As filed with the Securities and Exchange Commission on June 16, 1999
Registration No. 333-74303
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Chase Manhattan Bank USA, National Association
(Originator of the Trusts described herein)
(Exact name of registrant as specified in its charter)
CHASE CREDIT CARD MASTER TRUST
(Issuer with respect to the Offered Securities)
Delaware 22-2382028
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
802 Delaware Avenue
Wilmington, Delaware 19801
(302) 575-5000
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Andrew T. Semmelman
Vice President
Chase Manhattan Bank USA,
National Association
c/o 802 Delaware Avenue
Wilmington, Delaware 19801
(302) 575-5000
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copies to:
David M. Eisenberg, Esq. Martin R. Joyce, Esq. Andrew M. Faulkner, Esq.
Simpson Thacher & Bartlett The Chase Manhattan Bank Skadden, Arps, Slate,
425 Lexington Avenue 270 Park Avenue Meagher & Flom LLP
New York, New York 10017 New York, New York 10017 919 Third Avenue
(212) 455-2000 (212) 270-5918 New York, NY 10022
(212) 735-2853
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable on or after the effective date of the Registration
Statement.
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the
following box. |_|
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
Calculation of Registration Fee
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Title of Each Amount to be Proposed Proposed Amount of
Class of Registered Maximum Maximum (5)
Securities to be (1)(2) Offering Aggregate Registration
Registered Price per Unit Offering Fee
or Share Price (3)(4)
(2)(3)
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Asset Backed 1,000,000 100% $1,000,000 $278
Certificates
and Asset Backed
Notes
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(1) If any registered securities are issued at an original issue discount,
then such greater principal amount as shall result in an aggregate initial
offering price of $1,000,000. In no event will the aggregate initial
offering price of securities registered hereunder exceed $1,000,000 or the
equivalent thereof in one or more foreign currencies or composite
currencies, including the euro.
(2) Not specified as to each class of securities to be registered pursuant
to General Instruction II.D of Form S-3 under the Securities Act.
(3) The proposed maximum offering price per unit or share will be
determined from time to time by the registrant in connection with, and at
the time of, the issuance by the registrant of the securities registered
hereunder.
(4) Estimate solely for the purposes of computing the registration fee
pursuant to Rule 457(o) of the Rules and Regulations of the Securities and
Exchange Commission under the Securities Act.
(5) Previously paid.
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The attached prospectus and either of the attached prospectus supplements
may be used by Chase Securities Inc., a wholly owned subsidiary of The
Chase Manhattan Corporation and an affiliate of the Transferor, 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.
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The Registrants hereby amend, this Registration Statement on such date or
dates as may be necessary to delay its effective date until Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
EXPLANATORY NOTE
This Form S-3 Registration Statement (file no. 333-74303) includes, on
behalf of Chase Manhattan Bank USA, National Association (the "Bank"), as
originator of the trusts described herein, a base prospectus and two model
prospectus supplements. One model prospectus supplement describes an
offering by Chase Credit Card Master Trust of asset backed certificates.
The other model prospectus supplement describes an offering by Chase Credit
Card Owner Trust 1999-__ of asset backed notes. The prospectus and each
prospectus supplement have been prepared to comply with the "Plain English"
Rules (Release No. 33-7497), including Rule 421(b) and Rule 421(d) under
the Securities Act of 1933, as amended, and related revisions to Regulation
S-K and Form S-3 adopted by the Securities and Exchange Commission.
[FLAG]
The information in this prospectus is not complete and may be changed. We
cannot sell these securities until the registration statement filed with
the Securities and Exchange Commission is effective. This prospectus is not
an offer to sell these securities and is not soliciting an offer to buy
these securities in any state where the offer or sale is not permitted.
[TEXT BOX]
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A security is not a deposit and neither the securities nor the underlying
accounts or receivables or series certificates or notes are insured or
guaranteed by the FDIC or any other governmental agency.
A certificate will represent an interest in the master trust only. A note
will be an obligation of an owner trust only. Neither the certificates nor
the notes will represent interests in or recourse obligations of Chase USA,
the servicer or any of their affiliates.
This prospectus may be used to offer and sell any series of securities only
if accompanied by the prospectus supplement for that series.
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SUBJECT TO COMPLETION, DATED JUNE 16, 1999
Prospectus
CHASE CREDIT CARD MASTER TRUST
CHASE CREDIT CARD OWNER TRUSTS
Issuers
Chase Manhattan Bank USA, National Association
Transferor and Administrator of Owner Trusts
The Chase Manhattan Bank
Servicer of Master Trust
ASSET BACKED SECURITIES
The master trust-
o may periodically issue asset backed certificates in one or more
series, including series of asset backed certificates that will be
sold to owner trusts and pledged to secure notes; and
o will own receivables in a portfolio of consumer revolving credit
card accounts and other property described in this prospectus and
in the prospectus supplement.
The securities-
o with respect to the certificates, will represent interests in the
master trust and will be paid only from the assets of the master
trust;
o with respect to the notes, will be obligations of an owner trust
and will be secured by the assets of that owner trust, including
one or more certificates;
o offered by this prospectus will be rated in one of the four highest
rating categories by at least one nationally recognized statistical
rating organization;
o may have one or more forms of credit enhancement; and
o will be issued as part of a series which may include one or more
classes of securities.
The certificateholders will receive interest and principal payments from a
varying percentage of credit card account collections.
The noteholders will receive interest and principal as described in the
prospectus supplement. Each series of notes will be secured by a series
certificate issued by the master trust and purchased by the owner trust
that will issue the notes and any other assets described in that prospectus
supplement.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined
whether this prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
_______, 1999
Table of Contents
Overview of the Information in this Prospectus
and the Prospectus Supplement.....................................4
The Master Trust.....................................................5
The Owner Trusts.....................................................5
Chase USA's Credit Card Activities...................................6
Acquisition and Maintenance of Credit
Card Accounts..................................................7
Billing and Payments.................................................9
Collection of Delinquent Accounts...................................11
Description of FDR..................................................12
Interchange.........................................................12
Recoveries .........................................................13
Year 2000 Compliance ...............................................13
The Receivables.....................................................15
Use of Proceeds.....................................................16
Maturity Considerations.............................................17
Series of Certificates..............................................17
Series of Notes.....................................................18
Chase USA...........................................................18
Description of the Securities.......................................19
Form of Your Securities.............................................20
DTC ..............................................................20
Cedelbank...........................................................21
Euroclear...........................................................22
Book-Entry Registration.............................................22
Definitive Securities...............................................25
Initial Settlement..................................................26
Secondary Market Trading............................................26
Description of the Certificates.....................................30
Transferor Certificate..............................................31
Issuing New Series of Certificates..................................32
Interest Allocations................................................33
Principal Allocations...............................................34
Transfer and Assignment of Receivables..............................37
Chase USA's Representations and
Warranties....................................................37
Addition of Master Trust Assets.....................................38
Removal of Master Trust Assets......................................40
Discount Option.....................................................41
Master Trust Bank Accounts..........................................41
Companion Series....................................................42
Funding Period......................................................43
Investor Percentage and Transferor
Percentage....................................................44
Application of Collections..........................................45
Shared Excess Finance Charge
Collections...................................................46
Shared Principal Collections........................................47
Default Allocations.................................................47
Rebates and Fraudulent Charges......................................47
Investor Charge-Offs................................................47
Defeasance..........................................................48
Optional Repurchase.................................................48
Final Payment of Principal; Series
Termination...................................................48
Pay Out Events......................................................49
Servicing Compensation..............................................49
The Servicer........................................................50
Servicer Default....................................................50
Payment of Expenses.................................................51
Reports to Certificateholders.......................................51
Evidence as to Compliance...........................................52
Amendments..........................................................53
List of Certificateholders..........................................54
The Master Trust Trustee............................................55
Master Trust Termination............................................55
Description of the Notes............................................56
Principal and Interest on the Notes.................................56
The Indentures......................................................57
Certain Covenants...................................................60
The Indenture Trustee...............................................61
Transfer and Assignment of the Series
Certificate...................................................62
Reports to Noteholders..............................................62
Certain Matters Regarding the
Administrator.................................................63
Amendment...........................................................63
Termination.........................................................64
Credit Enhancement..................................................64
Specific Forms of Credit Enhancement................................65
Security Ratings....................................................68
Certain Legal Aspects of the Receivables............................69
Transfer of Receivables.............................................69
Certain Matters Relating to Receivership............................70
Consumer Protection Laws............................................71
Industry Litigation.................................................72
Tax Matters.........................................................73
Tax Characterization of the Master
Trust ........................................................74
Tax Considerations Relating to Certificate
Owners........................................................74
Tax Considerations Relating to Note
Owners .......................................................78
Non-U.S. Certificate Owners and Non-
U.S. Note Owners..............................................80
Information Reporting and Backup
Withholding...................................................83
State and Local Taxation............................................84
Employee Benefit Plan Considerations................................84
Certain ERISA Considerations With
Respect to Notes..............................................85
Prohibited Transaction Considerations...............................85
Certain ERISA Considerations With
Respect to Certificates.......................................86
Prohibited Transaction Considerations ..............................86
Plan of Distribution................................................88
Legal Matters.......................................................90
Reports to Securityholders..........................................90
Where You Can Find More Information.................................90
Glossary of Terms For Prospectus....................................92
Overview of the Information in this Prospectus
and the Prospectus Supplement
We provide information to you about the securities in two separate
documents that progressively provide more detail: (a) this prospectus,
which provides general information, some of which may not apply to a
particular series of securities, including your series, and (b) the
prospectus supplement, which will describe the specific terms of your
series of securities, including:
o the type of securities offered;
o the timing and amount of interest and principal payments;
o information about the receivables;
o information about credit enhancement for each class;
o credit ratings; and
o the method for selling the securities.
We have included a description of some of the basic terms and
characteristics of the securities that may be offered by this prospectus.
We have also included a description of any certificate offered by this
prospectus or sold to an owner trust to be pledged to secure notes. In
addition, we have included a description summarizing the terms and
provisions that would apply to all notes offered by this prospectus.
If you are purchasing notes, you should review carefully the
descriptions of the certificates in this prospectus and the prospectus
supplement. The most significant asset of each owner trust will be a
certificate issued by the master trust and pledged to secure the notes of
the owner trust. The terms and provisions of that certificate will be
reflected in the terms and provisions of the notes secured by that
certificate.
You should rely only on the information provided in this prospectus
and the prospectus supplement, including the information incorporated by
reference. We have not authorized anyone to provide you with different
information.
We include cross-references in this prospectus and in the
prospectus supplement to captions in these materials where you can find
further related discussions. The preceding table of contents and the table
of contents included in the prospectus supplement provide the pages on
which these captions are located.
You can find a glossary of the defined terms that appear in this
document in bold faced type under the caption "Glossary of Terms for
Prospectus" beginning on page 91 in this prospectus.
The Master Trust
The Chase Credit Card Master Trust was formed in October 1995 to
issue certificates representing interests in a pool of credit card
receivables held by the master trust. Certificates issued by the master
trust will be issued in amounts, at prices and on terms to be determined at
the time of sale as set forth in a supplement to this prospectus.
The master trust currently a Pooling and Servicing Agreement among
the following parties:
o Chase Manhattan Bank USA, National Association, as Transferor;
o The Chase Manhattan Bank, as Servicer; and
o The Bank of New York, as Trustee.
The Chase Manhattan Bank has delegated substantially all of its
servicing duties to Chase USA.
The master trust will not engage in any business activity other
than:
o acquiring and holding receivables;
o issuing series of certificates and a Transferor Certificate;
o making payments on these certificates;
o obtaining any credit enhancement or entering into any
enhancement contract necessary to issue certificates;
o entering into swap agreements to convert specified cash
flows from one form to another; and
o engaging in related activities.
Because of the restricted nature of its activities, we do not expect that
the obligations of the Master Trust will ever exceed the value of the
assets listed above.
The Owner Trusts
Each series of notes will be issued by an owner trust. Each owner
trust will be formed as a statutory business trust or a common law trust
under the laws of the State of Delaware. Chase USA will deposit in an owner
trust a Series Certificate rated in one of the four highest rating
categories by at least one Rating Agency. Each owner trust will be the
certificateholder of a single Series Certificate. The descriptions of the
certificates in this prospectus and in the related supplement are important
to purchasers of notes because the Series Certificate will be the most
significant asset of each owner trust. The terms and provisions of the
Series Certificate, including the payment terms, will be reflected in the
terms and provisions of the notes. Each series of notes will be issued
under an Indenture between the Owner Trustee and the Indenture Trustee. The
notes will be secured by the Series Certificate and the other collateral
pledged by the owner trust to secure the notes pursuant to the Indenture,
which may include a reserve account for the benefit of one or more classes
of notes.
The activities of each owner trust will be limited to
o acquiring and holding a Series Certificate and
any other assets,
o issuing a single series of notes,
o making payments on the notes, and
o engaging in other activities that are appropriate
to accomplish those goals.
Chase USA's Credit Card Activities
Chase USA's portfolio of credit card receivables is originated
through MasterCard and VISA accounts principally established by:
o Chase USA;
o Chemical Bank, before its merger with the
Chase Manhattan Corporation in June 1996; and
o The Bank of New York, before the purchase of its credit card
operations by Chase USA in November 1997.
Some of these accounts are designated as master trust accounts. The
receivables which the Bank will convey to the master trust under the terms
of the Pooling and Servicing Agreement have been and will be generated from
transactions made by the holders of these master trust accounts.
Chase USA is also seller and servicer, with Yasuda Bank and Trust
Company (U.S.A.) as trustee, of Chase Manhattan Credit Card Master Trust.
This master trust has issued several series of asset backed certificates
which remain outstanding. As long as any of these series remain
outstanding, the accounts designated for inclusion in Chase Manhattan
Credit Card Master Trust will not be available for addition to the master
trust. However, Chase USA is allowed, with Rating Agency approval, to
periodically remove accounts from Chase Manhattan Credit Card Master Trust
and add some or all of them to the master trust. See "Description of the
Securities --Description of the Certificates --Addition of Master Trust
Assets" and "--Removal of Master Trust Assets" for information on the
conditions to any addition or removal of accounts.
Chase USA has the right, and currently expects, to add accounts
from time to time to the master trust. Accounts available for addition to
the master trust might have been originated under policies and procedures
which differ from the policies and procedures used to originate accounts
currently in the master trust. If Chase USA adds any of these accounts, it
does not expect that these differences will have a material effect on your
interests.
Chase USA services credit card accounts at facilities located in:
o Hicksville, New York;
o Tempe, Arizona;
o Tampa, Florida; and
o Matteson, Illinois.
Many data processing and administrative functions for the Bank Portfolio are
performed by FDR.
Acquisition and Maintenance of Credit Card Accounts
The accounts in the master trust were generated under the VISA
U.S.A., Inc. and MasterCard International Inc. programs. Chase USA, a
member of VISA and MasterCard International, originated or purchased these
accounts. VISA and MasterCard International license their respective marks
permitting financial institutions to issue credit cards to their customers.
In addition, VISA and MasterCard International provide clearing services
facilitating exchange of payments among member institutions and networks
linking members' credit authorization systems.
The VISA and MasterCard credit cards are issued by Chase USA as
part of the worldwide VISA and MasterCard International systems, and
transactions creating the receivables through the use of these credit cards
are processed through the VISA and MasterCard
International authorization and settlement systems.
VISA and MasterCard credit cards may be used:
o to purchase merchandise and services;
o to obtain cash advances from a financial institution,
automated teller machine, a check drawn on the account
or as overdraft protection; and
o to consolidate and transfer balances from other credit cards.
Amounts due on master trust accounts for any of these purposes are included
as receivables in the master trust.
Chase USA originates accounts through several channels:
o Applications. Chase USA makes applications for VISA and
MasterCard accounts available at all CMB branches and point
of sale outlets. Chase USA advertises on television, radio
and in magazines with the goal of generating customer
applications. Chase USA also mails applications directly to
prospective cardholders. In each case, Chase USA reviews an
application for completeness and creditworthiness.
Applications provide information to Chase USA on the
applicant's employment history, income and residence status.
A credit report on the applicant, requested from an
independent credit reporting agency, will also be evaluated.
Discrepancies between the credit report and the application
must be resolved before the application can be approved.
Chase USA generally evaluates the applicant's ability to
repay credit card balances through application of a credit
scoring system using proprietary models and models developed
by independent consulting firms. Credit scoring is intended
to provide a general indication, based on the information
available from the application, credit bureaus or other
sources, of the applicant's likelihood to repay his or her
obligations. Credit scoring assigns values to the
information provided in each applicant's application and
credit bureau report and then estimates the associated
credit risk. The score at which an applicant will be
approved correlates to Chase USA's credit risk tolerance at
the time of the approval. Chase USA's personnel and outside
consultants regularly review the predictive accuracy of the
scoring models.
Applications are also evaluated with a proprietary
profitability model, which determines if the applicant is
likely to meet Chase USA's profitability expectations. These
expectations are adjusted from time to time based on
economic conditions, Chase USA's and CMB's corporate goals
and competitive pressures. Applicants who fall outside of
Chase USA's desired credit and profitability segments will
be denied a credit card.
An approved application is assigned an initial credit limit
based on the applicant's credit score and income level.
o Direct Mail and Telemarketing. Chase USA uses direct mail
and telemarketing solicitation campaigns to access
individuals whom Chase USA has identified as desirable
cardholders. A list of prospects from a variety of sources
are screened at one or more credit bureaus in accordance
with Chase USA's credit criteria, including previous payment
patterns and longevity of account relationships. Individuals
qualifying for pre-screened direct mail or telemarketing
solicitation are conditionally offered a credit card without
having to complete a detailed application. Credit limits
offered to pre-screened prospective cardholders are based on
each individual's credit profile, profitability potential
and overall indebtedness relative to inferred income.
o Purchase of Accounts. Chase USA has added, and may continue
to add, accounts to its credit card portfolio by purchasing
accounts from other financial institutions. Chase USA
originally opened credit card accounts it purchased using
criteria established by another institution. These purchased
accounts may not have been subject to the same level of
credit review as accounts Chase USA initially established.
Following acquisition, purchased accounts are evaluated
against the same criteria used by Chase USA to maintain
accounts which it originates. This evaluation might indicate
that the purchased account should be closed immediately,
which causes Chase USA to authorize no future purchases or
cash advances on the card. All accounts passing the
evaluation remain open, subject to the same criteria Chase
USA uses to periodically evaluate all of its accounts.
Regardless of origination channel, at least once per year each account is
subject to a systematic evaluation of payment and behavioral information.
Chase USA may adjust the account's credit limit up or down, based on
updated credit and profitability scores. Credit limits may also be
adjusted at the request of the applicant, subject to Chase USA's independent
evaluation of the applicant's payment and card usage history.
Each cardholder is subject to an agreement governing the terms and
conditions of the account. In these agreements, Chase USA has reserved the
right:
o to change or end any terms, conditions, services or features
of each account, including increasing or decreasing finance
charges, fees or minimum payments; and
o to sell or transfer the accounts and/or any amounts owed on
such accounts to another creditor.
Billing and Payments
The accounts in the master trust have various billing and payment
structures, including varying minimum payment levels and fees. Chase USA
sends monthly billing statements to cardholders. The following information
reflects the current billing and payment characteristics of
the master trust accounts.
When an account is established it is randomly assigned to a billing
cycle. Currently there are 20 billing cycles, each with a different monthly
billing date. On each cycle's monthly billing date, all activity since the
previous monthly billing date for all accounts in the cycle are processed
and billed to cardholders.
Chase USA generally determines the minimum monthly payment with
respect to the accounts by multiplying the combined new balance of
purchases and cash advances, less any disputed amounts, by 2.000%. If the
calculated minimum payment amount is less than $10.00, it is increased to
$10.00. The sum of this amount and any past due amounts equals the minimum
payment amount. The minimum payment, however, is never more than the new
balance.
When each account's monthly activity is processed for a billing
cycle, finance charges are assessed in two ways:
o Finance Charges on New Purchases. A daily periodic finance
charge is assessed on principal receivables from new
purchases if the following criteria are met
- on the first day of the billing cycle there was
a purchase balance outstanding; and
- on the last day of the billing cycle there was a
purchase balance outstanding.
If a finance charge is assessed on a new purchase, it will be
calculated as described below.
o Finance Charges on Cash Advances and Pre-Existing Purchases.
Daily periodic finance charges on cash advances and
pre-existing purchase balances are calculated as follows:
(average daily cash advance and pre-existing purchase
balance) X (applicable daily periodic finance charge rate) X
(number of days in the billing cycle)
In calculating the average daily cash advance and pre-existing
purchase balance, Chase USA will add the interest amount accrued on
the previous day's ending balance to the current day's balance. New
cash advances and new purchases are generally included in their
respective average daily balances from the date the advance or
purchase occurs, although - as noted above - in some cases finance
charges do not begin to accrue until the first day of the following
billing cycle.
Chase USA offers fixed rate and variable rate accounts. The annual
percentage rate for fixed rate accounts generally ranges from 9.9% per
annum to 19.8% per annum. The current annual percentage rate for variable
rate accounts is based on The Wall Street Journal prime rate plus a spread
generally ranging from 4.4% to 13.99%. Chase USA also offers temporary
promotional rates and promotional rates on transferred balances. In
specific situations, the periodic finance charges on a limited number of
accounts may be either greater than or less than those assessed by Chase
USA generally. To the extent that the amount of any finance charge
applicable to a purchase balance is less than $0.50, the Bank increases
this amount to $0.50.
Chase USA charges annual membership fees on some accounts while
other accounts carry no annual membership fee. For those accounts with an
annual membership fee, the fee is generally $20.00 for regular accounts,
$40.00 for premium fixed rate accounts and $45.00 for premium variable rate
accounts. Chase USA may waive all or a portion of annual membership fees in
connection with solicitations of new accounts - and has done so for
portions of recent solicitations - or when Chase USA determines that, for
competitive reasons, a waiver is necessary. In addition to the annual
membership fee, Chase USA may charge accounts other fees generally at the
rates specified below, including:
o a late fee of $29.00 if the Bank does not receive the
required minimum monthly payment by the payment due date
noted on the monthly billing statement;
o a cash advance fee of 3.0% of the amount of each cash
advance, with a minimum fee of $3.00 for each cash advance;
o a fee of $29.00 for each check written on a credit card
account - a form of cash advance - which Chase USA does not
honor because the credit card account is delinquent,
overdrawn or closed;
o a fee of $29.00 for each dishonored check sent as payment by
the cardholder; and
o an overlimit charge of $29.00 if, at the end of the billing
cycle, the total amount owed for principal and finance
charges exceeds the cardholder's credit line.
Cardholder payments to Chase USA are processed and applied to any
billed and unpaid finance charges and to billed and unpaid transactions in
the order determined by Chase USA. Any excess is applied to unbilled
transactions in the order determined by Chase USA and then to unbilled
finance charges. We can give you no assurance that periodic finance
charges, fees and other charges will remain at current levels in the
future.
Collection of Delinquent Accounts
An account is "delinquent" if, by the payment due date shown on the
account's monthly statement, Chase USA has not received the minimum monthly
payment. An account is "over limit" if its posted balance exceeds its
credit limit.
Efforts to collect delinquent credit card receivables are made by
Chase USA's personnel, collection agencies and attorneys retained by Chase
USA. Collection procedures are determined by an adaptive risk control
system that uses statistical models and basic account financial information
to determine the steps to be followed at various stages of delinquency.
Generally, Chase USA includes a request for payment of overdue amounts on
billing statements issued after the account becomes delinquent. In
addition, after a period determined by the risk control system, Chase USA
mails a separate notice to the cardholder with:
o notification that the account is delinquent;
o a warning that credit privileges may be revoked; and
o a request for payment of the delinquent amount.
Collection personnel generally initiate telephone contact with cardholders
whose credit card accounts have become 30 days or more delinquent. If the
initial telephone contact fails to resolve the delinquency, Chase USA
continues to contact the cardholder by telephone and by mail.
Based upon the risk control system's analysis, Chase USA may
suspend an account as early as the date on which the account becomes 30
days or more delinquent. Chase USA generally suspends the account by the
time the account becomes 50 days delinquent. One hundred days after an
account becomes delinquent the credit card is automatically canceled. Based
on the risk control system's analysis of a delinquent cardholder's
behavior, Chase USA may take any or all of the above actions earlier than
indicated here. In some cases, depending on the financial profile of the
cardholder and the stated reason for and magnitude of a delinquency, Chase
USA may enter into arrangements with a delinquent cardholder to extend or
otherwise change the payment schedule.
Chase USA's policy is to charge-off an account in the billing cycle
immediately following the cycle in which the account became one hundred
fifty (150) days delinquent. If Chase USA receives notice that a cardholder
is the subject of a bankruptcy proceeding, the Bank charges off such
cardholder's account upon the earlier of seventy-five (75) days after
receipt of such notice and the time period set forth in the previous
sentence. On February 10, 1999, the Federal Financial Institutions
Examination Council adopted a revised Uniform Retail Credit Classification
and Account Management Policy, which recommends that:
o all U.S. banks and thrift institutions should charge-off
accounts of obligors who declare bankruptcy within 60 days
of receipt of notification of filing from the bankruptcy
court, and
o these charge-offs should be implemented in reporting for the
year ending December 31, 2000.
We expect that the implementation of this revised charge-off policy would
cause a temporary increase in charge-offs, but would not materially affect
certificateholders' interests.
Description of FDR
FDR is located in Omaha, Nebraska and provides computer data
processing services primarily to the bankcard industry. FDR is a subsidiary
of First Data Corp.
Interchange
Financial institutions participating in the VISA and MasterCard
associations receive Interchange for performing specified tasks. Under the
VISA and MasterCard systems, a portion of Interchange in connection with
cardholder charges for goods and services is passed from banks which clear
the transactions for merchants to credit card issuing banks. MasterCard and
VISA set Interchange fees annually based on the number of credit card
transactions and the amount charged per transaction. MasterCard and VISA
may from time to time change the amount of Interchange reimbursed to banks
issuing their credit cards. Chase USA is required, under the terms of the
Pooling and Servicing Agreement, to transfer to the master trust a
percentage of Interchange. Each month, Interchange allocated to the master
trust is calculated as follows:
(Interchange for the Monthly Period) X (total amount of purchases
of merchandise and services in the Master Trust Portfolio) / (total
amount of purchases of merchandise and services in the entire Bank
Portfolio)
Interchange allocated to the master trust will be treated as collections
of finance charge receivables.
Recoveries
Chase USA is required, under the terms of the Pooling and Servicing
Agreement, to transfer to the master trust a percentage of the recoveries
on charged-off accounts received each month. Each month, Recoveries
allocated to the master trust are calculated as follows:
(total Recoveries collected by Chase USA) X (defaulted receivables
in the Master Trust Portfolio) / (defaulted receivables in the Bank
Portfolio)
Recoveries allocated to the master trust are treated by the master trust as
collections of finance charge receivables.
Year 2000 Compliance
[update in response to comment 47. see also comment 69]
Year 2000 efforts for Chase USA are being coordinated, managed and
monitored as part of the Year 2000 efforts of The Chase Manhattan
Corporation by the Corporation's Year 2000 Enterprise Program Office. The
Program Office reports directly to the Executive Committee of the
Corporation and is responsible for the Corporation's Year 2000 remediation
efforts, on a global basis, both technical and business-related. In
addition, a Year 2000 Core Team, consisting of senior managers from
internal audit, technology risk and control, financial management and
control, the technology infrastructure division, legal and the Program
Office, provides independent oversight of the process. The Year 2000 Core
Team, which also reports directly to the Corporation's Executive Committee,
is charged with identifying key risks and ensuring necessary management
attention for timely resolution of project issues.
The Corporation's Year 2000 program continues to evolve. On January
1, 1999, the Corporation established a Year 2000 Business Risk Council,
comprised of approximately 20 senior business leaders, including line
managers, risk managers, and representatives of key staff functions:
o to identify potential Year 2000 business risks,
o to coordinate planning and readiness efforts,
o to refine contingency plans for Year 2000, and
o to establish a Year 2000 command center structure and rapid
response teams.
The Corporation's Year 2000 program is tracked against well-defined
milestones. The Corporation completed its inventory and assessment phases
on schedule on September 30, 1997, identifying affected hardware and
software, prioritizing tasks and establishing implementation plans. The
Corporation identified 97 business software applications (30 of which are
provided by third-party vendors) related to the cardmember services
functions of Chase USA as requiring Year 2000 remediation. At December 31,
1998, 65 of the 67 internal applications related to the cardmember services
operations of Chase USA, and 26 of the 30 third-party applications, had
been remediated. The remaining six applications, which Chase USA and the
Corporation do not believe to be "mission critical," are in the process of
being remediated and are on schedule to be Year 2000 compliant by March
1999, in the case of the two internal applications, and June 30, 1999, in
the case of the four third-party applications.
In addition, each of Chase USA's third-party service providers has
been contacted to determine its Year 2000 readiness and establish a testing
schedule. In many cases (including with FDR) testing has begun and testing
with all such third-party service providers (including additional testing
with FDR) is scheduled throughout 1999. The Corporation also expects to
continue to participate in tests organized by major industry and
governmental infrastructure organizations as they are scheduled during the
remainder of 1999. These include tests with the VISA and MasterCard
associations, which began in January 1999.
At September 30, 1998, the Corporation's estimate for Year 2000
remediation costs for 1997-1999 was approximately $363 million. None of
these costs will be borne by the master trust.
In its normal course of business, the Corporation manages many
types of risk. The Corporation recognizes that the risks presented by Year
2000 are unique given the pervasive nature of the problem and the higher
likelihood that Year 2000 risk may present itself in multiple, simultaneous
impacts. Because of this, the Corporation has adjusted and will continue to
adjust its risk management processes and contingency plans to take the most
probable anticipated effects into account. In this regard, the Corporation
has begun its event planning for the Year 2000 with the goal of preventing
or mitigating potential disruptions. The Corporation's Year 2000 event
planning includes:
o creation of command centers;
o performance of dress rehearsals and simulation modeling
for various possible business and operational risks;
o establishment of special rapid response technology teams;
o scheduling of availability of key personnel;
o additional training and testing activities; and
o the establishment of rapid decision processes.
The Corporation's expectations for completion of its Year 2000
remediation and testing efforts, the anticipated costs to complete the
project and the anticipated business, operational and financial risks to
the Corporation, Chase USA and the master trust are subject to a number of
uncertainties. Any failures by the VISA or MasterCard associations, FDR or
other service providers to implement successfully their Year 2000
remediation plans could adversely impact the timing of collections on
receivables. A large number of similar failures by account obligors, banks
and other financial institutions or other participants in the national
payments system could also adversely affect the timing of collections on
receivables. If collections that normally would have been received in any
particular month are delayed, the portfolio yield for that month will be
reduced to that extent. Any such reduction would increase the likelihood of
a Pay Out Event resulting from insufficient portfolio yield.
The Receivables
The assets of the master trust include receivables generated
through accounts designated as master trust accounts, all of which are
owned by Chase USA. The master trust assets include:
o all monies due or to become due in payment of these
receivables;
o all proceeds of these receivables;
o all proceeds of any credit insurance policies relating
to these receivables;
o any Interchange and Recoveries allocable to the master
trust because of these receivables;
o all monies on deposit in specified master trust bank
accounts or investments made with these monies, including
any earned investment proceeds if the supplement so
indicates;
o proceeds of any credit enhancement, as described in the
related supplement; and
o proceeds of any derivative contracts between the master
trust and a counterparty, as described in the related
supplement.
Receivables in the master trust consist of:
o principal receivables, which are amounts charged by master
trust account cardholders for goods and services, cash
advances and consolidation or transfer of balances from
other credit cards; and
o finance charge receivables, which are periodic finance
charges and other amounts charged to master trust accounts,
including cash advance fees, late fees, and annual
membership fees.
The master trust considers collections of Interchange and Recoveries as
collections of finance charge receivables. If Chase USA exercises the
Discount Option, an amount of monthly collections of principal receivables
will be considered finance charge collections. See "Description of the
Securities --Description of the Certificates--Discount Option" for a
description of the manner of and the conditions to exercise of the Discount
Option.
Receivables conveyed to the master trust arise in accounts selected
from the Bank Portfolio and designated as master trust accounts. Initially,
a group of accounts were selected on the Cut-Off Date and designated as
master trust accounts; since then additional accounts have been designated
for inclusion in the master trust. Accounts initially designated as master
trust accounts, new accounts so designated and any future accounts
designated for inclusion in the Master Trust must meet eligibility criteria
set forth in the Pooling and Servicing Agreement. Receivables conveyed to
the master trust must also meet eligibility criteria set forth in the
Pooling and Servicing Agreement. If receivables conveyed to the master
trust are found to have been ineligible when created or designated for
inclusion, Chase USA must accept retransfer of these receivables and either
replace them with eligible receivables or pay the value of the
retransferred receivables to the master trust.
Chase USA has agreed to maintain a Minimum Transferor Interest in
the Master Trust Portfolio, based on the total outstanding amount of
principal receivables in the Master Trust Portfolio plus the total amount
on deposit in the Excess Funding Account. Chase USA has also agreed to
maintain a Minimum Aggregate Principal Receivables amount. If the average
daily Transferor Interest for any 30 consecutive days is below the Minimum
Transferor Interest, or the amount of principal receivables in the master
trust falls below the amount of Minimum Aggregate Principal Receivables,
Chase USA is required by the terms of the Pooling and Servicing Agreement
to designate accounts for addition to the master trust so that the amount
of receivables in these accounts, when added to then-existing receivables
in the master trust, equals or exceeds these minimum levels. See
"Description of the Securities --Description of the Certificates--Addition
of Master Trust Assets" for more information on adding accounts to the
master trust.
The Pooling and Servicing Agreement also gives Chase USA the right
to remove accounts from the designated list of master trust accounts. If
Chase USA does so, the master trust will reconvey all receivables in these
removed accounts, whether existing or to be created, to Chase USA. See
"Description of the Securities --Description of the Certificates--Removal
of Master Trust Assets" for more information on removing accounts from the
master trust.
When the master trust issues a new series of securities, Chase USA
will represent and warrant to the master trust that, as of the Closing Date
for the new series, the accounts designated as master trust accounts meet
the eligibility criteria set forth in the Pooling and Servicing Agreement.
See "Description of the Securities --Description of the Certificates--Chase
USA's Representations and Warranties" for more information on eligibility
criteria for accounts and receivables.
Use of Proceeds
The net proceeds from the sale of each series of certificates will
generally be paid to Chase USA and used for general corporate purposes. If
the master trust is issuing a Series Certificate, it will be deposited in
an owner trust in exchange for a series of notes. The net proceeds from the
sale of this series of notes will generally be paid to Chase USA and used
for general corporate purposes.
The attached supplement may state that some amounts of these net
proceeds will be paid to other parties and/or used for other purposes, such
as funding a reserve account.
Maturity Considerations
Series of Certificates
Following the Revolving Period, each series of certificates is
expected to begin to accumulate principal or begin to distribute principal
to certificateholders. The attached supplement describes the conditions
under which an accumulation or amortization period will begin for your
class of certificates.
Principal will accumulate in a funding account if your series
features controlled accumulation or rapid accumulation and one of these
principal accumulation periods begins. As described in the attached
supplement, during controlled accumulation on each Distribution Date an
amount of principal, up to the amount specified, will be set aside in the
funding account. If a Pay Out Event occurs and your series features rapid
accumulation, the full amount of principal available to your series will be
deposited in a funding account, up to the amount specified in the
related supplement. This accumulated principal will be paid to you on the
expected payment date or dates for your class of certificates, or earlier
if an amortization period begins before your first expected principal
payment date. Note that although your series may feature an accumulation
period, your class of certificates may not make use of it.
Principal will be paid to you in increments - up to the amount
specified in the attached supplement - if your class of certificates
features controlled amortization and this period begins. Your class of
certificates might also begin to pay principal to you if the attached
supplement specifies that your class will begin rapid amortization. Rapid
amortization will begin, for all classes of your series, when a Pay Out
Event occurs. During any amortization period, principal will be paid to you
only on a Distribution Date.
If the series described in the attached supplement features
multiple classes, different classes of your series may have differing
priorities for the accumulation or payment of principal. This means that
certificateholders of other classes could begin to receive payments of
principal before you do.
We can give you no assurance that principal will be available when
expected, either to accumulate or to pay to you. The scheduled payment date
or dates for your class of certificates is based upon assumptions about
payment rates on the master trust's credit card receivables, as detailed in
the attached supplement. Chase USA can give no assurance that these payment
rate assumptions will be correct. Payment rates depend on collections of
receivables; collections can vary seasonally and are also affected by
general economic conditions and the payment habits of individual
cardholders. The attached supplement will provide historical payment rates,
total charge-offs and other information relating to the master trust's
receivables. We cannot assure you that future payment rates, charge-offs or
other factors will be consistent with this historical data. The expected
life of your certificates might be longer than expected if principal is
collected more slowly. The attached supplement may detail that if the
principal payment rate falls below a specified level, a Pay Out Event will
occur. The occurrence of any Pay Out Event may substantially shorten the
average life of your certificates.
The attached supplement will state if your series is a Companion
Series to any other outstanding series of certificates. If rapid
accumulation begins with respect to, or a Pay Out Event occurs to, a series
with a Companion Series, the Companion Series may experience
delayed payments of principal.
See the table on page 34 for a more complete description of possible
accumulation and amortization periods. See "Maturity Considerations" in the
attached supplement for specific information about how your series will
accumulate and/or pay principal, as well as historical payment rate
information for the master trust.
Series of Notes
Each series of notes from an owner trust will be secured by the
owner trust's pledge of a Series Certificate. The considerations described
above for payment of certificates will apply to payment of notes. If a Pay
Out Event occurs with respect to a Series Certificate, principal may be
paid earlier than scheduled on the related notes. These notes may also be
repaid earlier than scheduled when an Event of Default occurs. See
"Description of the Securities--Description of the Notes--The
Indentures--Events of Default: Rights Upon Event of Default."
Chase USA
Chase USA, a wholly-owned subsidiary of the Corporation, was formed
in 1982 and is headquartered in Wilmington, Delaware. Chase USA is
currently chartered as a national bank and as such is regulated primarily
by the United States Comptroller of the Currency. Chase USA's activities
are predominantly related to credit card lending and other forms of
consumer lending.
The principal executive office of Chase USA is located at 802
Delaware Avenue, Wilmington, Delaware 19801, telephone number (302)
575-5000.
The Corporation is a bank holding company, the principal subsidiary
of which is The Chase Manhattan Bank, a New York State bank.
Description of the Securities
The securities are in the form of the master trust certificates and
the notes from each owner trust offered through this prospectus and the
attached supplement and will be issued in "series" consisting of one or
more "classes."
o Certificates. Each series of certificates will represent an
interest in the master trust distinct from the Transferor
Certificate and any other series of certificates issued by
the master trust. Each series of certificates will be issued
through the Pooling and Servicing Agreement and a Series
Supplement to the Pooling and Servicing Agreement. If you
are purchasing certificates, the attached supplement
describes any series-specific provisions supplementing the
information in this prospectus.
o Notes. Each series of notes will be an obligation of a
specified owner trust, the primary asset of which will be a
Series Certificate issued by the master trust. Each series
of notes from an owner trust will be issued through an
Indenture, entered into by the Owner Trustee and the
Indenture Trustee. If you are purchasing notes, the attached
supplement describes any provisions of the notes
supplementing the information in this prospectus.
Following is a summary of provisions of the securities - either
certificates or notes - which you are purchasing. This summary describes
the material provisions common to each series of securities; the attached
supplement will give you additional information specific to the securities
which you are purchasing. This summary is qualified in its entirety by
reference to the provisions of the Pooling and Servicing Agreement, the
Series Supplement and - if you are purchasing notes - the related
indenture, deposit and administration agreement and trust agreement.
Each series of securities may consist of one or more classes, one
or more of which may be senior to other classes. Each class of a series
will evidence the right to receive a specified portion of principal and
finance charge collections on receivables in the Master Trust Portfolio.
Each class of a series may differ from other classes in some aspects,
including:
o maturity date;
o interest rate; and
o availability and amount of credit enhancement.
Payments will be made to securityholders in whose names the securities were
registered on the Record Dates specified in the related supplement.
Generally, securities offered through this prospectus and the
attached supplement:
o will be represented by certificates or notes registered in
the name of a DTC nominee;
o will be available for purchase in minimum denominations and
integral multiples of $1,000; and
o will be available for purchase in book-entry form only.
The attached supplement will specify if your securities have different
characteristics.
The attached supplement may state that application will be made to
list your series or class of securities on the Luxembourg Stock Exchange or
another exchange.
Form of Your Securities
Following is a description of the form your securities, whether
certificates or notes, will take. We also describe how your securities will
be transferred and how payments will be made to you.
The information in this section concerning DTC and DTC's book-entry
system has been provided by DTC. Chase USA has not independently verified
the accuracy of this information.
DTC has informed Chase USA that its nominee will be Cede.
Accordingly, Cede is expected to be the holder of record of each series of
securities. This means that you, as an owner of securities, will generally
not be entitled to a Definitive Security representing your interest in the
issued securities: you will own securities through a book-entry record
maintained by DTC. References in this document to distributions, reports,
notices and statements will be made to DTC or Cede, as registered holder of
the securities, for distribution to you in accordance with DTC procedures.
All references in this document to actions by securityholders shall refer
to action taken by DTC upon instructions from DTC Participants.
You may hold your securities through DTC in the U.S., Cedelbank or
Euroclear in Europe or in any other manner described in the attached
supplement. You may hold your securities directly with one of these systems
if you are a participant in the system, or indirectly through organizations
which are participants.
DTC
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, 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 under the Exchange Act. DTC holds securities
that its participating organizations deposit with DTC. DTC also facilitates
the clearance and settlement among DTC Participants of securities
transactions, such as transfers and pledges, in deposited securities
through electronic book-entry changes in DTC Participants' accounts,
eliminating the need for physical movement of securities certificates. DTC
Participants include securities brokers and dealers, banks, trust companies
and clearing corporations and may include other organizations. DTC is owned
by a number of its DTC Participants and the New York Stock Exchange, Inc.,
the American Stock Exchange, Inc. and the National Association of
Securities Dealers, Inc. Indirect access to the DTC system is also
available to others such as securities brokers and dealers, banks, and
trust companies that clear through or maintain a custodial relationship
with a DTC Participant, either directly or indirectly. The rules applicable
to DTC and its DTC Participants are on file with the SEC.
DTC management is aware that some computer applications and systems
used for processing data were written using two digits rather than four to
define the applicable year, and therefore may not recognize a date using
"00" as the year 2000. This could result in the inability of these systems
to properly process transactions with dates in the year 2000 and
thereafter. DTC has developed and is implementing a program to address this
problem so that its applications and systems as the same relate to the
timely payment of distributions (including principal and interest payments)
to securityholders, book-entry deliveries and settlement of trades within
DTC continue to function properly. This program includes a technical
assessment and a remediation plan, each of which is complete. Additionally,
DTC plans to implement a testing phase of this program which is expected to
be completed within appropriate time frames.
In addition, DTC is contacting and will continue to contact
third-party vendors that provide services to DTC to determine the extent of
their Year 2000 compliance, and DTC will develop contingency plans as it
deems appropriate to address failures in Year 2000 compliance on the part
of third-party vendors. However, there can be no assurance that the systems
of third-party vendors will be timely converted and will not adversely
affect the proper functioning of DTC's services.
The information set forth in this section concerning DTC has been
provided by DTC for informational purposes only and is not intended to
serve as a representation, warranty or contract modification of any kind.
Chase USA makes no representations as to the accuracy or completeness of
such information.
Cedelbank
Cedelbank is incorporated under the laws of Luxembourg as a
professional depository. Cedelbank holds securities for Cedelbank Customers
and facilitates the clearance and settlement of securities transactions
between Cedelbank Customers through electronic book-entry changes in
accounts of Cedelbank Customers, thereby eliminating the need for physical
movement of certificates. Transactions may be settled in Cedelbank in any
of 36 currencies, including U.S. dollars. Cedelbank provides to its
Cedelbank Customers, among other things, services for safekeeping,
administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. Cedelbank deals with
domestic securities markets in over 30 countries through established
depository and custodial relationships. Cedelbank has established an
electronic bridge with Morgan Guaranty Trust as Euroclear Operator in
Brussels to facilitate settlement of trades between Cedelbank and
Euroclear. Cedelbank currently accepts over 110,000 securities issues on
its books. As a professional depository, Cedelbank is subject to regulation
by the Luxembourg Commission for the Supervision of the Financial Sector,
which supervises Luxembourg banks. Cedelbank Customers are recognized
financial institutions around the world, including underwriters, securities
brokers and dealers, banks, trust companies, clearing corporations and
other organizations and may include the underwriters of any series of
securities issued through this document. Cedelbank Customers in the U.S.
are limited to securities brokers, dealers and banks. Currently, Cedelbank
has approximately 2,000 customers located in over 80 countries, including
all major European countries, Canada and the United States. Indirect access
to Cedelbank is also available to others, such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship
with a Cedelbank Customer, either directly or indirectly.
Euroclear
The Euroclear System was created in 1968 to hold securities of
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 34 currencies,
including U.S. dollars. The Euroclear System includes various other
services, including securities lending and borrowing and interfaces with
domestic markets in several countries generally similar to the arrangements
for cross-market transfers with DTC described below. The Euroclear System
is operated by Morgan Guaranty Trust Company of New York's Brussels,
Belgium office, acting as Euroclear Operator, under contract with 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 the Euroclear System on behalf of Euroclear
Participants. Euroclear Participants include banks (including central
banks), securities brokers and dealers and other professional financial
intermediaries and may include the underwriters of the series of securities
offered through this document. Indirect access to the Euroclear System is
also available to other firms that clear through or maintain a custodial
relationship with a Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank 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 the Euroclear System and
applicable Belgian law. These terms and conditions govern transfers of
securities and cash within the Euroclear System, withdrawal of securities
and cash from the Euroclear System, and receipts of payments with respect
to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific
certificates to specific securities clearance accounts. The Euroclear
Operator acts under these terms and conditions only on behalf of Euroclear
Participants and has no record of or relationship with persons holding
through Euroclear Participants.
Book-Entry Registration
Cede, as DTC's nominee, will hold the global securities. Cedelbank
and Euroclear will hold omnibus positions on behalf of Cedelbank Customers
and Euroclear Participants, respectively, through customers' securities
accounts in Cedelbank's and Euroclear's names on the books of their
respective depositaries. These depositaries will in turn hold these
positions in customers' securities accounts in the depositaries' names on
DTC's books.
Transfers between DTC Participants will occur in accordance with
DTC rules. Transfers between Cedelbank Customers and Euroclear Participants
will occur in the ordinary way in accordance with their applicable rules
and operating procedures. Cross-market transfers between persons holding
securities directly or indirectly through DTC, on the one hand, and
directly or indirectly through Cedelbank Customers 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, these cross-market transactions will require
delivery of instructions to the relevant European international clearing
system by the counterparty in the system in accordance with its rules and
procedures, and within its established European time deadlines. 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.
Cedelbank Customers and Euroclear Participants may not deliver instructions
directly to the depositaries.
Because of time-zone differences, credits of securities in
Cedelbank or Euroclear as a result of a transaction with a DTC 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 Cedelbank Customers or Euroclear Participants on
such day. Cash received in Cedelbank or Euroclear as a result of sales of
securities by or through a Cedelbank Customer or a Euroclear Participant
will be received with value on the DTC settlement date but will be
available in the relevant Cedelbank or Euroclear cash account only as of
the business day following settlement in DTC.
Your purchases of securities under the DTC system must be made by
or through DTC Participants, which will receive a credit for the securities
on DTC's records. Your ownership interest is in turn recorded on the DTC
Participants' and indirect participants' records. You will not receive
written confirmation from DTC of their purchase, but you can expect to
receive written confirmation providing details of the transaction, as well
as periodic statements of your holdings, from the DTC Participant or
indirect participant through which you entered into the transaction.
Transfers of ownership interests in the securities are accomplished by
entries made on the books of DTC Participants acting on behalf of you and
other securityholders. You will not receive securities representing your
ownership interest in the securities offered through this document, except
in the event that use of the book-entry system for these securities is
discontinued.
To facilitate subsequent transfers, all securities deposited by DTC
Participants with DTC are registered in the name of DTC's nominee, Cede.
The deposit of securities with DTC and their registration in the name of
Cede effects no change in beneficial ownership. DTC has no knowledge of the
actual owners of the securities; DTC's records reflect only the identity of
the DTC Participants to whose accounts the securities are credited, which
may or may not be the actual securities owners. DTC Participants remain
responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to DTC
Participants, by DTC Participants to indirect participants, and by DTC
Participants and indirect participants to securityholders will be governed
by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Neither DTC nor Cede will consent or vote with respect to these
securities. Under its usual procedures, DTC mails an omnibus proxy to Chase
USA as soon as possible after the record date, which assigns Cede's
consenting or voting rights to those DTC Participants to whose accounts
these securities are credited on the relevant record date.
Principal and interest payments on these securities will be made to
DTC. DTC's practice is to credit DTC Participants' accounts on the
applicable Distribution Date in accordance with their respective holdings
shown on DTC's records unless DTC has reason to believe that it will not
receive payment on such Distribution Date. Payments by DTC Participants to
securityholders will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts of
customers in bearer form or registered in "street name" and will be the
responsibility of such DTC Participant and not of DTC, the Master Trust
Trustee, the Indenture Trustee, the Owner Trustee or Chase USA, subject to
any statutory or regulatory requirements as may be in effect from time to
time. Payment of principal and interest to DTC is the responsibility of the
Master Trust Trustee, disbursement of these payments to DTC Participants
shall be the responsibility of DTC, and disbursement of such payments to
securityholders shall be the responsibility of DTC Participants and
indirect participants.
DTC may discontinue providing its services as securities depository
for these securities at any time by giving reasonable notice to Chase USA,
the Master Trust Trustee or the Indenture Trustee. If this occurs, in the
event that a successor securities depository is not obtained, Definitive
Securities will be printed and delivered. Chase USA may decide to
discontinue use of the system of book-entry transfers through DTC or a
successor securities depository. In that event, Definitive Securities will
be delivered to each securityholder. See "--Definitive Securities" for a
description of the circumstances under which Definitive Securities will be
issued.
Distributions on securities held through Cedelbank or Euroclear
will be credited to the cash accounts of Cedelbank Customers 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 U.S. tax laws and
regulations as described under "Tax Matters." Cedelbank or the Euroclear
Operator, as the case may be, will take any other action permitted to be
taken by a securityholder under the Pooling and Servicing Agreement or
Indenture on behalf of a Cedelbank Customer or 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, Cedelbank and Euroclear have agreed to the foregoing
procedures in order to facilitate transfers of securities among their
participants, they are under no obligation to perform or continue to
perform these procedures and these procedures may be discontinued at any
time.
