture Trustee to institute such proceeding in its
own name as Indenture Trustee, (iii) such holder or holders have offered such
Indenture Trustee indemnity reasonably satisfactory to it against the costs,
expenses and liabilities to be incurred in complying with such request, (iv)
such 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 such Indenture Trustee
during such 60-day period by the holders of a majority in principal amount of
such outstanding Notes.
In addition, each Indenture Trustee and the related Noteholders, by
accepting the related Notes, will covenant that they will not at any time
institute against the related Trust any bankruptcy, reorganization or other
proceeding under any federal or state bankruptcy or similar law.
With respect to any Trust, neither the related Indenture Trustee nor the
related Owner Trustee in its individual capacity, nor any holder of a
Certificate representing an ownership interest in such Trust nor any of their
respective owners, beneficiaries, agents, officers, directors, employees,
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 related Notes or for the agreements of such Trust contained in
the related Indenture.
CERTAIN COVENANTS
Each Indenture will provide that the related Trust may not consolidate with
or merge into any other entity, unless (i) the entity formed by or surviving
such consolidation or merger is organized under the laws of the United States,
any state or the District of Columbia, (ii) such entity expressly assumes such
Trust's obligation to make due and punctual payments of principal and interest
on the Notes of the related series and the performance or observance of every
agreement and covenant of such Trust under the Indenture, (iii) no Event of
Default with respect to such series shall have occurred and be continuing
immediately after such merger or consolidation, (iv) such Trust has been advised
that the rating of the Notes or the Certificates of such series, if any, then in
effect would not be downgraded or withdrawn by the related Rating Agencies as a
result of such merger or consolidation, (v) such action as was necessary to
maintain the lien and security interest created by such
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Indenture shall have been taken, and (vi) such Trust has received an opinion of
counsel to the effect that such consolidation or merger would have no material
adverse tax consequence to such Trust or to any related Noteholder or
Certificateholder.
Each Trust will not, among other things, (i) except as expressly permitted
by the related Indenture, Transfer and Servicing Agreements or certain related
documents with respect to such Trust (collectively, the 'RELATED DOCUMENTS'),
sell, transfer, exchange or otherwise dispose of any of the properties or assets
of such Trust, (ii) claim any credit on or make any deduction from the principal
or interest payable in respect of the Notes of the related series (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 such Trust, (iii) permit the validity or
effectiveness of the related Indenture to be impaired or permit any person to be
released from any covenants or obligations with respect to such Notes under such
Indenture except as may be expressly permitted thereby, (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 such
Trust or any party thereof, or any interest therein or the proceeds thereof, or
(v) permit any lien of such Indenture not to constitute a valid first priority
security interest in such Trust (other than with respect to any such tax,
mechanics' or other lien).
No Trust may engage in any activity other than as specified in the related
Prospectus Supplement. No Trust will incur, assume or guarantee any indebtedness
other than indebtedness incurred pursuant to the related Notes and the related
Indenture, pursuant to any Advances made to it by the Servicer or otherwise in
accordance with the Related Documents.
Annual Compliance Statement. Each Trust will be required to file annually
with the related Indenture Trustee a written statement as to the fulfillment of
its obligations under the Indenture.
Indenture Trustee's Annual Report. The Indenture Trustee for each Trust
will be required to mail each year to all related Noteholders a brief report
relating to its eligibility and qualification to continue as Indenture Trustee
under the related Indenture, any amounts advanced by it under the related
Indenture, the amount, interest rate and maturity date of certain indebtedness
owing by such Trust to the related Indenture Trustee in its individual capacity,
the property and funds physically held by such Indenture Trustee as such and any
action taken by it that materially affects the related Notes and that has not
been previously reported.
Satisfaction and Discharge of Indenture. An Indenture will be discharged
with respect to the related Notes upon the delivery to the related Indenture
Trustee for cancellation of all such Notes or, with certain limitations, upon
deposit with such Indenture Trustee of funds sufficient for the payment in full
of all such Notes.
THE INDENTURE TRUSTEE
The Indenture Trustee for a series of Notes will be specified in the
related Prospectus Supplement. The Indenture Trustee for any series may resign
at any time, in which event the Administrator of the related Trust will be
obligated to appoint a successor indenture trustee for such series. The
Administrator of the related Trust may also remove any such Indenture Trustee if
such Indenture Trustee ceases to be eligible to continue as such under the
related Indenture or if such Indenture Trustee becomes insolvent. In such
circumstances, the Administrator of the related Trust will be obligated to
appoint a successor trustee for the related series of Notes. If an Event of
Default occurs under an Indenture and the related Prospectus Supplement provides
that a given class of Notes of the related series is subordinated to one or more
other classes of Notes of such series, pursuant to the Trust Indenture Act of
1939, as amended, the related Indenture Trustee may be deemed to have a conflict
of interest and be required to resign as trustee for one or more of such classes
of Notes. In any such case, the related Indenture will provide for a successor
trustee to be appointed for one or more of such classes of Notes and may provide
for rights of senior Noteholders to consent to or direct actions by the related
Indenture Trustee which are different from those of subordinated Noteholders.
Any resignation or removal of the Indenture Trustee and appointment of a
successor indenture trustee for any series of Notes will not become effective
until acceptance of the appointment by the successor indenture trustee for such
series.
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DESCRIPTION OF THE CERTIFICATES
GENERAL
With respect to each Trust, one or more classes of Certificates of the
related series may be issued pursuant to the terms of a Trust Agreement or a
Pooling and Servicing Agreement, a form of each of which has been 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 in this
Prospectus and in the related Prospectus Supplement, describes the material
terms of the Certificates of any series, but does not purport to be complete and
is subject to, and is qualified in its entirety by reference to, the provisions
of such Certificates and the related Trust Agreement or Pooling and Servicing
Agreement, as applicable.
The related Prospectus Supplement will specify whether each class of
Certificates of the related series will initially be represented by one or more
Certificates, in each case registered in the name of the Depository or its
nominee (except as set forth below) or will be issued in fully registered,
certificated form.
DISTRIBUTIONS OF PRINCIPAL AND INTEREST
The timing and priority of distributions, seniority, allocations of losses,
Pass Through Rate and amount of or method of determining distributions with
respect to principal and interest of each class of Certificates with respect to
any series will be described in the related Prospectus Supplement. Distributions
of interest on such Certificates will be made on the dates specified in the
related Prospectus Supplement (each, a 'DISTRIBUTION DATE') and will be made
prior to distributions with respect to principal of such Certificates. To the
extent provided in the related Prospectus Supplement, a series may include one
or more classes of Strip Certificates entitled to (i) distributions in respect
of principal with disproportionate, nominal or no interest distributions, or
(ii) interest distributions with disproportionate, nominal or no distributions
in respect of principal. Each class of Certificates may have a different Pass
Through Rate, which may be a fixed, variable or adjustable Pass Through Rate
(and which may be zero for certain classes of Strip Certificates) or any
combination of the foregoing. The related Prospectus Supplement will specify the
Pass Through Rate for each class of Certificates of a given series or the method
for determining such Pass Through Rate. See also 'Certain Information Regarding
the Securities--Fixed Rate Securities' and '--Floating Rate Securities' herein.
Unless otherwise provided in the related Prospectus Supplement, distributions in
respect of the Certificates of a given series that are issued with Notes will be
subordinate to payments in respect of such Notes as more fully described in the
related Prospectus Supplement. Distributions in respect of interest on and
principal of any class of Certificates will be made on a pro rata basis among
all the Certificateholders of such class.
In the case of a series of Certificates that includes two or more classes
of Certificates, the timing, sequential order, priority of payment or amount of
distributions in respect of interest and principal on each such class, and any
schedule or formula or other provisions applicable to the determination thereof,
shall be as set forth in the related Prospectus Supplement.
If the Servicer exercises its option to purchase the Receivables of a Trust
in the manner and on the respective terms and conditions described under
'Description of the Transfer and Servicing Agreements--Termination' herein,
related Certificateholders will receive as prepayment an amount in respect of
such Certificates as specified in the related Prospectus Supplement. In
addition, if the related Prospectus Supplement provides that the property of a
Trust will include a Pre-Funding Account, related Certificateholders may receive
a partial prepayment of principal on or immediately following the end of the
Funding Period in an amount and manner specified in the related Prospectus
Supplement. In the event of such partial prepayment, the Certificateholders may
be entitled to receive a prepayment premium, in the amount and to the extent
provided in the related Prospectus Supplement.
THE TRUSTEE
The Trustee for each Trust will be specified in the related Prospectus
Supplement. The Trustee's liability in connection with the issuance and sale of
the related Securities is limited solely to the express obligations of such
Trustee set forth in the related Trust Agreement and the Sale and Servicing
Agreement or the related Pooling and Servicing Agreement, as applicable. The
Trustee under each Trust Agreement or Pooling and Servicing Agreement, as
applicable, will perform administrative functions, including, if specified in
the related Prospectus
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Supplement, making distributions from the related Certificate Distribution
Account. A Trustee may resign at any time by giving written notice thereof to
the Servicer under the related Pooling and Servicing Agreement or the
Administrator under the related Trust Agreement, in which event the Servicer or
the Administrator, as the case may be, or its successor, will be obligated to
appoint a successor trustee. The Servicer or the Administrator may also remove
the Trustee if such Trustee ceases to be eligible to continue as Trustee under
the related Pool and Servicing Agreement or Trust Agreement, as applicable,
becomes legally unable to act or if such Trustee becomes insolvent. In such
circumstances, the Servicer or the Administrator will be obligated to appoint a
successor trustee. Any resignation or removal of a Trustee and appointment of a
successor trustee will not become effective until acceptance of the appointment
by the successor trustee. If the Administrator or Servicer shall not provide
such indemnification, the Servicer may be indemnified from the related Trust,
provided, that no indemnification shall be paid on any Distribution Date or
Payment Date, as applicable, until the Securityholders and the Servicer have
been paid all amounts otherwise due and the amount on deposit in any enhancement
account shall equal its required amount.
CERTAIN INFORMATION REGARDING THE SECURITIES
FIXED RATE SECURITIES
Each class of Securities (other than certain classes of Strip Notes or
Strip Certificates) may bear interest at a fixed rate per annum ('FIXED RATE
SECURITIES') or at a variable or adjustable rate per annum ('FLOATING RATE
SECURITIES'), as more fully described below and in the related Prospectus
Supplement. Each class of Fixed Rate Securities will bear interest at the
applicable per annum Interest Rate or Pass Through Rate, as the case may be,
specified in the related Prospectus Supplement. Unless otherwise set forth in
the related Prospectus Supplement, interest on each class of Fixed Rate
Securities will be computed on the basis of a 360-day year of twelve 30-day
months. See 'Description of the Notes--Principal and Interest on the Notes' and
'Description of the Certificates--Distributions of Principal and Interest'
herein.
FLOATING RATE SECURITIES
Each class of Floating Rate Securities will bear interest for each related
Interest Reset Period (as such term is defined in the related Prospectus
Supplement with respect to a class of Floating Rate Securities, an 'INTEREST
RESET PERIOD') at a rate per annum determined by reference to an interest rate
basis (the 'BASE RATE'), plus or minus the Spread, if any, or multiplied by the
Spread Multiplier, if any, in each case as specified in the related Prospectus
Supplement. The 'SPREAD' is the number of basis points (one basis point equals
one one-hundredth of a percentage point) that may be specified in the related
Prospectus Supplement as being applicable to such class, and the 'SPREAD
MULTIPLIER' is the percentage that may be specified in the related Prospectus
Supplement as being applicable to such class.