Definitive Securities
Although the attached supplement may indicate that this series of
securities, or one or more classes of this series, may be issued in a
different form, it is expected that securities offered through this
document will be issued in book-entry form. If these securities are
initially issued in book-entry form, Definitive Securities in fully
registered, certificated form will not be issued to any party other than
DTC or its nominee unless:
o Chase USA advises the Master Trust Trustee, in the case of
certificates, or the Owner Trustee for this series, in the
case of notes, in writing that DTC is no longer willing or
able to discharge properly its responsibilities as
depository with respect to this series of securities, and
the Master Trust Trustee or the Owner Trustee, as
applicable, or Chase USA is unable to locate a qualified
successor;
o Chase USA, at its option, advises the Master Trust Trustee,
in the case of certificates, or the Owner Trustee for this
series, in the case of notes, in writing that it elects to
terminate the book-entry system through DTC; or
o after the occurrence of a Servicer Default, in the case of
certificates, or an Event of Default, in the case of notes,
securityholders representing not less than 50% - or such
other percentage specified in the related supplement - of
the outstanding principal amount of the certificates or the
notes, as applicable, advise the Master Trust Trustee or the
Owner Trustee, as applicable, and DTC through DTC
Participants in writing that the continuation of a
book-entry system through DTC or its successor is no longer
in the best interests of the securityholders.
If any of these events occur, DTC must notify all DTC Participants
of the availability through DTC of Definitive Securities. Upon surrender by
DTC of the definitive security representing these securities and
instructions for re-registration, the Master Trust Trustee will issue the
securities as Definitive Securities, and thereafter the Master Trust
Trustee, in the case of certificates, or the Owner Trustee, in the case of
notes, will recognize the holders of these Definitive Securities as holders
under the Pooling and Servicing Agreement, in the case of certificates, or
the Indenture, in the case of notes.
Allocations of finance charge and principal collections to
certificates which are Definitive Securities will be made by the Master
Trust Trustee. Distributions of these amounts on notes which are Definitive
Securities will be made, after these amounts are received through
the Series Certificate deposited in the owner trust, by the Indenture
Trustee. In both cases, payments will be made directly to holders of
Definitive Securities in accordance with the procedures set forth in this
prospectus, in the Pooling and Servicing Agreement and any related
indenture. Payments on each Distribution Date will be made to holders in
whose names the Definitive Securities were registered at the close of
business on the related Record Date. If you own Definitive Securities in an
amount greater than a minimum level stated in the Pooling and Servicing
Agreement or Indenture, as applicable, payments of principal and interest
will be sent to you via wire transfer. If you own less than this minimum
level of Definitive Securities, payments will be made by check and mailed
to you at an address maintained by the Master Trust Trustee or Owner
Trustee, as applicable.
The final payment on any security, whether a Definitive Security or
the securities registered in the name of DTC or its nominee, will be made
only upon presentation and surrender of the security at the office or
agency specified in the notice of final distribution to securityholders.
The Master Trust Trustee or the Indenture Trustee, as applicable, will
provide this notice to registered securityholders no later than the fifth
day of the month in which the final distribution will occur. If the
securities are listed on the Luxembourg Stock Exchange, payments of
principal and interest, including the final payment on any security, will
also be made at the offices of Banque Generale du Luxembourg, S.A.
Definitive Securities will be transferable and exchangeable at the
offices of any of the transfer agents and registrars, which shall initially
be CMB and the Master Trust Trustee or Indenture Trustee, as applicable. No
service charge will be imposed for any registration of transfer or
exchange, but the transfer agent and registrar may require payment of a sum
sufficient to cover any tax or other governmental charge imposed in
connection with the transfer or exchange. The transfer agent and registrar
shall not be required to register the transfer or exchange of Definitive
Securities for a period of fifteen days preceding the due date for any
payment on the Definitive Securities.
Initial Settlement
All securities will be held in book-entry form by DTC in the name
of Cede as nominee of DTC. Investors' interests in the securities will be
represented through financial institutions acting on their behalf as direct
and indirect participants in DTC. As a result, Cedelbank and Euroclear will
hold positions on behalf of their participants through their respective
Depositaries, which will hold positions in accounts as DTC Participants.
Custody accounts of investors who elect to hold securities through
DTC will be credited with their holdings against payment in same-day funds
on the settlement date.
Investors who elect to hold securities through Cedelbank or
Euroclear accounts will follow the settlement procedures that apply to
conventional eurobonds, except that there will be no temporary global
security and no "lock-up" or restricted period. 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
investors holding securities through DTC will be conducted according to the
rules and procedures applicable to U.S. corporate debt obligations.
Secondary market trading between DTC Participants will be settled in
same-day funds.
Trading between Cedelbank and/or Euroclear Participants. Secondary
market trading between investors holding securities through Cedelbank 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 Cedelbank Customers or Euroclear Participants will be
settled using the procedures applicable to conventional eurobonds in
same-day funds.
Trading between DTC seller and Cedelbank or Euroclear purchaser.
When securities are to be transferred from the account of a DTC Participant
to the account of a Cedelbank Customer or a Euroclear Participant, the
purchaser will send instructions to Cedelbank or Euroclear through a
Cedelbank Customer or Euroclear Participant at least one business day prior
to settlement. Cedelbank or Euroclear will instruct the respective
depositary, as the case may be, to receive the securities against payment.
Payment will include interest accrued on the securities 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 securities. After settlement has been
completed, the securities will be credited to the respective clearing
system and by the clearing system, in accordance with its usual procedures,
to the Cedelbank Customer's or Euroclear Participant's account. The
securities credit will appear the next day, European time, and the cash
debit will be back-valued to, and the interest on the securities 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 Cedelbank or Euroclear cash
debit will be valued instead as of the actual settlement date.
Cedelbank Customers 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
pre-position funds for settlement, either from cash on hand or existing
lines of credit, as they would for any settlement occurring within
Cedelbank or Euroclear. Under this approach, they may take on credit
exposure to Cedelbank or Euroclear until the securities are credited to
their accounts one day later.
As an alternative, if Cedelbank or Euroclear has extended a line of
credit to them, Cedelbank Customers or Euroclear Participants can elect not
to pre-position funds and allow that credit line to be drawn upon the
finance settlement. Under this procedure, Cedelbank Customers or Euroclear
Participants purchasing securities would incur overdraft charges for one
day, assuming they cleared the overdraft when the securities were credited
to their accounts. However, interest on the securities would accrue from
the value date. Therefore, in many cases the investment income on the
securities earned during that one-day period may substantially reduce or
offset the amount of such overdraft charges, although this result will
depend on each Cedelbank Customer's or Euroclear Participant's particular
cost of funds.
Since the settlement is taking place during New York business
hours, DTC Participants can use their usual procedures for sending
securities to the respective depositary for the benefit of Cedelbank
Customers or Euroclear Participants. The sale proceeds will be available to
the DTC seller on the settlement date. In this way, to the DTC Participant
a cross-market transaction will settle no differently than a trade between
two DTC Participants.
Trading between Cedelbank or Euroclear seller and DTC purchaser.
Due to time zone differences in their favor, Cedelbank Customers and
Euroclear Participants may employ their customary procedures for
transactions in which securities are to be transferred by the respective
clearing system, through the respective depositary, to a DTC Participant.
The seller will send instructions to Cedelbank or Euroclear through a
Cedelbank Customer or Euroclear Participant at least one business day prior
to settlement. In these cases, Cedelbank 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 securities 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 Cedelbank Customer or Euroclear Participant the
following day, and receipt of the cash proceeds in the Cedelbank Customer'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 Cedelbank Customer 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 Cedelbank
Customer's or Euroclear Participant's account would instead be valued as of
the actual settlement date. Finally, day traders that use Cedelbank or
Euroclear and that purchase securities from DTC Participants for delivery
to Cedelbank Customers 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:
(1) borrowing through Cedelbank or Euroclear for one day --
until the purchase side of the day trade is reflected in their
Cedelbank or Euroclear accounts -- in accordance with the clearing
system's customary procedure;
(2) borrowing the securities in the U.S. from a DTC Participant
no later than one day prior to settlement which would give the
securities sufficient time to be reflected in their Cedelbank or
Euroclear account in order to settle the sale side of the trade; or
(3) 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 Cedelbank Customer or Euroclear Participant.
Certain U.S. Federal Income Tax Documentation Procedures
relating to Global Securities
A beneficial owner of Global Securities holding securities through
Cedelbank 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:
o 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
o 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
Securities 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 Securities Owners residing
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 or 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 the Securities 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 Certificate Owner
of a Global Security or, in the case of a Form 1001 or a Form 4224 filer,
his agent, files by submitting the appropriate form to the person through
whom it holds (the clearing agency, in the case of persons holding directly
on the books of the clearing agency). Form W-8 and Form 1001 are effective
for three calendar years and Form 4224 is effective for one calendar year.
The term "U.S. Person" means
o a citizen or resident of the United States,
o a corporation or partnership created or organized in the
United States or under the laws of the United States or of
any state,
o an estate the income of which is subject to United States
federal income taxation regardless of its source, or
o a trust the income of which is subject to United States
federal income taxation regardless of its source; provided,
however, that for tax years beginning after December 31,
1996 -- and, if a trustee so elects, for tax years ending
after August 20, 1996 --, a "U.S. Person" shall include any
trust:
- which is subject to the supervision of a court within
the United States and the control of a United States
person as described in section 7701(a)(30) of the
Code, or
- that has a valid election in effect under applicable
U.S. treasury regulations to be treated as a United
States person.
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
Securities. Investors are advised to consult their own tax advisors for
specific tax advice concerning their holding and disposing of the Global
Securities.
Description of the Certificates
Following is a summary of the material provisions common to all
series of certificates issued through the Pooling and Servicing Agreement,
including generally-distributed certificates and any Series Certificates
purchased by owner trusts and pledged to secure series
of notes.
Where the term "certificateholder" is used in the following
summary, it refers also to any owner trust holding a Series Certificate
pledged to support notes.
The assets of the master trust are allocated among:
o certificateholders of each series;
o providers of uncertificated credit enhancement
backed by receivables; and
o the Transferor Certificate.
Each series issued by the master trust is backed by an amount of
principal receivables and amounts on deposit in various master trust bank
accounts. The attached supplement may describe that your series' Investor
Interest will be adjusted by the amount of funds deposited in a bank
account or accounts, or adjusted in other ways. These amounts can vary from
period to period, and on any date are equal to:
(initial Investor Interest on the series' Closing Date) -
(aggregate principal payments made to the series'
certificateholders) - (aggregate unreimbursed charge-offs and
reallocated principal collections for the series)
Any Collateral Interest in a series will also be included in that
series' Investor Interest; if your series includes a Collateral Interest, a
description will be included in the attached supplement. During each
series' Revolving Period, the amount of the series' Investor Interest is
expected to remain constant to the extent noted in the attached supplement.
The aggregate Investor Interest in the master trust is the sum of
the Investor Interests for all series issued from the master trust.
The certificates of each series represent undivided interests in
the assets of the master trust, including the right to each series'
Investor Percentage of all cardholder payments on receivables in the master
trust. Certificateholders of each series will therefore receive varying
amounts of collections of principal and finance charges each month, and
will also be allocated a varying portion of receivables in defaulted
accounts written off during each month. Principal collections, finance
charge collections and receivables in defaulted accounts may be allocated
to your series in different ways: the attached supplement will describe how
the various Investor Percentages are calculated. If your series includes
multiple classes of certificates, collections allocated to your series may
be further allocated among each class. See "--Investor Percentage and
Transferor Percentage" for descriptions of the allocation percentages.
As a certificateholder, your right to collections is limited to the
amounts needed to make required payments to you. Collections allocated to
your series or your class of certificates might be reallocated. The
attached supplement and the Pooling and Servicing Agreement set forth how
collections will be allocated to, or reallocated from, your certificates.
Each series of certificates may be included in a Group of series.
Series in a Group may share excess principal collections, finance charge
collections or both among themselves. The attached supplement will state if
your series is in a Group and, if it is, what other series in your Group
were outstanding on your series' Closing Date.
Each series of certificates represents interests in the master
trust only, and does not represent interests in or recourse obligations of
Chase USA, CMB or any of their affiliates. A certificate is not a deposit
and neither the certificates nor the underlying master trust accounts or
receivables are insured or guaranteed by the FDIC or any other governmental
agency.
Transferor Certificate
The total amount of principal receivables and amounts on deposit in
various master trust bank accounts minus the aggregate Investor Interest
and the interest of credit enhancement providers - if not included as part
of the Investor Interest - is the Transferor Interest. The Transferor
Interest is represented by the Transferor Certificate. The holder of the
Transferor Certificate is entitled to a varying percentage of cardholder
payments from master trust receivables, called the Transferor Percentage.
Chase USA currently owns, and expects to continue owning, the
Transferor Certificate. To the extent provided in the attached supplement
and the Pooling and Servicing Agreement, Chase USA may transfer the
Transferor Certificate in whole or in part to another party. See "--Issuing
New Series of Certificates."
The amount of principal receivables in the master trust will vary
daily as cardholder payments are received and new receivables are created.
The amount of the Transferor Interest will fluctuate from day to day as the
amount of master trust principal receivables varies. When a series begins
to amortize or accumulate, the Investor Interest of the series will decline
as principal payments are made - or accumulated for future payment - to
certificateholders. The Transferor Interest will increase to reflect this
decrease in the Investor Interest.
The Transferor Interest may be reduced through the issuance of a
new series as described below under "--Issuing New Series of Certificates."
The Transferor Interest may also be reduced, however, if:
o the servicer adjusts the amount of principal receivables in
the master trust for particular charge-offs from principal
receivables used to calculate the Transferor Interest; and
o the Transferor enters into a participation or other
agreement with another person who purchases an interest in
the Transferor Certificate.
See "Chase USA's Representations and Warranties," "--Rebates and
Fraudulent Charges" and "--Application of Collections" for other
discussions on how the Transferor Interest may be reduced.
Issuing New Series of Certificates
The Pooling and Servicing Agreement provides that Chase USA, as
owner of the Transferor Certificate, may from time to time exchange the
current Transferor Certificate for a new Transferor Certificate and the
issuance of a new series of certificates. Each exchange of this form would
decrease the Transferor Interest and increase the Investor Interest. The
Transferor Certificate and an existing series of certificates may also be
exchanged for a new Transferor Certificate and a new series of
certificates.
Each new series may have a maturity date, principal payment method,
interest rate calculation method or other terms different from any other
outstanding series. Each new series may also have credit enhancement
available only to that series. Under the Pooling and Servicing Agreement,
the Master Trust Trustee holds credit enhancement only for the benefit of
the related series.
For Chase USA to exchange the Transferor Certificate for a new
series, Chase USA must:
o notify the Master Trust Trustee at least five business days
in advance of the exchange;
o receive written confirmation from each Rating Agency rating
an outstanding series of certificates that issuing the new
series of certificates will not cause a downgrade or
withdrawal of any outstanding rating of certificates and
notes.
o deliver to the Master Trust Trustee a Series Supplement
describing the principal terms of the series;
o receive a Tax Opinion that issuing the new series will not
have adverse tax consequences for any outstanding series;
o deliver to the Master Trust Trustee an executed credit
enhancement contract, if required under the terms of the new
series;
o deliver an officer's certificate stating that there are
enough receivables in the master trust to support all
existing series and the new one; and
o deliver to the Master Trust Trustee the existing Transferor
Certificate and, if they are also to be exchanged, the
certificates representing an existing series.
After satisfaction of these conditions and any other conditions set forth
in the Pooling and Servicing Agreement, the Master Trust Trustee will
cancel the existing Transferor Certificate and issue a new Transferor
Certificate and a new series of certificates.
The Pooling and Servicing Agreement also allows the Transferor, in
addition to the exchanges or new issuances described above, to transfer its
interest in all or a portion of the Transferor Certificate, provided that
before the transfer:
o the Master Trust Trustee receives written notification from
each Rating Agency that the transfer will not result in a
lowering of its then existing rating of the certificates of
any outstanding series rated by it and
o the Master Trust Trustee receives a Tax Opinion.
Interest Allocations
For each series of certificates and each related class, interest
will accrue from the date specified in the applicable supplement, on the
outstanding principal amount of the series or class at the applicable
certificate interest rate. Each certificate interest rate may be fixed,
floating or any other type of rate. Interest will be distributed to
certificateholders in the amounts and on the Distribution Dates specified
in the related supplement.
Interest payments made on each Distribution Date to a series will
be funded from:
o collections of finance charges allocated to the series'
Investor Interest during the preceding Monthly Period or
Monthly Periods;
o investment earnings, if any, on any funds held in master
trust bank accounts;
o any credit enhancement, to the extent described in the
related supplement; and
o any derivative counterparty, to the extent described in the
related supplement.
If interest payments will be made less frequently than monthly, an Interest
Funding Account may be established to accumulate the required interest
amount. If a series has more than one class of certificates, that series
may have more than one Interest Funding Account.
Your class of certificates will pay interest on the dates and at
the interest rate specified in the attached supplement. If your
certificates bear interest at a floating or variable rate, the attached
supplement will describe how that rate is calculated. For each Series
Certificate, the related supplement will describe how interest is
calculated.
Principal Allocations
Each series of certificates will be scheduled to receive principal
in a single payment, or in installments beginning on the Principal
Commencement Date for the series. If a series has more than one class of
certificates, a different Principal Commencement Date or scheduled
principal payment date may be assigned to each class. The related
supplement will set forth when each series and class of certificates is
expected to receive principal.
Generally, each series will begin in the Revolving Period, during
which no principal will be paid to any class of the series. Collections of
principal receivables allocated to a series in its Revolving Period will be
available, if specified in the related supplement, to other series in a
Group or paid to Chase USA as holder of the Transferor Certificate.
Each series or class of certificates will use one or more of the
following principal payment methods:
o principal amortization;
o controlled amortization;
o rapid amortization;
o controlled accumulation; and
o rapid accumulation.
One of the principal payment methods named above will commence at
the end of the Revolving Period and continue until:
o the Distribution Date on which the Investor Interest for
the class or series is repaid;
o the date on which another principal payment method begins; or
o the Series Termination Date.
Each method involving accumulation will make periodic deposits into
a Principal Funding Account. At the end of the accumulation period, the
amount in the Principal Funding Account will be paid to certificateholders
of the related class or series.
Each method involving amortization will make periodic payments of
principal allocated to the series or class to certificateholders. The
frequency of payments will be specified in the related supplement, but in
the event of rapid amortization payments will always be made monthly.
Descriptions of principal payment methods are found in Exhibit I.
If your class of certificates is subordinated to more senior
classes, you will receive payments of principal only after the more senior
classes are fully repaid.
For a Series Certificate held by an owner trust, the Master Trust
Trustee will transfer principal payments on the Series Certificate to the
owner trust. The related supplement will set forth how these payments will
be made to noteholders.
You may begin to receive payments of principal earlier or later
than expected. See "Maturity Considerations" for a discussion of how this
might occur.
<TABLE>
<CAPTION>
Table I: Descriptions of Principal Payment Methods
Principal Controlled Rapid Controlled Rapid
Amortization Amortization Amortization Accumulation Accumulation
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Begins Principal Principal On first occurrence Adjustable date, On first occurrence
Commencement Date Commencement Date of a Pay Out Event set in related of a Rapid
for series or class for series or class supplement Accumulation Event
for series or class
After Revolving Period Revolving Period Any other period Revolving Period Revolving Period
Controlled Controlled amortization Controlled amorti- Controlled
amortization for for another class zation for another amortization for
another class Controlled accumulation Controlled accumu- another class
Controlled for another class lation class for Controlled
accumulation for Rapid accumulation for another class for accumulation for
another class another class Rapid accumulation another class
Rapid accumulation Rapid accumulation
for another class for another class
Cannot Begin Rapid amortization Rapid amortization N/A Rapid amortization Rapid amortization
After Rapid accumulation
Ends Upon first to occur Upon first to occur Upon first to occur of: Upon first to occur Upon first to occur
of: Repayment of of: Repayment of Repayment of series of: Repayment of of: Repayment of
series or class series or class Series Termination Date series or class series or class
Beginning of rapid Beginning of rapid Beginning of rapid Beginning of rapid
amortization amortization amortization amortization
Series Termination Series Termination Beginning of rapid Series Termination
Date Date accumulation Date
Series Termination
Date
Amount Paid Principal allocated to Controlled Amorti- Principal allocated to Controlled Deposit Principal allocated
class or series (no zation Amount class or series (no more Amount deposited to class or series
more than initial than initial Investor each period, then deposited each
Investor Interest) Interest) paid to period (no more
certificateholders than initial
when period ends Investor Interest),
then paid to
certificateholders
on scheduled
payment date
Applies to Specific class Specific class Entire series Specific class Specific class
Additional Controlled Amortization Pay Out Events as Controlled Deposit Rapid Accumulation
Information Amount as set forth in set forth in the Amount as set forth Events as set forth
related supplement related supplement in related in the related
supplement; subject supplement
to adjustment
</TABLE>
Transfer and Assignment of Receivables
The master trust has all right, title and interest in and to the
receivables in accounts designated as master trust accounts, as well as all
future receivables created in these accounts. Chase USA, as Transferor, has
indicated on its computer files which accounts are designated as master
trust accounts. When new accounts are designated for inclusion in the
master trust, Chase USA will provide a complete list of these additional
accounts to the Master Trust Trustee and Chase USA will file, on behalf of
the master trust, UCC financing statements meeting the requirements of
state law. Except as noted above, Chase USA will take no other steps to
identify receivables in master trust accounts.
Chase USA's Representations and Warranties
When the master trust issues a new series of certificates, Chase
USA, as Transferor, will make several representations and warranties to the
master trust, including the following:
o as of the Closing Date, Chase USA has the authority to
consummate the issuance; and
o as of the initial account selection date or the date each
account was added to the master trust, it was an Eligible
Account.
If a representation or warranty made by Chase USA on the Closing Date is
later found to be materially incorrect when made, and
o certificateholders of your series had been materially and
adversely affected for a period of at least 60 days,
o notice had been given to Chase USA and
o the condition persists beyond the date set forth in that
notice,
a Pay Out Event for your series can be declared by the Master Trust
Trustee, or by certificateholders representing at least 50% of your series'
outstanding Investor Interest. Declaring a Pay Out Event will automatically
begin rapid amortization of principal.
Chase USA will make other representations and warranties,
including:
o the Pooling and Servicing Agreement constitutes a legal,
valid and binding obligation enforceable against Chase USA;
and
o the master trust has all right, title and interest in the
receivables in the Master Trust Portfolio or has a first
priority perfected security interest in these receivables.
If either of these representations and warranties is ever breached, Chase
USA might be required to accept reassignment of the entire Master Trust
Portfolio. Certificateholders representing 50% or more of all of the master
trust's outstanding series' Investor Interest may vote to give Chase USA 60
or more days to cure the breach. If, at the end of this time, the breach has
not been cured, Chase USA:
o will be obligated to accept retransfer of the entire Master
Trust Portfolio, and
o will pay into the master trust's Principal Account on the
next Distribution Date a cash sum equal to the outstanding
Investor Interest and any accrued and unpaid interest due as
of that date.
This will constitute payment in full of the aggregate Investor Interest.
Reassignment of the Master Trust Portfolio to Chase USA is the only remedy
to any breach of these representations and warranties.
Chase USA makes representations and warranties in the Pooling and
Servicing Agreement concerning master trust accounts and the receivables in
the Master Trust Portfolio. Only Eligible Accounts can be designated as
master trust accounts. Chase USA can give you no assurance that Eligible
Accounts will remain eligible once added to the master trust.
Chase USA also represents that each receivable in the Master Trust
Portfolio is an Eligible Receivable when created. If a receivable is found
to be ineligible when created, and this receivable is charged-off as
uncollectible or the master trust's rights to the receivable are impaired,
Chase USA must accept reassignment of the principal amount of this
ineligible receivable. The Master Trust Trustee may allow Chase USA a
period of time to cure the ineligibility before requiring reassignment.
Chase USA will accept reassignment by directing CMB, as servicer, to deduct
the principal amount of the ineligible receivable from the Transferor
Interest. If this would make the Transferor Interest a negative number,
Chase USA will make a cash deposit in the master trust's Principal Account
in the amount by which the Transferor Interest would have been negative.
Any deduction or deposit is considered a repayment in full of the
ineligible receivable. Chase USA's obligation to accept reassignment of any
ineligible receivable is the only remedy to any breach of a representation
or warranty concerning eligibility of receivables.
The attached supplement may specify additional representations and
warranties made by Chase USA when your securities are issued. The Master
Trust Trustee is not required to make periodic examinations of receivables
in the Master Trust Portfolio or any records relating to them. However,
CMB, as servicer, will deliver to the Master Trust Trustee once each year
an opinion of counsel affirming, among other things, that no further action
is necessary to maintain the master trust's perfected security interest in
the receivables.
Addition of Master Trust Assets
Chase USA has the right to designate, from time to time, additional
accounts to be included as master trust accounts. As described above under
"The Receivables," Chase USA may also be obligated, from time to time, to
designate new accounts to be included as master trust accounts.
Each new account must be an Eligible Account at the time of its
designation. However, new accounts may not be of the same credit quality as
existing master trust accounts.
Chase USA is also permitted to add Participations to the master
trust from time to time. These Participations must be undivided interests
in a pool of assets primarily consisting of receivables arising under
consumer credit card accounts owned by Chase USA. To amend the Pooling and
Servicing Agreement so that a Participation may be added to the master
trust without certificateholder consent, the following must occur:
o Chase USA must deliver an officer's certificate to the
Master Trust Trustee stating that, in Chase USA's reasonable
belief, adding the Participation will not have a material
adverse effect on certificateholders' interests; and
o the amendment allowing addition of the Participation will
not result in a downgrade or withdrawal of any ratings of
any outstanding series of certificates.
The SEC currently requires that any Participations added to the master
trust be registered under the Securities Act.
The Pooling and Servicing Agreement allows Chase USA to add
accounts to the master trust automatically upon satisfaction of several
conditions, including:
o each account must be an Eligible Account;
o Chase USA must not have designated the account as an account
not to be added;
o each new account was selected for inclusion in the master
trust through a selection process not harmful to
certificateholders' interests; and
o as of the addition date, Chase USA is not insolvent.
In addition to the Participation addition requirements noted above,
Chase USA must satisfy several conditions to add Participations and - if
accounts are not being added automatically - accounts to the master trust,
including:
o notice to the Master Trust Trustee, each Rating Agency
rating an outstanding series of securities and CMB, as
servicer;
o delivery and acceptance by the Master Trust Trustee of
written assignment of receivables in new accounts or
Participations to the master trust;
o delivery of a computer file or microfiche list with a list
of all new accounts or Participations;
o representation from Chase USA that, on the addition date,
each new account is an Eligible Account and was selected for
inclusion in the Master Trust through a selection process
not harmful to certificateholders' interests;
o as of the addition date, representation from Chase USA that
Chase USA is not insolvent; and
o if specified in any prospectus supplement, receipt of
confirmation from each Rating Agency that the addition will
not result in a downgrade or withdrawal of any ratings of
any outstanding series of certificates or notes.
Chase USA expects to file a report on Form 8-K with the SEC on any addition
of assets to the master trust not related to an automatic account addition.
Removal of Master Trust Assets
Chase USA has the right to remove accounts and Participations from
the master trust, subject to several conditions, including an officer's
certificate from Chase USA confirming:
o that removing the accounts or Participations will not cause
a Pay Out Event for any outstanding series;
o that Chase USA has delivered to the Master Trust Trustee a
list of accounts or Participations to be removed;
o that Chase USA represents that the accounts to be removed
were not selected through a selection process harmful to
certificateholders' interests;
o receipt of confirmation from each Rating Agency that the
removal will not result in a downgrade or withdrawal of any
ratings of any outstanding series of certificates or notes;
o that the post-removal amount of receivables in the Master
Trust Portfolio will meet the minimum requirements; and
o that unless a series has just been repaid, principal
receivables in removed accounts or Participations as of the
removal date will not exceed 5% of the aggregate outstanding
principal receivables in the Master Trust Portfolio.
Chase USA may remove any account from the master trust, at any time and
with no required representations, approvals or consents, if the account has
a zero balance.
Discount Option
Chase USA, has the option to reclassify a percentage of Principal
Receivables in the Master Trust Portfolio as Finance Charge Receivables.
This is referred to as the Discount Option. Chase USA may use the Discount
Option to compensate for a decline in the Portfolio Yield, but only if
there would be sufficient Principal Receivables to allow for that
discounting. The designation of Principal Receivables as Finance Charge
Receivables would result in a larger amount of Finance Charge Receivables
and a smaller amount of Principal Receivables. By doing so, Chase USA would
reduce the likelihood that a Pay Out Event would occur as a result of a
decreased Portfolio Yield, and at the same time will increase the
likelihood that Chase USA will have to add Principal Receivables to the
master trust.
If the Discount Percentage is greater than zero, an amount of
master trust principal collections for each Monthly Period equal to:
(the Discount Percentage) X (total principal collections allocable
to the master trust)
will be considered finance charge collections and allocated with regular
collections of finance charge receivables in the Master Trust Portfolio.
To exercise the Discount Option, Chase USA must satisfy the
conditions in the Pooling and Servicing Agreement, including confirmation
from each Rating Agency that the use of the Discount Option will not result
in a downgrade or withdrawal of any ratings of any outstanding series of
certificates or notes.
Master Trust Bank Accounts
The Master Trust Trustee has established and maintains the
following bank accounts on behalf of all series issued from the master
trust:
o the Principal Account,
o the Finance Charge Account,
o the Collection Account,
o the Excess Funding Account and
o one or more Distribution Accounts.
CMB, as Paying Agent, has the revocable right to withdraw funds from the
Distribution Accounts to make distributions to certificateholders.
The Master Trust Trustee may establish, as set forth in the related
supplement, additional bank accounts for each series, including:
o the Interest Funding Account,
o the Principal Funding Account and
o the Pre-Funding Account.
All of these bank accounts must be established with an Eligible
Institution, which may include:
o CMB, as the ;
o a depository institution, which may be the Master Trust
Trustee or an affiliate, organized under the laws of the
United States or any one of its states which at all times
- has a certificate of deposit rating of "P-1" by Moody's,
- has either a long-term unsecured debt rating of "AAA"
by S&P or a certificate of deposit rating of "A-1+" by
S&P and
- is a member of the FDIC; or
o any other institution acceptable to all Rating Agencies
rating any outstanding series.
Funds on deposit in any of these master trust bank accounts are
invested in permitted investments, which generally include:
o U.S. government debt;
o deposits at financial institutions having a rating in
Moody's and S&P's highest rating category;
o commercial paper having a rating in Moody's and S&P's
highest rating category;
o banker's acceptances from the highest-rated financial
institutions;
o some repurchase agreements; and
o any other investments which convert to cash within a finite
period, if agreed to by the Rating Agencies rating the
related series.
Deposits in series-specific bank accounts are for the benefit of the
related series, and the related supplement may set forth differing
permitted investments for amounts in these series-specific bank accounts.
Companion Series
The Series Certificate may be paired with a Companion Series in the
future. The issuance of a Companion Series is subject to the conditions
described above in "--Issuing New Series of Certificates," including the
condition that the Rating Agencies confirm that the issuance of a Companion
Series will not have a negative impact on the ratings of outstanding series
of certificates or notes.
A Companion Series may be funded with either a deposit to a
pre-funding account funded by the sale of the Companion Series or may have
a variable principal amount. Any pre- funding account would be for the
benefit of the Companion Series and not for your benefit.
As principal is allocated to the Series Certificate, the Investor
Interest of the Companion Series will increase and either:
o an equal amount of funds on deposit in the pre-funding
account will be released to Chase USA, or
o an interest in the variable funding certificate that is
equal to the principal allocated to the Series Certificate
will be sold and the proceeds will be distributed to Chase
USA.
We cannot assure you that terms of a Companion Series will not have an
adverse impact on the timing or amount of payments allocated to the Series
Certificate. In particular, if a rapid amortization or rapid accumulation
occurs for a Companion Series while the Series Certificate is outstanding,
the percentage of receivables allocated to the Series Certificate may be
reduced if the terms of the supplement relating to the Companion Series
required that the Companion Series also receive its share of principal
collections. In addition, if a rapid amortization or rapid accumulation
occurs for a Series Certificate, the percentage of receivables allocated to
the Companion Series may be reduced until the Series Certificate is paid in
full. See "Description of the Certificates--Funding Period" for more
discussion on Companion Series.
Funding Period
For any series of certificates, principal receivables may not be
available in the amount of the issued certificates. If this occurs, the
initial Investor Interest will be less than the certificate principal
amount. In this case, the related supplement will set forth the terms of
the Funding Period, which is the period from the series' Closing Date to
the earlier of:
o the date the series' Investor Interest equals the
certificate principal amount; and
o the date specified in the related supplement.
During the Funding Period, the series amount not invested in
receivables will be maintained in the Pre-Funding Account. On the Closing
Date, this amount may be up to 100% of the certificate principal amount.
The Investor Interest will increase as new receivables are conveyed to the
master trust or as the Investor Interests of other series are reduced. The
Investor Interest may decrease due to charge-offs allocated to the series.
During the Funding Period, funds on deposit in the Pre-Funding
Account will be paid to Chase USA as the Investor Interest increases. If
the Funding Period does not end by the date specified in the related
supplement, any amount remaining in the Pre-Funding Account will be repaid
to certificateholders. This type of event may also cause repayment of other
amounts to certificateholders, as set forth in the related supplement.
The prospectus supplement for a series with a Funding Period will
set forth:
o the initial Investor Interest;
o the full Investor Interest, which is the initial certificate
principal balance;
o the date on which the series Investor Interest is expected to
equal the full Investor Interest;
o when the Funding Period will end; and
o what other events, if any, will occur if the end of the
Funding Period is reached before the full Investor Interest
is funded.
A Companion Series may use a Funding Period to pair a new series
with an existing series in, or about to begin, principal amortization or
accumulation. As the Investor Interest for the existing series decreases,
the Investor Interest for the Companion Series will increase. If either the
existing series or the Companion Series experiences a Pay Out Event before
the Companion Series has reached its full Investor Interest, the Investor
Percentages for the two series may be reset as described in the related
supplements. This could have an effect on the allocation of principal
collections to one or both series. We can give you no assurance, if your
series is paired with a Companion Series, that the terms of the Companion
Series will have no impact on the timing or amount of payments made to
certificateholders of your series.
Investor Percentage and Transferor Percentage
From the amounts allocated to the master trust, CMB, as servicer,
will allocate finance charge collections, principal collections and
receivables in defaulted accounts to:
o each series;
o if a series has multiple classes, each class of the series;
o the Transferor Interest; and
o if the related supplement so states, to any credit enhancement
providers.
All allocations of these amounts will be made through the respective
Investor Percentages for each series, the Transferor Percentage and, where
appropriate, the Credit Enhancement Percentage. The related supplements
will set forth how the Investor Percentages are calculated and, if a series
has multiple classes, how allocations will be made among classes.
The Transferor Percentage is, in all cases, equal to:
100% - (all Investor Percentages for outstanding series) -
(all Credit Enhancement Percentages for outstanding series)
Application of Collections
Except in the circumstance described below, CMB, as servicer, must
deposit into the Collection Account, no later than two days after
processing, all payments made on receivables in the Master Trust Portfolio.
CMB must also allocate these deposits between accounts and to various
parties, as described below. However, CMB will be able to make these
deposits on a monthly or other periodic basis if one of the following is
true:
o all Rating Agencies rating an outstanding series agree in
writing that CMB does not need to make daily deposits; or
o CMB has a short-term rating of "P-1" from Moody's, a
short-term rating of "A-1" from S&P and deposit insurance
from the Bank Insurance Fund.
CMB must make daily or periodic deposits to the Collection Account only to
the extent that the funds are needed for deposit into other bank accounts
or distribution to certificateholders or other parties. If the Collection
Account balance ever exceeds this amount for deposit or distribution, CMB
will be able to withdraw the excess.
Each time a Collection Account deposit is made, CMB will withdraw
the following amounts and apply them as indicated:
o Transferor Interest and Principal. The Transferor Percentage
of deposits of principal and finance charge collections will
be paid or held for payment to Chase USA as holder of the
Transferor Certificate. However, if the Minimum Transferor
Interest exceeds the Transferor Interest on the relevant
date of processing, principal collections up to the amount
of such excess otherwise payable to the Transferor Interest
will be deposited to the Principal Account, the Excess
Funding Account, or paid to series of certificates, as set
forth in the Pooling and Servicing Agreement.
o Investor Finance Charges. For each series, the relevant
Investor Percentage of finance charge collections will be
deposited into the Finance Charge Account for allocation and
distribution as set forth in the related supplement.
o Investor Principal. Each series will be allocated a varying
share of principal collections based on the principal
distribution status of the series as follows
- if the series is in the Revolving Period, the Investor
Percentage of principal collections allocated to the
series will be invested or held for investment in new
receivables;
- if the series is in controlled accumulation or
controlled amortization, the Investor Percentage of
principal collections allocated to the series will be
available to fund the relevant period's controlled
deposit amount or controlled amortization amount; and
- if the series is in principal amortization or rapid
amortization, the Investor Percentage of principal
collections allocated to the series will be deposited
into the Principal Account for distribution as
provided in the related supplement.
As described in the related supplement, other series may use
principal collections not required by a series in any period
to make deposits or distributions. If the Minimum Transferor
Interest exceeds the Transferor Interest on the relevant
date of processing, principal collections allocated to but
not needed by a series, up to the amount of such excess,
will be deposited to the Principal Account, the
Excess Funding Account, or paid to other series of
certificates, as set forth in the Pooling and Servicing
Agreement.
If a series of certificates has more than one class, principal and
finance charge collections allocated to the series will be further
allocated and applied to each class as set forth in the related supplement.
Principal collections allocated to a series but not required for
deposit or distribution may be shared with other series. The related
supplement will set forth the manner and priority of any principal sharing.
See "--Shared Principal Collections" for more information.
Principal collections not paid to Chase USA because the Transferor
Interest is less than the Minimum Transferor Interest will be held in the
Principal Account and paid to Chase USA when the Transferor Interest is
again at least equal to the Minimum Transferor Interest. Amounts so
deposited in the Principal Account will be allocated as regular principal
collections to series in their accumulation or amortization periods, as set
forth in the related supplements.
Shared Excess Finance Charge Collections
If a series is in a Group, finance charge collections allocated to
the series in excess of the amount needed to make deposits or payments may
be shared with other series in the Group. If one series requires more
finance charge collections than allocated through its Investor Percentage,
it will have access to all of these shared excess finance charge
collections in other series in its Group. If two or more series require
more finance charge collections, excess finance charge collections in the
Group will be shared between the series in the manner and priority set
forth in the related supplements.
Shared Principal Collections
If a series is allocated principal in excess of the amount needed
for deposit or distribution, this excess amount will be available to make
principal payments or deposits required by other series. These shared
principal collections may be limited to series within a Group. If principal
collections allocated to a series are shared with another series, the
Investor Interest for the series from which collections were shared will
not be reduced.
Default Allocations
Each month, Master Trust Portfolio principal receivables in
defaulted accounts will be allocated to each series based on each series'
Investor Percentage. Defaulted accounts are Accounts which were written off
by the servicer as uncollectible. The default amount allocated to each
series will, if the series has multiple classes of certificates, be further
allocated to each class.
Rebates and Fraudulent Charges
CMB may adjust the amount of principal receivables in the Master Trust
Portfolio because of:
o a rebate or refund to a cardholder;
o merchandise refused or returned by a cardholder; and
o fraudulent or counterfeit charges.
The Transferor Interest will be reduced - net of the creation of new
receivables - by the adjustment amount. If reducing the Transferor Interest
would cause it to be less than the Minimum Transferor Interest, Chase USA,
as Transferor, will be required to pay the deficient amount into the Excess
Funding Account.
Investor Charge-Offs
Each month, principal receivables in defaulted accounts will be
allocated to each series. Allocated default amounts will reduce each
series' Investor Interest, unless these defaulted amounts are reimbursed
through payment of finance charge collections or other amounts, as set
forth in each series' supplement. Reducing a series' Investor Interest
through allocation of default amounts is called an Investor Charge-Off. The
Investor Interest can be increased through reimbursement of Investor
Charge-Offs, which can happen in any Monthly Period where finance charge
collections are available for that purpose.
If your series has multiple classes, Investor Charge-Offs will
generally be applied to subordinate classes first. If you own a subordinate
class of certificates, your Investor Interest could be reduced before other
classes are affected. The attached supplement describes how Investor
Charge-Offs are allocated to your class and any other classes.
Defeasance
Some series may provide that Chase USA, as Transferor, may set
aside with the Master Trust Trustee funds adequate to make all future
interest and principal payments on a series of certificates. This will end
Chase USA's responsibilities to that series. Chase USA will not be able to
do this without an opinion of counsel that:
o this will not alter the tax treatment of the series or the
master trust; and
o this will not cause the master trust to become subject to
regulation as an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
The related supplement will set forth if and how Chase USA may
defease a series.
Optional Repurchase
For each series, Chase USA has the option to repurchase the
remaining Investor Interest when the series' total outstanding Investor
Interest is no more than 5% of the Investor Interest on the series' Closing
Date. The repurchase price must be for:
o the dollar amount of all of the remaining Investor Interest
- less any amount on deposit in an associated Principal
Funding Account - plus any accrued and unpaid interest
through the repurchase date or
o a different optional repurchase price set forth in the
related supplement.
Final Payment of Principal; Series Termination
Each series will end on the earliest to occur of:
o the date on which the series' Investor Interest is reduced
to zero;
o the date set forth in the related supplement as the last day
on which interest and principal will be distributed to
certificateholders, referred to as the Series Termination
Date; and
o the date on which the master trust terminates.
If the Investor Interest is greater than zero on the Series Termination
Date, CMB or the Master Trust Trustee may be required to sell receivables
in an amount sufficient to repay the outstanding Investor Interest.
Pay Out Events
For each series issued from the master trust, occurrence of a Pay
Out Event will begin rapid amortization of principal. Rapid amortization of
principal will interrupt and replace the Revolving Period or any other form
of principal amortization or accumulation. A Pay Out Event will occur for
all series issued from the master trust if any one of the following occurs:
o Chase USA, as Transferor, is insolvent or enters
receivership;
o Chase USA is unable for any reason to transfer receivables
to the master trust as required by the Pooling and Servicing
Agreement; or
o the master trust becomes subject to regulation as an
"investment company" within the meaning of the Investment
Company Act of 1940, as amended.
Each series may, in the related supplement, specify additional Pay Out
Events applicable only to that series.
If Chase USA, as Transferor, voluntarily begins liquidation or a
receiver is appointed for Chase USA, Chase USA will
o immediately stop transferring receivables to the master
trust, and
o promptly notify the Master Trust Trustee of the event.
Within 15 days the Master Trust Trustee will publish a notice, stating that
the Master Trust Trustee intends to liquidate the receivables in the Master
Trust Portfolio in a commercially reasonable manner. The Master Trust
Trustee will liquidate the receivables unless instructed to do otherwise by
certificateholders representing a majority of the outstanding Investor
Interest, or by Chase USA's conservator or receiver. The conservator or
receiver may have the power to cause or prevent an early sale of master
trust assets. Any early sale of these assets could cause early repayment of
outstanding certificates.
Rapid amortization begins immediately when any Pay Out Event
occurs. If rapid amortization begins for your series before the scheduled
payment date on your certificates, you could begin receiving principal
distributions earlier than expected, which may shorten the
average life of your investment.
Servicing Compensation
CMB, as servicer, receives a fee for its servicing activities and
reimbursement of expenses incurred in administering the master trust. This
servicing fee accrues for each outstanding series, in the amounts and
calculated on the balances as set forth in the related supplement. Each
series' servicing fee is payable each period from collections of finance
charge receivables allocated to the series; some series, however, may
direct all or a portion of Interchange toward paying the servicing fee. In
series with multiple classes of certificates, each class will be
responsible for a portion of the series' servicing fee. Neither the master
trust nor certificateholders are responsible for any servicing fee
allocable to the Transferor Interest.
The Servicer
The servicer is responsible for servicing and administering
receivables in the Master Trust Portfolio. CMB, currently the servicer, has
delegated some of its servicing duties to FDR and substantially all of its
remaining duties to Chase USA. The servicer is required to maintain
insurance coverage against losses through wrongdoing of its officers and
employees who service receivables.
Servicer Default
The Pooling and Servicing Agreement and any Series Supplement
specify the duties and obligations of the servicer. A failure by the
servicer to perform its duties or fulfill its obligations can result in a
Servicer Default.
Servicer Defaults include:
o failure by the servicer to make any payment, transfer or
deposit, or to give instructions to the Master Trust Trustee
to do so, on the required date under the Pooling and
Servicing Agreement or any Series Supplement or within the
applicable grace period not exceeding 10 business days;
o failure on the part of the servicer to observe or perform
any of its other covenants or agreements if the failure
- materially adversely affects certificateholders of any
series issued and outstanding under the master trust and
- continues unremedied for a period of 60 days after
written notice and continues to materially adversely
affect those certificateholders; or
the delegation by the servicer of its duties, except as
specifically permitted under the Pooling and Servicing
Agreement and any Series Supplement;
o any representation, warranty or certification made by the
servicer, in the Pooling and Servicing Agreement and any
Series Supplement, or any certificate delivered under the
terms of those agreements, proves to have been incorrect
when made if it
- materially adversely affects certificateholders of any
series issued and outstanding under the master trust, and
- continues to be incorrect in any material respect for
a period of 60 days after written notice and
continues to materially adversely affect those
certificateholders;
o specific events of bankruptcy, insolvency or receivership of
the servicer; or
o any other event specified in the related supplement.
If a Servicer Default occurs, the Master Trust Trustee or
certificateholders representing a majority of the aggregate outstanding
Investor Interest may remove CMB as servicer to the master trust and
appoint a new servicer. If a new, eligible servicer is not appointed or has
not accepted appointment by the time CMB - or a successor servicer has
ceased to act as servicer, the Master Trust Trustee will become the
servicer. If the Master Trust Trustee is legally unable to act as successor
servicer, then Chase USA has the right to purchase all receivables in the
Master Trust Portfolio at a price approved by the Master Trust Trustee.
Chase USA's rights and obligations as Transferor will be unaffected
by any change in servicer.
If a conservator or receiver is appointed for the servicer and this
causes a Servicer Default, the conservator or receiver may have the power
to prevent a transfer of servicing duties to a successor servicer.
Payment of Expenses
CMB, as servicer, has agreed to pay some expenses incurred in
servicing the Master Trust Portfolio, including:
o fees and expenses of the Master Trust Trustee;
o fees and expenses of independent certified public accountants;
and
o other fees and expenses of the master trust, excluding
taxes.
Reports to Certificateholders
Certificateholders of each series issued from the master trust will
receive reports with information on the series and the master trust. CMB,
as servicer, will prepare a certificateholder report on each series'
Distribution Dates, setting forth information as specified in the related
supplement. If a series has multiple classes, information will be provided
for each class, as specified in the related supplement.
Periodic information to certificateholders generally will include:
o the total amount distributed;
o the amount of principal and interest for distribution;
o principal collections allocated to the series and to each
class of certificates;
o finance charge collections allocated to the series and to
each class of certificates;
o the aggregate amount of principal receivables in the Master
Trust Portfolio;
o the series' Investor Interest amount and the Investor
Interest as a percentage of principal receivables in the
Master Trust Portfolio;
o receivables in the Master Trust Portfolio broken out by
delinquency status;
o aggregate defaults allocated to the series;
o Investor Charge-Offs for the series or each class of the
series, and any reimbursement of Investor Charge-Offs;
o the servicing fee due from the series;
o for each series or class, the available amount of credit
enhancement, if any;
o the "pool factor," which is the ratio of the current
Investor Interest to the initial Investor Interest;
o the Portfolio Yield for the series; and
o if the series or a class of certificates bears interest at a
floating rate, information relating to the floating rate.
CMB will also provide an annual summary of distributions to each series by
January 31 of the succeeding year. This information is intended to help
certificateholders prepare their tax returns.
Evidence as to Compliance
The Pooling and Servicing Agreement provides that by March 31 of
each calendar year, CMB, as servicer, will have a firm of independent
certified public accountants furnish reports showing that, for the prior
calendar year:
o the accounting firm has reviewed management's assertion that
the system of internal control over servicing of securitized
credit card receivables met the criteria for effective
internal control as specified by the Committee of Sponsoring
Organizations of the Treadway Commission, and that in the
accounting firm's opinion, management's assertion is fairly
stated in all material respects; and
o for each outstanding series, the accounting firm has
reviewed at least one report prepared by the servicer from
each quarter of the calendar year, compared the amounts set
forth in the reports with the servicer's computer reports
and disclosed any discrepancies.
The Pooling and Servicing Agreement also provides that by August 31
of each year, an officer of CMB will forward a signed statement to the
Master Trust Trustee, stating that the servicer has performed under its
obligations - as set forth in the Pooling and Servicing Agreement - during
the prior calendar year, and if there has been a default in the performance
of any obligation, specifying the nature and status of the default.
Amendments
The Pooling and Servicing Agreement and any Series Supplement may
be amended by Chase USA, CMB and the Master Trust Trustee, as set forth in
the Pooling and Servicing Agreement and the relevant Series Supplement.
These amendments may be made without certificateholder consent to do the
following:
o cure any ambiguity;
o revise specific exhibits and schedules;
o correct or supplement any provision which may be
inconsistent with any other provision; or
o to add any necessary provision not inconsistent with the
existing provisions of the operating documents.
No amendment may be made without certificateholder consent which in any
material respect would adversely affect any certificateholder's interest.
Amendment without certificateholder consent can occur only if:
o CMB, as servicer, furnishes an officer's certificate to the
Master Trust Trustee, stating that the amendment will not
materially adversely affect any existing certificateholder's
interest;
o the amendment will not cause the master trust to be subject
to corporate taxation, or have any other negative federal
income tax effect on the master trust or certificateholders;
o each Rating Agency rating an affected series of certificates
provides written confirmation that the amendment will not
cause a downgrade or withdrawal of any existing rating of
certificates or notes; and
o the amendment does not do any of the following
- reduce the amount or delay the timing of scheduled
distributions to certificateholders of any series;
- change the manner or method of calculating interest due
to certificateholders of any series;
- alter the requirements for calculating the Minimum
Transferor Interest for any outstanding series;
- change the manner in which the Transferor Interest is
calculated; or
- reduce the percentage of the Investor Interest required
to consent to proposed changes which do require
certificateholder consent.
The Pooling and Servicing Agreement may be amended by Chase USA,
CMB and the Master Trust Trustee with the consent of certificateholders
representing a majority of the Investor Interest which is adversely
affected by an amendment. Even with consent, these amendments may not occur
if they:
o reduce the amount of or delay the timing of scheduled
distributions to certificateholders of any series;
o change the manner of calculating the Investor Interest, the
Investor Percentage or the amount of defaults allocated to
certificateholders without the consent of each affected
certificateholder; and
o reduce the percentage of the Investor Interest required to
consent to any amendment, without the consent of each
affected certificateholder.
List of Certificateholders
Certificateholders representing 10% of the outstanding Investor
Interest of a series - or any other percentage as set forth in the related
supplement - may request access to the Master Trust Trustee's current list
of certificateholders for purposes of communicating with other
certificateholders about their rights under the Pooling and Servicing
Agreement. See "--Form of Your Securities--Book-Entry Registration" and
"Form of Your Securities--Definitive Securities."
The Master Trust Trustee
Each series' prospectus supplement will identify the Master Trust
Trustee under the Pooling and Servicing Agreement. Chase USA, CMB and their
affiliates may from time to time enter into banking and trustee
relationships with the Master Trust Trustee, and all three parties may from
time to time hold certificates in their own names.
In addition, where required by local jurisdictions, the Master
Trust Trustee may appoint a co-trustee or separate trustees of all or any
part of the master trust. If this occurs, all rights, powers, duties and
obligations conferred or imposed by the Pooling and Servicing Agreement on
the Master Trust Trustee will be conferred or imposed:
o jointly on the Master Trust Trustee and any separate trustee
or co- trustee; or
o where the Master Trust Trustee shall be incompetent or
unqualified to perform required acts, singly upon any
separate trustee or co-trustee.
In each case, a separate trustee or co-trustee shall exercise and perform
these rights, powers, duties and obligations solely at the direction of the
Master Trust Trustee.
The Master Trust Trustee may resign at any time. If this occurs,
Chase USA will be obligated to appoint a successor Master Trust Trustee.
Chase USA may also remove the Master Trust Trustee and appoint a successor
if:
o the Master Trust Trustee ceases to be eligible to continue
in that role under the Pooling and Servicing Agreement; or
o the Master Trust Trustee becomes insolvent.
Any resignation or removal of a Master Trust Trustee will not become
effective until appointment of, and acceptance by, a successor.
Master Trust Termination
The master trust is scheduled to end on the earliest of:
o the date the aggregate Investor Interest - including the
interest of any credit enhancement provider, if not part of
the Investor Interest - is reduced to zero;
o the date on which all receivables are sold, disposed of or
otherwise liquidated due to insolvency; and
o August 31, 2016.
CMB and Chase USA may inform the Master Trust Trustee of a change in the
master trust termination date, provided that a change may not affect
existing certificateholders.
Description of the Notes
Following is a summary of the material provisions common to all
series of notes issued through the Indenture and offered by this
prospectus. The particular terms of your notes are described in the related
supplement. The summary is qualified in its entirety by references to the
provisions of your Indenture and related Series Certificate, Deposit and
Administration Agreement and the Trust Agreement.
An owner trust will issue the notes under an Indenture. The owner
trust will pledge a Series Certificate to the Indenture Trustee to secure
the payment of the notes. Each owner trust will issue one or more classes
of notes that may have different maturity dates, interest rates, priorities
of payments and debt ratings.
Chase USA will own the residual equity interest in each owner
trust. Amounts paid to the owner trust as holder of a Series Certificate
that are not payable in respect of the notes issued by the owner trust and
not required to be retained in a spread account will be distributed to
Chase USA.
Principal and Interest on the Notes
The related supplement will describe the timing and priority of
payment, seniority, allocations of losses, Note Rate and amount of or
method of determining payments of principal and interest on each class of
notes of your series. Your right to receive payments of principal and/or
interest may be senior or subordinate to the rights of holders of any other
class or classes of notes of your series, as described in related
supplement. Payments of interest on the notes of your series may be made
prior to payments of principal. The dates for payments of interest and
principal on the notes of your series may be different from the
Distribution Dates for the Series Certificate pledged to secure payment of
your notes. One or more classes of notes of your series may be redeemable
in whole or in part under the circumstances described in the related
supplement, including or when Chase USA exercises its option under the
Pooling and Servicing Agreement to purchase the related Series Certificate.
Your notes may have fixed principal payment schedules. In that
event, you would be entitled to receive on each specified Payment Date the
applicable amount of principal designated to be repaid, in the manner and
to the extent described in the related supplement.
Payments to all the noteholders of each class will have the same
priority. Under some circumstances, there may not be sufficient amounts
available to pay the amount of interest which is required to be paid to all
the noteholders of your class. In that event, you will receive a share,
based upon the aggregate amount of interest due to your class, of the
aggregate amount available for distribution of interest on the notes of
your series.
If your series includes two or more classes of notes, the
sequential order and priority of payment of principal and interest, and any
schedule or formula or other provisions for determining the amount of
principal and interest of each class will be described in the related
supplement. Payments of principal and interest on any class of notes will
be made equally among all the noteholders of that class based on the
principal amount of notes held by each noteholder.
The Indentures
Your owner trust will issue one or more classes of notes under an
Indenture. A form of Indenture has been filed as an exhibit to the
Registration Statement relating to the notes.
Events of Default: Rights Upon Event of Default. With respect to
the notes of a given series, "Events of Default" under your Indenture will
be any of the following:
o the owner trust fails to pay interest or principal when due
and payable;
o the owner trust becomes subject to regulation as an
"investment company" within the meaning of the Investment
Company Act of 1940, as amended;
o specific events of bankruptcy with respect to the owner
trust; and
o any other Events of Default described in the related
supplement.
During the occurrence of an Event of Default, the Indenture Trustee
or holders of a majority in principal amount of the notes of your series
may declare the principal of the notes to be immediately due and payable.
That declaration may be rescinded by the holders of a majority of the notes
with respect to which the Event of Default has occurred.
If your notes are declared to be due and payable following an Event
of Default, the Indenture Trustee may institute proceedings to collect
amounts due or foreclose on the owner trust property, exercise remedies as
a secured party, sell the owner trust property or have the owner trust keep
the owner trust property and continue to apply collections on the owner
trust property as if there had been no declaration of acceleration.
However, the Indenture Trustee is prohibited from selling the owner trust
property following an Event of Default, unless:
o the holders of all the notes consent to the sale;
o the proceeds of the sale are sufficient to pay in full the
principal and the accrued interest on the notes at the date
of the sale; or
o there has been an Event of Default arising from a failure to
make a required payment of principal or interest on the
notes, and the Indenture Trustee
- determines that the proceeds of the owner trust
property would not be sufficient to make all payments
on the notes when those payments would have become
due if the obligations had not been declared due and
payable, and
- obtains the consent of the holders of sixty-six and
two-thirds percent of the outstanding principal amount
of the notes.
If an Event of Default occurs and is continuing, the Indenture
Trustee will not be obligated to exercise any of the rights or powers under
the Indenture at the request or direction of any noteholders, if the
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 that request. Subject to the provisions for
indemnification and other limitations contained in the Indenture, a
majority of the noteholders of your series:
o will have the right to direct the time, method and place of
conducting any proceeding or any remedy available to the
Indenture Trustee, and
o may, in some cases, waive any default with respect to their
notes, except a default
- in the payment of principal or interest or
- in respect of a covenant or provision of the
Indenture that cannot be modified without the waiver
or consent of all the holders of the notes of your
series.
The Indenture Trustee's right to sell the Series Certificate will
be subject to restrictions on transferability described in the Series
Supplement, including a requirement that no more than ninety-nine persons
hold interests in the master trust (including the Series Certificate) that
have been issued without an opinion for federal income tax purposes that
those interests would be treated as debt and limitations on the nature of
the potential purchasers of the Series Certificate. Examples of these
limitations are:
o any foreign purchaser must certify that its ownership of the
Series Certificate is effectively connected with a trade or
business within the United States,
o any potential purchaser that is a partnership, Subchapter S
corporation or grantor trust for federal income tax purposes
will be required to represent that its interest in the
Series Certificate represents less than a specified
percentage of its assets, and
o a potential purchaser must not be an employee benefit plan,
a Plan or any entity whose underlying assets include "plan
assets."
Also, any transfer of the Series Certificate in foreclosure will be
subject to the requirement that each purchaser of an interest in the Series
Certificate deliver to the Master Trust Trustee and Chase USA an investment
letter relating to compliance with applicable securities laws and other
restrictions described in the applicable Series Supplement.
You may institute proceedings with respect to the Indenture only
if:
o you have previously given written notice to the Indenture
Trustee that an Event of Default continues;
o not less than 25% of the noteholders of your Series have
made written request to the Indenture Trustee to institute
the proceeding in its own name as Indenture Trustee;
o you have offered the Indenture Trustee indemnity reasonably
satisfactory to it against the costs, expenses and
liabilities that may be incurred in complying with that
request;
o the Indenture Trustee has for 60 days after receipt of
notice, request and offer of indemnity failed to institute
the proceeding; and
o no direction inconsistent with the written request has been
given to the Indenture Trustee during the 60-day period by a
majority of the noteholders.
The Indenture Trustee and the noteholders, by accepting the notes,
will agree that they will not institute against the owner trust or master
trust any bankruptcy, reorganization or other proceeding under any federal
or state bankruptcy or similar law.
The Indenture Trustee, the Owner Trustee in its individual
capacity, and Chase USA as owner of the equity interest in the owner trust
will not be personally liable for the payment of the principal of or
interest on the notes or for the agreements of the owner trust contained in
the Indenture.
Modification of Indenture. The owner trust and the Indenture
Trustee may, with the consent of the holders of a majority of the notes,
execute a supplemental indenture to add provisions to, change in any manner
or eliminate any provisions of, the Indenture, or modify except as provided
below - in any manner the rights of the noteholders.
Without the consent of each noteholder affected by a change to an
Indenture, a supplemental indenture will not:
o change the date of payment of any installment of principal
of or interest on any note or reduce the principal amount of
a note, the Note Rate or the redemption price of the note or
change any place of payment where, or the currency in which,
any note is payable;
o impair the right to institute suit for the enforcement of
specified provisions of the Indenture regarding payment;
o reduce the percentage of the aggregate amount of the notes
of your series, whose consent is required (a) for any
supplemental indenture or (b) for any waiver of compliance
with specified provisions of the Indenture or of some
defaults under the Indenture and their consequences provided
in the Indenture;
o modify or alter the provisions of the Indenture regarding
the voting of notes held by the master trust, any other
obligor on the notes, Chase USA or an affiliate of any of
them;
o reduce the percentage of the aggregate outstanding amount of
the notes required to direct the Indenture Trustee to sell
or liquidate the owner trust property;
o decrease the percentage of the aggregate principal amount of
the notes required to amend the sections of the Indenture
that specify the percentage of the principal amount of the
notes of your series necessary to amend the Indenture or
other related agreements;
o modify any provisions of the Indenture in a manner which
would affect the calculation of the amount of any payment of
interest or principal due on any note; or
o permit the creation of any lien equal to the lien of the
Indenture with respect to any of the collateral for your
notes or, except as otherwise permitted or contemplated in
the Indenture, end the lien of the Indenture on the
collateral or deprive you of the security provided by the
lien of the Indenture.
The Indenture Trustee may also enter into supplemental indentures,
without obtaining the consent of the noteholders of your series, for the
purpose of, among other things, adding any provisions to or changing in any
manner or eliminating any of the provisions of the Indenture or of
modifying in any manner the rights of its noteholders; provided that:
o that action will not materially and adversely affect the
interest of any noteholder, and
o each Rating Agency will provide confirmation that as a
result of the change, it will not reduce or withdraw its
rating on any notes that it rates.
Certain Covenants
The owner trust will not:
o except as expressly permitted by the Indenture, Deposit and
Administration Agreement and the Trust Agreement, sell,
transfer, exchange or otherwise dispose of any of the
properties or assets of the owner trust;
o claim any credit on or make any deduction from the principal
or interest payable in respect of the notes (other than
amounts withheld under the tax code or applicable state law)
or assert any claim against any present or former holder of
the notes because of the payment of taxes levied or
assessed on the owner trust;
o permit the validity or effectiveness of the Indenture to be
impaired or permit any person to be released from any
covenants or obligations with respect to the notes under the
Indenture except as permitted by the Indenture;
o permit any lien, claim, or security interest to be created
on the assets of the owner trust; or
o permit the lien of the Indenture not to constitute a valid
first priority security interest in the owner trust.
Annual Compliance Statement. The owner trust will be required to
present to the Indenture Trustee each year a written statement as to the
performance of its obligations under the Indenture.
Indenture Trustee's Annual Report. The Indenture Trustee will be
required to mail to the noteholders each year a brief report relating to
its eligibility and qualification to continue as Indenture Trustee under
the Indenture, the property and funds physically held by the Indenture
Trustee and any action it took that materially affects the notes and that
has not been previously reported.
List of Noteholders. Upon the issuance of Definitive Notes, three
or more holders of the notes who have each owned a note for at least six
months may obtain access to the list of noteholders the Indenture Trustee
maintains for the purpose of communicating with other noteholders. The
Indenture Trustee may elect not to allow the requesting noteholders access
to the list of noteholders if it agrees to mail the requested communication
or proxy, on behalf and at the expense of the requesting noteholders, to
all noteholders of record.
Satisfaction and Discharge of Indenture. An Indenture will be
discharged with respect to the notes upon the delivery to the Indenture
Trustee for cancellation of all the notes or, with specific limitations,
upon deposit with the Indenture Trustee of funds sufficient for the payment
in full of all the notes.
The Indenture Trustee
The Indenture Trustee for your series is identified in the related
supplement. The Indenture Trustee may resign at any time, in which event
your Administrator will appoint a successor Indenture Trustee for your
series. The Administrator may also remove the Indenture Trustee if it
ceases to be eligible to continue as an Indenture Trustee under the
Indenture or if the Indenture Trustee becomes insolvent. The Administrator
will then be obligated to appoint a successor Indenture Trustee for your
series. If an Event of Default occurs under an Indenture and the related
supplement provides that a given class of notes of your series is
subordinated to one or more other classes of notes of your series, under
the Trust Indenture Act of 1939, as amended, the Indenture Trustee may be
deemed to have a conflict of interest and be required to resign as
Indenture Trustee for one or more of those classes of notes. In that case,
a successor Indenture Trustee will be appointed for one or more of those
classes of notes and may provide for rights of senior noteholders to
consent to or direct actions by the 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 the successor Indenture
Trustee accepts its appointment for your series.
Transfer and Assignment of the Series Certificate
On the Closing Date for any series of notes, Chase USA will deposit
in the owner trust, the Series Certificate under the terms of the Deposit
and Administration Agreement. On the Closing Date, the Owner Trustee will
execute, and the Indenture Trustee will authenticate and deliver to Chase
USA, the notes.
Reports to Noteholders
On or prior to each Transfer Date, the Administrator will provide
to the Indenture Trustee for the Indenture Trustee to forward to you and to
each other noteholder of your series, and to the Owner Trustee, a statement
with the following information on the notes for the related Payment Date or
the period since the previous Payment Date, as applicable:
o the amount of the distribution allocated to principal on the
notes;
o the amount of the distribution allocated to interest on the
notes;
o the aggregate outstanding principal balance of the notes
after giving effect to all payments reported under the first
clause above; and
o the amount on deposit in the Owner Trust Spread Account, on
that Payment Date, after giving effect to all transfers and
withdrawals from and all transfers and deposits to that
account on that Payment Date, and the amount required to be
on deposit in the Owner Trust Spread Account on that date.
Each amount described in the first two clauses above will be
expressed as a dollar amount per $1,000 of the initial principal balance of
the notes.
Within the prescribed period of time for tax reporting purposes
after the end of each calendar year during the term of the Indenture, the
Indenture Trustee will mail to you and to other investors who at any time
during the prior calendar year had been noteholders and received any
payment on the notes, a statement containing information which is required
for the preparation of federal income tax returns. See "Tax Matters" for
information on tax reporting procedures.
Certain Matters Regarding the Administrator
The Administrator will, to the extent provided in the Deposit and
Administration Agreement, provide the notices and perform on behalf of the
owner trust other administrative obligations required by the Indenture.
Amendment
The parties to each of the Series Certificate, the Deposit and
Administration Agreement and the Trust Agrement may amend those agreements,
with the written consent of the Indenture Trustee, but without the consent
of the noteholders, to add provisions to or change in any manner or
eliminate provisions of the Transaction Agreement or to modify in any
manner the rights of the noteholders; provided, however, that an amendment
will not:
o as evidenced by an officer's certificate from Chase USA
addressed and delivered to the Indenture Trustee and the
Owner Trustee, materially and adversely affect the interest
of any noteholder, and
o as evidenced by an opinion of counsel, cause the owner trust
to be classified as an association (or a publicly traded
partnership) taxable as a corporation for federal income tax
purposes.
In addition, each of the Series Certificate, the Deposit and Administration
Agreement and the Trust Agreement may be amended by its parties
o with the written consent of the Indenture Trustee, and
o with the consent of the holders of notes evidencing at least
a majority of the then outstanding principal amount of the
notes
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of a Transaction Agreement or of
modifying in any manner the rights of noteholders; provided, however, that
the action will not, as evidenced by an opinion of counsel, cause the owner
trust to be classified as an association (or a publicly traded partnership)
taxable as a corporation for federal income tax purposes. Additionally,
without the consent of the holders of all of the notes, an amendment shall
not:
o reduce in any manner the amount of, or accelerate or delay
the timing of, collections of payments in respect of the
Series Certificate or payments that are required to be made
for the benefit of the noteholders or
o reduce the percentage of the outstanding principal amount of
the notes which is required to consent to any amendment.
Termination
The obligations of the Administrator, Chase USA, the Owner Trustee
and the Indenture Trustee under the related Indenture, Deposit and
Administration Agreement and Trust Agreement will end upon the earlier of:
o the payment to noteholders of the note principal balance and
all amounts required to be paid to them under the Series
Certificate, the Deposit and Administration Agreement or the
Trust Agreement and
o the Note Maturity Date.
Credit Enhancement
Credit Enhancement may be provided with respect to one or more
classes of any series, including your series, offered by this prospectus.
If so specified in the related supplement, any form of Credit Enhancement
may be structured so as to be drawn upon by more than one class to the
extent described in the prospectus supplement.
The type, characteristics and amount of Credit Enhancement for any
series or class:
o will be determined based on several factors, including the
characteristics of the receivables and accounts included in
the Master Trust Portfolio as of the Closing Date with
respect to that series and the desired rating for each
class, and
o will be established on the basis of requirements of each
Rating Agency rating the certificates or the notes of that
series or class.
In general, Credit Enhancement will not provide protection against
all risks of loss and will not guarantee repayment of the entire principal
balance of the certificates or the notes and/or payment of interest. If
losses occur which exceed the amount covered by Credit Enhancement or which
are not covered by Credit Enhancement, certificateholders and noteholders,
as applicable, will bear their allocable share of deficiencies.
If Credit Enhancement is provided with respect to a series or class
of securities, the related supplement will include a description of:
o the amount payable under Credit Enhancement;
o any additional conditions to payment under Credit
Enhancement not described in this prospectus;
o the conditions, if any, under which
- the amount payable under Credit Enhancement may be
reduced and
- Credit Enhancement may be ended or replaced; and
o any material provision of any agreement relating to Credit
Enhancement.
Additionally, the related supplement may provide information with
respect to any credit enhancement provider, including:
o a brief description of its principal business activities;
o its principal place of business, place of incorporation and
the jurisdiction under which it is chartered or licensed to
do business;
o if applicable, the identity of regulatory agencies which
exercise primary jurisdiction over the conduct of its
business; and
o its total assets, and its stockholders' or policy holders'
surplus, if applicable, and other appropriate financial
information as of the date specified in the related
supplement.
The related supplement may specify if Credit Enhancement with respect to a
series may be available to pay principal of the series' certificates after
Pay Out Events occur with respect to that series. If so, the credit
enhancement provider may have an interest in cash flows in respect of the
receivables called the Enhancement Invested Amount, to the extent described
in the related supplement.
Specific Forms of Credit Enhancement
The related supplement will also specify the manner and to what
extent the following types of Credit Enhancement or other Credit
Enhancement applies to your series of securities or any class of your
series:
Subordination
One or more classes of securities of any series may be subordinated
as described in the related supplement to the extent necessary to fund
payments with respect to senior securities. The rights of the holders of
any subordinated securities to receive distributions of principal and/or
interest on any Distribution Date for that series will be subordinated in
right and priority to the rights of the holders of senior securities, but
only to the extent described in the related supplement. The related
supplement may specify if subordination may apply only in the event of some
types of losses not covered by another Credit Enhancement. The related
supplement will also set forth information concerning:
o the amount of subordination of a class or classes of
subordinated securities in a series;
o the circumstances in which subordination will be applicable;
o the manner, if any, in which the amount of subordination
will be applicable;
o the manner, if any, in which the amount of subordination
will decrease over time; and
o the conditions under which amounts available from payments
that would otherwise be made to holders of subordinated
securities will be distributed to holders of senior
securities.
If collections of receivables otherwise distributable to holders of a
subordinated class of a series will be used as support for a class of
another series, the related supplement will specify the manner and
conditions for applying this cross-support feature.
Letter of Credit
One or more letters of credit may provide support for a series or
one or more classes of securities. The letter of credit may provide limited
protection against some losses in addition to or in lieu of other Credit
Enhancement. The issuer of the letter of credit, called the L/C Bank, will
be obligated to honor demands with respect to the letter of credit, to the
extent of the amount available under the letter of credit, to provide funds
under the circumstances and subject to the conditions specified in the
related supplement.
Cash Collateral Guaranty or Account
Support for a series or one or more classes of securities may be
provided by:
o a Cash Collateral Guaranty secured by the deposit of cash or
some permitted investments in a Cash Collateral Account
reserved for the beneficiaries of the Cash Collateral
Guaranty or
o a Cash Collateral Account alone.
The amount available from the Cash Collateral Guaranty or the Cash
Collateral Account will be the lesser of (1) amounts on deposit in the Cash
Collateral Account and (2) an amount specified in the related supplement.
The related supplement will set forth the circumstances under which
payments are made to beneficiaries of the Cash Collateral Guaranty from the
Cash Collateral Account or from the Cash Collateral Account directly.
Collateral Interest
An undivided interest in the master trust called the Collateral
Interest, in an amount initially equal to the percentage of the
certificates of a series specified in the supplement for that series, may
initially provide support for a series or one or more classes of
certificates. That series may also have the benefit of a Cash Collateral
Guaranty or Cash Collateral Account with an initial amount on deposit in
that account, if any, as specified in the related supplement which will be
increased:
o to the extent the Transferor elects, subject to the
conditions specified in the related supplement, to apply
principal collections allocable to the Collateral Interest
to decrease the Collateral Interest;
o to the extent principal collections allocable to the
Collateral Interest are required to be deposited into the
Cash Collateral Account as specified in the related
supplement; and
o to the extent excess finance charge collections are required
to be deposited into the Cash Collateral Account as
specified in the related supplement.
The total amount of Credit Enhancement available from the Collateral
Interest and, if applicable, the Cash Collateral Guaranty or Cash
Collateral Account will be the lesser of the sum of:
o the Collateral Interest and the amount on deposit in the Cash
Collateral Account and
o an amount specified in the related supplement.
The related supplement will set forth the circumstances under which:
o payments which otherwise would be made to holders of the
Collateral Interest will be distributed to holders of
certificates and
o if applicable, payment will be made under the Cash
Collateral Guaranty or under the Cash Collateral Account.
Surety Bond or Insurance Policy
A surety bond may be purchased for the benefit of the holders of
any series or class of securities to assure distributions of interest or
principal with respect to that series or class in the manner and amount
specified in the related supplement.
One or more insurance companies may provide insurance, with respect
to a series or one or more classes of securities, to guarantee, with
respect to one or more classes of that series, distributions of interest or
principal in the manner and amount specified in the related supplement.
Spread Account
Support for a series or one or more classes of securities may be
provided by the periodic deposit of available excess cash flow from the
master trust assets into an account called the Spread Account, intended to
assist with subsequent distribution of interest and principal on that
series or class in the manner specified in the related supplement.
Reserve Account
The establishment of a Reserve Account provides support for a
series or one or more classes of securities. The Reserve Account may be
funded, to the extent provided in the related
supplement, by:
o an initial cash deposit;
o the retention of excess cash;
o periodic distributions of principal or interest or both
otherwise payable to one or more classes of securities,
including subordinated securities;
o the provision of a letter of credit, guarantee, insurance
policy or other form of credit; or
o any combination of these items.
The Reserve Account will assist with the subsequent distribution of
principal or interest on that series or class in the manner provided in the
related supplement.
Security Ratings
Any rating of the securities by a Rating Agency will indicate:
o its view on the likelihood that securityholders will receive
required interest and principal payments; and
o its evaluation of the receivables and the availability of
any Credit Enhancement for the securities.
Among the things a rating will not indicate are:
o the likelihood that a Pay Out Event will occur;
o the likelihood that a United States withholding tax will be
imposed on non-U.S. securityholders;
o the marketability of the securities;
o the market price of the securities; or
o whether the securities are an appropriate investment for any
purchaser.
A rating will not be a recommendation to buy, sell or hold the
securities. A rating may be lowered or withdrawn at any time by a Rating
Agency.
The Transferor will request a rating of the securities offered by
this prospectus and the prospectus supplement from at least one Rating
Agency. It will be a condition to the issuance of the securities of each
series or class offered by this prospectus and the related supplement
including each series that includes a Pre-Funding Account, and, with
respect to any series of notes, the related Series Certificate - that they
be rated in one of the four highest rating categories by at least one
nationally recognized rating organization selected by the Transferor to
rate any series, which will be the Rating Agency. The rating or ratings
applicable to the securities of each series or class offered by this
prospectus will be set forth in the related supplement. Rating agencies
other than those requested could assign a rating to the securities and that
rating could be lower than any rating assigned by a Rating Agency chosen by
the Transferor.
Certain Legal Aspects of the Receivables
Transfer of Receivables
The transfer of receivables to the master trust constitutes either
a complete transfer of Chase USA's interest in the receivables or a grant
of a security interest in the receivables. If Chase USA's transfer creates
a security interest then it constitutes a perfected security interest under
applicable law.
The master trust will have a first priority claim on the
receivables subject only to some tax and other governmental liens, which
are discussed below.
The master trust will have a claim against Chase USA if the master
trust does not have an unencumbered claim to the receivables. See
"Description of the Securities--Description of the
Certificates--Chase USA's Representations and Warranties."
Chase USA will make all necessary filings under the UCC to perfect
the master trust's security interest in the receivables.
Notwithstanding the actions described above to protect the master
trust's interest in the receivables, there may be some circumstances in
which a creditor of Chase USA could acquire an interest in receivables that
would have priority over the master trust. Chase USA represents and
warrants that no such prior interests will exist. Chase USA also covenants
not to further encumber or sell the receivables.
In addition, a tax or other government lien on Chase USA's property
that arises prior to the transfer of the receivables to the master trust
may have a prior claim to the receivables. If the FDIC were appointed as
Chase USA's receiver, administrative expenses of the receiver may also have
priority over the interest of the master trust in the receivables.
While Chase USA's affiliate The Chase Manhattan Bank is the
servicer, collections from the receivables will be commingled with the
servicer's general funds and used for the servicer's benefit prior to each
Distribution Date. The master trust will not have a perfected security
interest in commingled collections. If the short-term deposit rating of the
servicer is reduced below "A-1" or "P-1" by the applicable Rating Agency,
the servicer will be obligated to cease commingling collections and begin
depositing collections into the Collection Account within two business days
after the date of processing.
Certain Matters Relating to Receivership
Chase USA is chartered as a national banking corporation and is
subject to regulation and supervision by the Comptroller of the Currency.
If Chase USA becomes insolvent or is in an unsound condition or if other
similar circumstances occur, the Comptroller is authorized to appoint the
FDIC as receiver.
As receiver, the FDIC has the power to repudiate or disaffirm the
obligations of the Transferor under the Pooling and Servicing Agreement.
Upon repudiation or disaffirmation of those obligations, the FDIC, as
receiver, will be obligated to compensate you for the master trust's
interest in the receivables if each of the following conditions is
satisfied:
o the Transferor granted a security interest in the
receivables to the Master Trust;
o the interest was validly perfected before the Transferor's
insolvency;
o the interest was not taken or granted in contemplation of
the Transferor's insolvency or with the intent to hinder,
delay or defraud the Transferor or its creditors;
o the Pooling and Servicing Agreement is continuously a record
of the Transferor; and
o the Pooling and Servicing Agreement represents a bona fide
and arm's-length transaction undertaken for adequate
consideration in the ordinary course of business and that
the Master Trust Trustee, as the secured party, is not an
insider or affiliate of the Transferor.
The FDIC has the right to require that you establish your right to
compensation by submitting to and completing the administrative claims
procedure established under the law applicable to bank insolvencies. This
could result in delays in payments of the certificates or the notes and
possible losses to you.
The amount of compensation that the FDIC is required to pay is
limited to your "actual direct compensatory damages" determined as of the
date of the FDIC's appointment as receiver. There is not a statutory
definition of "actual direct compensatory damages." The staff of the FDIC
takes the position that upon repudiation or disaffirmation these damages
would not include interest accrued to the date of actual repudiation or
disaffirmation. Under the FDIC interpretation, you would receive interest
only through the date of the appointment of the receiver. Since the FDIC
may delay actual repudiation or disaffirmation for up to 180 days following
its appointment as receiver, you may not receive the full amount of
interest owing to you under the certificates or the notes. There is one
reported federal district court decision that construes the term "actual
direct compensatory damages." This 1993 court case construed the term, in
the context of the repudiation of zero coupon bonds, to mean the fair
market value of those bonds as of the date of repudiation. Under neither
interpretation, however, would you be compensated for the period between
the appointment of the receiver and the date of repudiation.
Chase USA will notify you if a receiver or a conservator is
appointed for it. This appointment will cause a Pay Out Event for all
outstanding series. After that Pay Out Event occurs, newly created
receivables will not be transferred to the master trust and the Master
Trust Trustee will proceed to dispose of the receivables in a commercially
reasonable manner and on commercially reasonable terms:
o unless otherwise instructed within a specified period by
holders of certificates representing undivided interests
aggregating more than 50% of the Investor Interest of each
outstanding series (or if any series has more than one
class, of each class, and any other entity specified in the
Pooling and Servicing Agreement or Series Supplement), or
o unless otherwise required by the FDIC.
The proceeds from the sale of the receivables will be treated as
collections and will be distributed to certificateholders. The FDIC may
delay this procedure as described above.
If the only Pay Out Event to occur is either Chase USA's insolvency
or the appointment of a conservator or receiver for it, the FDIC may have
the power to prevent the early sale of the receivables and the commencement
of the Rapid Amortization Period. In addition, the FDIC may have the power
to cause the early sale of the receivables and the early retirement of the
certificates or to prohibit the continued transfer of receivables to the
master trust.
If no Servicer Default other than the conservatorship or
receivership of the servicer exists, the FDIC may have the power to prevent
the appointment of a successor servicer. See "Description of the
Securities--Description of the Certificates--Pay Out Events."
Consumer Protection Laws
The relationships of the cardholder and credit card issuer and the
lender are extensively regulated by federal and state consumer protection
laws. The most significant laws include the federal Truth-in-Lending, Equal
Credit Opportunity, Fair Credit Reporting, Fair Debt Collection Practices
and Electronic Funds Transfer Acts. These statutes:
o impose disclosure requirements
- when a credit card account is advertised, when it is
opened, at the end of monthly billing cycles, and at year
end;
o limit customer liability for unauthorized use;
o prohibit discriminatory practices in extending credit; and
o impose specific limitations on the type of account-related
charges that may be assessed.
Cardholders are entitled under these laws to have payments and credits
applied to the credit card accounts promptly, to receive prescribed notices
and to require billing errors to be resolved promptly. The master trust may
be liable for some violations of consumer protection laws that apply to the
related receivables. In addition, a cardholder may be entitled to assert
the violations by way of set-off against his or her obligation to pay the
amount of receivables owing. Chase USA warrants that all related
receivables have been and will be created in compliance with the
requirements of those laws. The servicer will also agree to indemnify the
master trust, among other things, for any liability arising from such
violations of consumer protection laws caused by the servicer. For a
discussion of the master trust's rights arising from the breach of these
warranties, see "The Chase Credit Card Master Trust Portfolio--Chase USA's
Representations and Warranties."
There have been numerous attempts at the federal, state and local
level to further regulate the credit card industry. In particular,
legislation has been introduced in Congress that would impose a ceiling on
the rate at which a financial institution may assess finance charges and
fees on credit card accounts. These ceilings are substantially below the
rate of the finance charges and fees that is currently assessed on Chase
USA's accounts. Chase USA cannot predict whether any such legislation will
be enacted. If ceilings on finance charges or fees are enacted, the yield
on the receivable pool may be reduced. This reduction could result in a Pay
Out Event and a Rapid Amortization Period. See "Description of the
Securities--Description of the Certificates--Rebates and Fraudulent
Charges" and "Description of the Certificates--Investor Charge-Offs."
Industry Litigation
In October 1998, the federal government filed an antitrust lawsuit
against VISA U.S.A., Inc., VISA International Inc. and MasterCard
International Incorporated alleging that these credit card associations
restrain competition and limit consumer choice. The government in this
lawsuit challenges, among other things:
o the control of VISA U.S.A., Inc., VISA International Inc.
and MasterCard International Incorporated by the same set of
banks,
o the ability of banks to issue both VISA and MasterCard cards
as well as
o the rules adopted by these associations prohibiting members
from offering credit cards of some competitors.
In public statements, VISA U.S.A., Inc., VISA International Inc. and
MasterCard International Incorporated have contested the government's
allegations. Chase USA is unable to predict the effect of this lawsuit on
Chase USA's credit card business. An adverse decision against VISA U.S.A.,
Inc., VISA International Inc. and MasterCard International Incorporated, or
an adverse settlement of this litigation, could result in changes in the
current associations and the Bank's ability to issue both VISA and
MasterCard cards as well as cards of other competitors.
Tax Matters
The following is a general discussion of the material U.S. federal
income tax consequences relating to the purchase, ownership and disposition
of a certificate or note. Unless otherwise indicated, this summary deals
only with U.S. Certificate Owners and U.S. Note Owners, as defined below,
who acquire their certificates or notes at their original issue price in
the original issuance of those certificates or notes and who hold these
securities as capital assets.
This discussion is based on present provisions of the Internal
Revenue Code of 1986, as amended, the proposed, temporary and final
Treasury regulations promulgated under the tax code, and administrative
rulings or pronouncements and judicial decisions all as in effect on the
date of this prospectus and all of which are subject to change, possibly
with retroactive effect.
The discussion does not address all of the tax consequences that
may be relevant to a particular certificate owner or note owner in light of
that certificate owner or note owner's circumstances, nor does it discuss
the U.S. federal income tax consequences that may be relevant to some types
of certificate owners or note owners that are subject to special treatment
under the tax code, such as:
o dealers in securities or currencies;
o financial institutions;
o tax-exempt entities;
o life insurance companies;
o persons holding certificates or notes as a part of a
hedging, integrated, conversion or constructive sale
transaction or a straddle; or
o persons whose functional currency is not the U.S. dollar.
In addition, the following discussion does not consider the alternative
minimum tax consequences, if any, of the investment in the certificates or
notes, or the state, local or foreign tax consequences of the investment.
Each prospective certificate owner or note owner is urged to consult its
own tax advisor in determining the federal, state, local and foreign income
and any other tax consequences of the purchase, ownership and disposition
of a certificate or note.
Prospective investors should note that no ruling will be sought
from the IRS with respect to any of the U.S. federal income tax
consequences discussed in this prospectus and opinions of counsel, such as
those described below, are not binding on the IRS or the courts.
Consequently, no assurance can be given that the IRS will not take
positions contrary to those described below. In addition, the opinions of
Simpson Thacher & Bartlett described below are based upon the
representations and assumptions set forth in their opinions, including, but
not limited to, the assumption that all of the relevant parties will comply
with the terms of the Pooling and Servicing Agreement and the other related
documents. If those representations are inaccurate and/or the relevant
parties fail to comply with the terms of the Pooling and Servicing
Agreement or the other related documents, the conclusions of tax counsel
described in the opinions and the discussion of the U.S. federal income tax
consequences set forth in this prospectus may not be accurate.
For purposes of this discussion, the terms U.S. Certificate Owner
and U.S. Note Owner mean a beneficial owner of a certificate (other than a
Series Certificate) or note, respectively, that is:
o a citizen or resident of the United States;
o a corporation or partnership created or organized in the
United States or under the laws of the United States or any
political subdivision of the United States;
o an estate the income of which is subject to United States
federal income taxation regardless of its source; or
o a trust that is subject to the supervision of a court within
the United States and the control of a United States person
as described in section 7701(a)(30) of the tax code or that
has a valid election in effect under applicable U.S.
Treasury regulations to be treated as a United States
person.
For purposes of this discussion, the terms non-U.S. Certificate Owner and
non-U.S. Note Owner mean a beneficial owner of a certificate (other than a
Series Certificate) or a note, respectively, who is not a U.S. Certificate
Owner or U.S. Note Owner.
Tax Characterization of the Master Trust
Tax counsel is of the opinion that the master trust will not be
classified as an association or as a publicly traded partnership taxable as
a corporation for U.S. federal income tax purposes. However, as discussed
above, this opinion is not binding on the IRS and no assurance can be given
that this characterization will prevail. See "--Tax Considerations Relating
to Certificate Owners--Possible Alternative Characterizations" below.
Tax Considerations Relating to Certificate Owners
Tax Characterization of the Certificates as Debt
The Transferor will express in the Pooling and Servicing Agreement
its intent that the certificates (other than a Series Certificate) will be
treated as debt for all U.S. tax purposes. The Transferor, by entering into
the Pooling and Servicing Agreement, and each certificate owner, by the
acceptance of a beneficial interest in a certificate, will agree to treat
the certificates (other than a Series Certificate) as debt for U.S. tax
purposes. However, the Pooling and Servicing Agreement generally refers to
the transfer of receivables as a "transfer, assignment and conveyance," and
the Transferor will treat the Pooling and Servicing Agreement, for some
non-tax accounting purposes, as causing a transfer of an ownership interest
in the receivables and not as creating a debt obligation.
For U.S. federal income tax purposes, the economic substance of a
transaction often determines its tax consequences. The form of a
transaction, while a relevant factor, is generally not conclusive evidence
of the economic substance of the transaction. In appropriate circumstances,
the courts have allowed the IRS, as well as taxpayers, in more limited
circumstances, to treat a transaction in accordance with its economic
substance, as determined under U.S. federal income tax law, even though the
participants in the transaction have characterized it differently for
non-tax purposes. However, in a 1967 case, the courts substantially limited
the circumstances in which a taxpayer for tax purposes could ignore the
form of a transaction. Nevertheless, tax counsel has advised that, in a
properly presented case, this would not prevent a determination of the tax
characterization of the certificates based on the economic substance of the
transaction.
President Clinton's Fiscal 2000 Budget Proposal includes a
legislative proposal that would codify the 1967 rule if tax indifferent
parties are involved. The proposal would only apply to transactions entered
into on or after the date of first committee action. As currently drafted,
it is unclear whether the proposal would apply to securities such as the
certificates. It is impossible to predict whether the proposed legislation
will be enacted and, if so, in what form. Prospective investors should
consult their own tax advisors regarding the proposed legislation.
The determination of whether the economic substance of a purported
sale of an interest in property is, instead, a loan secured by such
transferred property has been made by the IRS and the courts on the basis
of numerous factors designed to determine whether the seller has
relinquished and the purchaser has obtained substantial incidents of
ownership in the transferred property. Among those factors, the primary
factors examined are whether the purchaser has the opportunity for gain if
the property increases in value and has the risk of loss if the property
decreases in value. Tax counsel is of the opinion that, although no
transaction closely comparable to that contemplated in this prospectus has
been the subject of any Treasury regulation, revenue ruling or judicial
decision, the certificates (other than a Series Certificate) will be
properly characterized as indebtedness for U.S. federal income tax
purposes. Except where indicated to the contrary, the discussion below
assumes that the certificates (other than a Series Certificate) will be
considered debt for U.S. federal income tax purposes.
Taxation of Interest Income on the Certificates
The Transferor intends to take the position that: a U.S.
Certificate Owner generally will include the stated interest on a
certificate in gross income at the time such interest income is received or
accrued in accordance with that U.S. Certificate Owner's regular method of
tax accounting. This conclusion is based on the Transferor's position that
the stated interest on a certificate is unconditionally payable.
Under the applicable Treasury regulations, the stated interest on
the certificates will be considered unconditionally payable only if the
terms and conditions of the certificates make the likelihood of late
payment or non-payment of the stated interest a remote contingency. Since
the master trust and the Master Trust Trustee will have no discretion to
withhold, delay or otherwise defer scheduled monthly payments of stated
interest on the certificates, provided the master trust has sufficient cash
on hand to allow the Master Trust Trustee to make those interest payments,
the Transferor believes that the late payment or non-payment of stated
interest on the certificates is a remote contingency.
If, however, the stated interest on the certificates is not
considered unconditionally payable, the stated interest on the certificates
will be considered original issue discount, and a U.S. Certificate Owner
will be required to include such stated interest in income, as original
issue discount, on a daily economic accrual basis regardless of that
person's regular method of tax accounting and in advance of receipt of the
cash related to such income. In addition, if the stated interest on the
certificates is not paid in full on a Distribution Date, the certificates
may at such time, and at all later times, be considered to be issued with
original issue discount and all U.S. Certificate Owners would be required
to include that stated interest in income as original issue discount on an
economic accrual basis.
Sale, Exchange or Retirement of Certificates
Upon a sale or other taxable exchange, retirement or disposition of
a certificate, a U.S. Certificate Owner will recognize gain or loss equal
to the difference between:
o the amount realized on that sale, exchange, retirement or
other disposition, less an amount equal to any accrued but
unpaid interest that the U.S. Certificate Owner has not
included in gross income previously, which will be taxable
as such, and
o the U.S. Certificate Owner's adjusted tax basis in such
certificate.
This gain or loss generally will be capital gain or loss and generally will
be considered long-term capital gain or loss if the U.S. Certificate Owner
held the certificate for more than one year at the time of the sale,
exchange, retirement or other disposition. The long-term capital gains of
individuals generally are eligible for reduced rates of taxation. Capital
losses generally may be used only to offset capital gains.
Possible Alternative Characterizations
Although, as described above, it is the opinion of tax counsel that
the certificates (other than a Series Certificate) will be properly
characterized as debt for U.S. federal income tax purposes, this opinion is
not binding on the IRS and, consequently, no assurance can be given that
this characterization will prevail. If the IRS were to contend successfully
that some or all of the certificates or any Collateral Interest were not
debt obligations for U.S. federal income tax purposes, all or a portion of
the master trust could be classified as a partnership or as a publicly
traded partnership taxable as a corporation for those purposes. No attempt
will be made to comply with any IRS reporting or other requirements that
would apply if all or a portion of the master trust were treated as a
partnership or as a corporation because in the opinion of tax counsel the
certificates (other than a Series Certificate) will be characterized as
debt for U.S. federal income tax purposes and any beneficial owner of an
interest in a Collateral Interest will agree to treat that interest as
debt.
If the master trust were treated in whole or in part as a
partnership, other than a publicly traded partnership taxable as a
corporation, for U.S. federal income tax purposes, such partnership would
not itself be subject to U.S. federal income tax. Rather, each item of
income, gain, loss and deduction of the partnership would be taken into
account directly in computing the taxable income of the Transferor, or the
beneficial owner of the Transferor Certificate, and any certificate owners
treated as partners in the partnership in accordance with their respective
partnership interests. The amount and timing of income reportable by any
certificate owners treated as partners in the partnership would likely
differ from that reportable by those certificate owners had they been
treated as owning debt. Moreover, unless the partnership were treated as
engaged in a trade or business, an individual's and, under some
circumstances, a trust's share of the expenses of the partnership would be
miscellaneous itemized deductions that, in the aggregate, would be allowed
as deductions only to the extent that they exceeded two percent of the
individual's adjusted gross income, and subject to reduction if the
individual's adjusted gross income exceeded specified limits. As a result,
in these circumstances, a certificate owner subject to these limitations
may be taxed on a greater amount of income than the interest payable on
that certificate owner's certificates. In addition, all or a portion of the
partnership's taxable income that is allocable to a certificate owner that
is a pension, profit sharing or employee benefit plan or other tax-exempt
entity, including an individual retirement account, may, under some
circumstances, constitute unrelated business taxable income, which
generally would be taxable to that certificate owner under the tax code.
Alternatively, if the master trust were treated in whole or in part
as a publicly traded partnership taxable as a corporation, the taxable
income of the master trust would be subject to U.S. federal income tax at
the applicable marginal corporate income tax rates applicable to that
income. This entity-level tax could result in reduced distributions to
certificate owners. In addition, the distributions from the master trust
would not be deductible in computing the taxable income of the deemed
corporation, except to the extent that any certificates were treated as
debt of the corporation, and distributions to the related certificate
owners were treated as payments of interest on the certificates. Moreover,
distributions to certificate owners not treated as holding debt would be
treated as dividends for U.S. federal income tax purposes to the extent of
the current and accumulated earnings and profits of the deemed corporation.
Tax Considerations Relating to Note Owners
Tax Characterization of the Owner Trust
Tax counsel is of the opinion that no owner trust will be
classified as an association or as a publicly traded partnership taxable as
a corporation for U.S. tax purposes. However, as discussed above, this
opinion is not binding on the IRS and no assurance can be given that this
characterization will prevail. See "-- Possible Alternative
Characterizations--Alternative Characterizations Relating to the Notes"
below.
Tax Characterization of the Notes
The Transferor will express in the Indenture its intent that the
notes will be treated as debt for all U.S. tax purposes and, under the
terms of the Indenture and the related notes, the Transferor, and each note
owner, by the acceptance of a beneficial interest in a note, will agree to
treat each note as debt for such purposes. Tax counsel is of the opinion
that, although no transaction closely comparable to that contemplated in
this prospectus has been the subject of any Treasury regulation, revenue
ruling or judicial decision, the notes will be properly characterized as
indebtedness for U.S. tax purposes. Except where indicated to the contrary,
the discussion below assumes that the notes will be considered debt for
U.S. federal income tax purposes.
Taxation of Interest Income on the Notes
In general, the notes will not be issued with original issue
discount. Consequently, a U.S. Note Owner generally will include the stated
interest on a note in gross income at the time that interest income is
received or accrued in accordance with that person's regular method of tax
accounting.
Sale, Exchange or Retirement of Notes
Upon a sale or other taxable exchange, retirement or disposition of
a note, a U.S. Note Owner will recognize gain or loss equal to the
difference between:
o the amount realized on such sale, exchange, retirement or
other disposition, less an amount equal to any accrued but
unpaid interest which the U.S. Note Owner has not included
in gross income previously, which will be taxable as such,
and
o the U.S. Note Owner's adjusted tax basis in such note.
This gain or loss generally will be capital gain or loss and generally will
be long-term gain or loss if the U.S. Note Owner held the note for more
than one year at the time of such sale, exchange, retirement or other
disposition. The long-term capital gains of individuals generally are
eligible for reduced rates of taxation. Capital losses generally may be
used only to offset capital gains.
Possible Alternative Characterizations
Alternative Characterizations Relating to the Notes. Although, as
described above, it is the opinion of tax counsel that the notes will be
properly characterized as debt for U.S. federal income tax purposes, such
opinion is not binding on the IRS and no assurance can be given that this
characterization will prevail. If the IRS were to contend successfully that
some or all of the notes were not debt obligations for U.S. federal income
tax purposes, an owner trust could be classified either as a partnership or
as a publicly traded partnership taxable as a corporation for those
purposes. Because in the opinion of tax counsel the notes will be
characterized as debt for U.S. federal income tax purposes, no attempt will
be made to comply with any IRS reporting or other requirements that would
apply if an owner trust were treated as a partnership or as a publicly
traded partnership taxable as a corporation.
If an owner trust were treated as a partnership, other than as a
publicly traded partnership taxable as a corporation, for U.S. federal
income tax purposes, the partnership would not be subject to U.S. federal
income tax. Rather, each item of income, gain, loss and deduction of the
partnership would be taken into account directly in computing the taxable
income of the Transferor and any note owners treated as partners in the
partnership in accordance with their respective partnership interests. The
amount and timing of income reportable by any note owners treated as
partners in the partnership would likely differ from that reportable by
those note owners had they been treated as owning debt. Moreover, unless
the partnership were treated as engaged in a trade or business, an
individual's, and under some circumstances, a trust's share of the expenses
of such partnership would be miscellaneous itemized deductions that, in the
aggregate, would be allowed as deductions only to the extent that they
exceeded two percent of the individual's adjusted gross income, and subject
to reduction if the individual's adjusted gross income exceeded specified
limits. As a result, under these circumstances, a note owner subject to
these limitations may be taxed on a greater amount of income than the
interest payable on that note owner's notes. In addition, all or a portion
of any taxable income allocated to a note owner that is a pension, profit
sharing or employee benefit plan or other tax-exempt entity, including an
individual retirement account, may, under some circumstances, constitute
unrelated business taxable income, which generally would be taxable to such
note owner under the tax code.
Alternatively, if an owner trust were classified as a publicly
traded partnership taxable as a corporation, the taxable income of the
owner trust would be subject to U.S. federal income tax at the marginal
corporate income tax rates applicable to such income. This entity-level tax
could result in reduced distributions to note owners. In addition, the
distributions from the owner trust would not be deductible in computing the
taxable income of the deemed corporation, except to the extent that any
notes were treated as debt of that corporation and distributions to the
related note owners were treated as payments of interest thereon. Moreover,
distributions to note owners not treated as holding debt would be treated
as dividends for U.S. federal income tax purposes to the extent of the
current and accumulated earnings and profits of the deemed corporation.
Alternative Characterizations Relating to the Master Trust. If the
master trust were treated in whole or in part as a publicly traded
partnership taxable as a corporation, the taxable income of the master
trust would be subject to U.S. federal income tax at the marginal corporate
income rates applicable to such income. See "--Tax Considerations Relating
to Certificate Owners--Possible Alternative Characterizations" above. This
entity-level tax could result in reduced distributions to an owner trust
and, therefore, to note owners.
Non-U.S. Certificate Owners and Non-U.S. Note Owners
Assuming that all of the certificates and notes issued to non-U.S.
Certificate Owners and non-U.S. Note Owners are considered debt of the
Transferor for U.S. federal income tax purposes, under present U.S. federal
income and estate 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 Transferor or any withholding agent of
principal or interest on a certificate or note owned by a non-U.S.
Certificate Owner or a non-U.S. Note Owner provided that
o the beneficial owner does not actually or constructively own
10% or more of the total combined voting power of all
classes of stock of the Transferor entitled to vote within
the meaning of section 871(h)(3) of the tax code and the
Treasury regulations promulgated under the tax code;
o the beneficial owner is not a controlled foreign corporation
that is related to the Transferor through stock ownership;
o the beneficial owner is not a bank whose receipt of interest
on a certificate or note is described in section
881(c)(3)(A) of the tax code; and
o the beneficial owner satisfies the statement requirement set
forth in section 871(h) and section 881(c) of the tax code
and the Treasury regulations promulgated under the tax code;
and
(b) a certificate or note beneficially owned by an individual who
at the time of his or her death is a non-U.S. Certificate Owner or non-U.S.
Note Owner will not be subject to U.S. federal estate tax as a result of
such individual's death provided that
o the individual does not actually or constructively own 10%
or more of the total combined voting power of all classes of
stock of the Transferor entitled to vote within the meaning
of section 871(h)(3) of the tax code, and
o the interest payments with respect to the certificate or
note would not have been, if received at the time of the
individual's death, effectively connected with the conduct
of a U.S. trade or business by the individual.