The related Prospectus Supplement will designate a Base Rate for a given
Floating Rate Security based on the London interbank offered rate ('LIBOR'),
commercial paper rates, Federal funds rates, U.S. Government treasury securities
rates, negotiable certificates of deposit rates or another rate as set forth in
such Prospectus Supplement.
As specified in the related Prospectus Supplement, Floating Rate Securities
of a given class may also have either or both of the following (in each case
expressed as a rate per annum): (i) a maximum limitation, or ceiling, on the
rate at which interest may accrue during any interest period and (ii) a minimum
limitation, or floor, on the rate at which interest may accrue during any
interest period. In addition to any maximum interest rate that may be applicable
to any class of Floating Rate Securities, the interest rate applicable to any
class of Floating Rate Securities will in no event be higher than the maximum
rate permitted by applicable law, as the same may be modified by United States
law of general application.
Each Trust with respect to which a class of Floating Rate Securities will
be issued will appoint, and enter into agreements with, a calculation agent
(each a 'CALCULATION AGENT') to calculate interest rates on each such class of
Floating Rate Securities issued with respect thereto. The related Prospectus
Supplement will set forth the identity of the Calculation Agent for each such
class of Floating Rate Securities of a given series, which may be either the
Trustee or any Indenture Trustee with respect to such series. All determinations
of interest by the
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Calculation Agent shall, in the absence of manifest error, be conclusive for all
purposes and binding on the holders of Floating Rate Securities of a given
class. Unless otherwise specified in the related Prospectus Supplement, all
percentages resulting from any calculation of the rate of interest on a Floating
Rate Security will be rounded, if necessary, to the nearest 1/100,000 of 1%
(.0000001), with five one-millionths of a percentage point rounded upward.
INDEXED SECURITIES
To the extent so specified in any Prospectus Supplement, any class of
Securities of a given series may consist of Securities ('INDEXED SECURITIES') in
which the principal amount payable at the final scheduled Payment Date or
Distribution Date, as the case may be, for such class (the 'INDEXED PRINCIPAL
AMOUNT') is determined by reference to a measure (the 'INDEX') which will be
related to (i) the difference in the rate of exchange between United States
dollars and a currency or composite currency (the 'INDEXED CURRENCY') specified
in the related Prospectus Supplement (such Indexed Securities, 'CURRENCY INDEXED
SECURITIES'); (ii) the difference in the price of a specified commodity (the
'INDEXED COMMODITY') on specified dates (such Indexed Securities, 'COMMODITY
INDEXED SECURITIES'); (iii) the difference in the level of a specified stock
index (the 'STOCK INDEX'), which may be based on U.S. or foreign stocks, on
specified dates (such Indexed Securities, 'STOCK INDEXED SECURITIES'); or (iv)
such other objective price or economic measures as are described in the related
Prospectus Supplement. The manner of determining the Indexed Principal Amount of
an Indexed Security and historical and other information concerning the Indexed
Currency, the Indexed Commodity, the Stock Index or other price or economic
measures used in such determination will be set forth in the related Prospectus
Supplement, together with information concerning tax consequences to the holders
of such Indexed Securities.
If the determination of the Indexed Principal Amount of an Indexed Security
is based on an Index calculated or announced by a third party and such third
party either suspends the calculation or announcement of such Index or changes
the basis upon which such Index is calculated (other than changes consistent
with policies in effect at the time such Indexed Security was issued and
permitted changes described in the related Prospectus Supplement), then such
Index shall be calculated for purposes of such Indexed Security by an
independent calculation agent named in the related Prospectus Supplement on the
same basis, and subject to the same conditions and controls, as applied to the
original third party. If for any reason such Index cannot be calculated on the
same basis and subject to the same conditions and controls as applied to the
original third party, then the Indexed Principal Amount of such Indexed Security
shall be calculated in the manner set forth in the related Prospectus
Supplement. Any determination of such independent calculation agent shall in the
absence of manifest error be binding on all parties.
Unless otherwise specified in the related Prospectus Supplement, interest
on an Indexed Security will be payable based on the amount designated in the
related Prospectus Supplement as the 'FACE AMOUNT' of such Indexed Security. The
related Prospectus Supplement will describe whether principal amount of the
related Indexed Security, if any, that would be payable upon redemption or
repayment prior to the applicable final scheduled Payment Date or Distribution
Date, as the case may be, will be the Face Amount of such Indexed Security, the
Indexed Principal Amount of such Indexed Security at the time of redemption or
repayment or another amount described in such Prospectus Supplement.
BOOK-ENTRY REGISTRATION
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 Seller has been informed by DTC that DTC's nominee will be Cede, unless
another nominee is specified in the related Prospectus Supplement. Accordingly,
such nominee is expected to be the holder of record of any Book-Entry Securities
of any class or series. Unless and until Definitive Securities are issued under
the limited circumstances described herein or in the related Prospectus
Supplement, no Securityholder will be entitled to receive a physical certificate
representing its interest in such Security. All references herein and in the
related Prospectus Supplement to actions by Securityholders refer to actions
taken by DTC upon instructions
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from its Participants and all references herein and in the related Prospectus
Supplement 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 applicable Securities,
for distribution to Securityholders in accordance with DTC's procedures with
respect thereto. See '--Definitive Securities' herein.
Cedel and Euroclear will hold omnibus positions on behalf of the Cedel
Participants and the Euroclear Participants, respectively, through customers'
securities accounts in Cedel's and Euroclear's names on the books of their
respective depositaries (collectively, the 'DEPOSITARIES') which in turn will
hold such positions in customers' securities accounts in the Depositaries' names
on the books of DTC.
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a 'clearing
corporation' within the meaning of the New York Uniform Commercial Code and a
'clearing agency' registered pursuant to the provisions of Section 17A of the
Exchange Act. DTC was created to hold securities for its Participants and
facilitate the clearance and settlement of securities transactions between
Participants through electronic book-entry changes in accounts of its
Participants, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers (who may
include an underwriter with respect to any series), 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. Unless otherwise provided in the related
Prospectus Supplement, 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 related 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 Trustee as Noteholders
('NOTEHOLDERS') or Certificateholders ('CERTIFICATEHOLDERS'), as such term is
used in the related Pooling and Servicing Agreement or Trust Agreement and
Indenture, as
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applicable, and Securityholders will only be permitted to exercise the rights of
Securityholders indirectly through DTC, Cedel or Euroclear and their respective
participants or organizations.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the 'RULES'), DTC is required to make book-entry transfers of
Securities among Participants on whose behalf it acts with respect to the
Securities and to receive and transmit distributions of principal of, and
interest on, the Securities. Participants and Indirect Participants with which
Securityholders have accounts with respect to the Securities similarly are
required to make book-entry transfers and receive and transmit such payments on
behalf of their respective Securityholders. Accordingly, although
Securityholders will not physically possess Securities, the Rules provide a
mechanism by which Participants will receive payments and will be able to
transfer their interests.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a
Securityholder to pledge Securities to persons or entities that do not
participate in the DTC system, or to otherwise act with respect to such
Securities, may be limited due to the lack of physical certificates for such
Securities.
DTC has advised the Seller that it will take any action permitted to be
taken by a Noteholder under the related Indenture or a Certificateholder under
the related Trust Agreement or Pooling and Servicing 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 has advised the Seller that
it will take any actions permitted to be taken by a Noteholder under the related
Indenture or a Certificateholder under the related Trust Agreement or Pooling
and Servicing 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 an underwriter of any series.
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 an underwriter of any series. 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.
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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.
The Euroclear Operator acts under the Terms and Conditions only on behalf of
Euroclear Participants and has no record of or relationship with persons holding
through Euroclear Participants.
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 related Indenture (if any),
Trust Agreement or Pooling and Servicing Agreement, as applicable, on behalf of
a Cedel Participant or a Euroclear Participant only in accordance with its
relevant rules and procedures and subject to its Depositary's ability to effect
such actions on its behalf through DTC.
Although DTC, Cedel and Euroclear have agreed to the foregoing procedures
in order to facilitate transfers of Certificates 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, no Trustee will have any liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests of the Securities of any series held by DTC, Cedel or
Euroclear or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
DEFINITIVE SECURITIES
Unless otherwise specified in the related Prospectus Supplement, any Notes
or Certificates of a given series issued in book-entry form will be issued in
fully registered, certificated form ('DEFINITIVE NOTES' or '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 Depository or its nominee, only if (i)
the Servicer advises the applicable Trustee in writing that the Depository is no
longer willing or able to discharge properly its responsibilities as depository
with respect to such Securities and such Trustee is unable to locate a qualified
successor depository, (ii) the Servicer at its option, elects to terminate the
book-entry system through the Depository or (iii) after the occurrence of an
Event of Default or an Event of Servicing Termination with respect to such
Securities, holders representing at least a majority of the outstanding
principal amount of the related Notes or the Certificates, as applicable, of
such series advise the Depository through Participants in writing (with
instructions to notify the applicable Trustee in writing) that the continuation
of a book-entry system through the Depository (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, the Depository will be required to notify all applicable
Securityholders of a given series through Participants of the availability of
Definitive Securities. Upon surrender by the Depository of the definitive
certificates representing the corresponding Securities and receipt of
instructions for re-registration, the appropriate 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 related Indenture, Trust Agreement or Pooling and Servicing
Agreement, as applicable, directly to holders of Definitive Securities in whose
names the Definitive Securities were registered at the close of business on the
applicable record date specified for such Securities in the related Prospectus
Supplement. Such distributions will be made by check mailed to the address of
such holder as it appears on the register maintained by the related Trustee or
Indenture Trustee, as applicable. The final payment on any such Definitive
Security (whether a Definitive Security or the Securities registered in the name
of Cede
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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 related transfer agent and registrar for such series, which, unless
otherwise specified in the related Prospectus Supplement, shall initially be
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 holders of the Notes of any series (each of whom has owned a
Note for at least six months) may, by written request to the related Indenture
Trustee, obtain access to the list of all Noteholders of such series maintained
by such Indenture Trustee for the purpose of communicating with other
Noteholders of such series with respect to their rights under such Indenture or
such Notes. Such Indenture Trustee may elect not to afford the requesting
Noteholders access to the list of such Noteholders if it agrees to mail the
desired communication or proxy, on behalf and at the expense of the requesting
Noteholders, to all Noteholders of record. Unless Definitive Notes have been
issued, the only 'Noteholder' appearing on the list maintained by the related
Indenture Trustee will be Cede, as nominee for DTC. In such circumstances, any
beneficial owner of a Note wishing to communicate with other beneficial owners
of Notes will not be able to identify those beneficial owners through the
Indenture Trustee and instead will have to attempt to identify them through DTC
and its Participants or such other means as such beneficial owner may find
available.