To satisfy the statement requirement referred to in paragraph (a)
above, the certificate owner or the note owner or a financial institution
holding the certificate or note on behalf of the owner, must provide, in
accordance with specified procedures, the Transferor or any withholding
agent with a statement to the effect that such certificate owner or note
owner is not a U.S. Certificate Owner or U.S. Note Owner. Currently, these
requirements will be met if:
o the certificate owner or note owner provides its name and
address, and certifies, under penalties of perjury, that it
is not a U.S. Certificate Owner or U.S. Note Owner, which
certification may be made on an IRS Form W-8 or successor
form, or
o a financial institution holding the certificate or note on
behalf of a certificate owner or note owner certifies, under
penalties of perjury, that the statement has been received
by it and furnishes any withholding agent with a copy.
Under recently finalized Treasury regulations, the statement requirement
also may be satisfied with other documentary evidence for interest paid
after December 31, 2000 to an offshore account or through some foreign
intermediaries.
If a non-U.S. Certificate Owner or non-U.S. Note Owner cannot
satisfy the requirements described in paragraph (a) above, payments of
interest made to that beneficial owner will be subject to a 30% withholding
tax unless that beneficial owner provides the Transferor or any withholding
agent with a properly executed:
o IRS Form 1001, or successor form, claiming an exemption
from, or a reduction in the rate of, that withholding tax
under the benefit of an applicable U.S. income tax treaty or
o IRS Form 4224, or successor form, stating that the interest
paid on the certificate or note is not subject to that
withholding tax because it is effectively connected with the
certificate owner's or note owner's conduct of a trade or
business in the United States.
Under the recently finalized Treasury regulations, non-U.S. Certificate
Owners and non-U.S. Note Owners generally will be required to provide an
IRS Form W-8 in lieu of an IRS Form 1001 and IRS Form 4224, although
alternative documentation may be applicable in some
situations.
The non-U.S. Certificate Owner or non-U.S. Note Owner, although
exempt from the U.S. withholding tax discussed above, will be subject to
U.S. federal income tax on the interest on a net income basis in the same
manner as if it were a U.S. Certificate Owner or U.S. Note Owner if it is
engaged in a trade or business in the United States and the interest on its
certificates or notes is effectively connected with the conduct of that
trade or business.
In addition, if that non-U.S. Certificate Owner or non-U.S. Note
Owner is a foreign corporation, it may be subject to a U.S. branch profits
tax equal to 30% , or lower applicable treaty rate, of its effectively
connected earnings and profits for the taxable year, subject to
adjustments. For this purpose, the interest income will be included in such
foreign corporation's earnings and profits.
Any gain realized by a non-U.S. Certificate Owner or non-U.S. Note
Owner upon the sale, exchange, retirement or other disposition of a
certificate or note generally will not be subject to U.S. federal income or
withholding tax unless:
o the gain is effectively connected with a U.S. trade or
business of the non-U.S. Certificate Owner or non-U.S. Note
Owner in the United States,
o for a non-U.S. Certificate Owner or non-U.S. Note Owner who
is an individual, that individual is present in the United
States for 183 days or more in the taxable year of the sale,
exchange, retirement or other disposition, and other
conditions are met, or
o to the extent the gain is considered accrued but unpaid
interest, the requirements described above are not
satisfied.
If the certificates or notes were treated as an interest in a
partnership, other than a publicly traded partnership taxable as a
corporation, that recharacterization could cause a non-U.S. Certificate
Owner or non-U.S. Note Owner to be treated as engaged in a trade or
business in the United States. In that event, the non-U.S. Certificate
Owner or non-U.S. Note Owner would be required to file a U.S. federal
income tax return and, generally, would be subject to U.S. federal income
tax, including, for a non-U.S. Certificate Owner or non-U.S. Note Owner
that is a corporation, the U.S. branch profits tax, on its allocable share
of the net income from such partnership. Further, some withholding
obligations may apply with respect to partnership income that is allocable
to a non-U.S. Certificate Owner or non-U.S. Note Owner that is considered
to be a partner in the partnership. That withholding would be imposed at a
rate equal to the highest marginal U.S. federal income tax rate applicable
to the non-U.S. Certificate Owner or non-U.S. Note Owner. Alternatively, if
some or all of the certificates or notes were treated as equity interests
in a publicly traded partnership taxable as a corporation, the gross amount
of any related dividend distributions to a non-U.S. Certificate Owner or
non-U.S. Note Owner generally would be subject to U.S. withholding tax at
the rate of 30%, unless that rate were reduced under an applicable U.S.
income tax treaty. See "--Tax Considerations Relating to Certificate
Owners-- Possible Alternative Characterizations" and "-- Tax Considerations
Relating to Note Owners--Possible Alternative Characterizations" above.
Special rules may apply for non-U.S. Certificate Owners or non-U.S.
Note Owners who:
o have an office or other fixed place of business in the U.S.;
o are former U.S. citizens;
o are engaged in a banking, financing, insurance or similar
business in the U.S.; or
o are "controlled foreign corporations," "foreign personal
holding companies," "passive foreign investment companies"
or corporations that accumulate earnings in order to avoid
U.S. federal income tax.
These persons should consult their own U.S. tax advisors before investing
in the certificates or notes.
Information Reporting and Backup Withholding
In general, information reporting requirements will apply to some
payments of principal and interest paid on certificates or notes and to the
proceeds of the sale of a certificate or note made by U.S. Certificate
Owners or U.S. Note Owners other than some exempt recipients, such as
corporations. A 31% backup withholding tax will apply to those payments if
the U.S. Certificate Owner or U.S. Note Owner fails to provide a taxpayer
identification number or certification of 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 Transferor or any withholding agent to
a non-U.S. Certificate Owner or non-U.S. Note Owner if the statement
described above under "-- Non-U.S. Certificate Owners and Non-U.S. Note
Owners" has been received and the payor does not have knowledge that the
non-U.S. Certificate Owner or non-U.S. Note Owner is actually a U.S.
Certificate Owner or U.S. Note Owner.
In addition, backup withholding and information reporting will not
apply if payments of principal and interest on a certificate or note are
paid or collected by a foreign office of a custodian, nominee or other
foreign agent on behalf of a certificate owner or note owner or if a
foreign office of a broker, as defined in applicable Treasury regulations,
pays the proceeds of the sale of a certificate or note to the owner of that
security. If, however, the custodian, nominee, agent or broker is, for U.S.
federal income tax purposes:
o a United States person,
o a controlled foreign corporation,
o a foreign person that derives 50% or more of its gross
income for specified periods from the conduct of a trade or
business in the United States, or
o for taxable years beginning after December 31, 2000, 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 which is engaged
in a trade or business in the United States,
those payments will not be subject to backup withholding but will be subject
to information reporting, unless:
o that custodian, nominee, agent or broker has documentary
evidence in its records that the relevant certificate owner
or note owner is not a United States person and other
conditions are met, or
o the certificate owner or note owner otherwise establishes an
exemption.
Payments of principal and interest on a certificate or note paid to
the certificate owner or note owner 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 of sale of a certificate or note, will be subject
to both backup withholding and information reporting unless:
o the relevant certificate owner or note owner provides the
statement referred to above under "-- Non-U.S. Certificate
Owners and Non-U.S. Note Owners", and
o the payor does not have actual knowledge that the
certificate owner or note owner is actually a U.S.
Certificate Owner or U.S. Note Owner or the certificate
owner or note owner otherwise establishes an exemption.
Any amounts withheld under the backup withholding rules will be
allowed as a refund or a credit against a certificate owner's or note
owner's U.S. federal income tax liability provided the required information
is furnished to the IRS.
State and Local Taxation
The discussion above does not address the tax consequences of the
purchase, ownership or disposition of a certificate or note under any state
or local tax law. Each investor should consult its own tax advisor
regarding state and local tax consequences of purchasing, owning and
disposing of a certificate or note.
Employee Benefit Plan Considerations
ERISA and the tax code impose requirements on Plans and on the
Plans' fiduciaries. In accordance with ERISA's general fiduciary standards,
before investing in securities, a Plan fiduciary should determine, among
other factors, whether the investment:
o is permitted under the governing Plan;
o is appropriate for the Plan in view of its overall
investment policy and the composition and diversification of
its portfolio; and
o is prudent considering the factors discussed in this
prospectus.
ERISA and the tax code prohibit some transactions involving the
assets of a Plan and persons who are either "parties in interest" under
ERISA or "disqualified persons" under the tax code. Prohibited transactions
may generate excise taxes and other liabilities. Thus, a Plan fiduciary
considering an investment in the securities should also consider whether
the investment might constitute a prohibited transaction under ERISA or the
tax code.
Certain ERISA Considerations With Respect to Notes
Plans subject to the fiduciary and prohibited transactions rules of
ERISA and the tax code can purchase the notes subject to the considerations
and conditions discussed below.
Prohibited Transaction Considerations
Treatment of the Notes as Debt Instruments
Some transactions involving the operation of the owner trust could
give rise to prohibited transactions under ERISA and the tax code if the
assets of the owner trust were deemed to be assets of an investing Plan.
Generally, under an ERISA regulation, when a Plan acquires an "equity
interest" in an entity such as the owner trust, the Plan's assets include
both the equity interest and an undivided interest in each of the
underlying assets of the entity unless the exceptions set forth in the
regulation apply.
In general, an "equity interest" is defined under the regulation as
any interest in an entity other than an instrument which is treated as
indebtedness under applicable local law and which has no substantial equity
features. Although there is very little published authority concerning the
application of this definition, the Transferor believes that the notes
should be treated as debt rather than equity interests under the regulation
because the notes:
o should be treated as indebtedness under applicable local law
and debt, rather than equity, for U.S. tax purposes (see
"Tax Matters--Tax Considerations Relating to Note Owners"
above); and
o should not be deemed to have any "substantial equity
features."
Accordingly, the assets of the owner trust should not constitute Plan
assets subject to the fiduciary or prohibited transaction rules of ERISA or
the tax code.
Acquisition of Notes
If a Plan purchases notes and a person who has a relationship to
the owner trust, such as the Transferor, the servicer, any trustee, or
underwriters, or any of their affiliates, is also a "party in interest" or
a "disqualified person" with respect to the Plan, the purchase may be
prohibited under ERISA or the tax code, unless an exemption applies.
Accordingly, fiduciaries of a Plan considering an investment in the notes
should consult their own counsel concerning the propriety of the investment
prior to making the purchase.
In light of the foregoing, by acceptance of a note, each holder
will be deemed to have represented and warranted that either:
o the holder is not acquiring, or considered to be acquiring,
the note with the assets of a Plan; or
o no non-exempt prohibited transaction will occur as a result
of the acquisition and holding of the notes.
EACH PLAN FIDUCIARY SHOULD CONSULT WITH ITS COUNSEL REGARDING THE
POTENTIAL CONSEQUENCES UNDER ERISA, THE TAX CODE OR SIMILAR STATE LAW OF
THE ACQUISITION AND HOLDING OF THE NOTES.
Certain ERISA Considerations With Respect to Certificates
Prohibited Transaction Considerations
Treatment of Master Trust Assets as Plan Assets
Some transactions involving the operation of the master trust might
constitute prohibited transactions under ERISA and the tax code, if assets
of the master trust were deemed to be assets of an investing Plan. As noted
above, the ERISA regulation concerns whether or not a Plan's assets would
include an interest in the underlying assets of an entity (such as the
master trust) for purposes of the reporting and disclosure and fiduciary
responsibility provisions of ERISA. If assets of the master trust were
deemed to be assets of an investing Plan, any person who has discretionary
authority or control with respect to master trust assets will be a
fiduciary of the investing Plan. This fiduciary status would increase the
scope of activities which could be considered prohibited transactions under
ERISA and the tax code. Accordingly, if Plans invest in the master trust,
the master trust could be deemed to hold Plan assets unless one of the
exceptions contained in the ERISA regulation applies.
Exception for Insignificant Participation by Benefit Plan Investors
The ERISA regulation provides that the assets of an entity such as
the master trust will not be deemed to be Plan assets if equity
participation in the entity by "benefit plan investors" is not
"significant." Examples of benefit plan investors include employee welfare
benefit plans, some trusts or employee pension benefit plans and individual
retirement accounts. Equity participation in an entity by benefit plan
investors is not "significant" on any date if, immediately after the most
recent acquisition of any equity interests in the entity, less than 25% of
the value of each class of equity interests in the entity is held by
benefit plan investors. This less than 25% interest excludes the value of
any equity interests held by the Transferor, the Master Trust Trustee or
its affiliates. No monitoring or other measures will be taken to ensure
that the exception applies with respect to the master trust. No assurance
can be given as to whether the value of any class of equity interests in
the master trust held by benefit plan investors will be less than 25%, or
whether the value will remain below 25%.
Exception for Publicly Traded Securities
The ERISA regulation contains an exception which provides that if a
Plan acquires a "publicly-offered security," the issuer of the security is
not deemed to hold Plan assets solely by reason of such acquisition. A
publicly-offered security is a security that is:
o freely transferable;
o part of a class of securities that is owned by 100 or more
investors independent of the issuer and of one another; and
o either
- part of a class of securities registered under the
Exchange Act; or
- sold to the Plan as part of an offering of securities
to the public under the Securities Act and the class of
securities of which this security is a part is
registered under the Exchange Act within 120 days, or
such later time as may be allowed by the SEC, after
the end of the fiscal year of the issuer during which
the offering of these securities to the public
occurred.
Although it is anticipated that the conditions of this exception
may be met with respect to some classes of the certificates, no assurance
can be given and no monitoring will be done.
Fiduciaries and other persons contemplating purchasing the
certificates on behalf of or with the assets of any Plan should consult
their own counsel concerning the consequences to the Plan of an investment
in the certificates, including the consequences to the Plan if the assets
of the master trust were to become subject to the fiduciary and prohibited
transactions rules of ERISA and the tax code.
Additional Considerations for Insurance Company General Accounts
In particular, insurance companies considering the purchase of
certificates of any series should consult their own employee benefits
counsel or other appropriate counsel with respect to the U.S. Supreme
Court's 1993 decision in which it was held that, under some circumstances,
assets held in an insurance company's general account may be deemed to be
assets of Plans that were issued policies supported by the general account.
In addition, insurance companies may wish to consult with their own counsel
regarding the Small Business Job Protection Act of 1996, which added a new
section of ERISA relating to the status of the assets of insurance company
general accounts under ERISA and a section of the tax code. This new
section provides that assets underlying general account policies issued
before December 31, 1998 will not be considered assets of a Plan to the
extent criteria set forth in DOL regulations are satisfied. This section
also requires the DOL to issue regulations establishing those criteria. On
December 22, 1997, the DOL published proposed regulations, called the
general account regulations, for this purpose. The general account
regulations provide that when a Plan acquires a transition policy issued by
an insurance company on or before December 31, 1998, which is supported by
assets of the insurance company's general account, the Plan's assets will
include the policy but not the underlying assets of the general account to
the extent the requirements set forth in the general account regulations
are satisfied. The general account regulations also require an independent
fiduciary who has the authority to manage the Plan's assets to expressly
authorize the acquisition of that transition policy. If adopted as
proposed, the general account regulations would not apply to any general
account policies issued after December 31, 1998. Accordingly, investors
should analyze whether the U.S. Supreme Court case, the relevant ERISA
section and the general account regulations may have an impact with respect
to their purchase of the certificates of any series.
In light of the foregoing, by acceptance of a certificate, each
holder will be deemed to have represented and warranted that either:
o the holder is not acquiring, or considered to be acquiring,
the certificate with the assets of a Plan; or
o no non-exempt prohibited transaction will occur as a result
of such acquisition and holding of the certificates.
Plan of Distribution
The Transferor may sell the securities offered by the prospectus:
o through underwriters or dealers,
o directly to one or more purchasers, or
o through agents.
The prospectus supplement for any offered series will set forth the
terms of the offering of the offered securities, including, without
limitation, the names of any underwriters, the purchase price of the
offered securities and the resulting proceeds to Chase USA, any
underwriting discounts and other items constituting underwriters'
compensation, the initial public offering price and any discounts or
concessions allowed or reallowed or paid to dealers.
The underwriters of any underwritten securities will purchase the
securities for their own account. The underwriters may sell any securities
they purchase in one or more transactions. Those sales may be transacted at
a fixed public offering price, or at varying prices to be determined at the
time of sale, which will be set forth or described in the prospectus
supplement for the offered securities.
If Chase USA sells any securities to dealers as principals, those
dealers may re-sell those securities to the public at varying prices set by
those dealers from time to time.
Chase USA also may sell securities through agents on a best-efforts
basis at varying prices.
Each underwriting agreement will provide that Chase USA, as
Transferor of the receivables, will indemnify the underwriters of the
offered securities against liabilities under the federal securities laws,
or contribute to any amounts the underwriters may be required to pay with
respect to such liabilities. Dealers and agents may also be entitled to
indemnification or contribution with respect to liabilities under the
federal securities laws.
Any underwriter will be permitted to engage in the following
transactions, to the extent permitted by Regulation M under the Exchange
Act:
o Over-allotment transactions, which involve syndicate sales
in excess of the offering size creating a syndicate short
position;
o Stabilizing transactions, which permit bids to purchase the
offered securities so long as the stabilizing bids do not
exceed a specified maximum;
o Syndicate covering transactions, which involve purchases of
the offered securities in the open market after the
distribution has been completed in order to cover syndicate
short positions; and
o Penalty bids, which permit the underwriters to reclaim a
selling concession from a syndicate member when the offered
securities originally sold by the syndicate member are
purchased in a syndicate covering transaction.
Such over-allotment transactions, stabilizing transactions,
syndicate covering transactions and penalty bids may cause prices of the
offered securities to be higher than they would otherwise be in the absence
of such transactions. Neither the master trust nor any of the underwriters
represent that the underwriters will engage in any such transactions nor
that such transactions, once commenced, will not be discontinued without
notice.
This prospectus and the attached prospectus supplement may be used
by Chase Securities Inc., a wholly owned subsidiary of The Chase Manhattan
Corporation and an affiliate of Chase USA, in connection with offers and
sales related to market-making transactions in the offered 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.
Legal Matters
Certain legal matters relating to the issuance of the securities
will be passed upon for the Transferor by Simpson Thacher & Bartlett, New
York, New York. Certain legal matters relating to the issuance of the
securities will be passed upon for the Underwriters by Skadden, Arps,
Slate, Meagher & Flom LLP, New York, New York. Helene L. Kaplan, of counsel
to Skadden, Arps, Slate, Meagher & Flom LLP, is a member of the Board of
Directors of The Chase Manhattan Bank and The Chase Manhattan Corporation
and owns _____ shares of the Corporation's common stock, with the
associated rights attached thereto, ________ units of the Corporation's
common stock equivalents which entitle the holder upon termination of
service as a member of the Corporation's Board of Directors to receive a
cash payment for each unit equal to the fair market value at that time of a
share of the Corporation's common stock and __________ units of the
Corporation's common stock equivalents which entitle the holder upon
termination of service as a member of the Corporation's Board of Directors
to receive an equal number of shares of the Corporation's common stock.
Reports to Securityholders
Unless and until Definitive Securities are issued, monthly and
annual reports, containing information concerning the applicable master
trust or owner trust and prepared by the servicer or the Administrator,
will be sent on behalf of the master trust or owner trust to Cede as
nominee of DTC and registered holder of the related securities. See
"Description of the Securities--Form of Your Securities--Book-Entry
Registration," "--Description of the Certificates--Reports to
Certificateholders" and "--Evidence as to Compliance." The reports will not
constitute financial statements prepared in accordance with generally
accepted accounting principles. The servicer does not intend to send any
financial reports of Chase USA or CMB to the securities owners. The
servicer will file with the SEC such periodic reports with respect to the
master trust and the owner trusts as are required under the Exchange Act
and the rules and regulations of the SEC under that Act.
Where You Can Find More Information
We filed a registration statement relating to the securities with
the SEC. This prospectus is part of the registration statement, but the
registration statement includes additional information.
All required annual, monthly and special SEC reports and other
information will be filed by the Transferor with respect to the master
trust or with respect to each owner trust.
You may read and copy any reports, statements or other information
we file at the SEC's public reference room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. You can request copies of these documents, upon
payment of a duplicating fee, by writing to the SEC. Please call the SEC at
(800) SEC-0330 for further information on the operation of the public
reference rooms. Our SEC filings are also available to the public on the
SEC Internet site (http://www.sec.gov).
The SEC allows us to "incorporate by reference" information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference
is considered to be part of this prospectus. Information that we file later
with the SEC will automatically update the information in this prospectus.
In all cases, you should rely on the later information over different
information included in this prospectus or the related supplement. We
incorporate by reference any future annual, monthly and special SEC reports
and proxy materials filed by or on behalf of the master trust and any
related owner trust until we terminate our offering of the securities.
As a recipient of this prospectus, you may request a copy of any
document we incorporate by reference, except exhibits to the documents
(unless the exhibits are specifically incorporated by reference), at no
cost, by writing or calling us at: Comptroller of Chase USA, 802 Delaware
Avenue, Wilmington, Delaware 19801, (302) 575-5000.
Glossary of Terms For Prospectus
"Account" means each MasterCard and VISA credit card account
established under a credit card agreement between Chase USA and any person
and selected by Chase USA to have its receivables included in the master
trust including each Additional Account but excluding each Removed Account.
"Accumulation Period" means either a Controlled Accumulation Period
or a Rapid Accumulation Period during which principal collections are
accumulated in a Principal Funding Account for payment to
certificateholders on a scheduled payment date.
"Accumulation Period Reserve Account" means an Eligible Deposit
Account held for the benefit of the certificateholders of a series to be
funded to cover potential shortfalls resulting from the difference between:
o the amount of investment earnings on funds accumulated in
the Principal Funding Account during an Accumulation Period
and
o the amount of interest payments to be made to
certificateholders.
"Additional Account" means each MasterCard and VISA credit card
account selected by Chase USA to be included in the master trust as an
Account to have its receivables added to the master trust.
"Additional Interest" means interest on overdue Monthly Interest at
the rate specified in the related supplement.
"Administrator" means Chase USA as the administrator of an owner
trust under a Deposit and Administration Agreement.
"Amortization Period" means a Controlled Amortization Period, a
Principal Amortization Period or a Rapid Amortization Period.
"Bank Portfolio" means the portfolio of MasterCard and VISA
accounts owned by Chase USA.
"Cash Collateral Account" means an account securing a Cash Collateral
Guaranty.
"Cash Collateral Guaranty" means a guaranty secured by the deposit
of cash or permitted investments in a Cash Collateral Account reserved for
the beneficiaries of that Cash Collateral Guaranty.
"Cedelbank" means Cedelbank, societe anonyme, an institution
administering a book-entry settlement system for trading of securities in
Europe.
"Cedelbank Customers" means organizations participating in Cedelbank's
book-entry system.
"Chase USA" means Chase Manhattan Bank USA, National Association.
"Closing Date" means the date of issuance of a series.
"Collateral Interest" means a subordinated interest in a series of
certificates, in an amount initially equal to the percentage of the
certificates of a series specified in the prospectus supplement for that
series.
"Collection Account" means an Eligible Deposit Account for the
benefit of the certificateholders into which the servicer deposits
collections on the receivables.
"Companion Series" means:
o a series which has been paired with a previously issued
series and has an Investor Interest that increases as the
Investor Interest of the previously issued series decreases;
or
o any series designated as a Companion Series in the related
Series Supplement.
"Controlled Accumulation Amount" means a designated amount
scheduled to be deposited in the Principal Funding Account on each Transfer
Date during the Controlled Accumulation Period as specified in the related
supplement.
"Controlled Accumulation Period" means a period:
o beginning on a date specified in the related supplement
after the Revolving Period and
o ending on the earliest of
- the start of the Rapid Accumulation Period,
- the start of the Rapid Amortization Period, and
- the Series Termination Date; and
during which collections of Principal Receivables up to the amount
specified in the related supplement are deposited monthly into the
Principal Funding Account.
"Controlled Amortization Amount" means a designated amount
scheduled to be paid on each Distribution Date during the Controlled
Amortization Period as specified in the related supplement.
"Controlled Amortization Period" means a period:
o beginning on a date specified in the related supplement and
o ending on the earlier of
- the start of the Rapid Amortization Period and
- the Series Termination Date; and
during which collections of Principal Receivables up to an amount specified
in the related supplement are paid to certificateholders on each
Distribution Date.
"Controlled Deposit Amount" means the amount to be deposited in the
Principal Funding Account on each Transfer Date during the Controlled
Accumulation Period to cover principal amounts due certificateholders on
each scheduled payment date equal to the sum of:
o the Controlled Accumulation Amount for that Transfer Date, and
o any remaining shortfall in the Controlled Deposit Amount for
any prior Distribution Date.
"Cooperative" means the Euro-clear Clearance System, S.C., a Belgian
cooperative corporation.
"Corporation" means The Chase Manhattan Corporation.
"Credit Enhancement" means any instrument, agreement or other
arrangement providing support for a series or class of securities. Credit
Enhancement may be in the form of:
o the subordination of one or more classes of the certificates
or the notes of a series,
o a letter of credit,
o cash collateral guaranty or account,
o a collateral interest,
o a surety bond,
o an insurance policy,
o a spread account,
o a reserve account,
o the use of cross support features,
o another method of Credit Enhancement described in the
related supplement, or
o any combination of the above.
"Credit Enhancement Percentage" means the percentage interest in the
receivables allocated to some credit enhancement providers.
"Cut-Off Date" means September 27, 1995.
"Defaulted Account" means an Account written off as uncollectible
by the servicer.
"Definitive Notes" means notes in fully registered, certificated form.
"Definitive Securities" means securities in fully registered,
certificated form.
"Deposit and Administration Agreement" means an agreement between
the Bank and an owner trust as specified in the related supplement under
which a Series Certificate is deposited with the owner trust and Chase USA
agrees to act as Administrator of the owner trust.
"Discount Option" means the Transferor's option to designate a
percentage - the Discount Percentage - of receivables in the master trust
that would otherwise be Principal Receivables, to be treated as Finance Charge
Receivables.
"Discount Option Receivables" means those receivables that
otherwise would have been treated as Principal Receivables that are to be
treated as Finance Charge Receivables at the option of Chase USA.
"Discount Percentage" means a specified fixed or variable percentage
as specified in the related supplement.
"Distribution Account" means an Eligible Deposit Account from which
distributions are made to certificateholders.
"Distribution Date" means each date specified in the related
supplement on which distributions of interest or principal are to be made
to certificateholders.
"DOL" means the U.S. Department of Labor.
"DTC Participants" means participating organizations that have
securities deposited with DTC.
"Eligible Account" means, as of the relevant Cut-Off Date, or, with
respect to Additional Accounts, as of their date of designation for
inclusion in the master trust, each Account owned by the Transferor:
o which was in existence and maintained with the Transferor;
o which is payable in United States dollars;
o the obligor of which has provided, as his or her most recent
billing address, an address located in the United States or
its territories or possessions;
o which has not been classified by the Transferor as
counterfeit, deleted, fraudulent, stolen or lost;
o which has either been originated by the Transferor or
acquired by the Transferor from other institutions; and
o which has not been charged off by the Transferor in its
customary and usual manner for charging off Accounts as of
the Cut-Off Date and, with respect to an Additional Account,
as of its date of designation for inclusion in the master
trust.
"Eligible Deposit Account" means either:
o a segregated bank account with an Eligible Institution or
o a segregated bank account with the corporate trust
department of a depository institution organized under the
laws of the United States or any one of its states,
including the District of Columbia, or any domestic branch
of a foreign bank, and acting as a trustee for funds
deposited in such accounts, so long as any of the securities
of such depository institution has an investment grade
rating from each Rating Agency.
"Eligible Institution" means those financial institutions described
under "Description of the Securities--Description of the
Certificates--Master Trust Bank Accounts."
"Eligible Receivable" means each receivable:
o which has arisen under an Eligible Account;
o which was created in compliance, in all material respects,
with all requirements of law applicable to the Transferor,
and under the terms of a credit card agreement which
complies in all material respects with all requirements of
law applicable to the Transferor;
o with respect to which all consents, licenses or
authorizations of, or registrations with, any governmental
authority required to be obtained or given by the Transferor
in connection with the creation of a receivable or the
execution, delivery, creation and performance by the
Transferor of the related credit card agreement have been
duly obtained or given and are in full force and effect as
of the date of the creation of the receivable;
o as to which, at the time of its creation, the Transferor or
the master trust has good title free and clear of all liens
and security interests arising under or through the
Transferor, other than some tax liens for taxes not then due
or which the Transferor is contesting;
o which is the legal, valid and binding payment obligation of
the obligor under the receivable, legally enforceable
against that obligor in accordance with its terms, subject
to some bankruptcy-related exceptions; and
o which constitutes an "account" or "general intangible" under
Article 9 of the UCC as then in effect in the State of
Delaware.
"Enhancement Invested Amount" means a subordinated investor
interest in cash flows in respect of the receivables to the extent
described in the related supplement.
"Euroclear Participants" means participants of the Euroclear System.
"Events of Default" means, with respect to the notes, those events
described under "Description of the Securities--Description of the
Notes--The Indentures--Events of Default: Rights Upon Event of Default."
"Excess Funding Account" means the Eligible Deposit Account for the
benefit of the certificateholders in which principal collections are held
as collateral if the Transferor Interest is
less than the Minimum Transferor Interest.
"Finance Charge Account" means a bank account held for the benefit
of the certificateholders in which the servicer will deposit collections of
finance charge receivables
allocated to the certificateholders.
"Finance Charge Receivables" means periodic finance charges and
other amounts charged in respect of some credit card fees, including cash
advance fees, late fees and annual membership fees plus the amount of any
Discount Option Receivables.
"Funding Period" means with respect to any pre-funded series,
the period:
o beginning on the Closing Date and ending on a specified date
before an Amortization Period or an Accumulation Period
begins and
o during which the aggregate amount of Principal Receivables
in the Master Trust may be less than the aggregate principal
amount of the certificates of the related series and an
amount is held in a Pre-Funding Account for the benefit of
the certificateholders.
"Group" means each series specified in the related supplement to be
included in any group.
"Indenture" means an agreement between a Chase credit card owner
trust and the applicable Indenture Trustee under which notes are issued.
"Indenture Trustee" means the trustee acting on behalf of the
noteholders under an Indenture.
"Interchange" means fees received by creditors participating in the
VISA and MasterCard associations as partial compensation for taking credit
risk, absorbing fraud losses, and funding receivables for a limited period
prior to initial billing.
"Interest Funding Account" means an Eligible Deposit Account for
the benefit of the certificateholders in which amounts to be paid to
certificateholders as interest will be deposited on a monthly basis, if
interest payments are made to certificateholders less frequently than
monthly.
"Investor Charge-Off" means, for any Monthly Period, and for
any series:
o the amount by which the sum of (w) related Monthly Interest,
(x) overdue Monthly Interest, (y) any Additional Interest,
and (z) the accrued and unpaid Investor Servicing Fees
payable from collections of Finance Charge Receivables, the
Investor Default Amount and any other required fees exceeds
o amounts available to pay those amounts out of collections of
Finance Charge Receivables, available credit enhancement
amounts, if any, and other sources specified in the related
supplement, if any, but not more than the Investor Default
Amount.
"Investor Default Amount" means, for any Monthly Period, the
product of:
o the Investor Percentage with respect to that Monthly Period,
and
o the aggregate amount of Principal Receivables in Defaulted
Accounts for that Monthly Period.
"Investor Interest" means the aggregate principal amount of the
interest of the certificateholders in a series as specified in the related
supplement.
"Investor Percentage" means each of the varying percentages used to
allocate to a series receivables in Defaulted Accounts and collections of
Finance Charge Receivables and collections of Principal Receivables.
"Investor Servicing Fee" means the servicing fee allocable to the
Investor Interest of a series, as specified in the related supplement.
"Master Trust" means the Chase Credit Card Master Trust.
"Master Trust Portfolio" means the portfolio of MasterCard and VISA
accounts selected from the Bank Portfolio to be Accounts designated to have
their receivables included in the master trust.
"Master Trust Trustee" means The Bank of New York or any successor
trustee for the master trust.
"Minimum Aggregate Principal Receivables" means an amount equal to:
o the sum of the numerators used to calculate the Investor
Percentages for the allocation of collections of Principal
Receivables for each series outstanding minus
o the amount on deposit in the Excess Funding Account;
provided, that the Minimum Aggregate Principal Receivables may be reduced to
a lesser amount at any time if the Rating Agency Condition is satisfied.
"Minimum Transferor Interest" means, for any period, 7% of the sum of:
o the average Principal Receivables for that period, and
o the amount on deposit in each of the Excess Funding Account,
the Principal Funding Account and any other bank account
specified in the Pooling and Servicing Agreement or any
Series Supplement;
provided, however, that Chase USA may reduce the Minimum Transferor
Interest to not less than 2% of the sum of the amounts specified above upon
satisfaction of the Rating Agency Condition and other conditions set forth
in the Pooling and Servicing Agreement.
"Monthly Interest" means interest accrued for a specified month for
any series or class.
"Monthly Period" means a calendar month, except that the first
Monthly Period for any series:
o begins on the Closing Date for that series and
o ends on the last day of the calendar month before the month
in which the first Distribution Date occurs for that series.
"Non-U.S. Certificate Owner" means a beneficial owner of a
certificate other than a U.S. Certificate Owner.
"Non-U.S. Note Owner" means a beneficial owner of a note other than
a U.S. Note Owner.
"Note Maturity Date" means the final Payment Date on which payments
are to be made to the noteholders of a series.
"Note Rate" means the interest rate per annum applicable for any
series or class of notes.
"Owner Trustee" means the trustee of an owner trust identified in
the related supplement.
"Participations" means undivided interests in a pool of assets
primarily consisting of receivables arising under consumer revolving credit
card accounts owned by the Transferor.
"Payment Date" means the dates specified in the related supplement
on which distributions of interest or principal are to be made to
noteholders.
"Pay Out Event" means, for any series of certificates issued by
the master trust, any of the events identified in the related supplement
and any of the events described under "Description of the
Securities--Description of the Certificates--Pay Out Events."
"Paying Agent" means The Chase Manhattan Bank.
"Plan" means:
o an employee benefit plan within the meaning of Section 3(3)
of ERISA;
o a plan within the meaning of Section 4975 of the tax code; or
o any entity which may be deemed to hold the assets of any of
those plans under ERISA or the regulations promulgated under
ERISA (including, without limitation, an insurance company
general account).
"Pooling and Servicing Agreement" means the Second Amended and
Restated Pooling and Servicing Agreement, dated as of September 1, 1996,
among the Transferor, the servicer and the Master Trust Trustee, as amended
from time to time.
"Portfolio Yield" means, with respect to any series for any Monthly
Period, the annualized percentage equivalent of a fraction:
o the numerator of which is the sum of collections of Finance
Charge Receivables, investment earnings on amounts in the
Principal Funding Account --net of investment expenses and
losses-- and amounts withdrawn from the Accumulation Period
Reserve Account deposited into the Finance Charge Account
for that Monthly Period, calculated on a cash basis after
subtracting the Investor Default Amount for that Monthly
Period, and
o the denominator of which is the Investor Interest as of the
close of business on the last day of that Monthly Period.
"Pre-Funding Account" means a bank account:
o established with the Master Trust Trustee for the benefit of
certificateholders of a series and
o in which is deposited the difference between the aggregate
amount of principal receivables allocable to that series and
the aggregate outstanding principal amount of the
certificates of that series.
"Principal Account" means a bank account held for the benefit of
the certificateholders in which the servicer will deposit collections of
principal receivables allocated to the certificateholders.
"Principal Amortization Period" means a period:
o beginning on the date specified in the related supplement and
o ending on the earlier of
- the start of the Rapid Amortization Period and
- the Series Termination Date; and
during which collections of Principal Receivables allocable to the Investor
Interest of a series and other amounts specified in the related supplement
will be used on each Distribution Date to make principal distributions to
the certificateholders of that series or any class then scheduled to
receive principal distributions.
"Principal Commencement Date" means the date on which principal
payments on the securities of a series are scheduled to begin.
"Principal Funding Account" means an Eligible Deposit Account held
for the benefit of the certificateholders of a series with an Accumulation
Period in which collections of principal receivables are accumulated.
"Principal Receivables" means receivables that consist of amounts
charged by cardholders for:
o goods and services,
o cash advances, and
o consolidation or transfer of balances from other credit cards,
less the amount of any Discount Option Receivables.
"Program Office" means The Chase Manhattan Corporation's Year 2000
Enterprise Program Office.
"Rapid Accumulation Event" means an event specified in the related
supplement that would cause a Rapid Accumulation Period to commence.
"Rapid Accumulation Period" means a period:
o beginning when a Rapid Accumulation Event occurs or at such
other time as is specified in the related supplement and
o ending on the earliest of
- the start of the Rapid Amortization Period,
- payment in full of the Investor Interest of the
certificates of that series and
- the related Series Termination Date; and
during which collections of Principal Receivables allocable to a series
will be deposited on each Transfer Date into the Principal Funding Account
and used to pay principal to the certificateholders of that series or class
on the scheduled payment date.
"Rapid Amortization Period" means a period:
o beginning on the day a Pay Out Event occurs or such other
date as may be specified in the related supplement and
o ending on the earlier of
- the date on which the Investor Interest of the
certificates of that series have been paid in full or
- the related Series Termination Date; and
during which collections of Principal Receivables allocable to a series
will be paid on each Distribution Date to the certificateholders of that
series.
"Rating Agency" means a nationally recognized rating organization
selected by Chase USA to rate any series.
"Rating Agency Condition" means the notification in writing by each
Rating Agency that a proposed action will not result in that Rating Agency
reducing or withdrawing its then-existing rating of the investor
certificates of any outstanding series or class with respect to which it is
a Rating Agency.
"Record Date" means the date specified in the related supplement as
of which a certificateholder must be the registered holder of a certificate
to receive a payment on the following Distribution Date.
"Recoveries" means amounts received by the servicer with respect to
charged-off accounts in the Bank Portfolio.
"Removed Accounts" means Accounts designated by the Transferor to
have their receivables conveyed from the master trust to the Transferor and
which no longer constitute
Accounts.
"Reserve Account" means a bank account established to provide
support for a series or one or more classes of securities. This type of
account may be funded by an initial cash deposit or any other method
provided in the related supplement.
"Revolving Period" means, with respect to any series, a period:
o beginning on the Closing Date and
o ending when an Accumulation Period or Amortization Period
begins; and
during which collections of Principal Receivables allocable to that series
are generally not paid to certificateholders or accumulated but are
generally paid to the Transferor.
"Series Certificate" means a Series Certificate issued by the master
trust and deposited in an owner trust.
"Series Supplement" means the supplement to the Pooling and
Servicing Agreement relating to a particular series.
"Series Termination Date" means for any series the earliest to
occur of:
o the Distribution Date on which the Investor Interest has
been paid in full;
o the final Distribution Date on which principal and interest
with respect to a series is scheduled to be paid as
described in the related supplement; and
o the Trust Termination Date.
"Servicer Default" means any failure of the servicer under the
Pooling and Servicing Agreement and any Series Supplement:
o to perform its duties or fulfill its obligations (each, a
"breach") and
o to cure the breach within a specified period of time,
including any grace period, after discovery or notice of the
breach.
See "--Description of the Securities--Description of the
Certificates--Servicer Default" for a description of the specific events
that could result in a Servicer Default."
"Spread Account" means an account providing support for a series or
one or more classes of securities by the periodic deposit in that account
of available excess cash flow from the master trust assets.
"Tax Opinion" means an opinion of counsel to the effect that, for
federal income tax purposes:
o an issuance will not adversely affect the tax
characterization as debt of certificates of any outstanding
series or class that were characterized as debt at the time
of their issuance;
o following the issuance, the master trust will not be deemed
to be an association, or publicly traded partnership,
taxable as a corporation, and
o the issuance will not cause or constitute an event in which
gain or loss would be recognized by any certificateholder or
the master trust.
"Transfer Date" means the business day immediately prior to a
Distribution Date.
"Transferor" means:
o with respect to the period before June 1, 1996, CMB
(formerly known as Chemical Bank), and
o with respect to the period beginning on June 1, 1996, Chase USA.
"Transferor Certificate" means the certificate that represents the
Transferor Interest in the master trust.
"Transferor Interest" means the aggregate principal amount of the
interest of the Transferor in the master trust.
"Transferor Percentage" means the percentage of receivables in
Defaulted Accounts and collections of Finance Charge Receivables and
collections of Principal Receivables allocated to the holder of the
Transferor Certificate equal to 100% minus the sum of the applicable
Investor Percentages for all series of certificates then outstanding.
"Trust Termination Date" means the earliest of:
o the day after the Distribution Date on which the aggregate
Investor Interest and Enhancement Invested Amount or
Collateral Interest, if any, with respect to each series
outstanding is zero;
o August 31, 2016; or
o if the Receivables are sold, disposed of or liquidated after
an insolvency event occurs, immediately after that sale,
disposition or liquidation.
"UCC" means the Uniform Commercial Code as in effect in the
jurisdiction where Chase USA is located.
"U.S. Certificate Owner" means a beneficial owner of a certificate
(other than a Series Certificate) described under "Tax Matters--General."
"U.S. Note Owner" means a beneficial owner of a note described
under "Tax Matters--General."
"Year 2000 Core Team" means The Chase Manhattan Corporation's
management team overseeing the Year 2000 compliance process.
[FLAG]
The information in this prospectus is not complete and may be changed. We
cannot sell these securities until the registration statement filed with
the Securities and Exchange Commission is effective. This prospectus is not
an offer to sell these securities and it is not soliciting an offer to buy
these securities in any state where the offer or sale is not permitted.
Prospectus Supplement to Prospectus, Dated ________, 1999
CHASE CREDIT CARD MASTER TRUST
Issuer
Chase Manhattan Bank USA, National Association, Transferor
The Chase Manhattan Bank, Servicer
$__________ Class a Floating Rate Asset Backed Certificates, Series 1999-_
$__________ Class B Floating Rate Asset Backed Certificates, Series 1999-_
Class A Certificates Class B Certificates
Principal Amount $___________________ $___________________
Price $__________ (______%) $__________ (______%)
Underwriters' Commissions $__________ (______%) $__________ (______%)
Proceeds to the Issuer $__________ (______%) $__________ (______%)
Certificate Rate one-month LIBOR + one-month LIBOR +
____% p.a. ___% p.a.
Interest Payment Dates monthly on the 15th monthly on the 15th
First Interest Payment Date _________, 1999 ______, 1999
Scheduled Principal Payment Date _______ ________
distribution date distribution date
- -----------------------------------------------------------------------------
The Class B Certificates Are Subordinated To The Class A Certificatess.
- -----------------------------------------------------------------------------
These Securities are Interests in Chase Credit Master Trust and are backed
only by the assets of the Master Trust. Neither these Securities nor the
assets of the Master Trust are obligations of Chase Manhattan Bank USA,
N.A., The Chase Manhattan Bank or any of their affiliates, or obligations
insured by the FDIC.
These securities are highly structured. Before you purchase these
securities, be sure you understand the structure and the risks. See "Risk
Factors" on pages S-10 of this Prospectus Supplement.
We have applied to have the Securities listed on the Luxembourg Stock
Exchange.
- -----------------------------------------------------------------------------
Neither the Securities and Exchange Commission nor any State Securities
Commission has approved or disapproved of these Securities or passed on the
adequacy or accuracy of the Disclosures in this Supplement and the attached
Prospectus. Any representation to the contrary is a criminal offense.
- -----------------------------------------------------------------------------
These securities are offered subject to availability.
Underwriters of the Class A Certificates.
CHASE SECURITIES INC.
Underwriter of the Class B Certificates
CHASE SECURITIES INC.
The date of this Prospectus Supplement is __________, 199_.
Table of Contents
Page
Where To Find Information In These Documents.....................S-3
Summary of Terms.................................................S-4
Structural Summary...............................................S-5
The Series 1999-_ Certificates ............................S-5
Chase Credit Card Master Trust ............................S-5
Scheduled Principal Payments and Potential
Later Payments ......................................S-6
Minimum Yield on the Receivables; Possible
Early Principal Repayment of
Series 1999-_ .......................................S-6
Tax Status of Class A, Class B and Chase
Credit Card Master Trust ............................S-7
ERISA Considerations ......................................S-7
Mailing Address and Telephone Number
of Principal Executive Offices ......................S-8
Selected Master Trust Portfolio Summary Data.....................S-9
Risk Factors....................................................S-11
The Chase Credit Card Master Trust Portfolio....................S-18
General ..................................................S-18
Delinquency and Loss Experience ..........................S-19
Interchange ..............................................S-20
Recoveries ...............................................S-20
The Receivables.................................................S-21
General ..................................................S-21
Maturity Considerations.........................................S-25
Controlled Accumulation Period ...........................S-25
Rapid Amortization Period.................................S-25
Pay out Events............................................S-26
Payment Rates ............................................S-26
Receivable Yield Considerations.................................S-27
Use of Proceeds.................................................S-29
Description of the Certificates.................................S-29
General ..................................................S-29
Exchanges ................................................S-30
Status of the Certificates ...............................S-30
Transfer and Exchange of Definitive
Certificates .......................................S-30
Interest Payments ........................................S-31
Principal Payments .......................................S-32
Postponement of Controlled Accumulation
Period .............................................S-33
Subordination ............................................S-33
Allocation Percentages ...................................S-34
Reallocation of Cash Flows ...............................S-36
Application of Collections ...............................S-37
Shared Excess Finance Charge Collections .................S-44
Shared Principal Collections .............................S-45
Required Collateral Interest .............................S-45
Defaulted Receivables; Investor Charge-offs ..............S-46
Principal Funding Account ................................S-47
Reserve Account ..........................................S-47
Issuance of Additional Certificates ......................S-48
Companion Series .........................................S-49
Pay Out Events ...........................................S-50
Servicing Compensation and Payment of
Expenses............................................S-51
Reports to Certificateholders ............................S-52
Listing and General Information.................................S-52
ERISA Considerations............................................S-53
Class A Certificates .....................................S-54
Class B Certificates .....................................S-54
Consultation with Counsel ................................S-54
Underwriting....................................................S-56
Exchange Listing................................................S-57
Index of Terms for Prospectus Supplement........................S-58
Where To Find Information In These Documents
The attached prospectus provides general information about Chase
Credit Card Master Trust, including terms and conditions that are generally
applicable to the securities issued by the master trust. The specific terms
of Series 1999-_ are described in this supplement.
This supplement begins with several introductory sections describing
your series and Chase Credit Card Master Trust in abbreviated form:
o Summary of Terms provides important amounts, dates and
other terms of your series;
o Structural Summary gives a brief introduction of the key
structural features of your series and directions for locating
further information;
o Selected Master Trust Portfolio Summary Data gives certain
financial information about the assets of the Master Trust; and
o Risk Factors describes risks that apply to your series.
As you read through these sections, cross-references will direct you
to more detailed descriptions in the attached prospectus and elsewhere in
this supplement. You can also directly reference key topics by looking at
the table of contents pages in this supplement and the attached prospectus.
This prospectus supplement and the attached prospectus may be used by
Chase Securities Inc., an affiliate of Chase Manhattan Bank USA, N.A. and
The Chase Manhattan Bank and a subsidiary of The Chase Manhattan
Corporation, in connection with offers and sales related to market-making
transactions in the certificates offered by this supplement and the
attached prospectus. 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.
- -----------------------------------------------------------------------------
To Understand The Structure Of These Securities, You Must Read Carefully
The Attached Prospectus and This Supplement In Their Entirety.
- -----------------------------------------------------------------------------
Summary of Terms
- -----------------------------------------------------------------------------
Transferor: Chase Manhattan Bank USA, National
Association--"Chase USA"
Servicer: The Chase Manhattan Bank--"Chase Bank"
Master Trust Trustee: The Bank of New York
Pricing Date: _______, 1999
Closing Date: _______, 1999
Clearance and Settlement: DTC/Cedelbank/Euroclear
Master Trust Assets: receivables originated in VISA and MasterCard
accounts, including recoveries on charged-off
receivables and fees payable by VISA and
MasterCard to Chase USA
- -----------------------------------------------------------------------------
Series Structure: Amount % of Total Series
Class A $___________ __%
Class B $___________ __%
Collateral Interest $___________ __%
Annual Servicing Fee: __%
Class A Class B
Anticipated Ratings:*
(Moody's/S&P/Fitch IBCA) Aaa/AAA/AAA A2/A/A
Credit Enhancement: subordination of subordination of
Class B and the collateral interest
collateral interest
Interest Rate: one-month LIBOR + __% one-month LIBOR + __%
p.a. p.a.
Interest Accrual Method: actual/360 actual/360
Interest Payment Dates: monthly (15th) monthly (15th)
Interest Rate Index 2 business days 2 business days
Reset Date: before each before each
interest payment date interest payment date
First Interest Payment Date: ______, 1999 ______, 1999
Scheduled Principal
Payment Date: ___ distribution date ____ distribution date
Commencement of Controlled Last day of ________ N/A
Accumulation Period
(subject to adjustment):
Series 1999-_ Legal Final
date Maturity: ________distribution date ________distribution
Application for Exchange
Listing: Luxembourg Luxembourg
CUSIP Number:
ISIN:
Common Code:
* It is a condition to issuance that one of these ratings be obtained.
Structural Summary
This summary briefly describes certain major structural components of
Series 1999-_. To fully understand the terms of Series 1999-_ you will need
to read both this supplement and the attached prospectus in their entirety.
The Series 1999-_ Certificates
Your certificates represent the right to a portion of collections on the
underlying Master Trust assets. Your certificates will also be allocated a
portion of net losses on receivables, if any. Any collections allocated to
your series will be used to make interest or principal payments, to pay a
portion of the fees of Chase Bank as servicer and to cover net losses
allocated to your series. Any collections allocated to your series in
excess of the amount owed to you or Chase Bank as servicer will be shared
with other series of certificates issued by Chase Credit Card Master Trust,
or returned to Chase USA. In no case will you receive more than the
principal and interest owed to you under the terms described in this
supplement.
For further information on allocations and payments, see "Description of
the Certificates--Allocation Percentages" and "--Application of
Collections" in this supplement. For further information about the
receivables supporting your certificates, see "The Receivables" and
"Receivable Yield Considerations" in this supplement. For a more detailed
discussion of the certificates, see "Description of the Certificates" in
this supplement.
Your certificates feature credit enhancement by means of the subordination
of other interests, which is intended to protect you from net losses and
shortfalls in cash flow. Credit enhancement is provided to Class A by the
following:
o subordination of Class B; and
o subordination of the collateral interest.
Credit enhancement is provided to Class B by the following:
o subordination of the collateral
interest.
The effect of subordination is that the more subordinated interests will
absorb any net losses allocated to Series 1999-_, and make up any
shortfalls in cash flow, before the more senior interests are affected. On
the closing date the collateral interest will be $__________, or _% of
Series 1999-_. If the cash flow and any subordinated interest do not cover
all net losses allocated to Series 1999-_, your payments of interest and
principal will be reduced and you may suffer a loss of principal.
For a more detailed description of the subordination provisions of Series
1999-_, see "Description of the Certificates--Subordination" in this
supplement. For a discussion of losses, see "Description of the
Certificates--Defaulted Receivables; Investor Charge- Offs" in this
supplement. See "Risk Factors" in this supplement for more detailed
discussions of the risks of investing in Series 1999-_.
Chase Credit Card Master Trust
Your series is one of nineteen outstanding series issued by Chase Credit
Card Master Trust. Chase Credit Card Master Trust is maintained by the
Master Trust Trustee for the benefit of:
o certificateholders of Series 1999-_;
o certificateholders of other series issued by
Chase Credit Card Master Trust;
o providers of credit enhancements for Series 1999-_ and other series
issued by Chase Credit Card Master Trust; and
o Chase USA.
Each series has a claim to a fixed dollar amount of Chase Credit Card
Master Trust's assets, regardless of the total amount of receivables in the
Master Trust at any time. Chase USA holds the remaining claim to Chase
Credit Card Master Trust's assets, which fluctuates with the total amount
of receivables in the Master Trust. Chase USA, as the holder of that
remainder, has the right to purchase the outstanding Series 1999-_
certificates at any time when the outstanding amount of the Series 1999-_
certificateholders' interest in Chase Credit Card Master Trust is less than
5% of the original amount of that interest.
For more information on Chase Credit Card Master Trust's assets, see "The
Chase Credit Card Master Trust Portfolio" and "The Receivables" in this
supplement and "Chase USA's Credit Card Activities" and "The Receivables"
in the attached prospectus.
Scheduled Principal Payments and Potential Later Payments
Chase Credit Card Master Trust expects to pay the entire principal amount
of Class A in one payment on the ________ distribution date, and the entire
principal amount of Class B in one payment on the ________ distribution
date. In order to accumulate the funds to pay Class A on its scheduled
payment date, the Master Trust will accumulate principal collections in a
principal funding account. The Master Trust will deposit funds into the
principal funding account during a "controlled accumulation period." The
length of the controlled accumulation period may be as long as twelve
months, but will be shortened if Chase USA expects that a shorter period
will suffice for the accumulation of the Class A payment amount. The
accumulation period will end on the scheduled payment date for Class A,
when the funds on deposit in the principal funding account will be paid to
Class A.
If Class A is not fully repaid on its scheduled payment date, Class A will
begin to amortize by means of monthly payments of all principal collections
allocated to Series 1999-_ until it is fully repaid.
After Class A is fully repaid the Master Trust will use principal
collections allocated to Series 1999-_ to repay Class B. Because of the
relatively small principal payment required to repay Class B, the Master
Trust expects to pay the Class B principal in full in one month. If Class B
is not fully repaid on its scheduled payment date, Class B will begin to
amortize by means of monthly payments of all principal collections
allocated to Series 1999-_ after Class A is fully repaid.
For more information on scheduled principal payments, the controlled
accumulation period and Class B principal payments, see "Maturity
Considerations" and "Description of the Certificates--Principal Payments,"
"--Postponement of Controlled Accumulation Period" and "--Application of
Collections--Payments of Principal" in this supplement and "Description of
the Certificates--Principal Payments" and "--Accumulation Period" in the
attached prospectus.
Prior to the commencement of an accumulation or amortization period for
Series 1999-_, principal collections will be paid to Chase USA or shared
with other series that are amortizing or in an accumulation period.
Minimum Yield on the Receivables; Possible Early
Principal Repayment of Series 1999-_
Class A or Class B may be repaid earlier than its scheduled principal
repayment date if collections on the underlying receivables, together with
other amounts available for payment to securityholders, are too low. The
minimum amount that must be available for payment to Series 1999-_ in any
month, referred to as the "base rate," is the sum of the interest payable
to Class A, the interest payable to Class B and the interest payable to the
holder of the collateral interest, in each case for the related interest
period, plus the servicing fee for the related month. If the average Master
Trust portfolio yield for Series 1999-_ for any three consecutive months is
less than the average base rate for the same three consecutive months, a
"pay out event" will occur with respect to Series 1999-_ and the Master
Trust will commence a rapid amortization of Series 1999-_, and holders of
Series 1999-_ certificates will receive principal payments earlier than the
scheduled principal repayment date.
Series 1999-_ is also subject to several other pay out events, which could
cause Series 1999-_ to amortize, and which are summarized under the heading
"Description of the Certificates--Pay Out Events" in this supplement. If
Series 1999-_ begins to amortize, Class A will receive monthly payments of
principal until it is fully repaid; Class B will then receive monthly
payments of principal until it is fully repaid. In that event, your
certificates may be repaid prior to the scheduled payment date.
The final payment of principal and interest will be made no later than the
________ distribution date, which is the Series 1999-_ final payment date.
For more information on pay out events, the portfolio yield and base rate,
early principal repayment and rapid amortization, see "Maturity
Considerations," "Description of the Certificates--Principal Payments" and
"--Pay Out Events" in this supplement and "Description of the
Certificates--Principal Payments," "--Rapid Amortization Period" and
"--Final Payment of Principal; Termination" in the
attached prospectus.
Tax Status of Class A, Class B and Chase Credit
Card Master Trust
Simpson Thacher & Bartlett, tax counsel to Chase USA, is of the opinion
that:
o under existing law the Class A and Class B
certificates will be characterized as debt for
U.S. federal income tax purposes; and
o Chase Credit Card Master Trust will not be an association
or publicly traded partnership taxable as a corporation
for U.S. federal income tax purposes.
For further information regarding the application of
U.S. federal income tax laws, see "Tax Matters" in the
attached prospectus.
ERISA Considerations
Class A Certificates: The underwriters anticipate that the Class A
certificates will meet the criteria for treatment as "publicly-offered
securities." If so, subject to important considerations described under
"ERISA Considerations" in this prospectus supplement and "Employee Benefit
Plan Considerations" in the attached prospectus, the Class A certificates
will be eligible for purchase by persons investing assets of employee
benefit plans or individual retirement accounts.
Class B Certificates: Pension plans and other investors
subject to ERISA cannot acquire Class B certificates.
Prohibited investors include:
o "employee benefit plans" as defined in
section 3(3) of ERISA;
o any "plan" as defined in section 4975 of the
U.S. Internal Revenue Code; and
o any entity whose underlying assets may be deemed to include "plan
assets" under ERISA by reason of any such plan's investment in the
entity, including insurance company general accounts.
By purchasing any Class B certificates, you certify that you are not within
any of those categories.
For further information regarding the application of ERISA, see "ERISA
Considerations" in this supplement and "Employee Benefit Plan
Considerations" in the attached prospectus.
Mailing Address and Telephone Number of
Principal Executive Offices
The mailing address of Chase Manhattan Bank USA, National Association is
802 Delaware Avenue, Wilmington, Delaware 19801, and the telephone number
is (302) 575-5000.
Selected Master Trust Portfolio Summary Data
[GRAPHIC OMITTED]
The chart above shows the geographic distribution of the receivables in the
master trust portfolio among the 50
states and the District of Columbia. Other than the states specifically
shown in the chart, no state accounts for more
than 5% of receivables in the master trust portfolio.
[GRAPHIC OMITTED]
The chart above shows the percentages of the receivables in the master
trust portfolio arising under accounts within the age brackets shown.
[GRAPHIC OMITTED]
The chart above shows the total yield, payment rate and net charge-off rate
for the master trust portfolio for each month from January, 1997 to
December, 1998.
"Master Trust Yield" for any month means the total amount of collected
finance charges and interchange charges allocated to Chase Credit Card
Master Trust for the month, expressed as a percentage of total outstanding
principal receivables at the beginning of the month.
The "payment rate" for any month is the aggregate amount collected on
receivables during the month, including recoveries on previously charged
off, receivables, expressed as a percentage of total outstanding
receivables at the beginning of the month.
The amount of "net charge-offs" for any month is the amount of charged-off
receivables recorded in the month, net of any recoveries from earlier
charge-offs on receivables in the master trust portfolio, expressed as a
percentage of total outstanding principal receivables at the beginning of
the month.
Risk Factors
You should consider the following risk factors in deciding whether to
purchase the asset backed certificates described herein.
Potential Early Repayment or
Delayed Payment Due to Reduced
Portfolio Yield If the average Master Trust portfolio
yield for Series 1999-_ for any three
consecutive months is less than the
average base rate for the same three
consecutive months, a "pay out event"
will occur with respect to Series 1999-_
and the Master Trust will commence a
rapid amortization of Series 1999-_, and
holders of Series 1999-_ certificates
will receive principal payments earlier
than the scheduled principal repayment
date. Moreover, if principal collections
on receivables allocated to other series
are available for application to a rapid
amortization of any outstanding
securities, the period during which that
rapid amortization occurs may be
substantially shortened. Because of the
potential for early repayment if
collections on the receivables fall below
the minimum amount, any circumstances
that tend to reduce collections may
increase the risk of early repayment of
Series 1999-_.
Conversely, any reduction in collections
may cause the period during which
collections are accumulated in the
principal funding account for payment of
Class A to be longer than otherwise would
have been the case.
The following factors could result in
circumstances that tend to reduce
collections:
Chase USA May Change the Terms and
Conditions of the Accounts
Chase USA will transfer to Chase Credit
Card Master Trust receivables arising
under specified credit card accounts, but
Chase USA will continue to own those
accounts. As the owner of those accounts,
Chase USA retains the right to change
various terms and conditions of those
accounts, including finance charges and
other fees it charges and the required
minimum monthly payment. Chase USA may
change the terms of the accounts to
maintain its competitive position in the
credit card industry. Changes in the
terms of the accounts may reduce the
amount of receivables arising under the
accounts, reduce the amount of
collections on those receivables, or
otherwise alter payment patterns.
Chase USA has agreed that it will not
reduce the periodic finance charges it
charges on the receivables or other fees
on any account if that action would cause
Chase USA to reasonably expect that the
net yield on the Master Trust's portfolio
of accounts would be insufficient to make
interest payments on Series 1999-_ or any
other interest issued by the Master Trust
and pay the servicing fee payable by the
Master Trust, unless Chase USA is
required by law to reduce those charges
or determines that reductions are
necessary to maintain its credit card
business, based on its good faith
assessment of its business competition.
Chase USA has agreed that it will not
change the terms of the accounts or its
policies relating to the operation of its
credit card business, including the
reduction of the required minimum monthly
payment and the calculation of the amount
or the timing of finance charges, other
fees and charges, unless it reasonably
believes a pay out event would not occur
for any series and takes the same action
on its other substantially similar
accounts, to the extent permitted by
those accounts.
Chase USA has no restrictions on its
ability to change the terms of the
accounts except as described above or in
the attached prospectus.
Chase USA May Add Accounts to the Master
Trust Portfolio
In addition to the accounts already
designated for Chase Credit Card Master
Trust, Chase USA is permitted to
designate additional accounts for the
Master Trust portfolio and to transfer
the receivables in those accounts to the
Master Trust. Any new accounts and
receivables may have different terms and
conditions than the accounts and
receivables already in the Master Trust
portfolio - such as higher or lower fees
or interest rates, or longer or shorter
principal payment terms. Credit card
accounts purchased by Chase USA may be
included as additional accounts if
certain conditions are satisfied. Credit
card accounts purchased by Chase USA will
have been originated using the account
originator's underwriting criteria, not
those of Chase USA. The account
originator's underwriting criteria may be
less stringent than those of Chase USA.
The new accounts and receivables may
produce higher or lower collections or
charge-offs over time than the accounts
and receivables already in the Master
Trust and could tend to reduce the amount
of collections allocated to Series
1999-_.
Also, if Chase USA's percentage interest
in the accounts of the Master Trust falls
to 7% or less, Chase USA will be required
to maintain that level by designating
additional accounts for the Master Trust
portfolio and transferring the
receivables in those accounts to the
Master Trust. If Chase USA is required to
add accounts to the Master Trust, it may
not have any accounts to be added to the
Master Trust. If Chase USA fails to add
accounts when required, a "pay out event"
will occur and you could receive payment
of principal sooner than expected. See
"Description of the
Certificates--Addition of Master Trust
Assets" in the attached prospectus.
Certificate and Receivables Interest Rate
Reset Terms May Differ
Finance charges on certain of the
accounts in Chase Credit Card Master
Trust accrue at a variable rate above a
designated prime rate or other designated
index. The certificate rate of your
certificate is based on LIBOR. Changes in
LIBOR might not be reflected in the prime
rate or the designated index, resulting
in a higher or lower spread, or
difference, between the amount of
collections of finance charge receivables
on the accounts and the amounts of
interest payable on Series 1999-_ and
other amounts required to be funded out
of collections of finance charge
receivables.
Finance charges on certain of the
accounts in the Master Trust accrue at a
fixed rate. If LIBOR increases, the
amount of interest on your certificate
and other amounts required to be funded
out of collections of finance charge
receivables will increase, while the
amount of collections of finance charge
receivables on the accounts will remain
the same unless and until the rates on
the accounts are reset.
A decrease in the spread between
collections of finance charge receivables
and interest payments on your certificate
could increase the risk of early
repayment.
Changes to Consumer Protection Laws May
Impede Chase's Collection Efforts
Federal and state consumer protection
laws regulate the creation and
enforcement of consumer loans, including
credit card accounts and receivables.
Changes or additions to those regulations
could make it more difficult for the
servicer of the receivables to collect
payments on the receivables or reduce the
finance charges and other fees that Chase
USA can charge on credit card account
balances, resulting in reduced
collections. See "Description of the
Certificates--Pay Out Events" in the
attached prospectus.
Receivables that do not comply with
consumer protection laws may not be valid
or enforceable in accordance with their
terms against the obligors on those
receivables. Chase USA makes
representations and warranties relating
to the validity and enforce-ability of
the receivables arising under the
accounts in the Master Trust portfolio.
Subject to certain conditions described
under "Description of the
Certificates--Representations and
Warranties" in the attached prospectus
Chase USA must accept reassignment of
each receivable that does not comply in
all material respects with all
requirements of applicable law. However,
we do not anticipate that the Master
Trust Trustee under the pooling and
servicing agreement will make any
examination of the receivables or the
related records for the purpose of
determining the presence or absence of
defects, compliance with representations
and warranties, or for any other purpose.
The only remedy if any representation or
warranty is violated, and the violation
continues beyond the period of time Chase
USA has to correct the violation, is that
Chase USA must accept reassignment of the
receivables affected by the violation,
subject to certain conditions described
under "Description of the
Certificates--Representations and
Warranties" in the attached prospectus.
See also "Certain Legal Aspects of the
Receivables--Consumer Protection Laws" in
the attached prospectus.
If a cardholder sought protection under
federal or state bankruptcy or debtor
relief laws, a court could reduce or
discharge completely the cardholder's
obligations to repay amounts due on its
account and, as a result, the related
receivables would be written off as
uncollectible. See "Description of the
Certificates--Defaulted Receivables;
Investor Charge- Offs" in this supplement
and "Description of the
Certificates--Defaulted Receivables;
Rebates and Fraudulent Charges; Investor
Charge-Offs" in the attached prospectus.
Slower Generation of Receivables Could
Reduce Collections
The receivables transferred to Chase
Credit Card Master Trust may be paid at
any time. We cannot assure the creation
of additional receivables in the Master
Trust's accounts or that any particular
pattern of cardholder payments will
occur. A significant decline in the
amount of new receivables generated by
the accounts in the Master Trust could
result in reduced amounts of Master Trust
collections. See "Maturity
Considerations" in this supplement.
Allocations of Charged-off
Receivables Could Reduce
Payments to Certificateholders Chase USA anticipates that it will write
off as uncollectible some portion of the
receivables arising in accounts in the
Master Trust portfolio. Each class of
Series 1999-_ will be allocated a portion
of those charged-off receivables. See
"Description of the
Certificates--Allocation Percentages" and
"The Chase Credit Card Master Trust
Portfolio--Delinquency and Loss
Experience" in this supplement. If the
amount of charged-off receivables
allocated to any class of certificates
exceeds the amount of other funds
available for reimbursement of those
charge-offs (which could occur if the
limited amount of credit enhancement for
those certificates is reduced to zero)
the holders of those certificates may not
receive the full amount of principal and
interest due to them. See "Description of
the Certificates--Reallocation of Cash
Flows," "--Application of Collections"
and "--Defaulted Receivables; Investor
Charge-Offs" in this supplement.
Limited Ability to
Resell Certificates The underwriters may assist in resales of
Class A and Class B certificates but they
are not required to do so. A secondary
market for any of your securities may not
develop. If a secondary market does
develop, it might not continue or it
might not be sufficiently liquid to allow
you to resell any of your securities.
Certain Liens Could Be Given
Priority Over Your Securities Chase USA accounts for the transfer of
the receivables to the Master Trust as a
sale. However, a court could conclude
that Chase USA still owns the receivables
and that the Master Trust holds only a
security interest. Chase USA will take
steps to give the Master Trust Trustee a
"first priority perfected security
interest" in the receivables in the event
a court concludes Chase USA still owns
the receivables. If Chase USA became
insolvent and the Federal Deposit
Insurance Corporation were appointed
conservator or receiver of Chase USA, the
FDIC's administrative expenses might be
paid from the receivables before the
Master Trust received any payments on the
receivables. If a court concludes that
the transfer to the Master Trust is only
a grant of a security interest in the
receivables certain liens on Chase USA's
property arising before new receivables
come into existence may get paid before
the Master Trust's interest in those
receivables. Those liens include a tax or
government lien or other liens permitted
under the law without the consent of
Chase USA. See "Certain Legal Aspects of
the Receivables--Transfer of Receivables"
and "Description of the
Certificates--Representations and
Warranties" in the attached prospectus.
Insolvency or Bankruptcy of Chase
USA Could Result in Accelerated,
Delayed or Reduced Payments to
Certificateholders Under the Federal Deposit Insurance Act,
as amended by the Financial Institutions
Reform, Recovery and Enforcement Act of
1989, the Master Trust's security
interest in the receivables arising under
the accounts in the Master Trust
portfolio should be respected by the FDIC
where--
o Chase USA's transfer of the receivables
to the Master Trust is the grant of a
valid security interest in the
receivables to the Master Trust;
o Chase USA becomes insolvent and the
FDIC is appointed conservator or
receiver of Chase USA;
o the security interest (a) is validly
perfected before Chase USA's insolvency
and (b) was not taken in contemplation
of Chase USA's insolvency or with the
intent to hinder, delay or defraud
Chase USA or its creditors; and
o the pooling and servicing agreement
establishing the Master Trust under the
Federal Deposit Insurance Act is
continuously an official record of
Chase USA and represents a bona fide
and arm's length transaction undertaken
for adequate consideration in the
ordinary course of business.
Under the Federal Deposit Insurance Act,
the FDIC could--
o require The Bank of New York, as Master
Trust Trustee for the Trust, to go
through an administrative claims
procedure to establish its right to
payments collected on the receivables
in the Master Trust;
o request a stay of proceedings with
respect to Chase USA; or
o repudiate the pooling and servicing
agreement establishing the Master Trust
and limit the Master Trust's resulting
claim to "actual direct compensatory
damages" measured as of the date of
receivership. See "Certain Legal
Aspects of the Receivables--Certain
Matters Relating to Receivership" in
the attached prospectus.
If the FDIC were to take any of those
actions your payments of outstanding
principal and interest could be delayed
and possibly reduced.
If a conservator or receiver were
appointed for Chase USA, then a "pay out
event" could occur for all outstanding
series. Under the terms of the pooling
and servicing agreement new principal
receivables would not be transferred to
the Master Trust and the Master Trust
Trustee would sell the receivables
(unless holders of more than 50% of the
investor interest of each class of
outstanding certificates gave the Master
Trust Trustee other instructions). The
Master Trust would then terminate earlier
than was planned and you could have a
loss if the sale of the receivables
produced insufficient net proceeds to pay
you in full. The conservator or receiver
may nonetheless have the power--
o regardless of the terms of the pooling
and servicing agreement, (a) to prevent
the beginning of a rapid amortization
period, (b) to prevent the early sale
of the receivables and termination of
the Master Trust or (c) to require new
principal receivables to continue being
transferred to the Master Trust; or
o regardless of the instructions of the
certificateholders, (a) to require the
early sale of the Master Trust's
receivables, (b) to require termination
of the Master Trust and retirement of
the Master Trust's certificates
(including Series 1999-_) or (c) to
prohibit the continued transfer of
principal receivables to the trusts.
In addition, if Chase Bank, as servicer,
defaults on its obligations under the
pooling and servicing agreement solely
because a conservator or receiver is
appointed for Chase Bank, the conservator
or receiver might have the power to
prevent either the Master Trust Trustee
or the holders of securities issued by
the Trust from appointing a new servicer
under the related pooling and servicing
agreement. See "Certain Legal Aspects of
the Receivables--Certain Matters Relating
to Receivership" in the attached
prospectus.
Issuance of Additional Series
by the Trust May Affect the
Timing of Payments Chase Credit Card Master Trust, as a
master trust, may issue series of
certificates from time to time. The
Master Trust may issue additional series
with terms that are different from your
series without the prior review or
consent of any certificateholders. It is
a condition to the issuance of each new
series that each rating agency that has
rated an outstanding series confirm in
writing that the issuance of the new
series will not result in a reduction or
withdrawal of its rating of any class of
any outstanding series.
However, the terms of a new series could
affect the timing and amounts of payments
on any other outstanding series. See
"Description of the
Certificates--Exchanges" in the attached
prospectus.
Individual Certificateholders
Will Have Limited Control of
Trust Actions Certificateholders of any series or any
class within a series may need the
consent or approval of a specified
percentage of the investor interest of
other series or a class of such other
series to take or direct certain actions,
including to require the appointment of a
successor servicer after Chase Bank, as
servicer, defaults on its obligations
under the pooling and servicing
agreement, to amend the pooling and
servicing agreement in some cases, and to
direct a repurchase of all outstanding
series after certain violations of Chase
USA's representations and warranties. The
interests of the certificateholders of
any such series may not coincide with
yours, making it more difficult for you
or any other particular certificateholder
to achieve the desired results from such
vote.
Class B Bears Additional
Credit Risk Because Class B is subordinated to Class
A, principal payments to Class B will not
begin until Class A is repaid.
Additionally, if collections of finance
charge receivables allocated to Series
1999-_ are insufficient to cover amounts
due to Class A, the investor interest for
Class B might be reduced. This would
reduce the amount of the collections of
finance charge receivables available to
Class B in future periods and could cause
a possible delay or reduction in
principal and interest payments on Class
B. If receivables had to be sold, the net
proceeds of that sale available to pay
principal would be paid first to Class A
and any remaining net proceeds would be
paid to Class B. See "Description of the
Certificates--Subordination" in this
supplement.
The Chase Credit Card Master Trust Portfolio
Capitalized terms are defined in the attached prospectus or in this
supplement. Definitions are indicated by boldface type. Both the attached
prospectus and this supplement contain an index of terms listing the page
numbers where definitions can be found.
General
The receivables (the "Receivables") conveyed or to be conveyed to the
Master Trust pursuant to a pooling and servicing agreement (as the same may
be amended from time to time, the "Agreement"), among Chase Manhattan Bank
USA, National Association ("Chase USA" or the "Bank"), CMB, as Servicer of
the Receivables, and The Bank of New York, as Master Trust Trustee (the
"Master Trust Trustee"), as supplemented by the supplement relating to the
Certificates (the "Series 1999-_ Supplement") (the term "Agreement," unless
the context requires otherwise, refers to the Agreement as supplemented by
the Series 1999-_ Supplement) have been or will be generated from
transactions made by holders of MasterCard and VISA credit card accounts
("Accounts") selected by Chase USA, including premium accounts and standard
accounts, from the Bank Portfolio. Each Class A Floating Rate Asset Backed
Certificate, Series 1999-_ (collectively, the "Class A Certificates") and
each Class B Floating Rate Asset Backed Certificate, Series 1999-_
(collectively, the "Class B Certificates" and, together with the Class A
Certificates, the "Certificates" or the "Series 1999-_ Certificates") will
represent the right to receive certain payments from the Master Trust
(formerly known as Chemical Master Credit Card Trust I), created pursuant
to a Pooling and Servicing Agreement among the Transferor, The Chase
Manhattan Bank ("CMB"), as servicer, and The Bank of New York, as Master
Trust Trustee. As used in this prospectus supplement, the term
"Certificateholders" refers to holders of the Certificates, the term "Class
A Certificateholders" refers to holders of the Class A Certificates and the
term "Class B Certificateholders" refers to holders of the Class B
Certificates, and the term "Transferor" means (a) with respect to the
period prior to June 1, 1996, CMB (formerly known as Chemical Bank) and (b)
with respect to the period beginning on June 1, 1996, Chase USA.
The Receivables conveyed to the Master Trust arise in Accounts
selected by Chase USA from the Bank Portfolio on the basis of criteria set
forth in the Agreement as applied on September 27, 1995 (the "Cut-off
Date") and, with respect to Additional Accounts, as of the related dates of
their designations (the "Trust Portfolio"). Pursuant to the Agreement,
Chase USA has the right, subject to certain limitations and conditions set
forth therein, to designate from time to time Additional Accounts and to
transfer to the Master Trust all Receivables of such Additional Accounts,
whether such Receivables are then existing or thereafter created. Any
Additional Accounts designated pursuant to the Agreement must be Eligible
Accounts as of the date Chase USA designates such accounts as Additional
Accounts. Chase USA will be required to designate Additional Accounts, to
the extent available, (a) to maintain the Transferor Interest so that
during any period of 30 consecutive days, the Transferor Interest averaged
over that period equals or exceeds the Minimum Transferor Interest for the
same period and (b) to maintain, for so long as certificates of any Series
(including the Certificates) remain outstanding, the sum of (i) the
aggregate amount of Principal Receivables and (ii) the principal amount on
deposit in the Excess Funding Account equal to or greater than the Minimum
Aggregate Principal Receivables. "Minimum Transferor Interest" for any
period means 7% of the sum of (i) the average Principal Receivables for
such period and (ii) the average principal amount on deposit in the Excess
Funding Account, the Principal Funding Account and any other account
specified from time to time pursuant to the Agreement or the Series
Supplement for such period; provided, however, that Chase USA may reduce
the Minimum Transferor Interest to not less than 2% of the sum of the
amounts specified in clauses (i) and (ii) above upon satisfaction of the
Rating Agency Condition and certain other conditions set forth in the
Agreement. "Minimum Aggregate Principal Receivables" means an amount equal
to the sum of the numerators used to calculate the Investor Percentages
with respect to the allocation of collections of Principal Receivables for
each Series then outstanding minus the amount on deposit in the Excess
Funding Account as of the date of determination; provided, that the Minimum
Aggregate Principal Receivables may be reduced to a lesser amount at any
time if the Rating Agency Condition is satisfied. Chase USA will convey the
Receivables then existing or thereafter created under such Additional
Accounts to the Master Trust. Further, pursuant to the Agreement, Chase USA
will have the right (subject to certain limitations and conditions) to
designate certain Accounts and to require the Master Trust Trustee to
reconvey all Receivables in such Accounts (the "Removed Accounts") to Chase
USA, whether such Receivables are then existing or thereafter created.
Throughout the term of the Master Trust, the Accounts from which the
Receivables arise will be the Accounts designated by Chase USA on the
Cut-Off Date plus any Additional Accounts minus any Removed Accounts. As of
the Cut-Off Date and, with respect to Receivables in Additional Accounts,
as of the related date of their conveyance to the Master Trust, and on the
date any new Receivables are created, Chase USA will represent and warrant
to the Master Trust that the Receivables meet the eligibility requirements
specified in the Agreement. See "Description of the
Certificates--Representations and Warranties" in the attached prospectus.
Delinquency and Loss Experience
The Bank considers an account delinquent if a payment due thereunder
is not received by the Bank by the date of the statement following the
statement on which the amount is first stated to be due.
Efforts to collect delinquent credit card receivables are made by the
Bank's account management department, collection agencies and attorneys
retained by the Bank. For a description of the Bank's collection practices
and policies, see "Chase USA's Credit Card Activities--Collection of
Delinquent Accounts" in the attached prospectus.
The Bank's policy is to charge off an account during the billing
cycle immediately following the cycle in which such account became one
hundred fifty (150) days delinquent. If the Bank receives notice that a
cardholder is the subject of a bankruptcy proceeding, the Bank charges off
such account upon the earlier of seventy-five (75) days after receipt of
such notice and the time period set forth in the previous sentence.
The following tables set forth the delinquency and loss experience as
of the dates and for each of the periods shown for the Master Trust
Portfolio.
<TABLE>
<CAPTION>
Delinquency Experience
Trust Portfolio
(dollars in thousands)
[ ] December 31,
-----------------------------------------------------------------------------------
199 1998 1997 1996
-------------------------- -------------------------- ------------------------ ---------------------------
Percentage of Percentage of Percentage of Percentage of
Number of Days Delinquent Total Delinquent Total Delinquent Total Delinquent Total
Delinquent(1) Amount Receivables Amount Receivables Amount Receivables Amount Receivables
- ---------------- ---------- ------------- ---------- ------------- ---------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
30 to 59 Days... $ $ % $ % $ %
60 to 89 Days...
90 Days or More.
---------- ------------- ---------- ------------- ---------- ------------- ---------- -------------
TOTAL..... $ % $ % $ %
========== ============= ========== ============= ========== ============= ========== =============
</TABLE>
- --------------------
(1)Number of days delinquent means the number of days after the first
billing date following the original billing date. For example, 30 days
delinquent means that no payment was received within 60 days after the
original billing date.
(2)Delinquencies are calculated as a percentage of outstanding receivables as
of the end of the month.
<TABLE>
<CAPTION>
Loss Experience
Trust Portfolio
(dollars in millions)
Year Ended December 31,
----------------------------
[ ] Months Ended
__________, 1999 1998 1997 1996
------------------- ------- ------- ------
<S> <C> <C> <C> <C>
Average Receivables Outstanding(1).... $ $ $
Gross Charge-Offs(2)(3)...............
Recoveries............................
Net Charge-Offs.......................
Net Charge-Offs as a Percentage of Average % % %
Receivables Outstanding............
</TABLE>
- --------------------
(1)Average Principal Receivables Outstanding is the average of the daily
receivable balance during the period indicated.
(2)Gross Charge-Offs shown include only the principal portion of charged-off
receivables.
(3)Gross Charge-Offs do not include the amount of any reductions in Average
Receivables Outstanding due to fraud, returned goods or customer
disputes. Gross Charge-Offs exclude charges relating to changes in Chase
USA's charge-off policies.
The increase in Net Charge-Offs as a Percentage of Average Principal
Receivables Outstanding for the Master Trust Portfolio for the years ended
December 31, 1997 and December 31, 1998, when compared with the year ended
December 31, 1996, reflects, among other factors, higher levels of personal
bankruptcies.
Interchange
Chase USA will be required, pursuant to the terms of the Agreement,
to transfer to the Master Trust a percentage of Interchange (as defined in
the attached prospectus). Interchange arising from the Bank Portfolio will
be allocated to the Master Trust based upon the percentage equivalent of
the same ratio which the aggregate amount of purchases of merchandise and
services relating to the Accounts made during such Monthly Period bears to
the aggregate amount of purchases of merchandise and services relating to
the Bank Portfolio with respect to such Monthly Period. Interchange
allocated to the Master Trust will be treated as collections of Finance
Charge Receivables. MasterCard and VISA may from time to time change the
amount of Interchange reimbursed to banks issuing their credit cards. Under
the circumstances described in this supplement, Interchange will be used to
pay a portion of the Investor Servicing Fee required to be paid on each
Transfer Date. See "Description of the Certificates--Servicing Compensation
and Payment of Expenses" and "Chase USA's Credit Card
Activities--Interchange" in the attached prospectus.
Recoveries
Chase USA is required, pursuant to the terms of the Agreement, to
transfer to the Master Trust a percentage of the recoveries on charged-off
accounts in the Bank Portfolio ("Recoveries") received each month. For each
Monthly Period, Recoveries will be allocated to the Master Trust on the
basis of the percentage equivalent of the ratio which the amount of
Receivables in Defaulted Accounts for such Monthly Period bears to the
amount of receivables in defaulted accounts recorded in the Bank Portfolio
for such Monthly Period. Recoveries allocated to the Master Trust will be
treated as collections of Finance Charge Receivables. See "--Delinquency
and Loss Experience" above and "Chase USA's Credit Card
Activities--Collection of Delinquent Accounts" in the attached prospectus.
The Receivables
General
The Receivables in the Master Trust Portfolio, as of the beginning of
the day on January 1, 1999, included approximately $_____ billion of
Principal Receivables and approximately $_____ billion of Finance Charge
Receivables. The Accounts had an average Principal Receivable balance of
$_____ and an average credit limit of $_____. The percentage of the
aggregate total Receivable balance to the aggregate total credit limit was
approximately %_____. The average age of the Accounts was approximately __
months. As of the beginning of the day on ________, cardholders whose
Accounts are included in the Master Trust Portfolio had billing addresses
in all 50 states and the District of Columbia. As of the beginning of the
day on _________ approximately __%of the Accounts were standard accounts
and __% were premium accounts, and the aggregate Principal Receivable
balances of standard accounts and premium accounts, as a percentage of the
total aggregate Principal Receivables, were approximately __% and __%,
respectively. As of the beginning of the day on _____, the Receivables in
the Master Trust Portfolio represented approximately __% of aggregate
receivables in the Bank Portfolio.
The following tables summarize the Master Trust Portfolio by various
criteria as of the beginning of the day on January 1, 1999. Because the
future composition of the Master Trust Portfolio may change over time,
these tables are not necessarily indicative of the composition of the
Master Trust Portfolio at any subsequent time.
<TABLE>
<CAPTION>
Composition by Account Balance
Trust Portfolio
(dollar amounts in millions)
Percentage of Percentage of
Number of Total Number Receivables Total
Account Balance Accounts of Accounts Outstanding Receivables
- -------------------------------- --------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Credit Balance.................. % $ %
No Balance......................
$0.01 to $1,500.00..............
$1,500.01 to $5,000.00..........
$5,000.01 to $10,000.00.........
$10,000.01 to $20,000.00........
Over $20,000.00.................
--------- ------------- ----------- -------------
TOTAL........................ 100% $ 100%
========= ============= =========== =============
</TABLE>
<TABLE>
<CAPTION>
Composition by Credit Limit
Trust Portfolio
(dollar amounts in millions)
Percentage of Percentage of
Number of Total Number Receivables Total
Account Balance Accounts of Accounts Outstanding Receivables
- -------------------------------- --------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
$0.00.......................... % $ %
$0.01 to $1,500.00.............
$1,500 to $5,000.00............
$5,000.01 to $10,000.00........
Over $10,000.00................
--------- ------------- ----------- -------------
TOTAL....................... 100% $ 100%
========= ============= =========== =============
</TABLE>
<TABLE>
<CAPTION>
Composition by Period of Delinquency
Trust Portfolio
(dollar amounts in millions)
Percentage of Percentage of
Number of Total Number Receivables Total
Payment Status Accounts of Accounts Outstanding Receivables
- -------------------------------- --------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Current to 29 days delinquent..... % $ %
30 to 59 days delinquent..........
60 to 89 days delinquent..........
90 to 119 days delinquent.........
120 days delinquent or more.......
--------- ------------- ----------- -------------
TOTAL.......................... 100.00% $ 100.00%
========= ============= =========== =============
</TABLE>
<TABLE>
<CAPTION>
Composition by Account Seasoning(1)
Trust Portfolio
(dollar amounts in millions)
Percentage of Percentage of
Number of Total Number Receivables Total
Account Age Accounts of Accounts Outstanding Receivables
- -------------------------------- --------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Not More than 6 Months............ % $ %
Over 6 Months to 12 Months........
Over 12 Months to 24 Months.......
Over 24 Months to 36 Months.......
Over 36 Months to 48 Months.......
Over 48 Months to 60 Months.......
Over 60 Months to 120 Months......
Over 120 Months...................
--------- ------------- ----------- -------------
TOTAL........................... 100.00% $ 100.00%
========= ============= =========== =============
</TABLE>
(1)Account age is determined by the number of months elapsed since the
account was originally opened, except that with respect to the Chemical
Bank Portfolio accounts which were converted from standard to premium
accounts, account age is determined by the number of months since the
account was converted.
<TABLE>
<CAPTION>
Geographic Distribution of Accounts
Trust Portfolio
(dollar amounts in millions)
Percentage of
Number of Total Number Receivables Total
State Accounts of Accounts Outstanding Receivables
- ---------------------------------- --------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
California........................ % $ %
New York..........................
Texas.............................
Florida...........................
New Jersey........................
Illinois..........................
Ohio..............................
Massachusetts.....................
Pennsylvania......................
Michigan..........................
Virginia..........................
Maryland..........................
Indiana...........................
Georgia...........................
Connecticut.......................
North Carolina....................
Washington........................
Missouri..........................
Tennessee.........................
Minnesota.........................
Arizona...........................
Wisconsin.........................
Louisiana.........................
Colorado..........................
Alabama...........................
Kentucky..........................
Oregon............................
Oklahoma..........................
South Carolina....................
Nevada............................
Arkansas..........................
Kansas............................
Rhode Island......................
Mississippi.......................
New Hampshire.....................
Iowa..............................
New Mexico........................
Hawaii............................
Maine.............................
Nebraska..........................
Utah..............................
West Virginia.....................
Vermont...........................
Idaho.............................
Delaware..........................
Washington, D.C...................
Montana...........................
Alaska............................
Wyoming...........................
South Dakota......................
North Dakota......................
Other.............................
--------- ------------ ----------- -------------
TOTAL $ 100.00% $ 100.00%
========= ============ =========== =============
</TABLE>
Maturity Considerations
The Agreement provides that Class A Certificateholders will not
receive payments of principal until the ________ Distribution Date (the
"Class A Scheduled Payment Date"), or earlier in the event of a Pay Out
Event which results in the commencement of the Rapid Amortization Period.
The Agreement also provides that Class B Certificateholders will not
receive payments of principal until the ________ Distribution Date (the
"Class B Scheduled Payment Date") or earlier in the event of a Pay Out
Event which results in the commencement of the Rapid Amortization Period
(in either case, only after the Class A Investor Interest has been paid in
full). The Class B Certificate-holders will not begin to receive payments
of principal until the final principal payment on the Class A Certificates
has been made.
Controlled Accumulation Period
The Controlled Accumulation Period with respect to the Certificates
is scheduled to begin at the close of business on the last day of the
________ Monthly Period (the "Controlled Accumulation Period"). Subject to
the conditions set forth in this supplement under "Description of the
Certificates--Postponement of Controlled Accumulation Period," the day on
which the Revolving Period ends and the Controlled Accumulation Period
begins may be delayed to no later than the close of business on the last
day of the ________ Monthly Period. On each Transfer Date during the
Controlled Accumulation Period prior to the payment of the Class A Investor
Interest in full, an amount equal to, for each Monthly Period, the least of
(a) the Available Investor Principal Collections, (b) the "Controlled
Deposit Amount" for such Monthly Period, which is equal to the sum of the
Controlled Accumulation Amount for such Monthly Period and the Accumulation
Shortfall, if any, for such Monthly Period and (c) the Class A Adjusted
Investor Interest prior to any deposits on such day, will be deposited in
the Principal Funding Account until the principal amount on deposit in the
Principal Funding Account (the "Principal Funding Account Balance") equals
the Class A Investor Interest. After the Class A Investor Interest has been
paid in full, or following the first Transfer Date upon which the Principal
Funding Account Balance has increased to the amount of the Class A Investor
Interest, Available Investor Principal Collections, to the extent required,
will be distributed to the Class B Certificateholders on each Distribution
Date beginning, during the Controlled Accumulation Period, on the Class B
Scheduled Payment Date, until the earlier of the date the Class B Investor
Interest has been paid in full and the Series 1999-_ Termination Date.
After the Class A Investor Interest and the Class B Investor Interest have
each been paid in full, Available Investor Principal Collections, to the
extent required, will be distributed to the Collateral Interest Holder on
each Transfer Date (or, with respect to the Series 1999-_ Termination Date,
on the Series 1999-_ Termination Date) until the earlier of the date the
Collateral Interest has been paid in full and the Series 1999-_ Termination
Date. Amounts in the Principal Funding Account are expected to be available
to pay the Class A Investor Interest on the Class A Scheduled Payment Date.
After the payment of the Class A Investor Interest in full, Available
Investor Principal Collections are expected to be available to pay the
Class B Investor Interest on the Class B Scheduled Payment Date. Although
it is anticipated that collections of Principal Receivables will be
available on each Transfer Date during the Controlled Accumulation Period
to make a deposit of the applicable Controlled Deposit Amount and that the
Class A Investor Interest will be paid to the Class A Certificateholders on
the Class A Scheduled Payment Date and the Class B Investor Interest will
be paid to the Class B Certificateholders on the Class B Scheduled Payment
Date, respectively, no assurance can be given in this regard. If the amount
required to pay the Class A Investor Interest or the Class B Investor
Interest in full is not available on the Class A Scheduled Payment Date or
the Class B Scheduled Payment Date, respectively, a Pay Out Event will
occur and the Rapid Amortization Period will commence.
Rapid Amortization Period
If a Pay Out Event occurs, the Rapid Amortization Period will
commence and any amounts on deposit in the Principal Funding Account will
be paid to the Class A Certificateholders on the Distribution Date in the
month following the commencement of the Rapid Amortization Period. In
addition, to the extent that the Class A Investor Interest has not been
paid in full, the Class A Certificateholders will be entitled to monthly
payments of principal equal to the amount of Available Investor Principal
Collections until the earlier of the date on which the Class A Certificates
have been paid in full and the Series 1999-_ Termination Date. After the
Class A Certificates have been paid in full and if the Series 1999-_
Termination Date has not occurred, Available Investor Principal
Collections will be paid to the Class B Certificates on each
Distribution Date until the earlier of the date on which the Class B
Certificates have been paid in full and the Series 1999-_ Termination Date.
Pay out Events
A Pay Out Event occurs, either automatically or after specified
notice, upon (a) the failure of Chase USA to make certain payments or
transfers of funds for the benefit of the Certificateholders within the
time periods stated in the Agreement, (b) material breaches of certain
representations, warranties or covenants of Chase USA, (c) certain
insolvency events involving Chase USA, (d) a reduction of the average of
the Portfolio Yields for any three consecutive Monthly Periods to a rate
that is less than the average of the Base Rates for such period, (e) the
Master Trust becoming subject to regulation as an "investment company"
within the meaning of the Investment Company Act of 1940, as amended, (f)
the failure of Chase USA to convey Receivables arising under Additional
Accounts or Participations to the Master Trust when required by the
Agreement, (g) the occurrence of a Servicer Default which would have a
material adverse effect on the Certificateholders, (h) insufficient funds
in the Distribution Account to pay the Class A Investor Interest or the
Class B Investor Interest in full on the Class A Scheduled Payment Date or
the Class B Scheduled Payment Date, respectively, or (i) Chase USA becomes
unable for any reason to transfer Receivables to the Master Trust in
accordance with the provisions of the Agreement. See "Description of the
Certificates--Pay Out Events" in this supplement. The term "Base Rate"
means, with respect to any Monthly Period, the annualized percentage
equivalent of a fraction, the numerator of which is the sum of the Class A
Monthly Interest, the Class B Monthly Interest and the Collateral Monthly
Interest, each for the related Interest Period, and the Investor Servicing
Fee for such Monthly Period, and the denominator of which is the Investor
Interest as of the close of business on the last day of such Monthly
Period. The term "Portfolio Yield" means, with respect to any Monthly
Period, the annualized percentage equivalent of a fraction, the numerator
of which is the sum of collections of Finance Charge Receivables, Principal
Funding Investment Proceeds and amounts withdrawn from the Reserve Account
deposited into the Finance Charge Account and allocable to the Certificates
and the Collateral Interest for such Monthly Period, calculated on a cash
basis after subtracting the Investor Default Amount for such Monthly
Period, and the denominator of which is the Investor Interest as of the
close of business on the last day of such Monthly Period.
Payment Rates
The following table sets forth the highest and lowest cardholder
monthly payment rates for the Master Trust Portfolio during any month in
the period shown and the average cardholder monthly payment rates for all
months during the periods shown, in each case calculated as a percentage of
total opening monthly account balances during the periods shown. Payment
rates shown in the table are based on amounts which would be deemed
payments of Principal Receivables and Finance Charge Receivables with
respect to the Accounts.
Cardholder Monthly Payment Rates
Trust Portfolio
_____ Months
Ended
,1999 Year Ended December 31,
---------------- ----------------------------
1998 1997 1996
---------------- ------- ------- --------
Highest Month........ % % %
Lowest Month......... % % %
Monthly Average (1).. % % %
- --------------------
(1) Monthly Averages shown are expressed as an arithmetic average of the
payment rate for each month during the period indicated, each such
month's payment rate representing total payments collected during the
given month expressed as a percentage of total outstanding trust
receivables at the beginning of the month.
The Bank generally determines the minimum monthly payment with
respect to the accounts by multiplying the combined new balance of
purchases and cash advances, less any disputed amounts, by 2.000% (1/50
expressed as a percentage). If the amount so calculated is less than
$10.00, it is increased to $10.00. The sum of such amount and any past due
amounts equals the minimum payment amount. The minimum payment amount,
however, is never more than the new balance.
There can be no assurance that the cardholder monthly payment rates
in the future will be similar to the historical experience set forth above.
In addition, the amount of collections of Receivables may vary from month
to month due to seasonal variations, general economic conditions and
payment habits of individual cardholders. There can be no assurance that
collections of Principal Receivables with respect to the Master Trust
Portfolio will be similar to the historical experience set forth above or
that deposits into the Principal Funding Account or the Distribution
Account, as applicable, will be made in accordance with the applicable
Controlled Accumulation Amount. If a Pay Out Event occurs, the average life
of the Certificates could be significantly reduced or increased.
Because there may be a slowdown in the payment rate below the payment
rates used to determine the Controlled Accumulation Amounts, or a Pay Out
Event may occur which would initiate the Rapid Amortization Period, there
can be no assurance that the actual number of months elapsed from the date
of issuance of the Class A Certificates and the Class B Certificates to
their respective final Distribution Dates will equal the expected number of
months. As described in this supplement under "Description of the
Certificates--Postponement of Controlled Accumulation Period," the Servicer
may shorten the Controlled Accumulation Period. There can be no assurance
that there will be sufficient time to accumulate all amounts necessary to
pay the Class A Investor Interest and the Class B Investor Interest on the
Class A Scheduled Payment Date and the Class B Scheduled Payment Date,
respectively. See "Certificate Ratings" and "Maturity Considerations" in
the attached prospectus.
Receivable Yield Considerations
The gross revenues from finance charges and fees collected from
Accounts in the Master Trust Portfolio for each of the three calendar years
1998, 1997 and 1996 are set forth in the following table. The historical
yield figures in the following table are calculated on a cash collections
basis. Yield will be affected by numerous factors, including the monthly
periodic finance charges on the Receivables, the amount of the annual
membership fees and other fees, changes in the delinquency rate on the
Receivables and the percentage of cardholders who pay their balances in
full each month and do not incur monthly periodic finance charges.
Additionally, the monthly yield on a cash basis will be affected by the
number of collection days in such month. See "Risk Factors" in this
supplement.
<TABLE>
<CAPTION>
Portfolio Yield
Trust Portfolio
(Dollars in Millions)
__ Months
Ended Year Ended December 31,
________, (dollar amounts in millions)
1999 1998 1997 1996
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Finance Charges and Fees Billed (1).... $ $ $
Average Principal Receivables $ $ $
Outstanding (2)........................
Yield from Finance charges and Fees % % %
Billed (3)(4)..........................
</TABLE>
- --------------------
(1)Finance Charges and Fees Billed include periodic and minimum finance
charges, annual membership fees, late charges, cash advance transaction
fees, Interchange, overlimit fees and fees for returned checks and
Interchange.
(2)Average Principal Receivables Outstanding is the average of the
beginning of the month balance of trust principal receivables
outstanding.
(3)Yield from Finance Charges and Fees Billed is calculated as a percentage
of Average Principal Receivables Outstanding.
(4)The percentage reflected for the ______ months ended ________, 1999 is
an annualized figure.
Revenues vary for each account based on the type and volume of
activity for each account. See "The Chase Credit Card Master Trust
Portfolio" in this supplement and "Chase USA's Credit Card Activities" in
the attached prospectus.
Use of Proceeds
The net proceeds from the sale of the Certificates will be (i) if so
required, used to make an initial deposit to an account for the benefit of
the Collateral Interest Holder and (ii) paid to Chase USA. Chase USA will
use such balance of the net proceeds for its general corporate purposes.
Description of the Certificates
The Certificates will be issued pursuant to the Agreement, and the
Series 1999-_ Supplement. Pursuant to the Agreement, Chase USA and the
Master Trust Trustee may execute further Series Supplements in order to
issue additional Series. The following summary of the Certificates does not
purport to be complete and is subject to, and is qualified in its entirety
by reference to, all of the provisions of the Agreement and the Series
1999-_ Supplement. See "Description of the Certificates" in the attached
prospectus for additional information concerning the Certificates and the
Agreement.
General
The Certificates will represent the right to receive certain payments
from the assets of the Master Trust, including the right to the applicable
allocation percentage of all cardholder payments on the Receivables in the
Master Trust. Each Class A Certificate represents the right to receive
payments of interest at the Class A Certificate Rate for the related
Interest Period and payments of principal on the Class A Scheduled Payment
Date or, to the extent of the Class A Investor Interest, on each
Distribution Date during the Rapid Amortization Period, funded from
collections of Finance Charge Receivables and Principal Receivables,
respectively, allocated to the Class A Investor Interest and certain other
available amounts. The "Interest Period" with respect to any Distribution
Date, will be the period from and including the previous Distribution Date
through the day preceding such Distribution Date, except the initial
Interest Period will be the period from and including the Closing Date
through _____, 1999. Each Class B Certificate represents the right to
receive payments of interest at the Class B Certificate Rate, and payments
of principal on the Class B Scheduled Payment Date or, to the extent of the
Class B Investor Interest, on each Distribution Date during the Rapid
Amortization Period after the Class A Certificates have been paid in full,
funded from collections of Finance Charge Receivables and Principal
Receivables, respectively, allocated to the Class B Investor Interest and
certain other available amounts. In addition to representing the right to
payment from collections of Finance Charge Receivables and Principal
Receivables, each Class A Certificate also represents the right to receive
payments from Excess Spread, funds on deposit in the Principal Funding
Account and the Reserve Account and certain investment earnings thereon,
Reallocated Principal Collections and Shared Principal Collections and
certain other available amounts (including, under certain circumstances,
amounts on deposit in the Excess Funding Account). In addition to
representing the right to payment from collections of Finance Charge
Receivables and Principal Receivables, each Class B Certificate also
represents the right to receive payments from Excess Spread, Reallocated
Collateral Principal Collections and Shared Principal Collections and
certain other available amounts (including, under certain circumstances,
amounts on deposit in the Excess Funding Account). Payments of interest and
principal will be made, to the extent of funds available therefor, on each
Distribution Date on which such amounts are due to Certificateholders in
whose names the Certificates were registered on the last business day of
the calendar month preceding such Distribution Date (each, a "Record
Date").