Three or more Certificateholders of any series or one or more
Certificateholders evidencing not less than 25% of the Certificate Balance of
such series may, by written request to the applicable related Trustee or
Certificate Registrar, obtain access to the list of all Certificateholders of
such series for the purpose of communicating with such Certificateholders with
respect to their rights under the related Trust Agreement or Pooling and
Servicing Agreement, as applicable, or under such Certificates. Unless
Definitive Certificates have been issued, the only 'Certificateholder' appearing
on the list maintained by the related 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 related 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
With respect to each series of Securities, on each Payment Date or
Distribution Date, as applicable, the Paying Agent will include with each
distribution to each Noteholder (if any) and/or Certificateholder (if any) a
statement prepared by the Servicer. With respect to each series of Securities,
each such statement to be delivered to Noteholders will include (to the extent
applicable), among other things, the following information (and any other
information so specified in the related Prospectus Supplement) as to the Notes
of such series with respect to such Payment Date or the period since the
previous Payment Date, as applicable, and each such statement to be delivered to
Certificateholders will include (to the extent applicable) the following
information (and any other information so specified in the related Prospectus
Supplement) as to the Certificates of such series 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 such Notes and to the Certificate Balance of each class of
such 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 each class of Certificates of such
series;
(iii) amount of the Servicing Fee paid to the Servicer in respect of
the related Collection Period;
(iv) the amount of the Administration Fee paid to the Administrator in
respect of the related Collection Period;
(v) the aggregate unreimbursed Advances as of the last day of the
preceding Collection Period and the change in such amount from the previous
Collection Period;
(vi) the Pool Balance as of the close of business on the last day of
the preceding Collection Period;
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(vii) the aggregate outstanding principal balance and the Note Pool
Factor for each class of such Notes, and the Certificate Balance and the
Certificate Pool Factor for each class of such Certificates, in each case
after giving effect to all payments reported under clause (i) above on such
date;
(viii) the Interest Rate or Pass Through Rate for the next period with
respect to any class of Notes or any class of Certificates of such series
with variable or adjustable rates;
(ix) the amount of the aggregate realized losses, if any, for the
preceding Collection Period;
(x) the Noteholders' Interest Carryover Shortfall, the Noteholders'
Principal Carryover Shortfall, the Certificateholders' Interest Carryover
Shortfall and the Certificateholders' Principal Carryover Shortfall (each
as defined in the related Prospectus Supplement), if any, in each case as
applicable to each class of Securities and the change in such amounts from
the preceding statement;
(xi) the aggregate Purchase Amounts with respect to the Receivables,
if any, that were repurchased by the Seller or purchased by the Servicer in
such Collection Period;
(xii) the balance of the Reserve Account (if any) or any other
enhancement account, as of such date, after giving effect to changes
therein on such date, the Specified Reserve Account Balance on such date
(as defined in the related Prospectus Supplement) or any other required
enhancement account balance on such date, and the components of calculating
any such required balance;
(xiii) the balance of the Cash Collateral Account, if any, the
Available Cash Collateral Amount (and such amount expressed as a percentage
of the related Pool Balance) and the related Required Cash Collateral
Amount (each as defined in the related Prospectus Supplement);
(xiv) for each such date during the Funding Period, if any, the
remaining Pre-Funded Amount;
(xv) for the first such date that is on or immediately following the
end of the Funding Period, if any, the amount of any remaining Pre-Funded
Amount that has not been used to fund the purchase of Subsequent
Receivables and is being passed through as payments of principal on the
Securities of such series; and
(xvi) the balance in the Paid-Ahead Account, if any.
Each amount set forth pursuant to subclauses (i), (ii), (iii) and (iv) with
respect to the Notes or the Certificates of any series will be expressed as a
dollar amount per $1,000 of the initial principal balance of such Notes or the
initial Certificate Balance of such Certificates, as applicable.
Unless otherwise specified in the related Prospectus Supplement, 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
Servicer, on behalf of each Trust, will file with the Commission such periodic
reports with respect to each 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 each Trust, the Trustee or the
Paying Agent will furnish to each person who at any time during such calendar
year has been a Noteholder or Certificateholder with respect to such Trust 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' in the related Prospectus Supplement.
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DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain terms of (i) each Sale and
Servicing Agreement (or in the case of a Trust not issuing Notes, each Pooling
and Servicing Agreement) pursuant to which each Trust will acquire Receivables
from the Seller and the Servicer will agree to service such Receivables; (ii)
each Trust Agreement (or, in the case of a Trust not issuing Notes, each Pooling
and Servicing Agreement) pursuant to which each Trust will be created and (iii)
each Administration Agreement pursuant to which Chase will undertake certain
administrative duties with respect to each Trust that issues Notes
(collectively, the 'TRANSFER AND SERVICING AGREEMENTS'). Forms of the Transfer
and Servicing Agreements have been filed as exhibits to the Registration
Statement of which this Prospectus forms a part. The following summary, as well
as other pertinent information included elsewhere in this Prospectus and in the
related Prospectus Supplement, describes the material terms of the Transfer and
Servicing Agreements related to any series. This summary does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
the provisions of such Transfer and Servicing Agreements.
SALE AND ASSIGNMENT OF RECEIVABLES
On or before the closing date specified with respect to any given Trust in
the related Prospectus Supplement (the 'CLOSING DATE'), the Seller will transfer
and assign in consideration of the receipt of the related Securities, without
recourse, to the related Trust pursuant to a Sale and Servicing Agreement or to
the related Trustee pursuant to a Pooling and Servicing Agreement, as
applicable, its entire interest in the Initial Receivables, if any, certain
related property and the proceeds thereof of the related Receivables Pool,
including, among other things, its security interests in the related Financed
Vehicles. Each such Receivable will be identified in a schedule appearing as an
exhibit to such Sale and Servicing Agreement or Pooling and Servicing Agreement
(a 'SCHEDULE OF RECEIVABLES'). The Seller will sell the related Securities
offered hereby to the respective underwriters set forth in the Prospectus
Supplement. See 'Plan of Distribution.' To the extent specified in the related
Prospectus Supplement, a portion of the net proceeds received from the sale of
the Securities of a given series will be applied to the deposit of the
Pre-Funded Amount into the Pre-Funding Account and/or to the initial deposit
into a Reserve Account, a Cash Collateral Account or a Yield Supplement Account,
if any. The related Prospectus Supplement for each Trust will specify whether,
and the terms, conditions and manner under which, Subsequent Receivables will be
sold by the Seller to the related Trust from time to time during any Funding
Period on each date specified as a transfer date in the related Prospectus
Supplement (each, a 'SUBSEQUENT TRANSFER DATE').
Each Sale and Servicing Agreement or Pooling and Servicing Agreement, as
applicable, will set forth criteria that must be satisfied by each Receivable.
Unless the related Prospectus Supplement specifies that certain of the criteria
set forth below are not required to be satisfied, the criteria will include,
among others, the following: (a) each Receivable (i) in the case of a Receivable
originated with the involvement of a Dealer, has been originated in the form of
a credit sales transaction by a Dealer or a purchase money loan through a Dealer
located in one of the States of the United States (including the District of
Columbia) for the retail financing of a Financed Vehicle or (ii) in the case of
a Receivable originated without the involvement of a Dealer, has been originated
by the Originating Bank in the form of a secured loan for the retail financing
of a Financed Vehicle, and, in each case, has been fully and properly executed
by the parties thereto; (b) (i) in the case of a Receivable originated with the
involvement of a Dealer, if a retail installment sales contract, has been
purchased by the Seller from the originating Dealer and has been validly
assigned by such Dealer or the Originating Bank to the Seller in accordance with
its terms or (ii) in the case of a Receivable originated by Chase without the
involvement of a Dealer, has been purchased by the Seller from Chase, and has
been validly assigned by Chase to the Seller; (c) contains customary and
enforceable provisions such that the rights and remedies of the holder thereof
shall be adequate for realization against the collateral or the benefits of the
security; (d) each Receivable not a Final Payment Receivable provides for fully
amortizing level scheduled monthly payments (provided that the last payment may
be different from the level scheduled payment) and for accrual of interest at a
fixed rate according to the simple interest or actuarial method; (e) each
Receivable and each sale of the related Financed Vehicle complies in all
material respects with all requirements of applicable federal, state and local
laws and regulations thereunder, including usury laws, the Federal
Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit
Reporting Act, the Federal Trade Commission Act, the Magnuson-Moss Warranty Act,
Federal Reserve Board Regulations B and Z, state adaptations of the National
Consumer Act and of the Uniform Consumer Credit Code and any other consumer
credit, equal opportunity and disclosure laws applicable to such Receivable and
the
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sale thereof; (f) each Receivable constitutes the legal, valid and binding
payment obligation in writing of the Obligor, enforceable by the holder thereof
in all material respects in accordance with its terms, subject, as to
enforcement, to applicable bankruptcy, insolvency, reorganization, liquidation
and other similar laws and equitable principles relating to or affecting the
enforcement of creditors' rights; (g) subject to certain limited exceptions
specified in the Sale and Servicing Agreement or Pooling and Servicing
Agreement, as applicable, immediately prior to the sale and assignment thereof
to the Trustee, each Receivable was secured by a validly perfected first
priority security interest in the related Financed Vehicle in favor of the
Originating Bank as secured party, which security interest is assignable and has
been so assigned by the Seller to the related Trust; (h) as of the related
Cutoff Date, the Seller had no knowledge either of any facts which would give
rise to any right of rescission, setoff, counterclaim, or defense, or of the
same being asserted or threatened, with respect to any Receivable; (i) as of the
related Cutoff Date, the Seller had no knowledge of any liens or claims that
have been filed, including liens for work, labor, materials or unpaid taxes
relating to a Financed Vehicle, that would be liens prior to, or equal or
coordinate with, the lien granted by the Receivable; (j) except for payment
defaults continuing for a period of not more than 30 days as of the related
Cutoff Date, (i) the Seller has no knowledge that a default, breach, violation,
or event permitting acceleration under the terms of any Receivable exists, (ii)
the Seller has no knowledge that a continuing condition that with notice or
lapse of time would constitute a default, breach, violation or event permitting
acceleration under the terms of any Receivable exists and (iii) the Seller has
not waived any of the foregoing; (k) each Receivable requires that the Obligor
thereunder obtain comprehensive, liability, theft and physical damage insurance
covering the related Financed Vehicle; and (l) each Receivable satisfies the
other criteria specified above under 'The Receivables Pool' and each other
criterion set forth in the related Prospectus Supplement.
Unless otherwise provided in the related Prospectus Supplement, as of the
last day of the month following the date (or, if the Seller elects, the last day
of the month including such date) on which the Seller discovers or receives
written notice from the related Trustee or any Indenture Trustee that a
Receivable does not meet any of the criteria set forth in the related Sale and
Servicing Agreement or Pooling and Servicing Agreement, as applicable, and such
failure materially and adversely affects the interests of the related
Securityholders in such Receivable, the Seller, unless it has cured the failed
criterion, will repurchase such Receivable from the related 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 AMOUNT'). The repurchase obligation will
constitute the sole remedy available to the Certificateholders or the Trustee
and any Noteholders or Indenture Trustee in respect of such Trust for the
failure of a Receivable to meet any of the criteria set forth in the related
Sale and Servicing Agreement or Pooling and Servicing Agreement, as applicable.
Pursuant to each Sale and Servicing Agreement or Pooling and Servicing
Agreement, as applicable, to assure uniform quality in servicing the Receivables
and to reduce administrative costs, the related Trustee or any Indenture Trustee
will appoint the Servicer as initial custodian. Receivables will not be stamped
or otherwise marked to reflect the transfer of the Receivables to a Trust and
will not be segregated from the other Motor Vehicle Loans owned or serviced by
the Servicer. The Obligors under the Receivables will not be notified of the
transfer of the Receivables to a Trust, but the Seller's accounting records and
computer systems will reflect the sale and assignment of the Receivables to such
Trust. See 'Certain Legal Aspects of the Receivables' herein.
ACCOUNTS
With respect to each Trust that issues Notes, the Servicer will establish
and maintain one or more accounts, in the name of the Indenture Trustee on
behalf of the related Noteholders and any Certificateholders, into which all
payments made on or with respect to the related Receivables will be deposited
(the 'COLLECTION ACCOUNT'). The Servicer will also establish and maintain with
such Indenture Trustee an account, in the name of such Indenture Trustee on
behalf of such Noteholders, into which, to the extent and in the manner
described in the related Prospectus Supplement, amounts released from the
Collection Account and any Pre-Funding Account, Cash Collateral Account, Yield
Supplement Account, Reserve Account or other credit or cash flow enhancement for
payment to such Noteholders will be deposited and from which all distributions
to such Noteholders will be made (the 'NOTE DISTRIBUTION ACCOUNT'). With respect
to each Trust that issues certificates, the Servicer will establish and maintain
with the related Trustee an account, in the name of such Trustee on behalf of
such Certificateholders, into which amounts released from the Collection Account
and any Pre-Funding Account, Cash Collateral Account, Yield Supplement Account,
Reserve Account or other credit or cash flow enhancement for
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distribution to such Certificateholders will be deposited and from which all
distributions to such Certificateholders will be made (the 'CERTIFICATE
DISTRIBUTION ACCOUNT'). With respect to each Trust that does not issue Notes,
the Servicer will also establish and maintain the Collection Account and any
other Trust Account in the name of the related Trustee on behalf of the related
Certificateholders.
If so provided in the related Prospectus Supplement, the Servicer may
establish and maintain for the related Trust an additional account (the
'PAID-AHEAD ACCOUNT'), in the name of the related Indenture Trustee or Trustee,
into which, to the extent required by the related Sale and Servicing Agreement
or Pooling and Servicing Agreement, as applicable, early payments by or on
behalf of Obligors on Actuarial 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 applicable Cutoff Date ('PAID-AHEADS') will be deposited until such time as
the Paid-Ahead falls due. Until such time as Paid-Aheads 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 related Securityholders. The Paid-Ahead Account, if any,
will initially be maintained with the related Indenture Trustee or Trustee. So
long as the Seller is the Servicer and provided that (i) there exists no Event
of Servicing Termination and (ii) each other condition to holding Paid-Aheads as
may be required by the related Sale and Servicing Agreement or Pooling and
Servicing Agreement, as applicable, is satisfied, Paid-Aheads may be retained by
the Servicer until the applicable Payment Date or Distribution Date.
Any other accounts to be established with respect to a Trust, including any
Pre-Funding Account, Cash Collateral Account, Yield Supplement Account or
Reserve Account will be described in the related Prospectus Supplement.
For any series of Securities, the Collection Account and any Note
Distribution Account, Certificate Distribution Account, Pre-Funding Account,
Cash Collateral Account, Reserve Account, Yield Supplement Account, Paid-Ahead
Account and other accounts identified as such in the related Prospectus
Supplement are collectively referred to herein as the 'TRUST ACCOUNTS.'
The Trust Accounts will be maintained as Eligible Deposit Accounts. An
'ELIGIBLE DEPOSIT ACCOUNT' for any series 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 USA or 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 related
Securities and, in the case of any such institution (including Chase USA or
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 related
Securities. Unless the related Prospectus Supplement specifies that a Trust
Account will be established with another institution, each Trust Account will be
established initially with the trust department of Chase. Should Chase or any
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 each Trustee receives written confirmation from each related
Rating Agency to the effect that the ratings of the related Securities will not
be adversely affected.
If so provided in the related Prospectus Supplement, funds in the Trust
Accounts will be invested as provided in the related Sale and Servicing
Agreement or Pooling and Servicing Agreement, as applicable, in Permitted
Investments. 'PERMITTED INVESTMENTS' are generally limited to investments
confirmed by the related Rating Agencies as being consistent with the rating of
the related Securities. Permitted Investments may include Securities issued by
the Seller or its affiliates or trusts originated by the 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
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advisor, administrator, shareholder servicing agent and/or custodian or
subcustodian (for which it collects fees and expenses). Except as described
below or in the related Prospectus Supplement, Permitted Investments are limited
to obligations or securities that mature on or before the 'BUSINESS DAY' (as
defined in the related Prospectus Supplement) preceding the next Distribution
Date or Payment Date for such series (each such preceding day, a 'DEPOSIT
DATE'). However, to the extent set forth in the related Prospectus Supplement
and consistent with the ratings of the related Securities, funds in any Cash
Collateral Account, Reserve Account or Yield Supplement Account may be invested
in securities that will not mature prior to the next Deposit Date with respect
to such Certificates or Notes and will not be sold to meet any shortfalls. Thus,
the amount of cash in any Cash Collateral Account, Reserve Account or Yield
Supplement Account at any time, for example, may be less than the balance of the
Cash Collateral Account, Reserve Account or Yield Supplement Account. If the
amount required to be withdrawn from any Cash Collateral Account, Reserve
Account or Yield Supplement Account to cover shortfalls in collections on the
related Receivables (as provided in the related Prospectus Supplement) exceeds
the amount of cash in such Cash Collateral Account, Reserve Account or Yield
Supplement Account, a temporary shortfall in the amounts distributed to the
related Securityholders could result, which could, in turn, increase the average
life of the Securities of such series. Except as otherwise specified in the
related Prospectus Supplement, investment earnings on funds deposited in the
Trust Accounts, net of losses and investment expenses (collectively, 'INVESTMENT
EARNINGS'), shall be paid to the Servicer as additional servicing compensation.
Chase, in its capacity as the initial paying agent (the 'PAYING AGENT')
under each related Sale and Servicing Agreement and Indenture or Pooling and
Servicing Agreement, as applicable, will have the revocable right to withdraw
funds from a Trust Account for the purpose of making distributions to
Securityholders in the manner provided therein.
SERVICING PROCEDURES
The Servicer will service the Receivables in each Receivables Pool and will
make reasonable efforts to collect all payments due with respect to such
Receivables and, in a manner consistent with the related Sale and Servicing
Agreement or Pooling and Servicing Agreement, as applicable, and with the terms
of the Receivables, will follow such collection and servicing procedures as it
follows with respect to comparable new or used automobile receivables that it
services for itself and that are consistent with prudent industry standards. The
related Prospectus Supplement, Pooling and Servicing Agreement and Sale and
Servicing Agreement, as applicable, will set forth the terms and conditions in
accordance with which any Receivable may be modified, which terms will be set
forth in the related Prospectus Supplement. Some of such arrangements may result
in the Servicer's purchasing the Receivable for the Repurchase Amount, while
others may result in the Servicer's making Advances. Any such required purchase
or extension will constitute the sole remedy available to the Securityholders or
any related Trustee for any such uncured breach.
Each Sale and Servicing Agreement and Pooling and Servicing Agreement, as
applicable, will provide that the Servicer, on behalf of the related Trust,
shall use reasonable efforts, consistent with its customary servicing
procedures, to repossess or otherwise take possession of the Financed Vehicle
securing any Receivable with respect to which the Servicer shall have
determined, during any Collection Period, that eventual payment in full of the
amount financed (including accrued interest thereon) is unlikely (each such
Receivable, a 'DEFAULTED RECEIVABLE'); provided that no Receivable will become a
Defaulted Receivable any later than the calendar month in which more than 10% of
a scheduled payment of the Motor Vehicle Loan becomes 240 days delinquent. See
'The Receivables Pools--Insurance and Collection Procedures' herein. The
Servicer shall follow such customary and usual practices and procedures as it
shall deem necessary or advisable in its servicing of new or used automobile
receivables, which may include reasonable efforts to realize upon any recourse
to Dealers, consigning the Financed Vehicle to a Dealer for resale and selling
the Financed Vehicle at public or private sale. See 'Certain Legal Aspects of
the Receivables' herein. The proceeds of any such realization will be deposited
in the related Collection Account.
COLLECTIONS
With respect to each Trust, the Servicer will deposit all payments on the
related Receivables (from whatever source) and all proceeds of such Receivables
collected during each collection period specified in the related Prospectus
Supplement (each, a 'COLLECTION PERIOD') into the related Collection Account on
a daily basis
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within forty-eight hours of receipt. However, at any time that and for so long
as (i) the Seller is also the Servicer, and (ii) each other condition to making
deposits less frequently than daily as may be confirmed by the related Rating
Agencies or any enhancement provider or as set forth in the related Prospectus
Supplement is satisfied, the Servicer will not be required to deposit such
amounts into the Collection Account until on or before the Deposit Date
preceding the related Distribution Date or Payment Date. Pending deposit into
the Collection Account, collections may be invested by the Servicer at its own
risk and for its own benefit and will not be segregated from its own funds. If
the Servicer were unable to remit such funds, Securityholders might incur a
loss. To the extent set forth in the related Prospectus Supplement, the Servicer
may, in order to satisfy the requirements described above, obtain letters of
credit or other security for the benefit of the related Trust to secure timely
remittances of collections on the related Receivables and payment of the
aggregate Repurchase Amount with respect to Receivables purchased by the
Servicer.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Unless otherwise specified in the related Prospectus Supplement with
respect to any Trust, the Servicer will be entitled to receive the Servicing Fee
for each Collection Period payable on the related Distribution Date in an amount
equal to the sum of (i) the product of one-twelfth of the specified percentage
per annum (as set forth in the related Prospectus Supplement, the 'SERVICING FEE
RATE') and the Pool Balance as of the close of business on the last day of the
second Collection Period immediately preceding the Collection Period in which
such Distribution Date occurs and (ii) unless otherwise specified in the related
Prospectus Supplement with respect to any Trust, any Late Fees collected during
the related Collection Period (collectively, the 'SERVICING FEE'). The Servicing
Fee will also include Investment Earnings to the extent set forth in the related
Prospectus Supplement. The Servicing Fee (together with any portion of the
Servicing Fee that remains unpaid from prior Distribution Dates or Payments
Dates) will be paid solely to the extent of amounts allocable thereto as
specified in the related Prospectus Supplement. The Servicer will be entitled to
reimbursement from each Trust for certain liabilities.
'LATE FEES' shall mean, collectively, any late charges, credit-related
extension fees, non-credit related extension fees or other administrative fees
or similar charges allowed by applicable law with respect to the related
Receivables.
The Servicing Fee will compensate the Servicer for performing the functions
of a third-party servicer of motor vehicle receivables as an agent for the
Noteholders and Certificateholders, including collecting and posting all
payments and responding to inquiries of Obligors, investigating delinquencies,
reporting tax information to Obligors, advancing costs of disposition of
defaults. The Servicing Fee also will compensate the Servicer for administering
the particular Receivables Pool, accounting for collections and furnishing
monthly and annual statements to the related Trustee with respect to
distributions. The Servicing Fee will also compensate the Servicer for certain
taxes, accounting fees, outside auditor fees, the fees of the Paying Agent, the
Transfer Agent, the Registrar and the Trustee and its counsel, data processing
costs and other costs incurred in connection with administering the applicable
Receivables Pool.
ADVANCES
The Prospectus Supplement may provide that the Servicer may, in its sole
discretion, make a payment (an 'ADVANCE') with respect to each delinquent
Receivable in the related Receivables Pool in an amount described in such
Prospectus Supplement. The Servicer may elect not to make any Advance with
respect to a Receivable under the circumstances described in the related
Prospectus Supplement. The Servicer will be entitled to be reimbursed for
outstanding Advances in the manner described in the related Prospectus
Supplement. The Servicer will deposit all Advances with respect to any Payment
Date or Distribution Date, as applicable, on the related Deposit Date.
DISTRIBUTIONS
With respect to each series of Securities, beginning on the Payment Date or
Distribution Date, as applicable, specified in the related Prospectus
Supplement, distributions of principal and interest (or, where applicable, of
principal or interest only) on each class of such Securities entitled thereto
will be made by the applicable related Trustee or Paying Agent to the
Noteholders and the Certificateholders of such series. The timing, calculation,
allocation, order, source, priorities of and requirements for all payments to
any class of Noteholders of such
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series and all distributions to any class of Certificateholders of such series
will be set forth in the related Prospectus Supplement.