Chase USA initially will own the "Transferor Certificate." The
Transferor Certificate will represent the right to receive certain payments
from the assets of the Master Trust, including the right to a percentage
(the "Transferor Percentage") of all cardholder payments on the Receivables
in the Master Trust equal to 100% minus the sum of the applicable Investor
Percentages for all Series of certificates then outstanding. The Transferor
Certificate may be transferred in whole or in part subject to certain
limitations and conditions set forth in the Agreement. See "Description of
the Certificates--Certain Matters Regarding the Transferor and the
Servicer" in the attached prospectus.
Beneficial interests in the Certificates will be offered for purchase
in minimum denominations of $1,000 and integral multiples thereof.
Application has been made to list the Certificates on the Luxembourg
Stock Exchange.
The Class A Certificates and the Class B Certificates initially will
be represented by certificates registered in the name of Cede, as nominee
of The Depository Trust Company ("DTC") and will be deposited on the
Closing Date. Unless and until Definitive Certificates are issued, all
references herein to actions by Class A Certificateholders and/or Class B
Certificateholders shall refer to actions taken by DTC upon instructions
from DTC Participants and all references herein to distributions, notices,
reports and statements to Class A Certificateholders and/or Class B
Certificateholders shall refer to distributions, notices, reports and
statements to DTC or Cede, as the registered holder of the Class A
Certificates and the Class B Certificates, as the case may be, for
distribution to Certificate Owners in accordance with DTC procedures. In
addition, so long as the Certificates are listed on the Luxembourg Stock
Exchange, all such notices, reports and statements which are made available
to DTC or Cede, shall also be made available to the Banque Generale du
Luxembourg, S.A., as intermediary agent in Luxembourg for distribution upon
request to Certificate Owners in accordance with the procedures of the
Luxembourg Stock Exchange. Certificateholders may hold their Certificates
through DTC in the United States ("U.S.") or Cedelbank, societe anonyme
("Cedelbank") or the Euroclear System ("Euroclear") in Europe if they are
participants of such systems, or indirectly through organizations that are
participants in such systems. Cede, as nominee for DTC, will hold the
global Certificates. Cedelbank and Euroclear will hold omnibus positions on
behalf of the Cedelbank Customers and the Euroclear Participants,
respectively, through customers' securities accounts in Cedelbank's and
Euroclear's names on the books of their respective Depositaries which in
turn will hold such positions in customers' securities accounts in the
Depositaries' names on the books of DTC. See "Description of the
Certificates--General," "--Book-Entry Registration" and "--Definitive
Certificates" in the attached prospectus.
The Series 1999-_ Supplement and the Certificates will provide that
any money paid by the Master Trust to any Paying Agent for the payment of
principal or interest which remains unclaimed for two years after such
principal or interest shall have become due and payable will be repaid to
the Master Trust, and thereafter any Certificateholder may look only to the
Master Trust for payment thereof. Certificateholders, by purchase of their
Certificates, will be deemed to have consented to an amendment to the
Agreement to permit, among other things, the assignment from CMB to Chase
USA and assumption by Chase USA from CMB of all of its servicing
obligations thereunder.
Exchanges
The Transferor Certificate is transferable only as provided in the
Agreement. The Agreement also provides that the holder of the Transferor
Certificate may tender the Transferor Certificate to the Master Trust
Trustee in exchange for one or more new Series and a reissued Transferor
Certificate as described under "Description of the Certificates--Exchanges"
in the attached prospectus.
Status of the Certificates
Upon issuance, the Certificates will rank pari passu with all other
outstanding Series. Payments on the Class B Certificates are subordinated
to payments on the Class A Certificates as described herein.
Transfer and Exchange of Definitive Certificates
Upon the occurrence of any of the events described in the first
paragraph under "Description of the Certificates--Definitive Certificates"
in the attached prospectus, whereupon the Certificates shall be issued as
Definitive Certificates, if the Certificates are then listed on the
Luxembourg Stock Exchange, Certificate Owners holding Definitive
Certificates will be able to transfer and exchange Definitive Certificates
at the office or agency maintained by the Transfer Agent for such purpose
in Luxembourg.
Interest Payments
Interest will accrue on the Class A Certificates at the Class A
Certificate Rate and on the Class B Certificates at the Class B Certificate
Rate from _____, 1999 (the "Closing Date"). Interest will be distributed to
Certificateholders on _____, 1999 and on the 15th day of each following
month (or, if such 15th day is not a business day, the next succeeding
business day)(each, a "Distribution Date"). Interest payments on the Class
A Certificates and the Class B Certificates on any Distribution Date will
be calculated on the outstanding principal balance of the Class A
Certificates and the outstanding principal balance of the Class B
Certificates, as applicable, as of the preceding Record Date, except that
interest for the first Distribution Date will accrue at the applicable
Certificate Rate on the initial outstanding principal balance of the Class
A Certificates and the initial outstanding principal balance of the Class B
Certificates, as applicable, from the Closing Date. Interest due on the
Certificates but not paid on any Distribution Date will be payable on the
next succeeding Distribution Date together with additional interest (the
"Additional Interest") on such amount at the applicable Certificate Rate
plus 2% per annum (such amount with respect to the Class A Certificates,
the "Class A Additional Interest," and such amount with respect to the
Class B Certificates, the "Class B Additional Interest"). Additional
Interest shall accrue on the same basis as interest on the Certificates,
and shall accrue from the Distribution Date on which such overdue interest
first became due, to but excluding the Distribution Date on which such
Additional Interest is paid. Interest payments on the Class A Certificates
on any Distribution Date will be paid from Class A Available Funds for the
related Monthly Period, and to the extent such Class A Available Funds are
insufficient to pay such interest, from Excess Spread and Reallocated
Principal Collections (to the extent available) for such Monthly Period.
Interest payments on the Class B Certificates on any Distribution Date will
be paid from Class B Available Funds for the related Monthly Period, and to
the extent such Class B Available Funds are insufficient to pay such
interest, from Excess Spread and Reallocated Collateral Principal
Collections (to the extent available) remaining after certain other
payments have been made with respect to the Class A Certificates.
"Class A Available Funds" means, with respect to any Monthly Period,
an amount equal to the sum of (a) the Class A Floating Allocation of
collections of Finance Charge Receivables allocated to the Investor
Interest with respect to such Monthly Period (excluding the portion of
collections of Finance Charge Receivables attributable to Interchange that
is allocable to Servicer Interchange), (b) Principal Funding Investment
Proceeds, if any, with respect to the related Transfer Date and (c)
amounts, if any, to be withdrawn from the Reserve Account which are
required to be included in Class A Available Funds pursuant to the Series
1999-_ Supplement with respect to such Transfer Date. "Class B Available
Funds" means, with respect to any Monthly Period, an amount equal to the
Class B Floating Allocation of collections of Finance Charge Receivables
allocated to the Investor Interest with respect to such Monthly Period
(excluding the portion of collections of Finance Charge Receivables
attributable to Interchange that is allocable to Servicer Interchange).
The Class A Certificates will bear interest from the Closing Date
through _____, 1999, and with respect to each Interest Period thereafter,
at a rate of ____% per annum above LIBOR as determined on the related LIBOR
Determination Date with respect to each period (the "Class A Certificate
Rate"). The Class B Certificates will bear interest from the Closing Date
through _____, 1999, and with respect to each Interest Period thereafter,
at a rate of ____% per annum above LIBOR prevailing on the related LIBOR
Determination Date with respect to each such period (the "Class B
Certificate Rate").
The Master Trust Trustee will determine LIBOR on _____, 1999 for the
period from the Closing Date through _____, 1999 and for each Interest
Period thereafter, on the second business day prior to the Distribution
Date on which such Interest Period commences (each, a "LIBOR Determination
Date"). For the purposes of calculating LIBOR, a business day is any
business day on which dealings in deposits in United States dollars are
transacted in the London interbank market.
"LIBOR" means, as of any LIBOR Determination Date, the rate for
deposits in United States dollars for a period equal to the relevant
Interest Period which appears on Telerate Page 3750 as of 11:00 a.m.,
London time, on such date. If such rate does not appear on Telerate Page
3750, the rate for that LIBOR Determination Date will be determined on the
basis of the rates at which deposits in United States dollars are offered
by the Reference Banks at approximately 11:00 a.m., London time, on that
day to prime banks in the London interbank market for a period equal to the
relevant Interest Period. The Master Trust Trustee will request the
principal office of each of the Reference Banks to provide a quotation of
its rate. If at least two such quotations are provided, the rate for that
LIBOR Determination Date will be the arithmetic mean of the quotations. If
fewer than two quotations are provided as requested, the rate for that
LIBOR Determination Date will be the arithmetic mean of the rates quoted by
major banks in New York City, as selected by the Servicer, at approximately
11:00 a.m., New York City time, on that day for loans in United States
dollars to leading European banks for a period equal to the relevant
Interest Period.
"Telerate Page 3750" means the display page currently so designated
on the Dow Jones Telerate Service (or such other page as may replace that
page on that service for the purpose of displaying comparable rates or
prices).
"Reference Banks" means four major banks in the London interbank
market selected by the Servicer.
The Class A Certificate Rate and the Class B Certificate Rate
applicable to the current and immediately preceding Interest Period may be
obtained by telephoning the Master Trust Trustee at its Corporate Trust
Office at (212) 815-5286. The Master Trust Trustee will cause the Class A
Certificate Rate and the Class B Certificate Rate as well as the amount of
Class A Monthly Interest and Class B Monthly Interest applicable to an
Interest Period to be provided to the Luxembourg Stock Exchange as soon as
possible after its determination but in no event later than the first day
of such Interest Period. Such information will also be included in a
statement to the certificateholders of record prepared by the Servicer. See
"Description of the Certificates--Reports to Certificateholders" in the
attached prospectus.
Interest on the Certificates will be calculated on the basis of the
actual number of days in the Interest Period and a 360-day year. Each
Distribution Date will be communicated to the Luxembourg Stock Exchange.
Principal Payments
On each Transfer Date relating to the period which begins on the
Closing Date and ends at the commencement of the Controlled Accumulation
Period or, if earlier, the Rapid Amortization Period (the "Revolving
Period"), unless a reduction in the Required Collateral Interest has
occurred, collections of Principal Receivables allocable to the Investor
Interest will, subject to certain limitations, including the allocation of
any Reallocated Principal Collections with respect to the related Monthly
Period to pay the Class A Required Amount and the Class B Required Amount,
be treated as Shared Principal Collections or, under certain circumstances,
deposited into an excess funding account (the "Excess Funding Account").
On each Transfer Date relating to the Controlled Accumulation Period,
the Master Trust Trustee will deposit in the Principal Funding Account an
amount equal to the least of (a) Available Investor Principal Collections
with respect to such Transfer Date, (b) the applicable Controlled Deposit
Amount and (c) the Class A Adjusted Investor Interest prior to any deposits
on such date. Amounts in the Principal Funding Account will be paid to the
Class A Certificateholders on the Class A Scheduled Payment Date. After the
Class A Investor Interest has been paid in full, on each Transfer Date
during the Controlled Accumulation Period, amounts equal to the lesser of
(a) Available Investor Principal Collections with respect to such Transfer
Date and (b) the Class B Investor Interest will be deposited in the
Distribution Account for distribution to the Class B Certificateholders
until the Class B Investor Interest has been paid in full. Such amounts in
the Distribution Account will be paid to the Class B Certificateholders on
the Class B Scheduled Payment Date. On each Transfer Date, if a reduction
in the Required Collateral Interest has occurred, a portion of collections
of Principal Receivables allocable to the Investor Interest will be applied
in accordance with the loan agreement among the Master Trust Trustee, Chase
USA, the Servicer and the Collateral Interest Holder (the "Loan Agreement")
to reduce the Collateral Interest to the Required Collateral Interest.
During the Controlled Accumulation Period until the final principal payment
to the Class B Certificateholders, the portion of Available Investor
Principal Collections not applied to Class A Monthly Principal, Class B
Monthly Principal or Collateral Monthly Principal on a Transfer Date will
generally be treated as Shared Principal Collections or, under certain
circumstances, deposited into the Excess Funding Account.
"Available Investor Principal Collections" means, with respect to any
Monthly Period, an amount equal to the sum of (a) (i) collections of
Principal Receivables received during such Monthly Period and certain other
amounts allocable to the Investor Interest, minus (ii) the amount of
Reallocated Principal Collections with respect to such Monthly Period used
to fund the Required Amount, plus (b) any Shared Principal Collections with
respect to other Series that are allocated to Series 1999-_.
"Required Amount" for any Monthly Period shall mean the sum of (a)
the Class A Required Amount and (b) the Class B Required Amount, each for
such Monthly Period.
On each Distribution Date during the Rapid Amortization Period, the
Class A Certificateholders will be entitled to receive Available Investor
Principal Collections for the related Monthly Period in an amount up to the
Class A Investor Interest until the earlier of the date the Class A
Certificates are paid in full and the Series 1999-_ Termination Date. After
payment in full of the Class A Investor Interest, the Class B
Certificateholders will be entitled to receive on each Distribution Date
during the Rapid Amortization Period Available Investor Principal
Collections until the earlier of the date the Class B Certificates are paid
in full and the Series 1999-_ Termination Date. After payment in full of
the Class B Investor Interest, the Collateral Interest Holder will be
entitled to receive on each Transfer Date (other than the Transfer Date
prior to the Series 1999-_ Termination Date) and on the Series 1999-_
Termination Date, Available Investor Principal Collections until the
earlier of the date the Collateral Interest is paid in full and the Series
1999-_ Termination Date. See "--Pay Out Events" below for a discussion of
events which might lead to the commencement of the Rapid Amortization
Period.
Postponement of Controlled Accumulation Period
Upon written notice to the Master Trust Trustee, the Servicer may
elect to postpone the commencement of the Controlled Accumulation Period,
and extend the length of the Revolving Period, subject to certain
conditions including those set forth below. The Servicer may make such
election only if the Accumulation Period Length (determined as described
below) is less than twelve months. On the ________ Determination Date and
on each Determination Date thereafter, until the Controlled Accumulation
Period begins, the Servicer will determine the "Accumulation Period
Length," which is the number of whole months expected to be required to
fund the Principal Funding Account up to the initial outstanding principal
amount of the Class A Certificates no later than the Class A Scheduled
Payment Date, based on (a) the expected monthly collections of Principal
Receivables expected to be distributable to the certificateholders of all
Series (excluding certain other Series), assuming a principal payment rate
no greater than the lowest monthly principal payment rate on the
Receivables for the preceding twelve months and (b) the amount of principal
expected to be distributable to certificateholders of all Series (excluding
certain other Series) which are not expected to be in their revolving
periods during the Controlled Accumulation Period. If the Accumulation
Period Length is less than twelve months, the Servicer may, at its option,
postpone the commencement of the Controlled Accumulation Period such that
the number of months included in the Controlled Accumulation Period will be
equal to or exceed the Accumulation Period Length. The effect of the
foregoing calculation is to permit the reduction of the length of the
Controlled Accumulation Period based on the investor interests of certain
other Series which are scheduled to be in their revolving periods during
the Controlled Accumulation Period and on increases in the principal
payment rate occurring after the Closing Date. The length of the Controlled
Accumulation Period will not be determined to be less than one month.
Subordination
The Class B Certificates and the Collateral Interest will be
subordinated to the extent necessary to fund certain payments with respect
to the Class A Certificates. In addition, the Collateral Interest will be
subordinated to the extent necessary to fund certain payments with respect
to the Class B Certificates. Certain principal payments otherwise allocable
to the Class B Certificateholders may be reallocated to cover amounts in
respect of the Class A Certificates and the Class B Investor Interest may
be reduced if the Collateral Interest is equal to zero. Similarly, certain
principal payments allocable to the Collateral Interest may be reallocated
to cover amounts in respect of the Class A Certificates and the Class B
Certificates and the Collateral Interest may be reduced. To the extent the
Class B Investor Interest is reduced, the percentage of collections of
Finance Charge Receivables allocated to the Class B Certificates in
subsequent Monthly Periods will be reduced. Moreover, to the extent the
amount of such reduction in the Class B Investor Interest is not
reimbursed, the amount of principal and interest distributable to the Class
B Certificateholders will be reduced. No principal will be paid to the
Class B Certificateholders until the Class A Investor Interest is paid in
full. See "--Allocation Percentages," "--Reallocation of Cash Flows" and
"--Application of Collections--Excess Spread" below.
Allocation Percentages
Pursuant to the Agreement, with respect to each Monthly Period the
Servicer will allocate among the Investor Interest, the investor interest
for all other Series issued and outstanding and the interest of Chase USA
(the "Transferor Interest"), all amounts collected on Finance Charge
Receivables, all amounts collected on Principal Receivables and all Default
Amounts with respect to such calendar month (each such month, a "Monthly
Period").
Collections of Finance Charge Receivables and Default Amounts at any
time and collections of Principal Receivables during the Revolving Period
will be allocated to the Investor Interest based on the Floating Investor
Percentage. The "Floating Investor Percentage" means, with respect to any
Monthly Period, the percentage equivalent of a fraction, the numerator of
which is the Adjusted Investor Interest as of the close of business on the
last day of the preceding Monthly Period (or with respect to the first
Monthly Period, the initial Investor Interest) and the denominator of which
is the greater of (x) the sum of (A) the aggregate amount of Principal
Receivables as of the close of business on the last day of the preceding
Monthly Period (or with respect to the first Monthly Period, the aggregate
amount of Principal Receivables as of the close of business on the day
immediately preceding the Closing Date) and (B) the principal amount on
deposit in the Excess Funding Account as of the close of business on such
day and (y) the sum of the numerators used to calculate the Investor
Percentages for allocations with respect to Finance Charge Receivables,
Default Amounts or Principal Receivables, as applicable, for all
outstanding Series on such date of determination; provided, however, that
with respect to any Monthly Period in which an addition of Accounts occurs
or in which a removal of Accounts occurs, the amount in clause (x)(A) above
shall be (i) the aggregate amount of Principal Receivables in the Master
Trust as of the close of business on the last day of the prior Monthly
Period for the period from and including the first day of such Monthly
Period to but excluding the related date of the first addition to the
Master Trust of Receivables in certain designated Accounts ("Addition
Date") or the date of the removal from the Master Trust of Receivables in
certain designated Accounts (the "Removal Date") and (ii) the aggregate
amount of Principal Receivables in the Master Trust as of the beginning of
the day on the related Addition Date or Removal Date after adjusting for
the aggregate amount of Principal Receivables added to or removed from the
Master Trust on the related Addition Date or Removal Date, as the case may
be, for the period from and including the related Addition Date or Removal
Date to and including the last day of such Monthly Period. The amounts so
allocated will be further allocated among the Class A Certificateholders,
Class B Certificateholders and the Collateral Interest Holder based on the
Class A Floating Allocation, the Class B Floating Allocation and the
Collateral Floating Allocation, respectively. The "Class A Floating
Allocation" means, with respect to any Monthly Period, the percentage
equivalent (which percentage shall never exceed 100%) of a fraction, the
numerator of which is equal to the Class A Adjusted Investor Interest as of
the close of business on the last day of the preceding Monthly Period (or
with respect to the first Monthly Period, as of the Closing Date) and the
denominator of which is equal to the Adjusted Investor Interest as of the
close of business on such day. The "Class B Floating Allocation" means,
with respect to any Monthly Period, the percentage equivalent (which
percentage shall never exceed 100%) of a fraction, the numerator of which
is equal to the Class B Investor Interest as of the close of business on
the last day of the preceding Monthly Period (or with respect to the first
Monthly Period, as of the Closing Date) and the denominator of which is
equal to the Adjusted Investor Interest as of the close of business on such
day. The "Collateral Floating Allocation" means, with respect to any
Monthly Period, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is equal to the
Collateral Interest as of the close of business on the last day of the
preceding Monthly Period (or with respect to the first Monthly Period, as
of the Closing Date) and the denominator of which is equal to the Adjusted
Investor Interest as of the close of business on such day.
Collections of Principal Receivables during the Controlled
Accumulation Period and the Rapid Amortization Period will be allocated to
the Investor Interest based on the Fixed Investor Percentage. The "Fixed
Investor Percentage" means, with respect to any Monthly Period, the
percentage equivalent of a fraction, the numerator of which is the Investor
Interest as of the close of business on the last day of the Revolving
Period and the denominator of which is the greater of (x) the sum of (A)
the aggregate amount of Principal Receivables as of the close of business
on the last day of the prior Monthly Period and (B) the principal amount on
deposit in the Excess Funding Account as of the close of business on such
day and (y) the sum of the numerators used to calculate the Investor
Percentages for allocations with respect to Principal Receivables for all
outstanding Series for such Monthly Period; provided, however, that with
respect to any Monthly Period in which an Addition Date occurs or in which
a Removal Date occurs, the amount in clause (x)(A) above shall be (i) the
aggregate amount of Principal Receivables in the Master Trust as of the
close of business on the last day of the prior Monthly Period for the
period from and including the first day of such Monthly Period to but
excluding the related Addition Date or Removal Date and (ii) the aggregate
amount of Principal Receivables in the Master Trust at the beginning of the
day on the related Addition Date or Removal Date after adjusting for the
aggregate amount of Principal Receivables added to or removed from the
Master Trust on the related Addition Date or Removal Date, as the case may
be, for the period from and including the related Addition Date or Removal
Date to and including the last day of such Monthly Period. The amounts so
allocated will be further allocated among the Class A Certificateholders,
the Class B Certificateholders and the Collateral Interest Holder based on
the Class A Fixed Allocation, the Class B Fixed Allocation and the
Collateral Fixed Allocation, respectively. The "Class A Fixed Allocation"
means, with respect to any Monthly Period, the percentage equivalent (which
percentage shall never exceed 100%) of a fraction, the numerator of which
is equal to the Class A Investor Interest as of the close of business on
the last day of the Revolving Period, and the denominator of which is equal
to the Investor Interest as of the close of business on the last day of the
Revolving Period. The "Class B Fixed Allocation" means, with respect to any
Monthly Period, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is equal to the Class B
Investor Interest as of the close of business on the last day of the
Revolving Period, and the denominator of which is equal to the Investor
Interest as of the close of business on the last day of the Revolving
Period. The "Collateral Fixed Allocation" means, with respect to any
Monthly Period, the percentage equivalent (which percentage shall never
exceed 100%) of a fraction, the numerator of which is equal to the
Collateral Interest as of the close of business on the last day of the
Revolving Period, and the denominator of which is equal to the Investor
Interest as of the close of business on the last day of the Revolving
Period.
"Class A Investor Interest" for any date means an amount equal to (a)
the aggregate initial principal amount of the Class A Certificates, minus
(b) the aggregate amount of principal payments made to Class A
Certificateholders prior to such date, minus (c) the excess, if any, of the
aggregate amount of Class A Investor Charge-Offs for all Transfer Dates
preceding such date over the aggregate amount of any reimbursements of
Class A Investor Charge-Offs for all Transfer Dates preceding such date;
provided, however, that the Class A Investor Interest may not be reduced
below zero.
"Class A Adjusted Investor Interest" for any date of determination
means an amount equal to the then current Class A Investor Interest, minus
the Principal Funding Account Balance on such date.
"Class B Investor Interest" for any date means an amount equal to (a)
the aggregate initial principal amount of the Class B Certificates, minus
(b) the aggregate amount of principal payments made to Class B
Certificateholders prior to such date, minus (c) the aggregate amount of
Class B Investor Charge-Offs for all prior Transfer Dates, minus (d) the
aggregate amount of Reallocated Class B Principal Collections for all prior
Transfer Dates for which the Collateral Interest has not been reduced,
minus (e) an amount equal to the aggregate amount by which the Class B
Investor Interest has been reduced to fund the Class A Investor Default
Amount on all prior Transfer Dates as described under "--Defaulted
Receivables; Investor Charge Offs," and plus (f) the aggregate amount of
Excess Spread allocated and available on all prior Transfer Dates for the
purpose of reimbursing amounts deducted pursuant to the foregoing clauses
(c), (d) and (e); provided, however, that the Class B Investor Interest may
not be reduced below zero.
"Adjusted Investor Interest" for any date of determination means the
sum of the Class A Adjusted Investor Interest, the Class B Adjusted
Investor Interest, and the Collateral Interest.
"Collateral Interest" for any date means an amount equal to (a) the
Initial Collateral Interest, minus (b) the aggregate amount of principal
payments made to the Collateral Interest Holder prior to such date, minus
(c) the aggregate amount of Collateral Charge-Offs for all prior Transfer
Dates, minus (d) the aggregate amount of Reallocated Principal Collections
for all prior Transfer Dates, minus (e) an amount equal to the aggregate
amount by which the Collateral Interest has been reduced to fund the Class
A Investor Default Amount and the Class B Investor Default Amount on all
prior Transfer Dates as described under "--Defaulted Receivables; Investor
Charge-Offs," plus (f) the aggregate amount of Excess Spread allocated and
available on all prior Transfer Dates for the purpose of reimbursing
amounts deducted pursuant to the foregoing clauses (c), (d) and (e);
provided, however, that the Collateral Interest may not be reduced below
zero. The provider of such Credit Enhancement is referred to in this
supplement as the "Collateral Interest Holder."
"Investor Interest", for any date of determination, means an amount
equal to the sum of the Class A Investor Interest, the Class B Investor
Interest, and the Collateral Interest.
Reallocation of Cash Flows
With respect to each Transfer Date, the Servicer will determine the
amount (the "Class A Required Amount"), which will be equal to the amount,
if any, by which the sum of (a) Class A Monthly Interest due on the related
Distribution Date and overdue Class A Monthly Interest and Class A
Additional Interest thereon, if any, (b) the Class A Servicing Fee for the
related Monthly Period and overdue Class A Servicing Fee, if any, and (c)
the Class A Investor Default Amount, if any, for the related Monthly Period
exceeds the Class A Available Funds for the related Monthly Period. If the
Class A Required Amount is greater than zero, Excess Spread allocated to
Series 1999-_ and available for such purpose will be used to fund the Class
A Required Amount with respect to such Transfer Date. If such Excess Spread
is insufficient to fund the Class A Required Amount, first, Reallocated
Collateral Principal Collections and, then, Reallocated Class B Principal
Collections will be used to fund the remaining Class A Required Amount. If
Reallocated Principal Collections with respect to the related Monthly
Period, together with Excess Spread, are insufficient to fund the remaining
Class A Required Amount for such related Monthly Period, then the
Collateral Interest (after giving effect to reductions for any Collateral
Charge-Offs and Reallocated Principal Collections on such Transfer Date)
will be reduced by the amount of such excess (but not by more than the
Class A Investor Default Amount for such Monthly Period). In the event that
such reduction would cause the Collateral Interest to be a negative number,
the Collateral Interest will be reduced to zero, and the Class B Investor
Interest (after giving effect to reductions for any Class B Investor
Charge-Offs and any Reallocated Class B Principal Collections for which the
Collateral Interest was not reduced on such Transfer Date) will be reduced
by the amount by which the Collateral Interest would have been reduced
below zero (but not by more than the excess of the Class A Investor Default
Amount, if any, for such Monthly Period over the amount of such reduction,
if any, of the Collateral Interest with respect to such Monthly Period). In
the event that such reduction would cause the Class B Investor Interest to
be a negative number, the Class B Investor Interest will be reduced to zero
and the Class A Investor Interest will be reduced by the amount by which
the Class B Investor Interest would have been reduced below zero (but not
by more than the excess, if any, of the Class A Investor Default Amount for
such Monthly Period over the amount of the reductions, if any, of the
Collateral Interest and the Class B Investor Interest with respect to such
Monthly Period). Any such reduction in the Class A Investor Interest will
have the effect of slowing or reducing the return of principal and interest
to the Class A Certificateholders. In such case, the Class A
Certificateholders will bear directly the credit and other risks associated
with their interests in the Master Trust. See "--Defaulted Receivables;
Investor Charge-Offs" below.
With respect to each Transfer Date, the Servicer will determine the
amount (the "Class B Required Amount"), which will be equal to the sum of
(a) the amount, if any, by which the sum of (i) Class B Monthly Interest
due on the related Distribution Date and overdue Class B Monthly Interest
and Class B Additional Interest thereon, if any, and (ii) the Class B
Servicing Fee for the related Monthly Period and overdue Class B Servicing
Fee, if any, exceeds the Class B Available Funds for the related Monthly
Period and (b) the Class B Investor Default Amount, if any, for the related
Monthly Period. If the Class B Required Amount is greater than zero, Excess
Spread allocated to Series 1999-_ not required to pay the Class A Required
Amount or reimburse Class A Investor Charge-Offs will be used to fund the
Class B Required Amount with respect to such Transfer Date. If such Excess
Spread is insufficient to fund the Class B Required Amount, Reallocated
Collateral Principal Collections not required to fund the Class A Required
Amount for the related Monthly Period will be used to fund the remaining
Class B Required Amount. If such Reallocated Collateral Principal
Collections with respect to the related Monthly Period are insufficient to
fund the remaining Class B Required Amount, then the Collateral Interest
(after giving effect to reductions for any Collateral Charge-Offs and
Reallocated Principal Collections on such Transfer Date and after any
adjustments made thereto for the benefit of the Class A Certificateholders)
will be reduced by the amount of such deficiency (but not by more than the
Class B Investor Default Amount for such Monthly Period). In the event that
such a reduction would cause the Collateral Interest to be a negative
number, the Collateral Interest will be reduced to zero, and the Class B
Investor Interest will be reduced by the amount by which the Collateral
Interest would have been reduced below zero (but not by more than the
excess of the Class B Investor Default Amount for such Monthly Period over
the amount of such reduction of the Collateral Interest), and the Class B
Certificateholders will bear directly the credit and other risks associated
with their interests in the Master Trust. See "--Defaulted Receivables;
Investor Charge-Offs" below.
Reductions of the Class A Investor Interest or Class B Investor
Interest described above shall be reimbursed by, and the Class A Investor
Interest or Class B Investor Interest increased to the extent of, Excess
Spread available for such purposes on each Transfer Date. See
"--Application of Collections--Excess Spread." When such reductions of the
Class A Investor Interest and Class B Investor Interest have been fully
reimbursed, reductions of the Collateral Interest shall be reimbursed until
reimbursed in full in a similar manner.
"Reallocated Class B Principal Collections" for any Monthly Period
means collections of Principal Receivables allocable to the Class B
Investor Interest for the related Monthly Period in an amount not to exceed
the amount applied to fund the Class A Required Amount, if any; provided,
however, that such amount will not exceed the Class B Investor Interest
after giving effect to any Class B Investor Charge-Offs for the related
Transfer Date.
"Reallocated Collateral Principal Collections" for any Monthly Period
means collections of Principal Receivables allocable to the Collateral
Interest for the related Monthly Period in an amount not to exceed the
amount applied to fund the Class A Required Amount and the Class B Required
Amount, if any; provided, however, that such amount will not exceed the
Collateral Interest after giving effect to any Collateral Charge-Offs for
the related Transfer Date.
"Reallocated Principal Collections" for any Monthly Period means the
sum of (a) the Reallocated Class B Principal Collections for such Monthly
Period, if any, and (b) the Reallocated Collateral Principal Collections
for such Monthly Period, if any.
Application of Collections
Allocations. Except as otherwise provided below, the Servicer will
deposit into the Collection Account, no later than the second business day
following the date of processing, any payment collected by the Servicer on
the Receivables. On the same day as any such deposit is made, the Servicer
will make the deposits and payments to the accounts and parties as
indicated below; provided, however, that for as long as CMB remains the
Servicer under the Agreement and (a) (i) the Servicer provides to the
Master Trust Trustee a letter of credit or other credit enhancement
covering the risk of collection of the Servicer acceptable to the Rating
Agency and (ii) Chase USA shall not have received a notice from the Rating
Agency that reliance on such letter of credit or other credit enhancement
would result in the lowering of such Rating Agency's then-existing rating
of any Series then outstanding or (b) the Servicer has and maintains a
certificate of deposit rating of P-1 by Moody's and of A-1 by Standard &
Poor's and deposit insurance provided by either BIF or SAIF or makes other
arrangements satisfactory to each Rating Agency rating any Series then
outstanding, then the Servicer may make such deposits and payments on the
business day immediately prior to the Distribution Date (the "Transfer
Date") in an amount equal to the net amount of such deposits and payments
which would have been made had the conditions of this proviso not applied.
With respect to the Certificates and any Monthly Period, and
notwithstanding anything in the Agreement to the contrary, whether the
Servicer is required to make monthly or daily deposits from the Collection
Account into the Finance Charge Account or the Principal Account, (i) the
Servicer will only be required to deposit collections from the Collection
Account into the Finance Charge Account or the Principal Account up to the
required amount to be deposited into any such deposit account or, without
duplication, distributed on or prior to the related Distribution Date to
Certificateholders or to the Collateral Interest Holder and (ii) if at any
time prior to such Distribution Date the amount of collections deposited in
the Collection Account exceeds the amount required to be deposited pursuant
to clause (i) above, the Servicer will be permitted to withdraw the excess
from the Collection Account.
Payment of Interest, Fees and Other Items. On each Transfer Date, the
Master Trust Trustee, acting pursuant to the Servicer's instructions, will
apply the Class A Available Funds, Class B Available Funds and Collateral
Available Funds in the Finance Charge Account in the following manner:
(a) On each Transfer Date, an amount equal to the Class A Available
Funds will be distributed in the following priority:
(i) an amount equal to Class A Monthly Interest for the
related Distribution Date, plus the amount of any overdue
Class A Monthly Interest and Class A Additional Interest
thereon, if any, will be deposited into the Distribution
Account for distribution to Class A Certificateholders on
such Distribution Date;
(ii) an amount equal to the Class A Servicing Fee for the
related Monthly Period, plus the amount of any overdue
Class A Servicing Fee, will be paid to the Servicer;
(iii) an amount equal to the Class A Investor Default Amount,
if any, for the related Monthly Period will be treated as
a portion of Available Investor Principal Collections and
deposited into the Principal Account for such Transfer
Date; and
(iv) the balance, if any, will constitute a portion of Excess
Spread and will be allocated and distributed as described
under "--Excess Spread."
(b) On each Transfer Date, an amount equal to the Class B Available
Funds will be distributed in the following priority:
(i) an amount equal to Class B Monthly Interest for the
related Distribution Date, plus the amount of any overdue
Class B Monthly Interest and Class B Additional Interest
thereon, if any, will be deposited into the Distribution
Account for distribution to Class B Certificateholders on
such Distribution Date;
(ii) an amount equal to the Class B Servicing Fee for the
related Monthly Period, plus the amount of any overdue
Class B Servicing Fee, will be paid to the Servicer; and
(iii) the balance, if any, will constitute a portion of Excess
Spread and will be allocated and distributed as described
under "--Excess Spread."
(c) On each Transfer Date, an amount equal to the Collateral
Available Funds will be distributed in the following priority:
(i) if neither the Bank nor The Bank of New York is the
Servicer, an amount equal to the Collateral Interest
Servicing Fee for the related Monthly Period, plus the
amount of any overdue Collateral Interest Servicing Fee,
will be paid to the Servicer; and
(ii) the balance, if any, will constitute a portion of Excess
Spread and will be allocated and distributed as described
under "--Excess Spread."
"Class A Monthly Interest" means, with respect to any Distribution
Date, an amount equal to the product of (i) the Class A Certificate Rate
for the related Interest Period, (ii) the actual number of days in such
Interest Period divided by 360 and (iii) the outstanding principal balance
of the Class A Certificates as of the related Record Date; provided,
however, that with respect to the first Distribution Date, Class A Monthly
Interest will be equal to the interest accrued on the initial outstanding
principal balance of the Class A Certificates at the applicable Class A
Certificate Rate for the period from the Closing Date through _____, 1999.
"Class B Monthly Interest" means, with respect to any Distribution
Date, an amount equal to the product of (i) the Class B Certificate Rate
for the related Interest Period, (ii) the actual number of days in such
Interest Period divided by 360 and (iii) the outstanding principal balance
of the Class B Certificates as of the related Record Date; provided,
however, with respect to the first Distribution Date, Class B Monthly
Interest will be equal to the interest accrued on the initial outstanding
principal balance of the Class B Certificates at the applicable Class B
Certificate Rate for the period from the Closing Date through _____, 1999.
"Collateral Available Funds" means, with respect to any Monthly
Period, an amount equal to the Collateral Floating Allocation of
collections of Finance Charge Receivables allocated to the Investor
Interest with respect to such Monthly Period (excluding the portion of
collections of Finance Charge Receivables attributable to Interchange that
is allocable to Servicer Interchange).
"Excess Spread" means, with respect to any Transfer Date, an amount
equal to the sum of the amounts described in clause (a) (iv), clause (b)
(iii) and clause (c) (ii) above. To the extent such amounts are
insufficient to make the distributions required by subparagraphs (a)
through (j) below under "--Excess Spread," Excess Spread shall also be
deemed to include any Excess Finance Charge Collections allocable to other
Series available to Series 1999-_ in accordance with the Agreement. See
"--Shared Excess Finance Charge Collections" in this supplement.
Excess Spread. On each Transfer Date, the Master Trust Trustee,
acting pursuant to the Servicer's instructions, will apply Excess Spread
with respect to the related Monthly Period to make the following
distributions in the following priority:
(a) an amount equal to the Class A Required Amount, if any, with
respect to such Transfer Date will be used to fund the Class A
Required Amount; provided, that in the event the Class A
Required Amount for such Transfer Date exceeds the amount of
Excess Spread, such Excess Spread shall be applied first to pay
amounts due with respect to such Transfer Date pursuant to
clause (a) (i) above under "--Payment of Interest, Fees and
Other Items," second to pay amounts due with respect to such
Transfer Date pursuant to clause (a) (ii) above under
"--Payment of Interest, Fees and Other Items" and third to pay
amounts due with respect to such Transfer Date pursuant to
clause (a) (iii) above under "--Payment of Interest, Fees and
Other Items";
(b) an amount equal to the aggregate amount of Class A Investor
Charge-Offs which have not been previously reimbursed (after
giving effect to the allocation on such Transfer Date of
certain other amounts applied for that purpose) will be
deposited into the Principal Account and treated as a portion
of Available Investor Principal Collections for such Transfer
Date as described under "--Payments of Principal" below;
(c) an amount equal to the Class B Required Amount, if any, with
respect to such Transfer Date will be used to fund the Class B
Required Amount and will be applied first to pay amounts due
with respect to such Transfer Date pursuant to clause (b) (i)
above under "--Payment of Interest, Fees and Other Items,"
second to pay amounts due with respect to such Transfer Date
pursuant to clause (b) (ii) above under "--Payment of Interest,
Fees and Other Items" and third, the amount remaining, up to
the Class B Investor Default Amount, will be deposited into the
Principal Account and treated as a portion of Available
Investor Principal Collections for such Transfer Date as
described under "--Payments of Principal" below;
(d) an amount equal to the aggregate amount by which the Class B
Investor Interest has been reduced below the initial Class B
Investor Interest for reasons other than the payment of
principal to the Class B Certificateholders (but not in excess
of the aggregate amount of such reductions which have not been
previously reimbursed) will be deposited into the Principal
Account and treated as a portion of Available Investor
Principal Collections for such Transfer Date as described under
"--Payments of Principal" below;
(e) an amount equal to the Collateral Monthly Interest for such
Transfer Date, plus the amount of any Collateral Monthly
Interest previously due but not distributed to the Collateral
Interest Holder on a prior Transfer Date, will be distributed
to the Collateral Interest Holder for distribution in
accordance with the Loan Agreement;
(f) if the Bank or The Bank of New York is the Servicer, an amount
equal to the Collateral Interest Servicing Fee for the related
Monthly Period, plus the amount of any overdue Collateral
Interest Servicing Fee, will be paid to the Servicer;
(g) an amount equal to the aggregate Collateral Default Amount, if
any, for such Transfer Date will be deposited into the
Principal Account and treated as a portion of Available
Investor Principal Collections for such Transfer Date as
described under "--Payments of Principal" below;
(h) an amount equal to the aggregate amount by which the Collateral
Interest has been reduced below the Required Collateral
Interest for reasons other than the payment of principal to the
Collateral Interest Holder (but not in excess of the aggregate
amount of such reductions which have not been previously
reimbursed) will be deposited into the Principal Account and
treated as a portion of Available Investor Principal
Collections for such Transfer Date as described under
"--Payments of Principal" below;
(i) on each Transfer Date from and after the Reserve Account
Funding Date, but prior to the date on which the Reserve
Account terminates as described under "--Reserve Account," an
amount up to the excess, if any, of the Required Reserve
Account Amount over the Available Reserve Account Amount will
be deposited into the Reserve Account;
(j) an amount equal to the amounts determined to be payable
pursuant to the Loan Agreement shall be paid to the Collateral
Interest Holder; and
(k) the balance, if any, after giving effect to the payments made
pursuant to subparagraphs (a) through (j) above, will
constitute Excess Finance Charge Collections to be applied with
respect to other Series in accordance with the Agreement.
"Collateral Monthly Interest" with respect to any Transfer Date will
equal the product of (a) an amount equal to the interest rate with respect
to the Collateral Interest designated in the Loan Agreement (the
"Collateral Rate"), provided, however, that for purposes of calculating the
Base Rate for such Transfer Date the Collateral Rate shall be equal to the
lesser of (i) such interest rate designated in the Loan Agreement and (ii)
LIBOR plus 1.5% per annum, (b) the actual number of days in the related
Interest Period divided by 360 and (c) the Collateral Interest as of the
related Record Date or, with respect to the first Transfer Date, the
Initial Collateral Interest.
The figure below demonstrates the application of collections of
Finance Charge Receivables allocated to Series 1999-_. The figure is a
simplified demonstration of certain allocation and payment provisions and
is qualified by the full descriptions of these provisions in this
prospectus supplement and the attached prospectus.
Allocations of Collections of Finance Charge Receivables
[GRAPHIC OMITTED]
Payments of Principal. On each Transfer Date, the Master Trust
Trustee, acting pursuant to the Servicer's instructions, will distribute
Available Investor Principal Collections (see "--Principal Payments" above)
on deposit in the Principal Account in the following manner:
(a) on each Transfer Date with respect to the Revolving Period, all
such Available Investor Principal Collections will be
distributed or deposited in the following
priority:
(i) an amount equal to the Collateral Monthly Principal will
be paid to the Collateral Interest Holder in accordance
with the Loan Agreement; and
(ii) the balance will be treated as Shared Principal
Collections and applied as described under "Description
of the Certificates--Shared Principal Collections" in
this supplement and in the attached prospectus;
(b) on each Transfer Date with respect to the Controlled
Accumulation Period or the Rapid Amortization Period, all such
Available Investor Principal Collections will be distributed or
deposited in the following priority:
(i) an amount equal to Class A Monthly Principal will be (i)
during the Controlled Accumulation Period, deposited in
the Principal Funding Account (up to the Controlled
Deposit Amount for such Transfer Date) or (ii) during the
Rapid Amortization Period, distributed to the Class A
Certificateholders; and
(ii) for each Transfer Date after the Class A Investor
Interest has been paid in full (after taking into account
payments to be made on the related Distribution Date), an
amount equal to the Class B Monthly Principal for such
Transfer Date will be distributed to the Class B
Certificateholders;
(c) on each Transfer Date with respect to the Controlled
Accumulation Period and the Rapid Amortization Period in which
a reduction in the Required Collateral Interest has occurred,
Available Investor Principal Collections not applied to Class A
Monthly Principal or Class B Monthly Principal will be applied
to reduce the Collateral Interest to the Required Collateral
Interest; and
(d) on each Transfer Date with respect to the Controlled
Accumulation Period and the Rapid Amortization Period, the
balance of Available Investor Principal Collections not applied
pursuant to (b) and (c) above, if any, will be treated as
Shared Principal Collections and applied as described under
"Description of the Certificates--Shared Principal Collections"
in this supplement and in the attached prospectus.
The final distribution of principal and interest on the Certificates
will be made no later than the ________ Distribution Date in the manner
provided in "Description of the Certificates--Final Payment of Principal;
Termination" in the attached prospectus. Series 1999-_ will terminate on
the earliest to occur of (a) the Distribution Date on which the Investor
Interest is paid in full, (b) the ________ Distribution Date or (c) the
Trust Termination Date (such earliest to occur, the "Series 1999-_
Termination Date"). After the Series 1999-_ Termination Date, the Master
Trust will have no further obligation to pay principal or interest on the
Certificates.
"Class A Monthly Principal" means, with respect to any Transfer Date
relating to the Controlled Accumulation Period or the Rapid Amortization
Period, prior to the payment in full of the Class A Investor Interest, an
amount equal to the least of (i) the Available Investor Principal
Collections on deposit in the Principal Account with respect to such
Transfer Date, (ii) for each Transfer Date with respect to the Controlled
Accumulation Period, prior to the payment in full of the Class A Investor
Interest, and on or prior to the Class A Scheduled Payment Date, the
applicable Controlled Deposit Amount for such Transfer Date and (iii) the
Class A Adjusted Investor Interest prior to any deposits on such Transfer
Date.
"Class B Monthly Principal" means, with respect to any Transfer Date
relating to the Controlled Accumulation Period or the Rapid Amortization
Period, after the Class A Certificates have been paid in full (after taking
into account payments to be made on the related Distribution Date), an
amount equal to the lesser of (i) the Available Investor Principal
Collections on deposit in the Principal Account with respect to such
Transfer Date (minus the portion of such Available Investor Principal
Collections applied to Class A Monthly Principal on such Transfer Date) and
(ii) the Class B Investor Interest for such Transfer Date.
"Collateral Monthly Principal" means (a) with respect to any Transfer
Date relating to the Revolving Period following any reduction of the
Required Collateral Interest pursuant to clause (3) of the proviso in the
definition thereof, an amount equal to the lesser of (i) the excess, if
any, of the Collateral Interest (after giving effect to reductions for any
Collateral Charge-Offs and Reallocated Principal Collections on such
Transfer Date and after giving effect to any adjustments thereto for the
benefit of the Class A Certificateholders and the Class B
Certificateholders on such Transfer Date) over the Required Collateral
Interest on such Transfer Date, and (ii) the Available Investor Principal
Collections on such Transfer Date or (b) with respect to any Transfer Date
relating to the Controlled Accumulation Period or Rapid Amortization
Period, an amount equal to the lesser of (i) the excess, if any, of the
Collateral Interest (after giving effect to reductions for any Collateral
Charge-Offs and Reallocated Principal Collections on such Transfer Date and
after giving effect to any adjustments thereto for the benefit of the Class
A Certificateholders and the Class B Certificateholders on such Transfer
Date) over the Required Collateral Interest on such Transfer Date, and (ii)
the excess, if any, of (A) the Available Investor Principal Collections on
such Transfer Date over (B) the sum of the Class A Monthly Principal and
the Class B Monthly Principal for such Transfer Date.
"Controlled Accumulation Amount" means (a) for any Transfer Date with
respect to the Controlled Accumulation Period, prior to the payment in full
of the Class A Investor Interest, $__________; provided, however, that if
the commencement of the Controlled Accumulation Period is delayed as
described above under "--Postponement of Controlled Accumulation Period,"
the Controlled Accumulation Amount may be higher than the amount stated
above for each Transfer Date with respect to the Controlled Accumulation
Period and will be determined by the Servicer in accordance with the
Agreement based on the principal payment rates for the Accounts and on the
investor interests of other Series (other than certain excluded Series)
which are scheduled to be in their revolving periods and then scheduled to
create Shared Principal Collections during the Controlled Accumulation
Period and (b) for any Transfer Date with respect to the Controlled
Accumulation Period after the payment in full of the Class A Investor
Interest, an amount equal to the Class B Investor Interest on such Transfer
Date.
"Accumulation Shortfall" means (a) on the first Transfer Date with
respect to the Controlled Accumulation Period, the excess, if any, of the
Controlled Accumulation Amount for such Transfer Date over the amount
distributed from the Principal Account as Class A Monthly Principal for
such Transfer Date and (b) on each subsequent Transfer Date with respect to
the Controlled Accumulation Period, the excess, if any, of the applicable
Controlled Accumulation Amount for such subsequent Transfer Date plus any
Accumulation Shortfall for the prior Transfer Date over the amount
distributed from the Principal Account as Class A Monthly Principal for
such subsequent Transfer Date.
The figure on the next page demonstrates the manner in which
collections of Principal Receivables are allocated and applied to Series
1999-_. The figure is a simplified demonstration of certain allocation and
payment provisions and is qualified by the full descriptions of these
provisions in this prospectus supplement and the attached prospectus.
Allocations of Collections of Principal Receivables
[GRAPHIC OMITTED]
Shared Excess Finance Charge Collections
Any Series may be included in a Group of Series which may be issued
by the Master Trust from time to time. Series 1999-_ will be included in a
Group ("Group I"). Each previously issued and outstanding Series listed on
Annex I hereto currently is, and other Series may in the future be,
included in Group I. Group I is currently the only Group in the Master
Trust. Each Series in Group I will be entitled to share Excess Finance
Charge Collections in the manner, and to the extent, described below with
each other Series, if any, in Group I. The Series Supplement with respect
to each Series will specify whether such Series will be included in a
Group. Collections of Finance Charge Receivables and certain other amounts
allocable to the Investor Interest of any Series that is included in Group
I in excess of the amounts necessary to make required payments with respect
to such Series (including payments to any related Credit Enhancement
Providers) that are payable out of collections of Finance Charge
Receivables (any such excess, the "Excess Finance Charge Collections") will
be applied to cover any shortfalls with respect to amounts payable from
collections of Finance Charge Receivables allocable to any other Series
included in Group I, pro rata based upon the amount of the shortfall, if
any, with respect to each other Series in Group I. In all cases, any Excess
Finance Charge Collections remaining after covering shortfalls with respect
to all outstanding Series in a Group will be paid to the holder of the
Transferor Certificate. While any Series offered hereby may be included in
a Group, there can be no assurance that (a) any other Series will be
included in such Group or (b) there will be any Excess Finance Charge
Collections with respect to such Group for any Monthly Period. Excess
Finance Charge Collections permit coverage of shortfalls with respect to
amounts payable from collections of Finance Charge Receivables allocable to
Series 1999-_ using Excess Finance Charge Collections from other Series
which would otherwise be paid to Chase USA to cover shortfalls in amounts
payable from Excess Spread as described above under "--Application of
Collections--Excess Spread." While Chase USA believes that, based upon
applicable rules and regulations as currently in effect, the sharing of
Excess Finance Charge Collections among Series in a Group will not have
adverse regulatory implications for it, there can be no assurance that this
will continue to be true in the future.