With respect to each Trust, on each Payment Date and Distribution Date, as
applicable, collections on the related Receivables will be transferred from the
Collection Account directly to the Note Distribution Account, if any, and the
Certificate Distribution Account, if any, for distribution to Noteholders and
Certificateholders to the extent provided in the related Prospectus Supplement.
Credit enhancement, such as a Cash Collateral Account, Reserve Account or Yield
Supplement Account, will be available to cover any shortfalls in the amount
available for distribution on such date to the extent specified in the related
Prospectus Supplement. As more fully described in the related Prospectus
Supplement, and unless otherwise specified therein, distributions in respect of
principal of a class of Securities of a given series will be subordinate to
distributions in respect of interest on such class, and distributions in respect
of one or more classes of Securities of such series may be subordinate to
payments in respect of one or more other classes of Securities of such series.
CREDIT AND CASH FLOW ENHANCEMENT
The amounts and types of credit and cash flow enhancement arrangements, if
any, and the provider thereof, if applicable, with respect to each class of
Securities of a given series will be set forth in the related Prospectus
Supplement. If and to the extent provided in the related Prospectus Supplement,
credit and cash flow enhancement may be in the form of subordination of one or
more classes of Securities, a Cash Collateral Guaranty supported by a Cash
Collateral Account, a Reserve Account, a Yield Supplement Agreement, a Yield
Supplement Account, over-collateralization, letters of credit, credit or
liquidity facilities, surety bonds, guaranteed investment contracts, swaps or
other interest rate protection agreements, repurchase obligations, other
agreements with respect to third party payments or other support, cash deposits
or such other arrangements as may be described in the related Prospectus
Supplement or any combination of two or more of the foregoing. If specified in
the related Prospectus Supplement, credit or cash flow enhancement for a class
of Securities may cover one or more other classes of Securities of the same
series, and credit or cash flow enhancement for a series of Securities may cover
one or more other series of Securities.
The presence of a Cash Collateral Guaranty, a Yield Supplement Agreement, a
Reserve Account, a Yield Supplement Account and other forms of credit
enhancement for the benefit of any class or series of Securities is intended to
enhance the likelihood of receipt by the Securityholders of such class or series
of the full amount of principal and interest due thereon and to decrease the
likelihood that such Securityholders will experience losses. Unless otherwise
specified in the related Prospectus Supplement, the credit enhancement for a
class or series of Securities will not provide protection against all risks of
loss and will not guarantee repayment of the entire principal balance and
interest thereon. If losses occur that exceed the amount covered by any credit
enhancement or that are not covered by any form of credit enhancement,
Securityholders of any class or series will bear their allocable share of
deficiencies, as described in the related Prospectus Supplement. In addition, if
a form of credit enhancement covers more than one series of Securities,
Securityholders of any such series will be subject to the risk that such credit
enhancement will be exhausted by the claims of Securityholders of other series.
The Seller may replace or reduce the credit enhancement for any class of
Securities with another form of credit enhancement without the consent of the
related Securityholders, provided the related Rating Agencies confirm in writing
that such substitution or reduction will not result in the reduction,
qualification or withdrawal of the rating of such class of Securities or any
class of Securities of the related Series.
Reserve Account. If provided in the related Prospectus Supplement,
pursuant to the related Sale and Servicing Agreement, the Seller will establish
for a series or class of Securities an account, as specified in the related
Prospectus Supplement (the 'RESERVE ACCOUNT'), which will be maintained in the
name of the related Indenture Trustee. Unless otherwise provided in the related
Prospectus Supplement, the Reserve Account will be included in the property of
the related Trust. The Reserve Account will be funded by an initial deposit on
the Closing Date, and if the related Series has a Funding Period, will also be
funded on each Subsequent Transfer Date. The related Prospectus Supplement will
specify whether the Reserve Account will be funded solely from the proceeds of a
loan or loans to be made by a Cash Collateral Depositor pursuant to a loan
agreement (each a 'LOAN AGREEMENT'), from a deposit or deposits by the Seller,
or by a combination thereof. As described in the related Prospectus Supplement,
the amount on deposit in the Reserve Account will be increased on each Payment
Date up to the Specified Reserve Account Balance (as defined in the related
Prospectus Supplement) by the deposit therein of the amount of collections on
the related Receivables remaining on each such Payment Date
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after the payment of all other required payments and distributions on such date.
The related Prospectus Supplement will describe the circumstances and manner
under which distributions may be made out of the related Reserve Account, either
to holders of the Securities covered thereby, to the Seller or to a third-party
specified therein.
Cash Collateral Guaranty. If provided in the related Prospectus Supplement
with respect to a Trust classified as a grantor trust, the related Trustee will
have the right to demand payments under a Cash Collateral Guaranty under the
circumstances described therein. Each Cash Collateral Guaranty will be secured
by an account (each, a 'CASH COLLATERAL ACCOUNT'), which will be held in the
name of a cash collateral trustee (the 'CASH COLLATERAL TRUSTEE'), as specified
in the related Prospectus Supplement. The related Prospectus Supplement will
specify whether the Cash Collateral Account will be funded on the date of the
issuance of the related series of Securities from the proceeds of a loan to be
made by a Cash Collateral Depositor pursuant to a Loan Agreement, from a deposit
by the Seller or by a combination thereof. To the extent specified in the
related Prospectus Supplement, funds in the related Cash Collateral Account will
thereafter be supplemented by the deposit of amounts remaining on any
Distribution Date after making all other distributions required on such date.
Each Cash Collateral Guaranty will not be a recourse obligation of the related
Cash Collateral Depositor, any Cash Collateral Trustee, any related Trustee, the
Bank, as Seller or as Servicer, and will be secured solely with amounts, if any,
on deposit in the related Cash Collateral Account. Unless otherwise specified in
the related Prospectus Supplement, such Cash Collateral Account and any amounts
therein will not be the property of any Trust, but will be held in accordance
with the related Cash Collateral Trust Agreement as further described therein.
The related Prospectus Supplement will describe the circumstances and manner
under which distributions may be made out of any Cash Collateral Account, either
to the holders of the Securities covered thereby, to the Seller, to the Cash
Collateral Depositor or to a third party specified therein.
Yield Supplement Account; Yield Supplement Agreement. If so provided in
the related Prospectus Supplement, the Seller or a third party will enter into a
Yield Supplement Agreement and/or establish a Yield Supplement Account with the
related Indenture Trustee or related Trustee for the benefit of the holders of
the related Securities. A Yield Supplement Agreement or a Yield Supplement
Account will be designed to provide payments to the Securityholders in respect
of Receivables the Contract Rate of which is less than the Required Rate. A
Yield Supplement Account may be an asset of the obligor under the Yield
Supplement Agreement holding funds to secure the obligation of such obligor to
make payments under such Yield Supplement Agreement or, in the case of a Trust
that is not classified as a grantor trust, may be an asset of the Trust from
which cash may periodically be withdrawn to provide payments to the
Securityholders.
NET DEPOSITS
As an administrative convenience, the Seller, so long as it is Servicer and
is permitted to make deposits to the Collection Account on a monthly basis, will
be permitted to deposit the collections, aggregate Advances and Purchase Amounts
for any Trust for or with respect to the related Collection Period net of
distributions to be made to the Servicer or the Seller for such Trust with
respect to such Collection Period (remitting amounts to the Seller directly).
With respect to any Trust that issues both Certificates and Notes, if the
related Payment Dates do not coincide with Distribution Dates, all
distributions, deposits or other remittances made on a Payment Date will be
treated as having been distributed, deposited or remitted on the Distribution
Date for the applicable Collection Period for purposes of determining other
amounts required to be distributed, deposited or otherwise remitted on such
Distribution Date.
STATEMENTS TO TRUSTEES AND TRUST
Prior to each Distribution Date with respect to each series of Securities,
the Servicer will provide to the related Trustee and any 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 Securityholders of such series described herein under 'Certain
Information Regarding the Securities--Reports to Securityholders.'
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EVIDENCE AS TO COMPLIANCE
Each Sale and Servicing Agreement or Pooling and Servicing Agreement, as
applicable, will provide that a firm of independent public accountants will
annually furnish to the related Trustee and any 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 applicable Closing Date) with
certain standards relating to the servicing of the applicable Receivables, or as
to the effectiveness of its processing and reporting procedures and certain
other matters.
Each Sale and Servicing Agreement or Pooling and Servicing Agreement, as
applicable, 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 or 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
such Sale and Servicing Agreement or Pooling and Servicing Agreement, as
applicable, throughout the preceding twelve months (or, in the case of the first
such certificate, from the Closing Date) or, if there has been a default in the
fulfillment of any such obligation, describing each such default.
Copies of such statements and certificates may be obtained by
Securityholders by a request in writing addressed to the Servicer.
CERTAIN MATTERS REGARDING THE SERVICER
Each Sale and Servicing Agreement or Pooling and Servicing Agreement, as
applicable, will provide that the Servicer may not resign from its obligations
and duties as Servicer thereunder, except (i) upon determination that the
Servicer's performance of such duties is no longer permissible under applicable
law or (ii) in the event of the appointment of a successor servicer, upon
notification by each Rating Agency then rating any of the related Securities
that the rating then assigned to any such Securities will not be reduced or
withdrawn. Such resignation will not become effective until the related Trustee
(which shall not be obligated to act as successor servicer if the Servicer has
resigned for a reason other than that the performance of its duties are no
longer permissible under applicable laws), Indenture Trustee (if any) or a
successor servicer has assumed the Servicer's servicing responsibilities and
obligations under such Sale and Servicing Agreement or Pooling and Servicing
Agreement, as applicable.
Each Sale and Servicing Agreement or Pooling and Servicing Agreement, as
applicable, will also provide that, except in connection with a merger or
consolidation, neither the Seller nor the Servicer may transfer or assign all,
or a portion of, its rights, obligations and duties under any Sale and Servicing
Agreement or Pooling and Servicing Agreement, unless (i) (A) such transfer or
assignment will not result in a reduction or withdrawal by each Rating Agency
then rating any of the related Securities of the rating then assigned to any
such Securities and (B) the Indenture Trustee (if any) and the related Trustee
have consented to such transfer or assignment or (ii) the Indenture Trustee (if
any), the related Trustee and holders of Securities evidencing not less than 51%
of the voting interests thereof consent thereto. Any transfer or assignment with
respect to the Servicer of all of its rights, obligations and duties will not
become effective until a successor servicer has assumed the Servicer's rights,
obligations and duties under the related Sale and Servicing Agreement or Pooling
and Servicing Agreement, as applicable.
Each Sale and Servicing Agreement or Pooling and Servicing Agreement, as
applicable, will also provide that so long as the Bank (or its successor or
assign) or the Trustee is the Servicer, in the ordinary course of its business,
the Servicer will have the right to delegate any of its duties under the related
Sale and Servicing Agreement or Pooling and Servicing Agreement, as applicable,
to a third party. Any compensation payable to such third party will be paid by
the Servicer from its own funds, and none of the related Trust, Trustee (if not
the Servicer), Indenture Trustee (if any) or Securityholders will be liable for
such compensation. Notwithstanding any delegation of duties by the Servicer, the
Servicer will not be relieved of its liability and responsibility with respect
to such duties.