Shared Principal Collections
Collections of Principal Receivables for any Monthly Period allocated
to the Investor Interest will first be used to cover, with respect to any
Monthly Period during the Controlled Accumulation Period, deposits of the
applicable Controlled Deposit Amount to the Principal Funding Account or
the Distribution Account, and during the Rapid Amortization Period,
payments to the Certificateholders and then under certain circumstances
payments to the Collateral Interest Holder. The Servicer will determine the
amount of collections of Principal Receivables for any Monthly Period
allocated to the Investor Interest remaining after covering required
payments to the Certificateholders and any similar amount remaining for any
other Series ("Shared Principal Collections"). The Servicer will allocate
the Shared Principal Collections to cover any scheduled or permitted
principal distributions to certificateholders and deposits to principal
funding accounts, if any, for any Series entitled thereto which have not
been covered out of the collections of Principal Receivables allocable to
such Series and certain other amounts for such Series ("Principal
Shortfalls"). Shared Principal Collections will not be used to cover
investor charge-offs for any Series. If Principal Shortfalls exceed Shared
Principal Collections for any Monthly Period, Shared Principal Collections
will be allocated pro rata among the applicable Series based on the
relative amounts of Principal Shortfalls. To the extent that Shared
Principal Collections exceed Principal Shortfalls, the balance will be paid
to the holder of the Transferor Certificate or, under certain
circumstances, deposited into the Excess Funding Account.
Required Collateral Interest
The "Required Collateral Interest" with respect to any Transfer Date
means (i) initially $__________ (the "Initial Collateral Interest") and
(ii) thereafter on each Transfer Date an amount equal to 9% of the sum of
the Class A Adjusted Investor Interest, the Class B Investor Interest and
the Collateral Interest on such Transfer Date, after taking into account
deposits into the Principal Funding Account on such Transfer Date and
payments to be made on the related Distribution Date, and the Collateral
Interest on the prior Transfer Date after any adjustments made on such
Transfer Date, but not less than $__________; provided, however, (1) that
if certain reductions in the Collateral Interest are made or if a Pay Out
Event occurs, the Required Collateral Interest for such Transfer Date shall
equal the Required Collateral Interest for the Transfer Date immediately
preceding the occurrence of such reduction or Pay Out Event, (2) in no
event shall the Required Collateral Interest exceed the unpaid principal
amount of the Certificates as of the last day of the Monthly Period
preceding such Transfer Date after taking into account payments to be made
on the related Distribution Date and (3) the Required Collateral Interest
may be reduced to a lesser amount at any time if the Rating Agency
Condition is satisfied.
"Rating Agency Condition" means the notification in writing by each
Rating Agency that a proposed action will not result in such Rating Agency
reducing or withdrawing its then-existing rating of the investor
certificates of any outstanding Series or class with respect to which it is
a Rating Agency.
With respect to any Transfer Date, if the Collateral Interest is less
than the Required Collateral Interest, certain Excess Spread, if available,
will be allocated to increase the Collateral Interest to the extent of such
shortfall. Any of such Excess Spread not required to be so allocated or
deposited into the Reserve Account with respect to any Transfer Date will
be applied in accordance with the Loan Agreement. See "--Application of
Collections--Excess Spread."
Defaulted Receivables; Investor Charge-offs
On or before each Transfer Date, the Servicer will calculate the
Investor Default Amount for the preceding Monthly Period. The term
"Investor Default Amount" means, for any Monthly Period, the product of (a)
the Floating Investor Percentage with respect to such Monthly Period and
(b) the aggregate amount of Receivables in Defaulted Accounts (the "Default
Amount") for such Monthly Period. A portion of the Investor Default Amount
will be allocated to the Class A Certificateholders (the "Class A Investor
Default Amount") on each Transfer Date in an amount equal to the product of
the Class A Floating Allocation applicable during the related Monthly
Period and the Investor Default Amount for such Monthly Period. A portion
of the Investor Default Amount will be allocated to the Class B
Certificateholders (the "Class B Investor Default Amount") on each Transfer
Date in an amount equal to the product of the Class B Floating Allocation
applicable during the related Monthly Period and the Investor Default
Amount for such Monthly Period. A portion of the Investor Default Amount
will be allocated to the Collateral Interest Holder (the "Collateral
Default Amount") on each Transfer Date in an amount equal to the product of
the Collateral Floating Allocation applicable during the related Monthly
Period and the Investor Default Amount for such Monthly Period.
On each Transfer Date, if the Class A Investor Default Amount for
such Transfer Date exceeds the amount of Excess Spread and Reallocated
Principal Collections available to fund such amount with respect to the
Monthly Period immediately preceding such Transfer Date, the Collateral
Interest (after giving effect to reductions for any Collateral Charge-Offs
and any Reallocated Principal Collections on such Transfer Date) will be
reduced by the amount of such excess, but not more than the lesser of the
Class A Investor Default Amount and the Collateral Interest (after giving
effect to reductions for any Collateral Charge-Offs and any Reallocated
Principal Collections on such Transfer Date) for such Transfer Date. In the
event that such reduction would cause the Collateral Interest to be a
negative number, the Collateral Interest will be reduced to zero, and the
Class B Investor Interest (after giving effect to reductions for any Class
B Investor Charge-Offs and any Reallocated Class B Principal Collections on
such Transfer Date) will be reduced by the amount by which the Collateral
Interest would have been reduced below zero. In the event that such
reduction would cause the Class B Investor Interest to be a negative
number, the Class B Investor Interest will be reduced to zero, and the
Class A Investor Interest will be reduced by the amount by which the Class
B Investor Interest would have been reduced below zero, but not more than
the Class A Investor Default Amount for such Transfer Date (a "Class A
Investor Charge-off"), which will have the effect of slowing or reducing
the return of principal and interest to the Class A Certificateholders. If
the Class A Investor Interest has been reduced by the amount of any Class A
Investor Charge- Offs, it will be reimbursed on any Transfer Date (but not
by an amount in excess of the aggregate Class A Investor Charge-Offs) by
the amount of Excess Spread allocated and available for such purpose as
described under "--Application of Collections--Excess Spread."
On each Transfer Date, if the Class B Investor Default Amount for
such Transfer Date exceeds the amount of Excess Spread and Reallocated
Collateral Principal Collections which are allocated and available to fund
such amount with respect to the Monthly Period preceding such Transfer
Date, the Collateral Interest (after giving effect to reductions for any
Collateral Charge-Offs and any Reallocated Principal Collections on such
Transfer Date and after giving effect to any adjustments with respect
thereto as described in the preceding paragraph) will be reduced by the
amount of such excess but not more than the lesser of the Class B Investor
Default Amount and the Collateral Interest (after giving effect to
reductions for any Collateral Charge-Offs and any Reallocated Principal
Collections on such Transfer Date and after giving effect to any
adjustments with respect thereto as described in the preceding paragraph)
for such Transfer Date. In the event that such reduction would cause the
Collateral Interest to be a negative number, the Collateral Interest will
be reduced to zero and the Class B Investor Interest will be reduced by the
amount by which the Collateral Interest would have been reduced below zero,
but not more than the Class B Investor Default Amount for such Transfer
Date (a "Class B Investor Charge-off"). The Class B Investor Interest will
also be reduced by the amount of Reallocated Class B Principal Collections
in excess of the Collateral Interest (after giving effect to reductions for
any Collateral Charge-Offs and any Reallocated Collateral Principal
Collections on such Transfer Date) and the amount of any portion of the
Class B Investor Interest allocated to the Class A Certificates to avoid a
reduction in the Class A Investor Interest. The Class B Investor Interest
will thereafter be reimbursed (but not in excess of the unpaid principal
balance of the Class B Certificates) on any Transfer Date by the amount of
Excess Spread allocated and available for that purpose as described under
"--Application of Collections--Excess Spread."
On each Transfer Date, if the Collateral Default Amount for such
Transfer Date exceeds the amount of Excess Spread which is allocated and
available to fund such amount as described under "--Application of
Collections--Excess Spread," the Collateral Interest will be reduced by the
amount of such excess but not more than the lesser of the Collateral
Default Amount and the Collateral Interest for such Transfer Date (a
"Collateral Charge-off"). The Collateral Interest will also be reduced by
the amount of Reallocated Principal Collections and the amount of any
portion of the Collateral Interest allocated to the Class A Certificates to
avoid a reduction in the Class A Investor Interest or to the Class B
Certificates to avoid a reduction in the Class B Investor Interest. The
Collateral Interest will thereafter be reimbursed on any Transfer Date by
the amount of Excess Spread allocated and available for that purpose as
described under "--Application of Collections--Excess Spread."
Principal Funding Account
Pursuant to the Series 1999-_ Supplement, the Master Trust Trustee at
the direction of the Servicer will establish and maintain an Eligible
Deposit Account held for the benefit of the Certificateholders (the
"Principal Funding Account"). During the Controlled Accumulation Period,
the Master Trust Trustee at the direction of the Servicer will transfer
collections in respect of Principal Receivables (other than Reallocated
Principal Collections) and Shared Principal Collections from other Series,
if any, allocated to Series 1999-_ from the Principal Account to the
Principal Funding Account as described under "--Application of
Collections." Such collections will be retained in the Principal Funding
Account and ultimately used to pay the principal of the Class A
Certificates on the Class A Scheduled Payment Date or the first
Distribution Date with respect to the Rapid Amortization Period, whichever
occurs earlier.
Funds on deposit in the Principal Funding Account will be invested to
the following Transfer Date by the Master Trust Trustee at the direction of
the Servicer in Permitted Investments. Investment earnings (net of
investment losses and expenses) on funds on deposit in the Principal
Funding Account (the "Principal Funding Investment Proceeds") will be
applied on each Transfer Date as Class A Available Funds. If, for any
Transfer Date, the Principal Funding Investment Proceeds are less than an
amount equal to the product of (a) (i) a fraction, the numerator of which
is the actual number of days in the related Interest Period and the
denominator of which is 360, times (ii) the Class A Certificate Rate in
effect with respect to such Interest Period and (b) the Principal Funding
Account Balance as of the Record Date preceding such Transfer Date (the
"Class A Covered Amount"), the amount of such deficiency (the "Class A
Principal Funding Investment Shortfall") shall be withdrawn, to the extent
available, from the Reserve Account and deposited in the Finance Charge
Account and included in collections of Finance Charge Receivables to be
applied to the payment of Class A Monthly Interest.
Reserve Account
Pursuant to the Series 1999-_ Supplement, the Master Trust Trustee
will establish and maintain an Eligible Deposit Account held for the
benefit of the Certificateholders (the "Reserve Account"). The Reserve
Account is established to assist with the subsequent distribution of
interest on the Certificates during the Controlled Accumulation Period. On
each Transfer Date from and after the Reserve Account Funding Date, but
prior to the termination of the Reserve Account, the Master Trust Trustee,
acting pursuant to the Servicer's instructions, will apply Excess Spread
allocated to the Certificates (to the extent described above under
"--Application of Collections--Excess Spread") to increase the amount on
deposit in the Reserve Account (to the extent such amount is less than the
Required Reserve Account Amount). The "Reserve Account Funding Date" will
be the Transfer Date with respect to the Monthly Period which commences no
later than three months prior to the commencement of the Controlled
Accumulation Period, or such earlier date as the Servicer may determine.
The "Required Reserve Account Amount" for any Transfer Date on or after the
Reserve Account Funding Date will be equal to (a) 0.50% of the outstanding
principal balance of the Class A Certificates or (b) any other amount
designated by Chase USA; provided, that if such designation is of a lesser
amount, Chase USA shall have provided the Servicer, the Collateral Interest
Holder and the Master Trust Trustee with evidence that the Rating Agency
Condition has been satisfied and Chase USA shall have delivered to the
Master Trust Trustee a certificate of an authorized officer to the effect
that, based on the facts known to such officer at such time, in the
reasonable belief of Chase USA, such designation will not cause a Pay Out
Event or an event that, after the giving of notice or the lapse of time,
would cause a Pay Out Event to occur with respect to Series 1999-_. On each
Transfer Date, after giving effect to any deposit to be made to, and any
withdrawal to be made from, the Reserve Account on such Transfer Date, the
Master Trust Trustee will withdraw from the Reserve Account an amount equal
to the excess, if any, of the amount on deposit in the Reserve Account over
the Required Reserve Account Amount and distribute such excess to the
Collateral Interest Holder for application in accordance with the terms of
the Loan Agreement.
Provided that the Reserve Account has not terminated as described
below, all amounts on deposit in the Reserve Account on any Transfer Date
(after giving effect to any deposits to, or withdrawals from, the Reserve
Account to be made on such Transfer Date) will be invested to the following
Transfer Date by the Master Trust Trustee at the direction of the Servicer
in Permitted Investments. The interest and other investment income (net of
investment expenses and losses) earned on such investments will be retained
in the Reserve Account (to the extent the amount on deposit is less than
the Required Reserve Account Amount) or deposited in the Finance Charge
Account and treated as Class A Available Funds.
On or before each Transfer Date with respect to the Controlled
Accumulation Period and on the first Transfer Date with respect to the
Rapid Amortization Period, a withdrawal will be made from the Reserve
Account, and the amount of such withdrawal will be deposited in the Finance
Charge Account and included in collections of Finance Charge Receivables to
be applied to the payment of the Class A Monthly Interest for such Transfer
Date in an amount equal to the lesser of (a) the Available Reserve Account
Amount with respect to such Transfer Date and (b) the Class A Principal
Funding Investment Shortfall with respect to such Transfer Date; provided,
that the amount of such withdrawal shall be reduced to the extent that
funds otherwise would be available to be deposited in the Reserve Account
on such Transfer Date. On each Transfer Date, the amount available to be
withdrawn from the Reserve Account (the "Available Reserve Account Amount")
will be equal to the lesser of the amount on deposit in the Reserve Account
(before giving effect to any deposit to be made to the Reserve Account on
such Transfer Date) and the Required Reserve Account Amount for such
Transfer Date.
The Reserve Account will be terminated upon the earlier to occur of
(a) the termination of the Master Trust pursuant to the Agreement and (b)
if the Controlled Accumulation Period has not commenced, the first Transfer
Date with respect to the Rapid Amortization Period or, if the Controlled
Accumulation Period has commenced, the earlier to occur of (i) the first
Transfer Date with respect to the Rapid Amortization Period and (ii) the
Transfer Date immediately preceding the Class A Scheduled Payment Date.
Upon the termination of the Reserve Account, all amounts on deposit therein
(after giving effect to any withdrawal from the Reserve Account on such
date as described above) will be distributed to the Collateral Interest
Holder for application in accordance with the terms of the Loan Agreement.
Any amounts withdrawn from the Reserve Account and distributed to the
Collateral Interest Holder as described above will not be available for
distribution to the Certificateholders.
Issuance of Additional Certificates
The Series 1999-_ Supplement provides that, from time to time during
the Revolving Period, Chase USA may, subject to certain conditions
described below, cause the Master Trust Trustee to issue additional
Certificates ("Additional Certificates") and to increase the size of the
Collateral Interest (each such issuance, an "Additional Issuance"). When
issued, the Additional Certificates of each Class will be identical in all
respects to the other outstanding Certificates of that Class and will be
equally and ratably entitled to the benefits of the Agreement without
preference, priority or distinction.
In connection with each Additional Issuance, a pro rata principal
amount of each Class of Certificates will be issued and there will be a pro
rata increase in the Collateral Interest.
As of the date of any Additional Issuance, the Collateral Interest,
the Controlled Accumulation Amount and the Investor Interest for each Class
of this Series will be increased proportionately to reflect the aggregate
face amount of the Additional Certificates.
Additional Certificates may be issued only upon the satisfaction of
certain conditions provided in the Series 1999-_ Supplement, including the
following:
(a) on or before the fifth business day immediately preceding the
date on which the Additional Certificates are to be issued,
Chase USA will have given the Master Trust Trustee, the
Servicer and the Rating Agencies notice of such issuance and
the date upon which it is to occur;
(b) after giving effect to the Additional Issuance, the total
amount of Principal Receivables will be greater than or equal
to the Minimum Aggregate Principal Receivables;
(c) Chase USA shall have delivered evidence of the proportional
increase in the Collateral Interest to the Master Trust Trustee
and the Rating Agencies;
(d) the Rating Agency Condition shall have been satisfied with
respect to the Additional Issuance;
(e) Chase USA shall have delivered to the Master Trust Trustee a
certificate of an authorized officer to the effect that, in the
reasonable belief of Chase USA, such Additional Issuance will
not have a material adverse effect on any outstanding Class of
this Series;
(f) as of the date of the Additional Issuance there shall be no
Investor Charge-Offs with respect to any Class of this Series;
and
(g) Chase USA shall have delivered to the Master Trust Trustee a
Tax Opinion with respect to the Additional Issuance.
There are no restrictions on the timing or amount of any Additional
Issuance other than the foregoing conditions.
Companion Series
The Series 1999-_ Certificates may be paired with one or more other
Series (each, a "Companion Series"). Each Companion Series either will be
prefunded with an initial deposit to a prefunding account in an amount up
to the initial principal balance of such Companion Series, funded primarily
from the proceeds for the sale of such Companion Series, or will have a
variable principal amount. Any such prefunding account will be held for the
benefit of such Companion Series and not for the benefit of
Certificateholders. As principal is paid with respect to the Series 1999-_
Certificates, either (i) in the case of a prefunded Companion Series, an
equal amount of funds on deposit in any prefunding account for such
prefunded Companion Series will be released (which funds will be
distributed to Chase USA) or (ii) in the case of a Companion Series having
a variable principal amount, an interest in such variable Companion Series
in an equal or lesser amount may be sold by the Master Trust (and the
proceeds thereof will be distributed to Chase USA) and, in either case, the
invested amount in the Master Trust of such Companion Series will increase
by up to corresponding amount. Upon payment in full of the Series 1999-_
Certificates, assuming that there have been no unreimbursed charge-offs
with respect to any related Companion Series, the aggregate invested amount
of such related Companion Series will have been increased by an amount up
to an aggregate amount equal to the Series 1999-_ Investor Interest paid to
the Series 1999-_ Certificateholders since the issuance of such Companion
Series. The issuance of a Companion Series will be subject to the
conditions described under "Description of the Certificates--Exchanges" in
the attached prospectus. There can be no assurance, however, that the terms
of any Companion Series might not have an impact on the timing or amount of
payments received by a Series 1999-_ Certificateholder. In particular, the
denominator of the Fixed Investor Percentage may be increased upon the
occurrence of a Pay Out Event with respect to a Companion Series resulting
in a possible reduction of the percentage of collections of Principal
Receivables allocated to Series 1999-_ if such event allowed the payment of
principal at such time to the Companion Series and required reliance by
Series 1999-_ on clause (y) of the denominator of the Fixed Investor
Percentage for Series 1999-_. See "Maturity Considerations" and
"--Allocation Percentages" in this supplement.
Pay Out Events
As described above, the Revolving Period will continue through the
close of business on the last day of the ________ Monthly Period (unless
such date is postponed as described under "--Postponement of Controlled
Accumulation Period"), unless a Pay Out Event occurs prior to such date. A
"Pay Out Event" refers to any of the following events:
(a) failure on the part of Chase USA (i) to make any payment or
deposit on the date required under the Agreement (or within the
applicable grace period which shall not exceed five days) or
(ii) to observe or perform in any material respect any other
covenants or agreements of Chase USA set forth in the Agreement
or the Series 1999-_ Supplement, which failure has a material
adverse effect on the Certificateholders (which determination
shall be made without regard to the existence of the Collateral
Interest) and which continues unremedied for a period of 60
days after written notice and continues to materially and
adversely affect the interests of the Certificateholders (which
determination shall be made without regard to the existence of
the Collateral Interest) for such period;
(b) any representation or warranty made by Chase USA in the
Agreement or the Series 1999-_ Supplement, or any information
required to be given by Chase USA to the Master Trust Trustee
to identify the Accounts proves to have been incorrect in any
material respect when made and which continues to be incorrect
in any material respect for a period of 60 days after written
notice and as a result of which the interests of the
Certificateholders are materially and adversely affected (which
determination shall be made without regard to the existence of
the Collateral Interest) and continue to be materially and
adversely affected for such period; provided, however, that a
Pay Out Event pursuant to this clause (b) shall not be deemed
to occur thereunder if Chase USA has accepted reassignment of
the related Receivable or all such Receivables, if applicable,
during such period (or such longer period as the Master Trust
Trustee may specify) in accordance with the provisions of the
Agreement;
(c) any reduction of the average of the Portfolio Yields for any
three consecutive Monthly Periods to a rate which is less than
the average of the Base Rates for such period;
(d) a failure by Chase USA to convey Receivables arising under
Additional Accounts, or Participations, to the Master Trust
when required by the Agreement;
(e) any Servicer Default occurs which would have a material adverse
effect on the Certificateholders;
(f) insufficient funds in the Distribution Account to pay the Class
A Investor Interest in full on the Class A Scheduled Payment
Date or the Class B Investor Interest in full on the Class B
Scheduled Payment Date;
(g) certain events of bankruptcy, insolvency, conservatorship or
receivership relating to Chase USA;
(h) Chase USA becomes unable for any reason to transfer Receivables
to the Master Trust in accordance with the provisions of the
Agreement; or
(i) the Master Trust is subject to regulation as an "investment
company" within the meaning of the Investment Company Act of
1940, as amended.
In the case of any event described in clause (a), (b) or (e) above, a
Pay Out Event will be deemed to have occurred with respect to the
Certificates only if, after any applicable grace period, either the Master
Trust Trustee or Certificateholders and the Collateral Interest Holder
evidencing undivided interests aggregating more than 50% of the Investor
Interest, by written notice to Chase USA and the Servicer (and to the
Master Trust Trustee if given by the Certificateholders) declare that a Pay
Out Event has occurred with respect to the Certificates as of the date of
such notice. In the case of any event described in clause (g), (h) or (i),
a Pay Out Event with respect to all Series then outstanding, and in the
case of any event described in clause (c), (d) or (f), a Pay Out Event with
respect to only the Certificates, will be deemed to have occurred without
any notice or other action on the part of the Master Trust Trustee, the
Certificateholders, the Collateral Interest Holder or all
certificateholders, as appropriate, immediately upon the occurrence of such
event. On the date on which a Pay Out Event is deemed to have occurred, the
Rapid Amortization Period will commence. In such event, distributions of
principal to the Certificateholders will begin on the first Distribution
Date following the month in which such Pay Out Event occurred. If, because
of the occurrence of a Pay Out Event, the Rapid Amortization Period begins
earlier than the close of business on the last day of the ________ Monthly
Period Certificateholders will begin receiving distributions of principal
earlier than they otherwise would have, which may shorten the average life
of the Certificates.
See "Description of the Certificates--Pay Out Events" in the attached
prospectus for an additional discussion of the consequences of an
insolvency, conservatorship or receivership of Chase USA.
Servicing Compensation and Payment of Expenses
The Servicer will receive a fee as servicing compensation from the
Master Trust (the "Servicing Fee"). The Servicing Fee may be payable from
Finance Charge Receivables, Interchange or other amounts as specified in
this supplement. The share of the Servicing Fee allocable to the Investor
Interest with respect to any Transfer Date (the "Investor Servicing Fee")
shall be equal to one-twelfth of the product of (a) 2.0% and (b) the
Adjusted Investor Interest as of the last day of the Monthly Period
preceding such Transfer Date; provided, however, with respect to the first
Transfer Date, the Investor Servicing Fee shall be equal to the product of
(i) a fraction the numerator of which is the number of days from and
including the Closing Date to and including the last day of the _____ 1999
Monthly Period and the denominator of which is 360, (ii) 2.0% and (iii) the
Investor Interest on the Closing Date. On each Transfer Date Servicer
Interchange with respect to the related Monthly Period will be paid to the
Servicer in payment of a portion of the Investor Servicing Fee with respect
to such Monthly Period. The "Servicer Interchange" for any Monthly Period
will be an amount equal to the portion of collections of Finance Charge
Receivables allocated to the Investor Interest with respect to such Monthly
Period that is attributable to Interchange; provided, however, that
Servicer Interchange for a Monthly Period shall not exceed one-twelfth of
the product of (i) the Adjusted Investor Interest, as of the last day of
such Monthly Period and (ii) 1.0%. In the case of any insufficiency of
Servicer Interchange on deposit in the Finance Charge Account, a portion of
the Investor Servicing Fee with respect to such Monthly Period will not be
paid to the extent of such insufficiency and in no event shall the Master
Trust, the Master Trust Trustee, the Certificateholders or the Collateral
Interest Holder be liable for the share of the Servicing Fee to be paid out
of Servicer Interchange.
The share of the Investor Servicing Fee allocable to the Class A
Certificateholders with respect to any Transfer Date (the "Class A
Servicing Fee") shall be equal to one-twelfth of the product of (a) the
Class A Floating Allocation, (b) 1.0% (the "Net Servicing Fee Rate") and
(c) the Adjusted Investor Interest as of the last day of the Monthly Period
preceding such Transfer Date; provided, however, that with respect to the
first Transfer Date, the Class A Servicing Fee shall be equal to the
product of (i) the Class A Floating Allocation, (ii) a fraction, the
numerator of which is the number of days from and including the Closing
Date to and including the last day of the _____ 1999 Monthly Period and the
denominator of which is 360, (iii) the Net Servicing Fee Rate and (iv) the
Investor Interest on the Closing Date. The share of the Investor Servicing
Fee allocable to the Class B Certificateholders with respect to any
Transfer Date (the "Class B Servicing Fee") shall be equal to one-twelfth
of the product of (a) the Class B Floating Allocation, (b) the Net
Servicing Fee Rate and (c) the Adjusted Investor Interest as of the last
day of the Monthly Period preceding such Transfer Date; provided, however,
that with respect to the first Transfer Date, the Class B Servicing Fee
shall be equal to the product of (i) the Class B Floating Allocation, (ii)
a fraction, the numerator of which is the number of days from and including
the Closing Date to and including the last day of the _____ 1999 Monthly
Period and the denominator of which is 360, (iii) the Net Servicing Fee
Rate and (iv) the Investor Interest on the Closing Date. The share of the
Investor Servicing Fee allocable to the Collateral Interest Holder with
respect to any Transfer Date (the "Collateral Interest Servicing Fee")
shall be equal to one-twelfth of the product of (a) the Collateral Floating
Allocation, (b) the Net Servicing Fee Rate and (c) the Adjusted Investor
Interest as of the last day of the Monthly Period preceding such Transfer
Date; provided, however, that with respect to the first Transfer Date, the
Collateral Interest Servicing Fee shall be equal to the product of (i) the
Collateral Floating Allocation, (ii) a fraction, the numerator of which is
the number of days from and including the Closing Date to and including the
last day of the _____ 1999 Monthly Period and the denominator of which is
360, (iii) the Net Servicing Fee Rate and (iv) the Investor Interest on the
Closing Date. Pursuant to the Agreement, the amount by which the Servicing
Fee exceeds the Investor Servicing Fee will be paid from amounts allocable
to the Transferor Certificate and to other Series. In no event shall the
Master Trust, the Master Trust Trustee, the Certificateholders or the
Collateral Interest Holder be liable for the share of the Servicing Fee to
be paid out of Servicer Interchange. The Class A Servicing Fee and the
Class B Servicing Fee shall be payable to the Servicer solely to the extent
amounts are available for distribution in respect thereof as described
under "--Application of Collections."
The Servicer will pay from its servicing compensation certain
expenses incurred in connection with servicing the Receivables including,
without limitation, payment of the fees and disbursements of the Master
Trust Trustee and independent certified public accountants and other fees
which are not expressly stated in the Agreement to be payable by the Master
Trust or the Certificateholders other than federal, state and local income
and franchise taxes, if any, of the Master Trust.
Reports to Certificateholders
On each Transfer Date, the Master Trust Trustee will forward to each
Certificateholder of record, a statement prepared by the Servicer setting
forth the items described in "Description of the Certificates--Reports to
Certificateholders" in the attached prospectus. In addition, such statement
will include (a) the amount, if any, withdrawn from the Principal Funding
Account for such Transfer Date, and (b) the Collateral Interest, if any,
for such Transfer Date. So long as the Certificates are listed on the
Luxembourg Stock Exchange, notice to Certificateholders will be given by
publication in a daily newspaper in Luxembourg (expected to be the
Luxemburger Wort). In the event that Definitive Certificates are issued,
notices to Certificateholders will also be given by mail to their addresses
as they appear on the register maintained by the Master Trust Trustee.
Listing and General Information
Application has been made to list the Class A Certificates and the
Class B Certificates on the Luxembourg Stock Exchange. In connection with
the listing application, the Organization Certificate and By-laws of the
Bank, as well as legal notice relating to the issuance of the Class A
Certificates and the Class B Certificates will be deposited prior to
listing with the Chief Registrar of the District Court of Luxembourg, where
copies thereof may be obtained upon request. The Class A and the Class B
Certificates have been accepted for clearance through the facilities of
DTC, Cedelbank and Euroclear. The CUSIP numbers for the Class A
Certificates and the Class B Certificates are _____ and _____ respectively;
the International Securities Identification Numbers (ISIN) for the Class A
Certificates and the Class B Certificates are _____ and _____ respectively;
and the Common Code numbers for the Class A Certificates and the Class B
Certificates are _____ and _____, respectively.
As of the date of this prospectus supplement, the Bank is not
involved in any litigation or arbitration proceeding relating to claims
which are material in the context of the issuance of the Certificates, nor
so far as the Bank is aware are any such proceedings pending or threatened.
Except as disclosed herein, there has been no material adverse change
in the financial position of the Bank since _________, 199_ through the
date of this prospectus supplement.
The transactions contemplated in this prospectus supplement were
authorized by resolutions adopted by the Bank's Board of Directors on
_____, 1999 and by the Bank's Asset and Loan Securitization Committee as of
_____, 1999.
Copies of the Pooling and Servicing Agreement, the Series 1999-_
Supplement, the annual report of independent public accountants described
in "Description of the Certificates--Evidence as to Compliance" in the
attached prospectus, the documents described under "Where You Can Find More
Information" and the reports to Certificateholders referred to under
"Reports to Certificateholders" and "Description of the
Certificates--Reports to Certificateholders" in the attached prospectus
will be available free of charge at the office of Banque Generale du
Luxembourg, S.A. (the "Listing Agent"), 50 Avenue J.F. Kennedy, L-2951,
Luxembourg. Financial information regarding the Bank is included in the
consolidated financial statements of The Chase Manhattan Corporation in The
Chase Manhattan Corporation's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998. Such report is available, and reports for
subsequent years will be available, at the office of the Listing Agent.
So long as there is no Paying Agent and Transfer Agent in Luxembourg,
Banque Generale du Luxembourg, S.A. will act as intermediary agent in
Luxembourg. In the event that Definitive Certificates are issued, a Paying
Agent and Transfer Agent will be appointed in Luxembourg.
The Certificates, the Agreement and the Series 1999-_ Supplement are
governed by the laws of the State of New York.
ERISA Considerations
Section 406 of the Employee Retirement Income Security Act of 1979,
as amended ("ERISA") and Section 4975 of the Code prohibit certain pension,
profit sharing or other employee benefit plans, individual retirement
accounts or annuities and employee annuity plans and Keogh plans
(collectively, "Plans") from engaging in certain transactions involving
"plan assets" with persons that are "parties in interest" under ERISA or
"disqualified persons" under the Code (collectively, "Parties in Interest")
with respect to the Plan. A violation of these "prohibited transaction"
rules may generate excise tax and other liabilities under ERISA and Section
4975 of the Code for such persons, unless a statutory, regulatory or
administrative exemption is available. Plans that are 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 ERISA requirements.
Class A Certificates
A violation of the prohibited transaction rules could occur if the
Class A Certificates were to be purchased with assets of any Plan if the
Transferor, the Master Trust Trustee, any of the Underwriters or any of
their affiliates were a Party in Interest with respect to such Plan, unless
a statutory, regulatory or administrative exemption is available or an
exemption applies under a regulation (the "Plan Asset Regulation") issued
by the Department of Labor ("DOL"). The Transferor, the Master Trust
Trustee, any of the Underwriters and their affiliates are likely to be
Parties in Interest with respect to many Plans. Before purchasing the Class
A Certificates, a Plan fiduciary or other Plan investor should consider
whether a prohibited transaction might arise by reason of the relationship
between the Plan and the Transferor, the Master Trust Trustee, any of the
Underwriters or any of their affiliates and consult their counsel regarding
the purchase in light of the considerations described below and in the
attached prospectus.
Under certain circumstances, the Plan Asset Regulation treats the
assets of an entity in which a Plan holds an equity interest as "plan
assets" of such Plan. Because the Class A Certificates will represent
beneficial interests in the Master Trust, and despite the agreement of the
Transferor and the Certificate Owners to treat the Class A Certificates as
debt instruments, the Class A Certificates are likely to be considered
equity interests in the Master Trust for purposes of the Plan Asset
Regulation, with the result that the assets of the Master Trust are likely
to be treated as "plan assets" of the investing Plans for purposes of ERISA
and Section 4975 of the Code, unless the exception for "publicly-offered
securities" is applicable as described in the attached prospectus. The
Underwriters anticipate that the Class A Certificates will meet the
criteria for treatment as "publicly-offered securities" as described in the
attached prospectus. No restrictions will be imposed on the transfer of the
Class A Certificates. It is expected that the Class A Certificates will be
held by at least 100 or more investors who were independent of the issuer
and of one another ("Independent Investors") at the conclusion of the
initial public offering although no assurance can be given, and no
monitoring or other measures will be taken to ensure, that such condition
is met. The Class A Certificates will be sold as part of an offering
pursuant to an effective registration statement under the Securities Act
and then will be timely registered under the Exchange Act.
If the foregoing exception under the Plan Asset Regulation were not
satisfied, transactions involving the Master Trust and Parties in Interest
with respect to a Plan that purchases or holds Class A Certificates might
be prohibited under Section 406 of ERISA and/or Section 4975 of the Code
and result in excise tax and other liabilities under ERISA and Section 4975
of the Code unless an exemption were available. The five DOL class
exemptions may not provide relief for all transactions involving the assets
of the Master Trust even if they would otherwise apply to the purchase of a
Class A Certificate by a Plan.
Class B Certificates
The Class B Underwriter currently does not expect that the Class B
Certificates will be held by at least 100 Independent Investors and,
therefore, does not expect that such Class B Certificates will qualify as
publicly-offered securities under the regulation referred to in the
preceding paragraph. Accordingly, the Class B Certificates may not be
acquired or held by (a) any employee benefit plan that is subject to ERISA,
(b) any plan or other arrangement (including an individual retirement
account or Keogh plan) that is subject to Section 4975 of the Code, or (c)
any entity whose underlying assets include "plan assets" under the
regulation by reason of any such plan's investment in the entity. By its
acceptance of a Class B Certificate, each Class B Certificateholder will be
deemed to have represented and warranted that it is not and will not be
subject to the foregoing limitation.
Consultation with Counsel
In light of the foregoing, fiduciaries or other persons contemplating
purchasing the Certificates on behalf or with "plan assets" of any Plan
should consult their own counsel regarding whether the Master Trust assets
represented by the Certificates would be considered "plan assets," the
consequences that would apply if the Master Trust assets were considered
"plan assets," and the applicability of exemptive relief from the
prohibited transaction rules.
Finally, Plan fiduciaries and other Plan investors should consider
the fiduciary standards under ERISA or other applicable law in the context
of the Plan's particular circumstances before authorizing an investment of
a portion of the Plan's assets in the Certificates. Accordingly, among
other factors, Plan fiduciaries and other Plan investors should consider
whether the investment (i) satisfies the diversification requirement of
ERISA or other applicable law, (ii) is in accordance with the Plan's
governing instruments, and (iii) is prudent in light of the "Risk Factors"
and other factors discussed in this prospectus supplement.
Underwriting
Subject to the terms and conditions set forth in the Underwriting
Agreement dated February 26, 1999 (the "Underwriting Agreement") between
Chase USA and the underwriters named below (the "Underwriters"), Chase USA
has agreed to sell to the Underwriters of the Class A Certificates (the
"Class A Underwriters") and the Underwriter of the Class B Certificates
(the "Class B Underwriter"), and each of the Underwriters has severally
agreed to purchase, the principal amount of the Class A Certificates and
the Class B Certificates, as applicable, set forth opposite its name:
Principal Amount of
Class A Underwriters Certificates
- -------------------- --------------------
Chase Securities Inc. $___________
- -------------------------------
- -------------------------------
- -------------------------------
Total $
===========
Principal Amount of
Class B Underwriter Class B Certificates
- ------------------- ----------------------
Chase Securities Inc. $__________
The price to public, Underwriters' discounts and commissions, the
concessions that the Underwriters may allow to certain dealers, and the
discounts that such dealers may reallow to certain other dealers, each
expressed as a percentage of the principal amount of the Class A and Class
B Certificates, shall be as follows:
Underwriting Selling
Discount and Concessions, Reallowance,
Price to Public Commissions Not to Exceed Not to Exceed
--------------- ------------ ------------- --------------
Class A Certificates _____% _____% _____% _____%
Class B Certificates _____% _____% _____% _____%
After the offering is completed, Chase USA will receive the proceeds,
after deduction of the underwriting and other expenses, listed below:
Proceeds to Transferor Underwriting
Proceeds to (as % of the Principal Discounts and
Transferor amount of the Certificates) Concessions
----------- --------------------------- --------------
Class A Certificates $__________ ______% $_________
Class B Certificates $__________ ______% $_________
After the public offering, the public offering price and other
selling terms may be changed by the Class A Underwriters and Class B
Underwriter, as the case may be.
Each Underwriter has represented and agreed that (a) it only issued
or passed on and will only issue or pass on in the United Kingdom any
document received by it in connection with the issue of the Certificates to
a person who is of a kind described in Article 11(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 or
who is a person to whom the document may otherwise lawfully be issued or
passed on, (b) it has complied and will comply with all applicable
provisions of the Financial Services Act 1986 of Great Britain with respect
to anything done by it in relation to the Certificates in, from or
otherwise involving the United Kingdom and (c) if that Underwriter is an
authorized person under the Financial Services Act 1986, it has only
promoted and will only promote (as that term is defined in Regulation 1.02
of the Financial Services (Promotion of Unregulated Schemes) Regulations
1991) to any person in the United Kingdom the scheme described herein if
that person is of a kind described either in Section 76(2) of the Financial
Services Act 1986 or in Regulation 1.04 of the Financial Services
(Promotion of Unregulated Schemes) Regulations 1991.
Chase USA will indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or contribute
to payments the Underwriters may be required to make in respect thereof.
Chase Securities Inc. is a wholly owned subsidiary of The Chase
Manhattan Corporation. See "Chase USA" in the attached prospectus.
The Underwriters may engage in over-allotment transactions,
stabilizing transactions, syndicate covering transactions and penalty bids
with respect to the Certificates in accordance with Regulation M under the
Exchange Act. Over-allotment transactions involve syndicate sales in excess
of the offering size creating a syndicate short position. Stabilizing
transactions permit bids to purchase the Certificates so long as the
stabilizing bids do not exceed a specified maximum. Syndicate covering
transactions involve purchases of the Certificates in the open market after
the distribution has been completed in order to cover syndicate short
positions. Penalty bids permit the Underwriters to reclaim a selling
concession from a syndicate member when the Certificates 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 prices of the Certificates
to be higher than they would otherwise be in the absence of such
transactions. Neither the Master Trust nor any of the Underwriters
represent that the Underwriters will engage in any such transactions nor
that such transactions, once commenced, will not be discontinued without
notice.
This prospectus supplement and the attached prospectus may be used by
Chase Securities Inc. in connection with offers and sales related to
market-making transactions in 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. Chase
Securities Inc. has no obligation to make a market in the Certificates and
any such market-making may be discontinued at any time without notice, in
its sole discretion. Chase Securities Inc. is among the Underwriters
participating in the initial distribution of the Certificates.
Exchange Listing
Chase USA has applied to list the Certificates on the Luxembourg
Stock Exchange. Chase USA cannot guaranty that the application for the
listing will be accepted. You should consult with Banque Generale du
Luxembourg, S.A., the Luxembourg listing agent for the Certificates, 50
Avenue J.F. Kennedy, L-2951 Luxembourg, phone number (352) 42423113, to
determine whether or not the Certificates are listed on the Luxembourg
Stock Exchange.
This prospectus supplement and the attached prospectus have been
prepared by the Bank solely for use in connection with the offering and
listing of the Certificates described herein. The Bank has taken reasonable
care to ensure that facts stated in this Prospectus Supplement and the
attached Prospectus are true and accurate in all material respects and
there have not been omitted material facts the omission of which would make
misleading any statements of fact or opinion herein or therein. The Bank
accepts responsibility accordingly.
Index of Terms for Prospectus Supplement
Term Page
----
Accounts ..............................................................S-18
Accumulation Period Length................................................S-33
Accumulation Shortfall....................................................S-43
Addition Date.............................................................S-34
Additional Certificates...................................................S-49
Additional Interest.......................................................S-31
Additional Issuance.......................................................S-49
Adjusted Investor Interest................................................S-36
Agreement ..............................................................S-18
Available Investor Principal Collections..................................S-33
Available Reserve Account Amount..........................................S-48
Bank ..............................................................S-18
Base Rate ..............................................................S-26
Cedelbank ..............................................................S-30
Certificateholders........................................................S-18
Certificates..............................................................S-18
Chase USA ..............................................................S-18
Class A Additional Interest...............................................S-31
Class A Adjusted Investor Interest........................................S-35
Class A Available Funds...................................................S-31
Class A Certificate Rate..................................................S-31
Class A Certificateholders................................................S-18
Class A Certificates......................................................S-18
Class A Covered Amount....................................................S-47
Class A Fixed Allocation..................................................S-35
Class A Floating Allocation...............................................S-34
Class A Investor Charge-off...............................................S-46
Class A Investor Default Amount...........................................S-46
Class A Investor Interest.................................................S-35
Class A Monthly Interest..................................................S-39
Class A Monthly Principal.................................................S-42
Class A Principal Funding Investment Shortfall............................S-47
Class A Required Amount...................................................S-36
Class A Scheduled Payment Date............................................S-25
Class A Servicing Fee.....................................................S-52
Class A Underwriters......................................................S-56
Class B Additional Interest...............................................S-31
Class B Available Funds...................................................S-31
Class B Certificate Rate..................................................S-31
Class B Certificateholders................................................S-18
Class B Certificates......................................................S-18
Class B Fixed Allocation..................................................S-35
Class B Floating Allocation...............................................S-34
Class B Investor Charge-off...............................................S-47
Class B Investor Default Amount...........................................S-46
Class B Investor Interest.................................................S-35
Class B Monthly Interest..................................................S-39
Class B Monthly Principal.................................................S-42
Class B Required Amount...................................................S-36
Class B Scheduled Payment Date............................................S-25
Class B Servicing Fee.....................................................S-52
Class B Underwriter.......................................................S-56
Closing Date..............................................................S-31
CMB.......................................................................S-18
Collateral Available Funds................................................S-39
Collateral Charge-off.....................................................S-47
Collateral Default Amount.................................................S-46
Collateral Fixed Allocation...............................................S-35
Collateral Floating Allocation............................................S-34
Collateral Interest.......................................................S-36
Collateral Interest Holder................................................S-36
Collateral Interest Servicing Fee.........................................S-52
Collateral Monthly Interest...............................................S-40
Collateral Monthly Principal..............................................S-43
Collateral Rate...........................................................S-40
Companion Series..........................................................S-49
Controlled Accumulation Amount............................................S-43
Controlled Accumulation Period............................................S-25
Controlled Deposit Amount.................................................S-25
Cut-off Date..............................................................S-18
Default Amount............................................................S-46
Distribution Date.........................................................S-31
DOL.......................................................................S-54
DTC.......................................................................S-30
ERISA.....................................................................S-53
Euroclear.................................................................S-30
Excess Finance Charge Collections.........................................S-45
Excess Funding Account....................................................S-32
Excess Spread.............................................................S-39
Fixed Investor Percentage.................................................S-35
Floating Investor Percentage..............................................S-34
Group I...................................................................S-44
Independent Investors.....................................................S-54
Initial Collateral Interest...............................................S-45
Interest Period...........................................................S-29
investment company........................................................S-26
Investor Default Amount...................................................S-46
Investor Interest.........................................................S-36
Investor Servicing Fee....................................................S-51
LIBOR.....................................................................S-32
Libor Determination Date..................................................S-31
Listing Agent.............................................................S-53
Loan Agreement............................................................S-32
Master Trust Trustee......................................................S-18
Master Trust Yield........................................................S-10
Minimum Aggregate Principal Receivables...................................S-18
Minimum Transferor Interest...............................................S-18
Monthly Period............................................................S-34
Net Servicing Fee Rate....................................................S-52
Parties in Interest.......................................................S-53
Pay out Event.............................................................S-50
Plan Asset Regulation.....................................................S-54
Plans.....................................................................S-53
Portfolio Yield...........................................................S-26
Principal Funding Account.................................................S-47
Principal Funding Account Balance.........................................S-25
Principal Funding Investment Proceeds.....................................S-47
Principal Shortfalls......................................................S-45
Rating Agency Condition...................................................S-46
Reallocated Class B Principal Collections.................................S-37
Reallocated Collateral Principal Collections..............................S-37
Reallocated Principal Collections.........................................S-37
Receivables ..............................................................S-18
Record Date ..............................................................S-29
Recoveries ..............................................................S-20
Reference Banks...........................................................S-32
Removal Date..............................................................S-34
Removed Accounts..........................................................S-19
Required Amount...........................................................S-33
Required Collateral Interest..............................................S-45
Required Reserve Account Amount...........................................S-48
Reserve Account...........................................................S-47
Reserve Account Funding Date..............................................S-48
Revolving Period..........................................................S-32
Series 1999-_ Certificates................................................S-18
Series 1999-_ Supplement..................................................S-18
Series 1999-_ Termination Date............................................S-42
Servicer Interchange......................................................S-51
Servicing Fee.............................................................S-51
Shared Principal Collections..............................................S-45
Telerate Page 3750........................................................S-32
Transfer Date.............................................................S-38
Transferor................................................................S-18
Transferor Certificate....................................................S-29
Transferor Interest.......................................................S-34
Transferor Percentage.....................................................S-29
Trust Portfolio...........................................................S-18
U.S.......................................................................S-30
Underwriters..............................................................S-56
Underwriting Agreement....................................................S-56
Annex I
Other Series Issued and Outstanding
The table below sets forth the principal characteristics of the
______ other Series previously issued by the Master Trust and currently
outstanding. For more specific information with respect to any Series, any
prospective investor should contact The Chase Manhattan Bank at (212)
270-6000. The Chase Manhattan Bank will provide, without charge, to any
prospective purchaser of the Certificates, a copy of the Disclosure
Documents for any other publicly issued Series.