Each Sale and Servicing Agreement or Pooling and Servicing Agreement, as
applicable, will further provide that neither the Servicer nor any of its
directors, officers, employees, and agents shall be under any liability to the
related Trust, Trustee, Indenture Trustee (if any) or Securityholders for taking
any action or for refraining from taking any action pursuant to the related Sale
and Servicing Agreement or Pooling and Servicing Agreement, as applicable;
provided, however, that neither the Servicer nor any such person will be
protected against any liability that would otherwise be imposed by reason of
willful misfeasance, bad faith or gross negligence in the
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performance of duties or by reason of reckless disregard of obligations and
duties thereunder. Each Sale and Servicing Agreement or Pooling and Servicing
Agreement, as applicable, will further provide that the Servicer, and its
directors, officers, employees and agents are entitled to indemnification by the
related Trust for, and will be held harmless against, any loss, liability or
expense incurred in connection with any legal action relating to their
performance of servicing duties under the related Sale and Servicing Agreement
or Pooling and Servicing Agreement, as applicable, that is not otherwise
indemnified, other than (i) any loss or liability otherwise reimbursable
thereunder and (ii) any loss, liability, or expense incurred by reason of
willful misconduct, negligence or bad faith in performance of their duties
thereunder or by reason of their reckless disregard of obligations and duties
thereunder; provided, however, that such indemnification will be paid on a
Payment Date or Distribution Date only from amounts in excess of the amount
required to be maintained on deposit in the related enhancement account, or if
there is no such enhancement account, only after all payments or deposits
required under the related Sale and Servicing Agreement or Pooling and Servicing
Agreement, as applicable, for the benefit of Securityholders and the Servicer
have been made. In addition, each Sale and Servicing Agreement or Pooling and
Servicing Agreement, as applicable, will provide that the Servicer is under no
obligation to appear in, prosecute or defend any legal action that is not
incidental to the Servicer's servicing responsibilities under the related Sale
and Servicing Agreement or Pooling and Servicing Agreement, as applicable, 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 such Sale and Servicing Agreement or
Pooling and Servicing Agreement, as applicable, and the rights and duties of the
parties thereto and the interests of the related Securityholders thereunder. In
such event, the legal expenses and costs of such action and any liability
resulting therefrom will be expenses, costs and liabilities of the related Trust
and the Servicer will be entitled to be reimbursed therefor out of the related
enhancement account; provided, however, that such reimbursement will be paid on
a Payment Date or Distribution Date only from amounts in excess of the amount
required to be maintained on deposit in the related enhancement account, or if
there is no such enhancement account, only after all payments required under the
related Sale and Servicing Agreement or Pooling and Servicing Agreement, as
applicable, for the benefit of Securityholders or the Servicer have been made.
EVENTS OF SERVICING TERMINATION
Except as otherwise provided in the related Prospectus Supplement, 'EVENTS
OF SERVICING TERMINATION' under each Sale and Servicing Agreement or Pooling and
Servicing Agreement, as applicable, will consist of (i) any failure by the
Servicer to deliver to the related Trustee or any Indenture Trustee the
Servicer's certificate for the related Collection Period or any failure by the
Servicer to deliver to the related Trustee or any Indenture Trustee for deposit
in any Trust Account any proceeds or payments required to be delivered under the
terms of such Securities or the related Sale and Servicing Agreement or Pooling
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 upon receipt of written notice to the Servicer by
the related Trustee or Indenture Trustee or to the related Trustee or Indenture
Trustee and the Servicer by holders of the related Notes evidencing not less
than 25% of the principal amount of such Notes then outstanding (or, if no Notes
are outstanding, Certificates of the related series evidencing 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 related Sale and Servicing Agreement
or Pooling and Servicing Agreement or Indenture, which failure materially and
adversely affects the rights of the related Trust or the Securityholders (which
determination shall be made without regard to whether funds are available to the
Securityholders pursuant to any related enhancement) and which continues
unremedied for 60 days after the date of written notice of such failure to the
Servicer by the related Trustee or any Indenture Trustee or to the related
Trustee or any Indenture Trustee and the Servicer by holders of the related
Notes (so long as Notes are outstanding) evidencing not less than 25% of the
principal amount of such Notes then outstanding (25% or, if no Notes are
outstanding, Certificates of the related series evidencing not less than 25% of
the Certificate Balance then Outstanding); (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
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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, with the written
consent of any provider of enhancement specified in the related Prospectus
Supplement, waive certain defaults by the Servicer in the performance of its
obligations.
RIGHTS UPON EVENT OF SERVICING TERMINATION
In the case of any Trust that has issued Notes, unless otherwise provided
in the related Prospectus Supplement, as long as an Event of Servicing
Termination under a Sale and Servicing Agreement remains unremedied, the related
Indenture Trustee or holders of Notes of the related series evidencing not less
than a majority of the principal amount of such 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 related Trustee or holders of Certificates
evidencing not less than a majority of the Certificate Balance then outstanding)
may terminate all the rights and obligations of the Servicer under such Sale and
Servicing Agreement, whereupon such Indenture Trustee or a successor servicer
appointed by such Indenture Trustee will succeed to all the responsibilities,
duties and liabilities of the Servicer under such Sale and Servicing Agreement
and will be entitled to similar compensation arrangements. In the case of any
Trust that has not issued Notes, unless otherwise provided in the related
Prospectus Supplement, as long as an Event of Servicing Termination under the
related Sale and Servicing Agreement or Pooling and Servicing Agreement, as
applicable, remains unremedied, the related Trustee or holders of Certificates
of the related series evidencing not less than a majority of the Certificate
Balance then outstanding, by notice given in writing to the Servicer (and to the
related Trustee if given by Certificateholders), may terminate all the rights
and obligations of the Servicer under such Sale and Servicing Agreement or
Pooling and Servicing Agreement, whereupon such Trustee or a successor servicer
appointed by such Trustee will succeed to all the rights, duties and liabilities
of the Servicer under such Sale and Servicing Agreement or Pooling and Servicing
Agreement and will be entitled to similar compensation arrangements. In the
event that such Indenture Trustee or 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. Such Indenture Trustee or 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 such Sale and Servicing Agreement or Pooling and
Servicing Agreement.
WAIVER OF PAST DEFAULTS
With respect to each Trust that has issued Notes, unless otherwise provided
in the related Prospectus Supplement, the holders of Notes evidencing at least a
majority in principal amount of the then outstanding Notes of the related series
(or, the holders of any Certificates of such series evidencing 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 related Indenture
Trustee or such Noteholders) may, on behalf of all such Noteholders and
Certificateholders, waive any default by the Servicer in the performance of its
obligations under the related Sale and Servicing Agreement and its consequences,
except an Event of Servicing Termination in making any required deposits to or
payments from any of the Trust Accounts in accordance with such Sale and
Servicing Agreement. Therefore, the Noteholders of a series have the ability, as
limited above, to waive defaults by the Servicer which could materially and
adversely affect the related Securityholders. With respect to each Trust that
has not issued Notes, holders of Certificates of such series evidencing not less
than a majority of the Certificate Balance then outstanding may, on behalf of
all such Certificateholders, with the consent of the provider of any
enhancement, waive any default by the Servicer in the performance of its
obligations under the related Sale and Servicing Agreement or Pooling and
Servicing Agreement, as applicable, except an Event of Servicing Termination in
making any required deposits to or payments from the related Trust Accounts in
accordance with such Sale and Servicing Agreement or Pooling and Servicing
Agreement as applicable. No such waiver will impair such Securityholders' rights
with respect to subsequent defaults.
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AMENDMENT
Unless otherwise provided in the related Prospectus Supplement, each of the
Transfer and Servicing Agreements may be amended by the parties thereto, without
prior notice to the related Securityholders but with prior consent of the
related Trustee and prior notice to any related Rating Agencies (i) to cure any
ambiguity, to correct or supplement any provision therein or in the related
Securities which may be inconsistent with any other provision therein, to
evidence a succession to the Servicer or the Seller pursuant to the related
Transfer and Servicing Agreement, or 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 an
officer's certificate and/or opinion of counsel reasonably acceptable to the
related Trustee and any Indenture Trustee, materially and adversely affect the
interests of the related Trust or any related Securityholders 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. Unless otherwise
specified in the related Prospectus Supplement, the Transfer and Servicing
Agreements may also be amended by the Seller, the Servicer, the related Trustee
and any related Indenture Trustee with the consent of the holders of Notes
evidencing at least a majority in principal amount of then outstanding Notes, if
any, of the related series and the holders of the Certificates, if any, of the
related series evidencing at least a majority of the Certificate Balance then
outstanding for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of such Transfer and Servicing
Agreements or of modifying in any manner the rights of such Securityholders;
provided, however, that no such amendment may (i) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on the related Receivables or distributions that are required to be
made for the benefit of such Securityholders, or (ii) reduce the aforesaid
percentage of the Notes or Certificates of such series which are required to
consent to any such amendment, without the consent of the holders of all the
outstanding Notes or Certificates, as the case may be, of such series.
PAYMENT OF NOTES
Upon the payment in full of all outstanding Notes of a given series and the
satisfaction and discharge of the related Indenture, the related Owner Trustee
will succeed to all the rights of the Indenture Trustee, and any
Certificateholders of such series, will succeed to all the rights of the
Noteholders of such series under the related Sale and Servicing Agreement,
except as otherwise provided therein.
TERMINATION
With respect to each Trust, the obligations of the Servicer, the Seller,
the related Trustee and any related Indenture Trustee, if any, pursuant to the
Transfer and Servicing Agreements will terminate upon the earlier of (i) the
Distribution Date or Payment Date next succeeding the month that is six months
after the maturity or other liquidation of the last related Receivable and the
disposition of any amounts received upon liquidation of any property remaining
in the related Trust and (ii) the payment to Securityholders of the related
series of all amounts required to be paid to them pursuant to the Transfer and
Servicing Agreements.
Unless otherwise provided in the related Prospectus Supplement, in order to
avoid excessive administrative expense, the Servicer will be permitted at its
option to purchase from each Trust, as of the last day of any applicable
Collection Period, if the then outstanding Pool Balance with respect to the
Receivables held by such Trust is 5% or less of the initial Pool Balance (as
defined in the related Prospectus Supplement, the 'ORIGINAL POOL BALANCE'), all
the remaining related Receivables at a price equal to the aggregate of the
Repurchase Amounts thereof as the end of such Collection Period.
As more fully described in the related Prospectus Supplement, any
outstanding Notes of the related series will be redeemed concurrently with the
purchase event specified above and the subsequent distribution to any related
Certificateholders of all amounts required to be distributed to them pursuant to
the applicable Trust Agreement or Pooling and Servicing Agreement will effect
early retirement of the Certificates of such series.
The related Trustee and any related Indenture Trustee will give written
notice of termination to each Securityholder of the related series of record,
which notice will specify the Distribution Date and/or Payment Date upon which
such Securityholders may surrender their Securities to the related 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
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registered in the name of Cede representing the Securities) at the office or
agency of the related Trustee or the Transfer Agent and Registrar, as the case
may be, specified in the notice of termination.
With respect to any Trust issuing Notes, subject to applicable law and
after the Indenture Trustee has taken certain measures to notify Noteholders,
any money held by the Indenture Trustee or any Paying Agent in trust for payment
on the Notes which remain unclaimed for two years shall, upon request of such
Trust, be paid to such Trust. Following any such payment, the Trustee and any
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 such Trust. If, within 18 months after the first notice
of final payment on any Certificates, there remain Certificates which have not
been surrendered for cancellation, the related 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 Seller.
Any amounts remaining in a Trust not issuing Notes, after the related
Trustee has taken certain measures to locate a Certificateholder and such
measures have failed, will, under certain circumstances, be distributed to the
United Way or a similar charitable organization located or operating in the New
York metropolitan area as specified by the Servicer; provided, however, that
such funds will, under certain circumstances, be distributed by the Paying Agent
to the United Way no later than three years after the final Distribution Date
specified in such Trustee's written notice of termination to the
Certificateholders.
ADMINISTRATION AGREEMENT
With respect to any Trust that issues Notes, Chase, in its capacity as
administrator (the 'ADMINISTRATOR'), will enter into an agreement (as amended
and supplemented from time to time, the 'ADMINISTRATION AGREEMENT') with each
Trust and the related Indenture Trustee pursuant to which the Administrator will
agree, to the extent provided in such Administration Agreement, to provide the
notices and to perform on behalf of the related Trust certain other
administrative obligations required by the related Indenture. As compensation
for the performance of the Administrator's obligations under the Administration
Agreement and as reimbursement for its expenses related thereto, the
Administrator will be entitled to a monthly administration fee in an amount to
be set forth in the related Prospectus Supplement (the 'ADMINISTRATION FEE'). To
the extent and on the terms set forth in the related Administration Agreement
and described in the related Prospectus Supplement, the Administrator may act
directly or through its agents and attorneys.
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CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
GENERAL
The Receivables are 'chattel paper' as defined in the Uniform Commercial
Code in effect in the State of New York (the 'UCC'). 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 each Trust's ownership or security interest
in its Receivables, the Seller will file UCC-1 financing statements with the
appropriate governmental authorities in the State of Delaware to give notice of
such Trust's and any related Indenture Trustee's ownership of and security
interest in the Receivables and their proceeds. Under each Sale and Servicing
Agreement and Pooling and Servicing Agreement, the Seller will be obligated to
maintain the perfection of each Trust's and any related 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 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 since
they would not be marked to show such sale, although Chase Auto Finance's master
computer records will indicate such sale.
SECURITY INTERESTS IN THE FINANCED VEHICLES
Security interests in vehicles registered in most states may be perfected
by a notation of the secured party's lien on, or possession of, the certificate
of title for such vehicle, depending on state law. Since around December 1994
and April 1997, respectively, Chase Auto Finance has participated in
California's and Virginia's electronic titles programs. Since such times
California and Virginia liens have been noted electronically rather than on
paper certificates. Chase Auto Finance's practice is to obtain a representation
and warranty from each Dealer or the related Obligor (in the case of Receivables
originated without involvement of Dealers) to the effect that the Originating
Bank has been designated as the sole lien holder on the certificate of title. In
the event the Dealer or related Obligor fails, due to clerical errors or for any
other reason, to effect such notation of the Originating Bank's interest in a
Financed Vehicle, the Originating Bank would not have a perfected first priority
security interest in such Financed Vehicle. In this event the only recourse of
the Originating Bank, the Seller or the Servicer vis-a-vis third parties would
be against the Obligor on an unsecured basis or against a Dealer.
Pursuant to the terms of each Sale and Servicing Agreement or Pooling and
Servicing Agreement, as applicable, the Seller will assign its security interest
in the individual Financed Vehicles to each Trust, and if applicable, such Trust
will assign each such security interest to the related Indenture Trustee.
However, because of the administrative burden and expense, neither the Seller
nor the related Trustee will amend the certificates of title to identify the
related Trust or any related Indenture Trustee as the new secured party and,
accordingly, the Originating Bank will continue to be named as the secured party
on the certificates of title relating to the Financed Vehicles. In a majority of
states, 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 and the new secured party
succeeds to the Originating Bank's rights as the secured party as against
creditors of the Obligor. In certain states, in the absence of such amendment
and delivery, the Seller, the related Trust and/or any related Indenture Trustee
may not have a perfected security interest in the Financed Vehicle. In such
event or in the event that the Trust does not have a perfected first priority
security interest in the Financed Vehicle, the only recourse of such Trust
vis-a-vis third parties would be against an Obligor on an unsecured basis or (if
the Originating Bank did not have a perfected security interest in such Financed
Vehicle) against the Seller pursuant to its repurchase obligation. See
'--Repurchase Obligation' herein.
Except as described above, in the absence of fraud or forgery by a vehicle
owner or administrative error by state recording officials, the notation of the
lien of the Originating Bank on the certificate of title will be sufficient to
protect each Trust against the rights of subsequent purchasers of a Financed
Vehicle or subsequent lenders who take a security interest in the Financed
Vehicle. If there are any Financed Vehicles as to which the Originating Bank has
failed to perfect the security interest assigned to a Trust (i) such security
interest would be
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subordinate to, among others, holders of perfected security interests and (ii)
subsequent purchasers of such Financed Vehicles would take possession free and
clear of such security interest. There also exists a risk in not identifying
each Trust or any related Indenture Trustee as the new secured party on the
certificate of title that, through fraud or negligence, the security interest of
such Trust or Indenture Trustee could be released.
In the event that the owner of a Financed Vehicle moves to a state other
than the state in which such Financed Vehicle initially is registered, under the
laws of most states the perfected security interest in the Financed Vehicle will
continue for four months after such relocation and thereafter until the owner
re-registers the Financed Vehicle in such state. A majority of states generally
require surrender of a certificate of title to re-register a vehicle.
Accordingly, Chase Auto Finance must surrender possession if it holds the
certificate of title to such Financed Vehicle or, in the case of Financed
Vehicles 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 motor vehicle, Chase Auto Finance would receive notice
of surrender if the security interest in the Financed Vehicle is noted on the
certificate of title. Accordingly, Chase Auto Finance would have the opportunity
to re-perfect the security interest in the Financed Vehicle in the state of
relocation. In states that do not require a certificate of title for
registration of a motor vehicle, re-registration could defeat perfection. In the
ordinary course of servicing its portfolio of Motor Vehicle Loans, Chase Auto
Finance takes steps to effect such re-perfection upon receipt of notice of
re-registration or information from the Obligor as to relocation. Similarly,
when an Obligor under a Receivable sells a Financed Vehicle, Chase Auto Finance
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
each Sale and Servicing Agreement and Pooling and Servicing Agreement, the
Servicer is obligated to take such steps, at the Servicer's expense, as are
necessary to maintain perfection of security interests in the Financed Vehicles.
Under the laws of many states, certain possessory liens for repairs
performed on a motor vehicle and storage, as well as certain rights in favor of
Federal and state governmental authorities arising from the use of a motor
vehicle in connection with illegal activities, may take priority even over a
perfected security interest. Certain U.S. federal tax liens may have priority
over the lien of a secured party. The Seller will represent in each Sale and
Servicing Agreement and Pooling and Servicing Agreement that it has no knowledge
of any such liens with respect to any Financed Vehicle. However, such liens
could arise at any time during the term of a Receivable. No notice will be given
to the Trustee in the event such a lien arises.
ENFORCEMENT OF SECURITY INTERESTS IN VEHICLES
The Servicer on behalf of each Trust and any Indenture Trustee may take
action to enforce its security interest by repossession and resale of the
Financed Vehicles securing the Receivables. The actual repossession may be
contracted out to third party contractors. Under the UCC and laws applicable in
most states, a creditor can repossess a motor vehicle securing a loan by
voluntary surrender, 'self-help' repossession that is 'peaceful' (i.e., without
breach of the peace) and, in the absence of voluntary surrender and the ability
to repossess without breach of the peace, by judicial process. 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 a sale. In the event of such repossession and
resale of a Financed Vehicle, the Trust would be entitled to be paid out of the
sale proceeds before such proceeds could be applied to the payment of the claims
of unsecured creditors or the holders of subsequently perfected security
interests or, thereafter, to the debtor.
Under the 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 motor vehicle 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 and resell collateral or enforce a deficiency
judgment.
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OTHER MATTERS
The Seller intends that each transfer of Receivables by it to a Trust under
a Sale and Servicing Agreement or a Pooling and Servicing Agreement constitutes
a sale. In the event that the Seller were to become insolvent, the FDIA, as
amended by FIRREA, sets forth certain powers that the FDIC may exercise if it
were appointed receiver of the Seller. To the extent that the Seller has granted
a security interest in the Receivables to a Trust and that interest was validly
perfected before the Seller's insolvency and was not taken in contemplation of
insolvency or with the intent to hinder, delay or defraud the Seller or its
creditors, that security interest would not be subject to avoidance by the FDIC
as receiver of the Seller. Positions taken by the FDIC staff prior to the
passage of FIRREA do not suggest that the FDIC, if appointed receiver of the
Seller, would interfere with the timely transfer to such Trust of payments
collected on the related Receivables. If, however, the FDIC were to assert a
contrary position, or were to require the 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 the Seller as provided under the
FDIA, delays in payments on the related Securities and possible reductions in
the amount of those payments could occur.
Numerous federal and state consumer protection laws may impose requirements
applicable to the origination and lending pursuant to the contracts, 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 each Trust) to all claims and defenses that the obligor in
the transaction could assert against the seller of the goods. Liability of a
subsequent holder under the FTC Rule is limited to the amounts paid by the
obligor under the contract, and a subsequent holder of the contract may also be
unable to collect any balance remaining due thereunder from the obligor. The
Uniform Consumer Credit Code applicable in certain states contains provisions
which generally duplicate this rule.
Each Sale and Servicing Agreement and Pooling and Servicing Agreement will
set forth criteria that must be satisfied by each Receivable, and such criteria
will provide, among other things, that each Receivable complies with all
requirements of law in all material respects. Accordingly, if an Obligor has a
claim against a Trust for violation of any law and such claim materially and
adversely affects the related Securityholders' interest in a Receivable, such
violation would result in the failure to satisfy a criterion in the related Sale
and Servicing Agreement or Pooling and Servicing Agreement and would create an
obligation of the Seller to repurchase the Receivable unless such failure is
cured.
REPURCHASE OBLIGATION
Under each Sale and Servicing Agreement and Pooling and Servicing
Agreement, each Receivable must satisfy certain criteria, and such criteria
relate to, among other things, the validity, subsistence, perfection, and
priority of the security interest of the Originating Bank in each Financed
Vehicle. Accordingly, if any defect exists in the perfection of the security
interest of the Seller in any Financed Vehicle and such defect materially and
adversely affects the related Securityholders' interest in the related
Receivable, such defect would result in the failure to satisfy a criterion in
the related Sale and Servicing Agreement or Pooling and Servicing Agreement and
would create an obligation of the Seller to repurchase such Receivable unless
such failed criterion is cured.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ('ERISA'),
and Section 4975 of the Internal Revenue Code of 1986, as amended (the 'CODE'),
impose certain requirements on employee benefit plans and certain other plans
and arrangements, including individual retirement accounts and annuities, Keogh
plans and certain collective investment funds or insurance company general or
separate accounts in which such plans, accounts or arrangements are invested,
that are subject to the fiduciary responsibility provisions of ERISA and/or
Section 4975 of the Code (collectively, 'PLANS'), and on persons who are
fiduciaries with respect to Plans, in connection with the investment of 'plan
assets' of any Plan ('PLAN ASSETS'). ERISA generally
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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 Plan 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 and refer to the related Prospectus Supplement 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 of any
series 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.
PLAN OF DISTRIBUTION
The Securities of each series may be sold to or through underwriters (the
'UNDERWRITERS') by a negotiated firm commitment underwriting and public
reoffering by the Underwriters or such other underwriting arrangement as may be
specified in the related Prospectus Supplement or may be placed either directly
or through agents. The Seller intends that the Securities will be offered
through such various methods from time to time and that offerings may be made
concurrently through more than one of such methods or that an offering of a
particular series of Securities may be made through a combination of such
methods.
Each Prospectus Supplement will either (i) set forth the price at which
each class of Securities being offered thereby will be offered to the public and
any concessions that may be offered to certain dealers participating in the
offering of such Securities, or (ii) specify that the related Securities are to
be resold by the Underwriters in negotiated transactions at varying prices to be
determined at the time of such sale. After the initial public offering of any
such Securities, such public offering prices and such concessions may be
changed.
Each Underwriting Agreement (as defined in the related Prospectus
Supplement) will provide that the Seller will indemnify the Underwriters against
certain civil liabilities, including liabilities under the Securities Act, or
contribute to payments the several Underwriters may be required to make in
respect thereof.
Each Trust may, from time to time, invest funds in its Trust Accounts in
Eligible Investments acquired from such Underwriters or from the Seller or any
of its Affiliates.
Underwriters 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 such Underwriters 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 any of the
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<PAGE>
Underwriters represent that they will engage in any such transactions or that
such transactions, once commenced, will not be discontinued without notice.
Pursuant to each of the Underwriting Agreements with respect to a given
series of Securities, the closing of the sale of any class of Securities subject
to such Underwriting Agreement will be conditioned on the closing of the sale of
all other such classes of Securities of that series.
The place and time of delivery for the Securities of any series in respect
of which this Prospectus is delivered will be set forth in the related
Prospectus Supplement.
RATINGS
Each Class of Securities of a series offered pursuant to this Prospectus
and a related Prospectus Supplement will be rated at its initial issuance in one
of the four highest categories by at least one nationally recognized statistical
rating organization (each, a 'RATING AGENCY').
A securities rating addresses the likelihood of the receipt by the
Securityholders of scheduled interest and principal payments. The rating takes
into consideration the characteristics of the Receivables and the structural,
legal and tax aspects associated with the Securities. The ratings on the
Securities do not, however, constitute statements regarding the likelihood or
frequency of prepayments on the Receivables or the possibility that the
Securityholders might realize a lower than anticipated yield or that if there is
a rapid rate of principal payments, including prepayments, on the Receivables,
investors in Strip Notes or Strip Certificates could fail to recover their
initial investments.
A security rating is not a recommendation to buy, sell or hold Securities
and may be subject to revision or withdrawal at any time by the assigning Rating
Agency. No person is obligated to maintain the rating on any Security, and,
accordingly, there can be no assurance that the ratings assigned to a Security
upon initial issuance will not be lowered or withdrawn by a Rating Agency at any
time thereafter.
LEGAL MATTERS
Certain legal matters relating to the issuance of the Securities of any
series will be passed upon for the Seller by Simpson Thacher & Bartlett (a
partnership which includes professional corporations), New York, New York, and
such other counsel specified in the related Prospectus Supplement. Certain legal
matters will be passed upon for the Underwriters by Gibson, Dunn & Crutcher, LLP
New York, New York. From time to time Simpson Thacher & Bartlett and Gibson,
Dunn & Crutcher LLP provide legal services to the Seller and its affiliates.
55
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INDEX OF TERMS
TERM PAGE
- --------------------------------------------- -------
Actuarial Receivables........................ 18
Administration Agreement..................... 50
Administration Fee........................... 50
Administrator................................ 50
Advance...................................... 43
Applicable Trustee........................... 34
Assignments.................................. 20
Bank......................................... 6
Base Rate.................................... 32
Book-Entry Securities........................ 6
Business Day................................. 42
Calculation Agent............................ 32
Cash Collateral Account...................... 45
Cash Collateral Depositor.................... 10
Cash Collateral Guaranty..................... 9
Cash Collateral Trustee...................... 45
Cede......................................... 2
Cedel........................................ 35
Cedel Participants........................... 35
Certificate Balance.......................... 8
Certificate Distribution Account............. 41
Certificate Pool Factor...................... 25
Certificateholders........................... 34
Certificates................................. 1
Chase........................................ 6
Chase Auto Finance........................... 6,17
Chase Auto Finance Portfolio................. 19
Chase Connecticut Bank....................... 19
Chase Connecticut Loans...................... 19
Chase Florida Bank........................... 19
Chase Florida Loans.......................... 19
Chase Lincoln Bank........................... 19
Chase Lincoln Loans.......................... 19
Chase Maryland Loans......................... 19
Chase N.A.................................... 6
Chase USA.................................... 1
Closing Date................................. 39
Code......................................... 53
Collection Account........................... 40
Collection Period............................ 42
Commission................................... 2
Commodity Indexed Securities................. 33
Contract Rate................................ 17
Cooperative.................................. 35
Corporation.................................. 6
Currency Indexed Securities.................. 33
Cutoff Date.................................. 16
Dealer Agreements............................ 20
Dealers...................................... 20
Defaulted Receivable......................... 42
56
<PAGE>
TERM PAGE
- --------------------------------------------- -------
Definitive Certificates...................... 36
Definitive Notes............................. 36
Definitive Securities........................ 36
Deposit Date................................. 42
Depositaries................................. 34
Depository................................... 26
Direct Receivables........................... 19
Disqualified Persons......................... 54
Distribution Date............................ 31
DSCs......................................... 20
DTC.......................................... 2
Due Date..................................... 17
Eligible Deposit Account..................... 41
ERISA........................................ 53
Euroclear.................................... 35
Euroclear Operator........................... 35
Euroclear Participants....................... 35
Events of Default............................ 28
Events of Servicing Termination.............. 47
Exchange Act................................. 2
Face Amount.................................. 33
FDIA......................................... 13
FDIC......................................... 1
Federal Tax Counsel.......................... 11
Final Payment Receivables.................... 18
Financed Vehicles............................ 9
FIRREA....................................... 13
Fixed Rate Securities........................ 32
Floating Rate Securities..................... 32
FTC Rule..................................... 53
Funding Period............................... 1,9
Holders...................................... 7
Indenture.................................... 7
Indenture Trustee............................ 6
Index........................................ 33
Indexed Commodity............................ 33
Indexed Currency............................. 33
Indexed Principal Amount..................... 33
Indexed Securities........................... 33
Indirect Participants........................ 7
Initial Receivables.......................... 9
Interest Rate................................ 7
Interest Reset Period........................ 32
Investment Earnings.......................... 42
Issuer....................................... 6
Late Fees.................................... 43
LIBOR........................................ 32
Loan Agreement............................... 44
Merger....................................... 6
Motor Vehicle Loans.......................... 16
Note Distribution Account.................... 40
Note Pool Factor............................. 25
57
<PAGE>
TERM PAGE
- --------------------------------------------- -------
Noteholders.................................. 34
Notes........................................ 1
Obligors..................................... 16
Original Pool Balance........................ 49
Originating Bank............................. 17
Owner Trustee................................ 6
Paid-Aheads.................................. 41
Paid-Ahead Account........................... 41
Paid-Ahead Period............................ 24
Paid-Ahead Simple Interest Receivable........ 24
Participants................................. 7
Parties in Interest.......................... 54
Pass Through Rate............................ 8
Paying Agent................................. 42
Payment Date................................. 26
Percentage Interest.......................... 6
Permitted Investments........................ 41
Plan Assets.................................. 53
Plans........................................ 53
Pool Balance................................. 25
Pooling and Servicing Agreement.............. 6
Portfolio Experience......................... 19
Pre-Funding Account.......................... 1
Pre-Funding Amount........................... 9
Prospectus Supplement........................ 1
Qualified Institution........................ 41
Qualified Trust Institution.................. 41
Rating Agency................................ 55
Receivables.................................. 16
Receivables Pool............................. 16
Registration Statement....................... 2
Related Documents............................ 30
Repurchase Amount............................ 40
Required Rate................................ 11
Reserve Account.............................. 44
Rules........................................ 35
Sale and Servicing Agreement................. 9
Schedule of Receivables...................... 39
Securities................................... 1
Securities Act............................... 2
Securityholder............................... 34
Securityholders.............................. 7
Seller....................................... 1,6
Senior Securities............................ 14
Servicer..................................... 1,6
Servicing Fee................................ 43
Servicing Fee Rate........................... 43
Simple Interest Receivables.................. 17
Spread....................................... 32
Spread Multiplier............................ 32
Stock Index.................................. 33
Stock Indexed Securities..................... 33
58
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TERM PAGE
- --------------------------------------------- -------
Strip Certificates........................... 8
Strip Notes.................................. 7
Subordinated Securities...................... 14
Subsequent Receivables....................... 9
Subsequent Transfer Date..................... 39
Terms and Conditions......................... 36
Transfer Agent and Registrar................. 37
Transfer and Servicing Agreements............ 39
Trust........................................ 1
Trust Accounts............................... 41
Trust Agreement.............................. 6
Trustee...................................... 6
UCC.......................................... 51
Underwriters................................. 54
Yield Supplement Account..................... 10
Yield Supplement Agreement................... 10
59
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<PAGE>
<PAGE>
===============================================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE SELLER,
THE SERVICER OR BY THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE SELLER, THE SERVICER OR THE RECEIVABLES SINCE THE DATE HEREOF OR
THEREOF. THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO 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 Supplement......................................... i
Summary of Terms.............................................. S-1
Risk Factors.................................................. S-8
The Trust..................................................... S-9
The Receivables Pool.......................................... S-10
Chase USA..................................................... S-17
Use of Proceeds............................................... S-17
Weighted Average Life of the Securities....................... S-17
Description of the Notes...................................... S-24
Description of the Certificates............................... S-25
Description of the Transfer and Servicing
Agreements.................................................. S-26
Legal Investment.............................................. S-33
Certain Federal Income Tax Consequences....................... S-33
Certain State Tax Consequences................................ S-39
ERISA Considerations.......................................... S-39
Underwriting.................................................. S-41
Legal Matters................................................. S-42
Index of Terms................................................ S-43
Annex A....................................................... S-A-1
Prospectus.................................................... 1
Summary of Prospectus......................................... 6
Risk Factors.................................................. 13
The Trusts.................................................... 16
The Receivables Pools......................................... 17
Weighted Average Life of the Securities....................... 23
Pool Factors and Trading Information.......................... 25
Use of Proceeds............................................... 25
Chase USA..................................................... 26
Description of the Notes...................................... 26
Description of the Certificates............................... 31
Certain Information Regarding the Securities.................. 32
Description of the Transfer and Servicing
Agreements.................................................. 39
Certain Legal Aspects of the Receivables...................... 51
ERISA Considerations.......................................... 53
Plan of Distribution.......................................... 54
Ratings....................................................... 55
Legal Matters................................................. 55
Index of Terms................................................ 56
UNTIL , 1998 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT), ALL
DEALERS EFFECTING TRANSACTIONS IN THE SECURITIES, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER THIS PROSPECTUS SUPPLEMENT AND
THE PROSPECTUS. THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF
DEALERS TO DELIVER THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
===============================================================================
===============================================================================
PROSPECTUS SUPPLEMENT
$1,086,404,142.65
CHASE MANHATTAN AUTO
OWNER TRUST 1998-B
$1,053,800,000.00 ASSET BACKED NOTES
$32,604,142.65 ASSET BACKED CERTIFICATES
CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION
SELLER AND SERVICER
Underwriters of the Notes
CHASE SECURITIES INC.
CREDIT SUISSE FIRST BOSTON
MERRILL LYNCH & CO.
SALOMON SMITH BARNEY
Underwriter of the Certificates
CHASE SECURITIES INC.
APRIL , 1998
===============================================================================