Series 1995-2
1. Class A Certificates
Initial Investor Interest..................... $600,000,000
Certificate Rate.............................. 6.23%
Controlled Accumulation Amount (subject to
adjustment)................................... $50,000,000
Commencement of Controlled Accumulation
Period (subject toadjustment)................. September 30, 1999
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... $47,728,181.82
Other Enhancement............................. Subordination of Class B
Certificates
Scheduled Payment Date........................ October 15, 2000
Series 1995-2 Termination Date................ June 15, 2003
Series Issuance Date.......................... October 19, 1995
2. Class B Certificates
Initial Investor Interest..................... $34,090,000
Certificate Rate.............................. 6.38%
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... Same as above for Class
A Certificates
Scheduled Payment Date........................ November 15, 2000
Series 1995-2 Termination Date................ Same as above for Class
A Certificates
Series Issuance Date.......................... Same as above for Class
A Certificates
Series 1995-3
1. Class A Certificates
Initial Investor Interest..................... $450,000,000
Certificate Rate.............................. 6.23%
Controlled Accumulation Amount (subject to
adjustment)................................... $37,500,000
Commencement of Controlled Accumulation Period
(subject to adjustment)....................... July 31, 2001
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... $35,795,636.36
Other Enhancement............................. Subordination of Class B
Certificates
Scheduled Payment Date........................ August 15, 2002
Series 1995-3 Termination Date................ April 15, 2005
Series Issuance Date.......................... November 21, 1995
2. Class B Certificates
Initial Investor Interest..................... $25,568,000
Certificate Rate.............................. 6.39%
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... Same as above for Class
A Certificates
Scheduled Payment Date........................ September 15, 2002
Series 1995-3 Termination Date................ Same as above for Class
A Certificates
Series Issuance Date.............................. Same as above for Class
A Certificates
Series 1995-4
1. Class A Certificates
Initial Investor Interest..................... $300,000,000
Certificate Rate.............................. Three Month LIBOR +
0.20%
Controlled Accumulation Amount (subject to
adjustment)................................... $25,000,000
Commencement of Controlled Accumulation Period
(subject to adjustment)....................... October 31, 2001
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... $35,714,857.14
Other Enhancement............................. Subordination of Class B
Certificates
Scheduled Payment Date........................ November 25, 2002
Series 1995-4 Termination Date................ July 25, 2005
Series Issuance Date.......................... November 29, 1995
2. Class B Certificates
Initial Investor Interest..................... $21,428,000
Certificate Rate.............................. Three Month LIBOR +
0.32%
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... Same as above for Class
A Certificates
Scheduled Payment Date........................ November 25, 2002
Series 1995-4 Termination Date................ Same as above for Class
A Certificates
Series Issuance Date.......................... Same as above for Class
A Certificates
Series 1996-1
1. Class A Certificates
Initial Investor Interest..................... $700,000,000
Certificate Rate.............................. 5.55%
Controlled Accumulation Amount
(subject to adjustment)....................... $58,333,333.33
Commencement of Controlled Accumulation
Period (subject to adjustment)................ December 31, 1999
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... $55,682,545.45
Other Enhancement............................. Subordination of Class B
Certificates
Scheduled Payment Date........................ January 15, 2001
Series 1996-1 Termination Date................ September 15, 2003
Series Issuance Date.......................... January 23, 1996
2. Class B Certificates
Initial Investor Interest..................... $39,772,000
Certificate Rate.............................. 5.71%
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... Same as above for Class
A Certificates
Scheduled Payment Date........................ February 15, 2001
Series 1996-1 Termination Date................ Same as above for Class
A Certificates
Series Issuance Date.......................... Same as above for Class
A Certificates
Series 1996-2
1. Class A Certificates
Initial Investor Interest..................... $550,000,000
Certificate Rate.............................. 5.98%
Controlled Accumulation Amount (subject to
adjustment)................................... $45,833,333.33
Commencement of Controlled Accumulation
Period (subject to adjustment)................ December 31, 2004
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... $43,750,000.00
Other Enhancement............................. Subordination of Class B
Certificates
Scheduled Payment Date........................ January 15, 2006
Series 1996-2 Termination Date................ September 15, 2008
Series Issuance Date.......................... January 23, 1996
2 Class B Certificates
Initial Investor Interest..................... $31,250,000
Certificate Rate.............................. 6.16%
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... Same as above for Class
A Certificates
Scheduled Payment Date........................ February 15, 2006
Series 1996-2 Termination Date................ Same as above for Class
A Certificates
Series Issuance Date.......................... Same as above for Class
A Certificates
Series 1996-3
1. Class A Certificates
Initial Investor Interest..................... $411,983,000
Certificate Rate.............................. 7.09%
Controlled Accumulation Amount (subject
to adjustment)................................ $34,331,916.67
Commencement of Controlled Accumulation
Period (subject to adjustment)................ May 31, 2005
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... $32,772,440.86
Other Enhancement............................. Subordination of Class B
Certificates
Scheduled Payment Date........................ June 15, 2006
Series 1996-3 Termination Date................ February 15, 2009
Series Issuance Date.......................... May 30, 1996
2. Class B Certificates
Initial Investor Interest..................... $23,408,000
Certificate Rate.............................. 7.27%
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... Same as above for Class
A Certificates
Scheduled Payment Date........................ July 15, 2006
Series 1996-3 Termination Date................ Same as above for Class
A Certificates
Series Issuance Date.......................... Same as above for Class
A Certificates
Series 1996-4
1. Class A Certificates
Initial Investor Interest..................... $1,400,000,000
Certificate Rate.............................. One Month LIBOR + 0.13%
Controlled Accumulation Amount (subject to
adjustment)................................... $116,666,666.67
Commencement of Controlled Accumulation
Period (subject to adjustment)................ October 31, 2002
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... $150,000,666.67
Other Enhancement............................. Subordination of Class B
Certificates
Scheduled Payment Date........................ November 17, 2003
Series 1996-4 Termination Date................ July 17, 2006
Series Issuance Date.......................... November 14, 1996
2. Class B Certificates
Initial Investor Interest..................... $116,666,000
Certificate Rate.............................. One Month LIBOR + 0.35%
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... Same as above for Class
A Certificates
Scheduled Payment Date........................ December 15, 2003
Series 1996-4 Termination Date................ Same as above for Class
A Certificates
Series Issuance Date.......................... Same as above for Class
A Certificates
Series 1997-1
1. Class A Certificates
Initial Investor Interest..................... $1,150,000,000
Certificate Rate.............................. One Month LIBOR + 0.09%
Controlled Accumulation Amount (subject to
adjustment)................................... $95,833,333.33
Commencement of Controlled Accumulation
Period (subject to adjustment)................ January 31, 2003
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... $123,214,619
Other Enhancement............................. Subordination of Class B
Certificates
Scheduled Payment Date........................ February 15, 2004
Series 1997-1 Termination Date................ October 15, 2006
Series Issuance Date.......................... February 24, 1997
2. Class B Certificates
Initial Investor Interest..................... $95,833,000
Certificate Rate.............................. One Month LIBOR + 0.29%
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... Same as above for Class
A Certificates
Scheduled Payment Date........................ March 15, 2004
Series 1997-1 Termination Date................ Same as above for Class
A Certificates
Series Issuance Date.......................... Same as above for Class
A Certificates
Series 1997-2
1. Class A Certificates
Initial Investor Interest..................... $1,500,000,000
Certificate Rate.............................. 6.30%
Controlled Accumulation Amount (subject to
adjustment)................................... $125,000,000
Commencement of Controlled Accumulation
Period (subject to adjustment)................ July 31, 1999
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... $119,318,455
Other Enhancement............................. Subordination of Class B
Certificates
Scheduled Payment Date........................ August 15, 2000
Series 1997-2 Termination Date................ April 15, 2003
Series Issuance Date.......................... August 18, 1997
2. Class B Certificates
Initial Investor Interest..................... $85,227,000
Certificate Rate.............................. 6.45%
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... Same as above for Class
A Certificates
Scheduled Payment Date........................ September 15, 2000
Series 1997-2 Termination Date................ Same as above for Class
A Certificates
Series Issuance Date.......................... Same as above for Class
A Certificates
Series 1997-3
1. Class A Certificates
Initial Investor Interest..................... $250,000,000
Certificate Rate.............................. 6.777%
Controlled Accumulation Amount (subject to
adjustment.................................... One-twelfth of
outstanding balance
of Class A Certificates
on August 1, 2003
Commencement of Controlled Accumulation
Period (subject to adjustment)................ August 31, 2003
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... $26,786,048
Other Enhancement............................. Subordination of Class B
Certificates
Scheduled Payment Date........................ September 15, 2004
Series 1997-3 Termination Date................ May 15, 2007
Series Issuance Date.......................... September 22, 1997
2. Class B Certificates
Initial Investor Interest..................... $20,833,000
Certificate Rate.............................. One Month LIBOR + 0.35%
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... Same as above for Class
A Certificates
Scheduled Payment Date........................ October 15, 2004
Series 1997-3 Termination Date................ Same as above for Class
A Certificates
Series Issuance Date.......................... Same as above for
Class A Certificates
Series 1997-4
1. Class A Certificates
Initial Investor Interest..................... $600,000,000
Certificate Rate.............................. One Month LIBOR + 0.16%
Controlled Accumulation Amount (subject to
adjustment)................................... $50,000,000
Commencement of Controlled Accumulation
Period (subject to adjustment)................ November 30, 2001
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... $64,285,715
Other Enhancement............................. Subordination of Class B
Certificates
Scheduled Payment Date........................ December 15, 2002
Series 1997-4 Termination Date................ August 15, 2005
Series Issuance Date.......................... December 8, 1997
2. Class B Certificates
Initial Investor Interest..................... $50,000,000
Certificate Rate.............................. One Month LIBOR + 0.36%
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... Same as above for Class
A Certificates
Scheduled Payment Date........................ January 15, 2003
Series 1997-4 Termination Date................ Same as above for Class
A Certificates
Series Issuance Date.......................... Same as above for Class
A Certificates
Series 1997-5
1. Class A Certificates
Initial Investor Interest..................... $500,000,000
Certificate Rate.............................. 6.194%
Controlled Accumulation Amount (subject to
adjustment)................................... $41,666,667
Commencement of Controlled Accumulation Period
(subject to adjustment)....................... November 30, 2001
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... $39,772,819
Other Enhancement............................. Subordination of Class B
Certificates
Scheduled Payment Date........................ December 15, 2002
Series 1997-5 Termination Date................ August 15, 2005
Series Issuance Date.......................... December 23, 1997
2. Class B Certificates
Initial Investor Interest..................... $28,409,000
Certificate Rate.............................. 6.388%
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... Same as above for Class
A Certificates
Scheduled Payment Date........................ January 15, 2003
Series 1997-5 Termination Date................ Same as above for Class
A Certificates
Series Issuance Date.......................... Same as above for Class
A Certificates
Series 1998-1
1. Class A-1 Certificates
Initial Investor Interest..................... $273,822,563
Certificate Rate.............................. One Month LIBOR + 0.231%
Controlled Accumulation Amount (subject to
adjustment)................................... $22,818,547
Commencement of Controlled Accumulation
Period (subject to adjustment)................ January 31, 2004
Annual Servicing Fee Percentage............... 2.0%
Enhancement................................... Subordination of Class B
Certificates and
Initial Collateral
Interest
Scheduled Payment Date........................ February 15, 2005
Series 1998-1 Termination Date................ October 15, 2007
Series Issuance Date.......................... February 12, 1998
Class A-2 Certificates
Initial Investor Interest..................... $245,278,391
Certificate Rate.............................. One Month LIBOR +
0.1885%
Controlled Accumulation Amount (subject to
adjustment)................................... $20,439,866
Commencement of Controlled Accumulation
Period (subject to adjustment)................ January 31, 2004
Annual Servicing Fee Percentage............... 2.0%
Enhancement................................... Subordination of Class B
Certificates and
Initial Collateral
Interest
Scheduled Payment Date........................ February 15, 2005
Series 1998-1 Termination Date................ October 15, 2007
Series Issuance Date.......................... February 12, 1998
Class A-3 Certificates
Initial Investor Interest..................... $243,131,534
Certificate Rate.............................. One Month LIBOR +
0.2445%
Controlled Accumulation Amount (subject to
adjustment)................................... $20,260,961
Commencement of Controlled Accumulation
Period (subject to adjustment)................ January 31, 2004
Annual Servicing Fee Percentage............... 2.0%
Enhancement................................... Subordination of Class B
Certificates and
Initial Collateral
Interest
Scheduled Payment Date........................ February 15, 2005
Series 1998-1 Termination Date................ October 15, 2007
Series Issuance Date.......................... February 12, 1998
2. Class B Certificates
Initial Investor Interest..................... $63,519,000
Certificate Rate.............................. One Month LIBOR + 0.37%
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... $81,668,141
Scheduled Payment Date........................ March 15, 2005
Series 1998-1 Termination Date................ Same as above for Class
A Certificates
Series Issuance Date.......................... Same as above for Class
A Certificates
Series 1998-2
1. Class A Certificates
Initial Investor Interest..................... $800,000,000
Certificate Rate.............................. Federal Funds Rate +
0.24%
Controlled Accumulation Amount (subject to
adjustment)................................... $66,666,667
Commencement of Controlled Accumulation
Period (subject to adjustment)................ January 31, 2000
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... $85,714,953
Other Enhancement............................. Subordination of Class B
Certificates
Scheduled Payment Date........................ February 15, 2001
Series 1998-2 Termination Date................ February 15, 2003
Series Issuance Date.......................... March 9, 1998
2. Class B Certificates
Initial Investor Interest..................... $66,666,000
Certificate Rate.............................. One Month LIBOR + 0.25%
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... Same as above for Class
A Certificates
Scheduled Payment Date........................ March 15, 2003
Series 1998-2 Termination Date................ Same as above for Class
A Certificates
Series Issuance Date.......................... Same as above for
Class A Certificates
Series 1998-3
1. Class A Certificates
Initial Investor Interest..................... $600,000,000
Certificate Rate.............................. 6.000%
Controlled Accumulation Amount (subject to
adjustment)................................... $50,000,000
Commencement of Controlled Accumulation
Period (subject to adjustment)................ March 31, 2002
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... $47,728,182
Other Enhancement............................. Subordination of Class B
Certificates
Scheduled Payment Date........................ April 15, 2003
Series 1998-3 Termination Date................ August 15, 2005
Series Issuance Date.......................... May 1, 1998
2. Class B Certificates
Initial Investor Interest..................... $34,090,000
Certificate Rate.............................. 6.150%
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... Same as above for Class
A Certificates
Scheduled Payment Date........................ May 15, 2003
Series 1998-3 Termination Date................ Same as above for Class
A Certificates
Series Issuance Date.......................... Same as above for Class
A Certificates
Series 1998-4
1. Class A Certificates
Initial Investor Interest..................... $552,486,188
Certificate Rate.............................. One Month LIBOR + 0.134%
Controlled Accumulation Amount (subject to
adjustment)................................... $46,040,516
Commencement of Controlled Accumulation
Period (subject to adjustment)............... July 31, 2007
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... $59,195,465
Other Enhancement............................. Subordination of Class B
Certificates
Scheduled Payment Date........................ August 15, 2008
Series 1998-4 Termination Date................ December 15, 2010
Series Issuance Date.......................... July 28, 1998
2. Class B Certificates
Initial Investor Interest..................... $46,040,000
Certificate Rate.............................. One Month LIBOR + 0.36%
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... Same as above for Class
A
Certificates
Scheduled Payment Date........................ September 15, 2008
Series 1998-4 Termination Date................ Same as above for Class
A Certificates
Series Issuance Date.......................... Same as above for Class
A Certificates
Series 1998-5
1. Class A Certificates
Initial Investor Interest..................... $650,000,000
Certificate Rate.............................. One Month LIBOR + 0.16%
Controlled Accumulation Amount (subject to
adjustment)................................... $54,166,667
Commencement of Controlled Accumulation
Period (subject to adjustment)................ August 31, 2002
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... $69,643,524
Other Enhancement............................. Subordination of Class B
Certificates
Scheduled Payment Date........................ September 15, 2003
Series 1998-5 Termination Date................ January 15, 2006
Series Issuance Date.......................... September 24, 1998
2. Class B Certificates
Initial Investor Interest..................... $54,166,000
Certificate Rate.............................. One Month LIBOR + 0.36%
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... Same as above for Class
A Certificates
Scheduled Payment Date........................ October 15, 2003
Series 1998-5 Termination Date................ Same as above for Class
A Certificates
Series Issuance Date.......................... Same as above for Class
A Certificates
Series 1998-6
1. Class A Certificates
Initial Investor Interest..................... $650,000,000
Certificate Rate.............................. One Month LIBOR + 0.26%
Controlled Accumulation Amount (subject to
adjustment)................................... $54,166,667
Commencement of Controlled Accumulation
Period (subject to adjustment)................ April 30, 2001
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... $69,643,524
Other Enhancement............................. Subordination of Class B
Certificates
Scheduled Payment Date........................ May 15, 2002
Series 1998-6 Termination Date................ September 15, 2004
Series Issuance Date.......................... November 24, 1998
2. Class B Certificates
Initial Investor Interest..................... $54,166,000
Certificate Rate.............................. One Month LIBOR + 0.51%
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... Same as above for Class
A Certificates
Scheduled Payment Date........................ June 15, 2002
Series 1998-6 Termination Date................ Same as above for Class
A Certificates
Series Issuance Date.......................... Same as above for Class
A Certificates
Series 1999-1
1. Class A Certificates
Initial Investor Interest..................... $750,000,000
Certificate Rate.............................. One Month LIBOR + 0.16%
Controlled Accumulation Amount (subject to
adjustment)................................... $62,500,000
Commencement of Controlled Accumulation
Period (subject to adjustment)................ April 30, 2003
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... $80,357,145
Other Enhancement............................. Subordination of Class B
Certificates
Scheduled Payment Date........................ May 15, 2004
Series 1999-1 Termination Date................ September 15, 2006
Series Issuance Date.......................... March 4, 1999
2. Class B Certificates
Initial Investor Interest..................... $62,500,000
Certificate Rate.............................. One Month LIBOR + 0.39%
Annual Servicing Fee Percentage............... 2.0%
Initial Collateral Interest................... Same as above for Class
A Certificates
Scheduled Payment Date........................ June 15, 2004
Series 1999-1 Termination Date................ Same as above for Class
A Certificates
Series Issuance Date.......................... Same as above for Class
A Certificates
[FLAG]
The information in this prospectus supplement and prospectus is not
complete and may be changed. We cannot sell these securities until the
registration statement filed with the Securities and Exchange Commission is
effective. Neither this prospectus supplement nor the prospectus is an
offer to sell these securities and it is not soliciting an offer to buy
these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED JUNE 16, 1999
PROSPECTUS SUPPLEMENT TO PROSPECTUS, DATED ____, 199__
CHASE CREDIT CARD OWNER TRUST 1999-__
Issuer
CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION, Transferor and Administrator
THE CHASE MANHATTAN BANK, Servicer of Chase Credit Card Master Trust
$_________ CLASS A FLOATING RATE ASSET BACKED NOTES, SERIES 1999-__
$_________ CLASS B FLOATING RATE ASSET BACKED NOTES, SERIES 1999-__
$_________ CLASS C FLOATING RATE ASSET BACKED NOTES, SERIES 1999-__
<TABLE>
<S> <C> <C> <C>
Class A Class B Class C
Principal Amount $_______________ $_______________ $_______________
Price $________ (___%) $________ (___%) $________ (___%)
Underwriters' Commissions $________ (___%) $________ (___%) $________ (___%)
Proceeds to the Issuer $________ (___%) $________ (___%) $________ (___%)
Interest Rate one-month LIBOR + one-month LIBOR + one-month LIBOR +
___% p.a. ___% p.a. ___% p.a.
Interest Payment Dates monthly on the 15th monthly on the 15th monthly on the 15th
First Interest Payment Date ____________, 1999 _____________, 1999 _____________, 1999
Note Maturity Date ____________, ___ _____________, ____ _____________, ____
</TABLE>
THE CLASS B NOTES ARE SUBORDINATED TO THE CLASS A NOTES. THE CLASS C NOTES
ARE SUBORDINATED TO THE CLASS A NOTES AND THE CLASS B NOTES.
THESE SECURITIES ARE INTERESTS IN CHASE CREDIT CARD OWNER TRUST 1999-__,
AND ARE BACKED ONLY BY THE ASSETS OF THE OWNER TRUST. NEITHER THESE
SECURITIES NOR THE ASSETS OF THE OWNER TRUST ARE RECOURSE OBLIGATIONS OF
CHASE CREDIT CARD MASTER TRUST, CHASE MANHATTAN BANK USA, N.A., THE CHASE
MANHATTAN BANK OR ANY OF THEIR AFFILIATES, OR OBLIGATIONS INSURED BY THE
FDIC.
THESE SECURITIES ARE HIGHLY STRUCTURED. BEFORE YOU PURCHASE THESE
SECURITIES, BE SURE YOU UNDERSTAND THE STRUCTURE AND THE RISKS. SEE "RISK
FACTORS" BEGINNING ON PAGE S-15 OF THIS PROSPECTUS SUPPLEMENT.
WE HAVE APPLIED TO HAVE THE SECURITIES LISTED ON THE LUXEMBOURG STOCK
EXCHANGE.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED ON THE
ADEQUACY OR ACCURACY OF THE DISCLOSURES IN THIS SUPPLEMENT AND THE ATTACHED
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The underwriters for each class of notes have agreed to purchase those
notes, subject to the terms and conditions in the underwriting agreement.
Underwriters of the Class A Notes
CHASE SECURITIES INC.
Underwriters of the Class B Notes
CHASE SECURITIES INC.
Underwriters of the Class C Notes
CHASE SECURITIES INC.
The date of this Prospectus Supplement is ______, 1999.
TABLE OF CONTENTS
WHERE TO FIND INFORMATION IN THESE DOCUMENTS.........................S-4
SUMMARY OF TERMS.....................................................S-6
STRUCTURAL SUMMARY...................................................S-8
SELECTED MASTER TRUST PORTFOLIO SUMMARY DATA........................S-13
RISK FACTORS........................................................S-15
You May Receive Principal Payments Earlier or Later than
the Scheduled Maturity Date if the Portfolio Yield is
Reduced.......................................................S-15
ALLOCATIONS OF CHARGED-OFF RECEIVABLES COULD REDUCE
PAYMENTS TO YOU...............................................S-18
ISSUANCE OF ADDITIONAL SERIES BY THE MASTER TRUST MAY
AFFECT THE TIMING OF PAYMENTS TO YOU..........................S-18
CHASE USA MAY ADD ACCOUNTS WITH DIFFERENT TERMS TO
THE MASTER TRUST PORTFOLIO ...................................S-18
CHASE USA MAY NOT BE ABLE TO ADD NEW ACCOUNTS WHEN
REQUIRED UNDER THE POOLING AND SERVICING AGREEMENT............S-19
INSOLVENCY OR BANKRUPTCY OF CHASE USA COULD RESULT IN
ACCELERATED, DELAYED OR REDUCED PAYMENTS TO YOU...............S-19
YOU WILL HAVE LIMITED CONTROL OF OWNER TRUST AND MASTER
TRUST ACTIONS.................................................S-21
You May Not Be Able to Resell Your Notes.........................S-21
Repayment of Your Notes is Limited to the Owner Trust
Assets........................................................S-22
Class B and Class C Bear Losses Before Class A...................S-22
CHASE CREDIT CARD MASTER TRUST PORTFOLIO............................S-23
GENERAL..........................................................S-23
Delinquency and Loss Experience..................................S-23
Characteristics of Receivables Portfolio.........................S-24
MATURITY CONSIDERATIONS.............................................S-28
Controlled Accumulation..........................................S-28
Rapid Amortization Period........................................S-29
Historical Payment Rates.........................................S-29
RECEIVABLE YIELD CONSIDERATIONS.....................................S-30
CREATION OF THE OWNER TRUST.........................................S-31
USE OF PROCEEDS.....................................................S-31
DESCRIPTION OF THE SECURITIES.......................................S-32
Description of the Series Certificate............................S-32
General..........................................................S-32
Interest Allocations.............................................S-33
Principal Allocations............................................S-33
Controlled Accumulation..........................................S-34
Allocation Percentages...........................................S-34
Reallocation of Cash Flows.......................................S-35
Application of Collections.......................................S-35
Shared Excess Finance Charge Collections.........................S-40
Shared Principal Collections.....................................S-40
Defaulted Receivables............................................S-40
Principal Funding Account........................................S-41
Accumulation Period Reserve Account..............................S-41
Pay Out Events...................................................S-42
Servicing Fees and Expenses......................................S-45
DESCRIPTION OF THE NOTES............................................S-45
General..........................................................S-45
Subordination....................................................S-46
Interest Payments................................................S-46
Principal Payments...............................................S-47
Optional Redemption..............................................S-48
Distributions....................................................S-48
Owner Trust Spread Account.......................................S-49
Events of Default................................................S-51
Noteholder Reports...............................................S-51
LISTING AND GENERAL INFORMATION.....................................S-52
UNDERWRITING........................................................S-53
EXCHANGE LISTING....................................................S-55
OTHER SERIES ISSUED AND OUTSTANDING.................................S-55
GLOSSARY OF TERMS FOR PROSPECTUS SUPPLEMENT.........................S-66
WHERE TO FIND INFORMATION IN THESE DOCUMENTS
The attached prospectus provides general information about Chase
Credit Card Owner Trust 1999-__ and Chase Credit Card Master Trust,
including terms and conditions that are generally applicable to the notes
issued by the owner trust and the certificates issued by the master trust.
The specific terms of the notes and the series certificate are described in
this supplement.
This supplement begins with several introductory sections describing
your series, Chase Credit Card Owner Trust 1999-___ and Chase Credit Card
Master Trust in abbreviated form:
o Summary of Terms provides important amounts, dates and other
terms of your notes;
o Structural Summary gives a brief introduction to the key
structural features of your notes and the series certificate
and directions for locating further information;
o Selected Master Trust Portfolio Summary Data gives certain
financial information about the assets of the master trust;
and
o Risk Factors describes risks that apply to your notes and the
series certificate.
As you read through these sections, cross-references will direct you
to more detailed descriptions in the attached prospectus and elsewhere in
this supplement. You can also directly reference key topics by looking at
the table of contents pages in this supplement and the attached prospectus.
As a purchaser of notes, you should review carefully the description
of the series certificate in this prospectus supplement and the prospectus.
The most significant asset of the owner trust will be the series
certificate issued by the master trust and pledged to secure the notes.
This prospectus supplement and the attached prospectus may be used by
Chase Securities Inc., an affiliate of Chase Manhattan Bank USA, N.A. and
of The Chase Manhattan Bank and a subsidiary of The Chase Manhattan
Corporation, in connection with offers and sales related to market-making
transactions in the notes offered by this supplement and the attached
prospectus. 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.
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the prospectus. We have not
authorized anyone to provide you with different information.
We are not offering these notes in any state where the offer is not
permitted.
We do not make any representation as to the accuracy of the
information in this prospectus supplement and the prospectus as of any date
other than the dates stated on their respective covers.
TO UNDERSTAND THE STRUCTURE OF THESE SECURITIES, YOU MUST READ CAREFULLY
THE ATTACHED PROSPECTUS AND THIS SUPPLEMENT IN THEIR ENTIRETY.
SUMMARY OF TERMS
Seller and Administrator: Chase Manhattan Bank USA, National
Association - "Chase USA"
Issuer: Chase Credit Card Owner Trust 1999-__
Indenture Trustee:
Owner Trustee:
Pricing Date: _________, ____
Closing Date: _________, ____
Clearance and Settlement: DTC/Cedelbank/Euroclear
Owner Trust Assets: The series certificate issued by Chase Credit
Card Master Trust representing the right to
certain collections on receivables originated
in the VISA and MasterCard accounts
comprising the master trust portfolio,
including recoveries on charged-off
receivables and fees payable by VISA and
MasterCard to Chase USA. The series
certificate will be rated in one of the four
highest rating categories by at least one
nationally recognized rating agency.
% of Initial Series
Note Structure: Amount Principal Amount
Class A $___________ ___%
Class B $___________ ___%
Class C $___________ ___%
Annual Servicing Fee:
CLASS A CLASS B CLASS C
Anticipated Ratings:
(Moody's/S&P/Fitch Aaa/AAA/AAA* A2/A/A* [Baa2/BBB/BBB]**
IBCA)
Credit Enhancement: subordination subordination spread account
of Class B of Class C
and Class C
ERISA Eligible: Yes*** Yes*** Yes***
Interest Rate: [1-month LIBOR + [1-month LIBOR + [1-month LIBOR +
___% p.a.] ___% p.a.] ___% p.a.]
Interest Accrual
Method: actual/360 actual/360 actual/360
Interest Payment
Dates: monthly (15th) monthly (15th) monthly (15th)
Interest Rate Index [2 business days [2 business days [2 business days
Reset Date: before each before each before each
interest interest interest
payment date] payment date] payment date]
First Interest
Payment Date: _________, ___ _________, ___ __________, ___
Scheduled Note
Payment Date: _________, 20xx _________, 20xx _________, 20xx
Final Note Payment
Date
(no later than): _________, 20xx _________, 20xx _________, 20xx
Application for
Exchange Listing: Luxembourg Luxembourg Luxembourg
CUSIP Number: ______________ ______________ ______________
ISIN: ______________ ______________ ______________
Common Code: ______________ ______________ ______________
- ------------------------
* It is a condition to issuance that one of these ratings be obtained.
** It is a condition to issuance that two of these ratings be obtained.
*** Investors subject to ERISA should consult with their counsel.
STRUCTURAL SUMMARY
This summary briefly describes certain major structural components of
Series 1999-__. To fully understand the terms of Series 1999-__ you will
need to read both this supplement and the attached prospectus in their
entirety.
THE OWNER TRUST AND THE NOTES
The notes are obligations of the owner trust and bear interest at the rates
and are payable on the dates stated in the summary of terms. The notes will
be issued by the owner trust. The owner trust is a [Delaware business]
[common law] trust formed by Chase USA for the purpose of issuing the
notes. Chase USA is the beneficial owner of the owner trust.
The notes are secured by the series certificate and the proceeds of the
series certificate that may be held from time to time by the owner trust.
For more information on the owner trust, see "Creation of the Owner Trust"
in this supplement. For more information on the notes, see "Description of
the Securities-- Description of the Notes" in this supplement.
THE MASTER TRUST AND THE SERIES CERTIFICATE
Chase Credit Card Master Trust is the issuer of the series certificate. The
series certificate for Series 1999-__ is one of __ outstanding series
issued by the master trust. The series certificate will not be subordinated
to any other series of certificates issued by the master trust. The trustee
of the master trust maintains the master trust for several beneficiaries:
o the owner trust, as holder of the series certificate for Series
1999-__, is entitled to an allocation of collections on the
receivables in the master trust portfolio based on the outstanding
amount of the series certificate;
o certificateholders of other series issued by the master trust are
entitled to allocations of collections on the receivables based on
the aggregate outstanding amount of each series;
o providers of credit enhancements for certain series of certificates
issued by the master trust are entitled to allocations of
collections on the receivables based on the terms of those
enhancements; and
o Chase USA, as transferor of the receivables to the master trust, is
entitled to the remainder of the collections on the receivables.
The series certificate represents an undivided interest in certain assets
of the master trust. Each month, a portion of collections and net losses on
the receivables will be allocated to the owner trust as holder of the
series certificate. The amounts allocated to the series certificate will be
used to pay principal and interest due on the notes, to cover net losses
allocated to the series certificate and to pay the servicing fees and other
expenses allocated to the series certificate.
For more information on the series certificate, see "Description of the
Series Certificate" in this supplement. For more information on the
allocation of collections on the series certificate and payment on the
series certificate, see "Description of the Securities--Description of the
Series Certificate-- Interest Allocations," "--Principal Allocations" and
"--Allocation Percentages" in this supplement.
SHARING EXCESS COLLECTIONS
If the collections allocated to the series certificate exceed the principal
and interest payable on the notes, the servicing fee payable to the
servicer of the master trust, net losses allocated to the series and any
required funding of the spread account (collections > principal + interest
+ servicing fee + losses + spread account funding), the servicer will share
the excess with other series of certificates issued by the master trust,
and then distribute any remaining excess to Chase USA as the owner of the
equity interest in the owner trust. In no case will the holders of the
notes receive more than the outstanding amount of principal and interest
due on the notes.
For more information with respect to the sharing of excess collections, see
"Description of the Securities--Description of the Securities--Description
of the Series Certificate--Shared Excess Finance Charge Collections" and
"--Shared Principal Collections" in this supplement.
SCHEDULED PAYMENT DATES; MATURITY DATES
The notes are scheduled to be paid in full on the following payment dates
for each class:
Class A __________, 20xx
Class B __________, 20xx
Class C __________, 20xx
The owner trust expects to pay each class of notes in full on the scheduled
payment date for that class.
For the benefit of the owner trust, the master trust will accumulate funds
in a principal funding account for the purpose of redeeming Class A. The
master trust will deposit principal collections in the principal funding
account during a "controlled accumulation period" that ends on the
scheduled payment date for Class A. The controlled accumulation period may
be as long as twelve months, but will be shortened if Chase USA determines
that a shorter period will suffice for the accumulation of the Class A
principal amount. During the controlled accumulation period, the master
trust will make monthly deposits into the principal funding account in
specified amounts. The funds available for deposit in the principal funding
account will comprise the monthly principal collections allocated to Series
1999-__ but may also include principal collections allocated to other
series that would otherwise be paid to Chase USA as transferor of the
receivables to the master trust. In general, the availability of principal
collections allocated to other series would be expected to permit Chase USA
to shorten the controlled accumulation period. On the scheduled payment
date for Class A, the master trust will pay to the owner trust the amount
on deposit in the principal funding account, and the owner trust will make
a principal allocation to Class A to the extent of the available funds.
On the scheduled payment date for Class B, if Class A has been paid in
full, the master trust will pay to the owner trust all principal
collections allocated to Series 1999-__ and the owner trust will make a
principal allocation to Class B, up to the outstanding principal amount of
Class B, to the extent of the available funds.
On the scheduled payment date for Class C, if Class A and Class B have been
paid in full, the master trust will pay to the owner trust all principal
collections allocated to Series 1999-__ and the owner trust will make a
principal allocation to Class C, up to the outstanding principal amount of
Class C, to the extent of the available funds.
The notes will mature, and any remaining principal and interest will be
payable, on _________. No further payments on the notes will be made after
that date.
For more information with respect to repayment of principal of notes and
the controlled accumulation period, see "Description of the
Securities--Description of the Notes-- Principal Payments," "Maturity
Considerations--Controlled Accumulation" and "Description of the
Securities--Description of the Series Certificate--Controlled Accumulation"
in this supplement.
SHORTFALLS IN EXPECTED CASHFLOWS
If the funds available in the principal funding account and paid to the
owner trust on the scheduled Class A payment date are insufficient to pay
Class A principal in full, the owner trust will use the available funds to
pay in part each of the outstanding Class A notes. On each subsequent
payment date, the owner trust will apply all principal allocations it
receives on the series certificate to the further payment of each of the
outstanding Class A notes until they have been paid in full.
If Class A remains outstanding on the scheduled Class B payment date, the
owner trust will use the principal collections it receives from the master
trust to pay Class A until Class A has been paid in full. If the principal
collections remaining after Class A has been paid in full are insufficient
to pay Class B in full, the owner trust will use those funds to pay in part
each of the outstanding Class B notes. On each subsequent payment date, the
owner trust will apply all principal allocations it receives on the series
certificate to the further payment of each of the outstanding Class B notes
until they have been paid in full.
If Class A or Class B remains outstanding on the scheduled Class C payment
date, the owner trust will use the principal collections it receives from
the master trust to pay Class A and Class B until Class A and Class B have
been paid in full. If the available funds remaining after Class A and Class
B have been paid in full are insufficient to pay Class C in full, the owner
trust will use those funds to pay in part each of the outstanding Class C
notes. On each subsequent payment date, the owner trust will apply all
principal allocations it receives on the series certificate to the further
payment of each of the outstanding Class C notes until they have been paid
in full.
For more information on shortfalls in expected cashflows, see "Description
of the Securities--Description of the Notes--Principal Payments" in this
supplement.
OPTIONAL REDEMPTION
Chase USA, as transferor of the receivables to the master trust, has the
right, but not the obligation, to purchase the series certificate, and
cause the payment in full of the outstanding notes, when the outstanding
amount of the series certificate is less than 5% of the amount of the
series certificate at the closing date. If Chase USA exercises its right to
purchase the series certificate, the purchase price received by the owner
trust will be used to redeem the outstanding notes. The redemption price
for any note will equal the sum of the outstanding principal amount of the
note plus the accrued but unpaid interest on the note at the redemption
date.
For more information with respect to optional redemption of the notes, see
"Description of the Securities--Description of the Notes--Optional
Redemption" in this supplement and "Description of the
Securities--Description of the Series Certificate--Final Payment of
Principal; Series Termination" in the attached prospectus.
ALLOCATION OF NET LOSSES; CREDIT ENHANCEMENT
The series certificate represents an interest in both collections and net
losses on the receivables in the master trust portfolio. The Class A and
Class B notes, however, feature credit enhancement by means of the
subordination of other interests, which provides the Class A and Class B
notes with a measure of protection from net losses and shortfalls in cash
flow. Class C has the benefit of a spread account that is available to
reimburse any losses that Class C may suffer.
The master trust will allocate a portion of net losses on the receivables
in the master trust portfolio to the series certificate. Finance charge
collections allocated to the series certificate ordinarily will be used to
pay interest on the notes, to fund the servicing fee with respect to Series
1999-__ and then to cover the portion of net losses allocated to the series
certificate. If finance charges are insufficient to make all required
payments and reimbursements in any month, shared finance charge collections
from other series, if any, may be used to make up the shortfall.
If those amounts are not sufficient, reallocated principal collections may
be used to make up the shortfall, but in that event the outstanding amount
of the series certificate will be reduced by the amount of the reallocated
principal. Any reduction in the outstanding amount of the series
certificate may be reinstated on subsequent payment dates by application of
any finance charge collections remaining after payment of all other
required amounts.
If any reduction of the outstanding amount of the series certificate is not
reinstated, the owner trust will not receive sufficient principal
allocations for the redemption or repayment of the entire aggregate
principal amount of the notes. In that event, the owner trust will pay
first the principal of Class A, then the principal of Class B, and finally
the principal of Class C. In this manner, Class C will be subordinated to
Class A and Class B, and Class B will be subordinated to Class A.
Class C will have the benefit of the spread account maintained by the owner
trust. The master trust will make payments to the owner trust out of
available finance charge collections on the receivables in order to fund
the spread account. If payments of principal and finance charge collections
on the series certificate are insufficient to pay the principal and
interest due on Class C, the owner trust will use the funds on deposit in
the spread account, if any, to make up the shortfall.
For more information on allocation of losses, see "Description of the
Securities-- Description of the Notes--Subordination" in this supplement.
For more information with respect to the use of the spread account for
payments to Class C, see "Description of the Securities--Description of the
Notes--Owner Trust Spread Account."
MINIMUM YIELD ON THE RECEIVABLES; EVENTS OF DEFAULT AND ACCELERATION OF
MATURITY
The owner trust will begin to repay the principal of the notes before their
scheduled payment dates if the finance charge collections on the
receivables in the master trust portfolio are too low. The minimum amount
of collections for any month, referred to as the "Base Rate", is the sum of
the interest payable on the notes for the related interest period, plus the
servicing fee allocated to the series certificate for the related month. If
the average net yield for the master trust portfolio, after deducting net
loss amounts, for any three consecutive months is less than the average
Base Rate for the same three consecutive months, a "pay out event" will
occur with respect to the series certificate and the master trust will
begin a "rapid amortization" of the series certificate through payment of
all allocated principal to the owner trust. The owner trust, in turn, will
use the proceeds of any rapid amortization to repay the notes in full or in
part as described above under "--Shortfalls in Expected Cashflows."
The series certificate is also subject to several other pay out events,
which could cause the start of a rapid amortization of the series
certificate. Also, the notes are subject to certain events of default,
which could result in the acceleration of the maturity of the notes. These
other events are summarized under the headings "Description of the
Securities--Description of the Series Certificate--Pay Out Events" and
"Description of the Notes--Events of Default" in this supplement.
For more information on pay out events, the portfolio yield and base rate,
early principal repayment and redemption and rapid amortization, see
"Maturity Considerations--Rapid Amortization," "Description of the
Securities--Description of the Series Certificate--Pay Out Events" and
"Description of the Notes--Principal Payments" and "--Optional Redemption"
in this supplement and "Description of the Securities--Description of the
Series Certificate--Principal Allocations" and "--Final Payment of
Principal; Series Termination" in the attached prospectus.
TAX STATUS OF CLASS A, CLASS B, CLASS C AND CHASE CREDIT CARD MASTER TRUST
Simpson Thacher & Bartlett, tax counsel to Chase USA, is of the opinion
that:
o under existing laws the Class A, Class B and Class C notes will be
characterized as debt for U.S. federal income tax purposes; and
o neither Chase Credit Card Owner Trust 1999-__ nor the Chase Credit
Card Master Trust will be an association or publicly traded
partnership taxable as a corporation for U.S. federal income tax
purposes.
For further information regarding the application of U.S. federal income
tax laws, see "Tax Matters" in the attached prospectus.
ERISA CONSIDERATIONS
Subject to important considerations described under "Employee Benefit Plan
Considerations" in the attached prospectus, each class of notes will be
eligible for purchase by persons investing assets of employee benefit plans
or individual retirement accounts.
For further information regarding the application of ERISA, see "Employee
Benefit Plan Considerations" in the attached prospectus.
MAILING ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES
The mailing address of Chase Manhattan Bank USA, National Association is
802 Delaware Avenue, Wilmington, Delaware 19801, and the telephone number
is (302) 575-5000.
SELECTED MASTER TRUST PORTFOLIO SUMMARY DATA
The chart below shows the geographic distribution of the receivables in the
master trust portfolio among the 50 states and the District of Columbia.
Other than the states specifically shown in the chart, no state accounts
for more than 5% of receivables in the master trust portfolio.
[GRAPHIC OMITTED]
The chart below shows the percentages of the receivables in the master
trust portfolio arising under accounts within the age brackets shown.
[GRAPHIC OMITTED]
The chart below shows the Master Trust Yield, payment rate and net
charge-off rate for the master trust portfolio for each month from January
1997 to March 1999.
[GRAPHIC OMITTED]
"Master Trust yield" for any month means the total amount of collected
finance charges and interchange charges allocated to Chase Credit Card
Master Trust for the month, expressed as a percentage of total outstanding
principal receivables at the beginning of the month.
The "payment rate" for any month is the total amount collected on
receivables during the month, including recoveries on previously charged
off receivables, expressed as a percentage of total outstanding receivables
at the beginning of the month.
The amount of "net charge-offs" for any month is the amount of charged-off
receivables recorded in the month, net of any recoveries from earlier
charge-offs on receivables in the master trust portfolio, expressed as a
percentage of total outstanding principal receivables at the beginning of
the month.
RISK FACTORS
The following is a summary of all material risks that apply to an
investment in the notes. The remainder of this supplement and the attached
prospectus provide much more detailed information about these risks. You
should consider the following risk factors in light of your investment
strategy in deciding whether to purchase the notes.
YOU MAY RECEIVE PRINCIPAL
PAYMENTS EARLIER OR LATER
THAN THE SCHEDULED MATURITY
DATE IF THE PORTFOLIO YIELD
IS REDUCED If the average Chase Credit Card Master Trust
Portfolio Yield for Series 1999-__ for any
three consecutive months is less than the
average Base Rate for the same three months,
a "pay out event" will occur for the series
certificate for your series. The master trust
then will commence a rapid amortization of
the series certificate and the master trust
will begin making payments of principal to
the indenture trustee who holds the series
certificate for your benefit. As a result,
you will receive principal allocations from
the indenture trustee earlier than the
scheduled principal allocation date of your
notes. Additionally, if principal collections
on receivables allocated to other series are
available for application to a rapid
amortization of your securities, a rapid
amortization may be substantially shortened.
Because of the potential for early repayment
if the Portfolio Yield on the receivables
falls below the minimum amount, any
circumstances that tend to reduce the
Portfolio Yield increase the risk of early
repayment of your notes.
The following four factors could result in
reduced collections of Portfolio Yield:
CHASE USA MAY CHANGE THE
TERMS AND CONDITIONS OF
THE ACCOUNTS Chase USA will transfer to the master trust
receivables arising under specified credit
card accounts, but Chase USA will continue to
own those accounts. As the owner of those
accounts, Chase USA retains the right to
change various terms and conditions of those
accounts, including finance charges and other
fees it charges and the required minimum
monthly payment. Chase USA may change the
terms of the accounts to maintain its
competitive position in the credit card
industry. Changes in the terms of the
accounts may reduce the amount of receivables
arising under the accounts, reduce the amount
of collections on those receivables, or
otherwise alter payment patterns. See
"Description of the Securities-Description of
the Series Certificate--Addition of Master
Trust Assets" and "Chase USA's Credit Card
Activities--Billing and Payments" in the
attached prospectus.
SECURITIES INTEREST RATE AND
RECEIVABLES INTEREST RATE
MAY RESET AT DIFFERENT TIMES Finance charges on some of the accounts in
the master trust accrue at a variable rate
above a stated prime rate or other index
under the terms of the agreement with the
cardholder. The interest rate of your note is
based on LIBOR. Changes in LIBOR might not be
reflected in the prime rate or other index,
resulting in a higher or lower spread, or
difference, between the amount of collections
of finance charge receivables on the accounts
and the amounts of interest payable on your
notes and other amounts required to be funded
out of collections of finance charge
receivables.
Finance charges on some of the accounts in
the master trust accrue at a fixed rate. If
LIBOR increases, the interest payments on
your notes and other amounts required to be
funded out of collections of finance charge
receivables will increase, while the amount
of collections of finance charge receivables
on the accounts will remain the same unless
and until the fixed rates on the accounts are
reset.
A decrease in the spread between collections
of finance charge receivables and those
allocated to make interest payments on your
notes could reduce the Portfolio Yield and
increase the risk of early repayment of the
series certificate and early repayment of
your notes as described above.
CHANGES TO CONSUMER
PROTECTION LAWS MAY
IMPEDE CHASE'S
COLLECTION EFFORTS Federal and state consumer protection laws
regulate the creation and enforcement of
consumer loans, including credit card
accounts and receivables. Changes or
additions to those regulations could make it
more difficult for the servicer of the
receivables to collect payments on the
receivables or reduce the finance charges and
other fees that we can charge on credit card
account balances, resulting in reduced
collections. See "Description of the
Securities--Description of the Series
Certificate--Pay Out Events" in the attached
prospectus.
Receivables that do not comply with consumer
protection laws may not be valid or
enforceable in accordance with their terms
against the obligors on those receivables.
Chase USA makes representations and
warranties relating to the validity and
enforceability of the receivables in the
master trust. No other party will make any
examination of the receivables or the related
records for the purpose of determining the
presence or absence of defects, compliance
with representations and warranties, or for
any other purpose. The only remedy if any of
Chase USA's representations or warranties is
violated, and the violation continues beyond
the period of time allowed to correct the
violation, is that Chase USA must accept
reassignment of the receivables affected by
the violation. See also "Certain Legal
Aspects of the Receivables--Consumer
Protection Laws" in the attached prospectus.
CARDHOLDERS MAY MAKE
PRINCIPAL PAYMENTS AT
ANY TIME The receivables transferred to the master
trust may be repaid by cardholders at any
time. We cannot assure the creation of
additional receivables in the master trust's
accounts or that any particular pattern of
cardholder payments will occur. A significant
decline in the amount of new receivables
generated by the accounts in the master trust
could result in reduced amounts of
collections in the master trust portfolio and
could increase the risk of early repayment of
the series certificate and early repayment of
your notes as described above. See "Maturity
Considerations" in this supplement.
ALLOCATIONS OF CHARGED-OFF
RECEIVABLES COULD REDUCE
PAYMENTS TO YOU CMB as servicer will write off the
receivables arising in accounts in the master
trust portfolio if the receivables become
uncollectible or are otherwise more than 180
days past due. The series certificate for
your series will be allocated a portion of
these charged-off receivables. If the amount
of charged-off receivables allocated to the
series certificate for your series exceeds
the amount of funds available for
reimbursement of those charge-offs, the owner
trust as the holder of the series certificate
for your series may not receive the full
amount of principal and interest due to it by
the scheduled note payment date for your
notes and you may suffer a loss in the
repayment of your principal. See "Chase
Credit Card Master Trust
Portfolio--Delinquency and Loss Experience"
and "Description of the
Securities--Description of the Series
Certificate--Reallocation of Cash Flows,"
"--Application of Collections" and
"--Defaulted Receivables" in this supplement.
ISSUANCE OF ADDITIONAL
SERIES BY THE MASTER TRUST
MAY AFFECT THE TIMING OF
PAYMENTS TO YOU Chase Credit Card Master Trust, as a master
trust, may issue series of certificates from
time to time. The master trust may issue an
additional series certificate with terms that
are different from the series certificate for
your series without your prior review or
consent. It is a condition to the issuance of
each new series certificate that each rating
agency that has rated an outstanding series
confirm in writing that the issuance of the
new series will not result in a reduction or
withdrawal of its rating of any class of any
outstanding series or of any series of
securities. The rating agency confirmation
will be based primarily on the master trust's
ability to pay principal by the final note
payment date and interest on each payment
date, but the rating agency will not consider
how the terms of a new series could affect
the timing and amounts of payments on your
series. See "Description of the
Securities--Description of the Series
Certificate--Issuing New Series of
Certificates" in the attached prospectus.
CHASE USA MAY ADD ACCOUNTS
WITH DIFFERENT TERMS TO
THE MASTER TRUST PORTFOLIO In addition to the accounts already
designated for the master trust, Chase USA is
permitted to designate additional accounts
for the master trust portfolio and to
transfer the receivables in those accounts to
the master trust. Any new accounts and
receivables may have different terms and
conditions than the accounts and receivables
already in the master trust such as higher or
lower fees or interest rates, or longer or
shorter principal allocation terms. Credit
card accounts purchased by Chase USA may be
included as additional accounts if conditions
in the pooling and servicing agreement are
satisfied. Credit card accounts purchased by
Chase USA will have been created using the
account originator's underwriting criteria,
not those used by Chase USA. The account
originator's underwriting criteria may be
more or less stringent than those of Chase
USA. The new accounts and receivables may
produce higher or lower collections or
charge-offs over time than the accounts and
receivables already in the master trust and
could tend to reduce the amount of
collections allocated to the series
certificate for your series. See "Description
of the Securities--Description of the
Certificates--Addition of Master Trust
Assets" in the attached prospectus.
CHASE USA MAY NOT BE ABLE
TO ADD NEW ACCOUNTS WHEN
REQUIRED UNDER THE POOLING
AND SERVICING AGREEMENT If Chase USA's percentage interest in the
accounts of the master trust falls to 7% or
less, Chase USA will be required to maintain
that level by designating additional accounts
for the master trust portfolio and
transferring the receivables in those
accounts to the master trust. Chase USA may
not have any additional accounts to add at
that time. If Chase USA fails to add accounts
when required, a "pay out event" will occur
and you could receive payment of principal
sooner than you expected. See "Description of
the Securities--Description of the
Certificates--Addition of Master Trust
Assets" in the attached prospectus.
INSOLVENCY OR BANKRUPTCY OF
CHASE USA COULD RESULT IN
ACCELERATED, DELAYED OR
REDUCED PAYMENTS TO YOU Chase USA accounts for the transfer of
receivables to the master trust as a sale.
However, a court could conclude that Chase
USA still owns the receivables and that the
master trust holds only a security interest.
If a court concludes that the transfer to the
master trust is only a grant of a security
interest in the receivables, a tax or
government lien on our property arising
before new receivables come into existence
may have priority over the master trust's
interests in those receivables. See "Certain
Legal Aspects of the Receivables--Transfer of
Receivables" and "Description of the
Securities--Description of the
Certificates--Chase USA's Representations and
Warranties" in the attached prospectus.
Chase USA is chartered as national banking
association and is subject to regulation and
supervision by the Office of the Comptroller
of the Currency. If Chase USA becomes
insolvent or is in an unsound condition, the
Comptroller is authorized to appoint the FDIC
as receiver. Under such circumstances, the
FDIC could:
o require the master trust trustee to go
through an administrative claims
procedure to establish its right to
payments collected on the receivables in
the master trust;
o request a stay of proceedings with
respect to the master trust's claims
against Chase USA; or
o repudiate the pooling and servicing
agreement and limit the master trust's
resulting claim against the receivables
to "actual direct compensatory damages"
measured as of the date of receivership."
See "Certain Legal Aspects of the
Receivables--Certain Matters Relating to
Receivership" in the attached prospectus.
If the FDIC were to take any of those actions
payments on your notes could be delayed and
possibly reduced.
If a conservator or receiver were appointed
for Chase USA, then a "pay out event" would
occur for all outstanding series. Under the
terms of the pooling and servicing agreement
new principal receivables would not be
transferred to the master trust and the
master trust trustee would sell the
receivables unless holders of more than 50%
of the investor interest of each class of
outstanding certificates gave the master
trust trustee other instructions. The master
trust would then terminate earlier than was
planned and you could have a loss if the sale
of the receivables produced insufficient net
proceeds to pay you in full. The conservator
or receiver may nonetheless have the power:
o regardless of the terms of the pooling
and servicing agreement, (a) to prevent
the beginning of a rapid amortization
period, (b) to prevent the early sale of
the receivables and termination of the
trust or (c) to require new principal
receivables to continue being transferred
to the trust; or
o regardless of the instructions of the
certificateholders, (a) to require the
early sale of the receivables, (b) to
require termination of the master trust
and retirement of the certificates or (c)
to prohibit the continued transfer of
principal receivables to the master
trust.
In addition, if the servicer defaults on its
obligations under the pooling and servicing
agreement solely because a conservator or
receiver is appointed for it, the conservator
or receiver might have the power to prevent
either the master trust trustee or the
holders of securities issued by the master
trust from appointing a new servicer under
the pooling and servicing agreement. See
"Certain Legal Aspects of the
Receivables--Certain Matters Relating to
Receivership" in the attached prospectus.
YOU WILL HAVE LIMITED
CONTROL OF OWNER TRUST
AND MASTER TRUST ACTIONS You will have limited voting rights relating
to actions of the owner trust and indenture
trustee. You will not have the right to vote
to direct the master trust trustee to take
any actions other than the right to vote to
declare a pay out event or a servicer
default.
YOU MAY NOT BE ABLE TO
RESELL YOUR NOTES The underwriters may assist in resales of any
class of the notes but they are not required
to do so. A secondary market for your notes
may not develop. If a secondary market does
develop, it might not continue or it might
not be sufficiently liquid to allow you to
resell your notes.
REPAYMENT OF YOUR NOTES IS
LIMITED TO THE OWNER TRUST
ASSETS The owner trust will not have any significant
assets other than the series certificate, the
owner trust spread account and the note
distribution account. As a result, you must
rely only on those assets for repayment of
your notes. Although the owner trust may be
required to sell the series certificate
following a pay out event, we cannot assure
you that the proceeds of a sale of the series
certificate will be sufficient to pay the
interest or principal due to you.
Additionally, the sale of the series
certificate is subject to restrictions on
transfer that may delay the payment on your
notes.
CLASS B AND CLASS C BEAR
LOSSES BEFORE CLASS A Class B is subordinated to Class A. Principal
allocations to Class B will not begin until
Class A has been paid in full. If principal
collections allocated to the series
certificate are reallocated to make interest
allocations, the full amount of Class B
principal may not be repaid. If receivables
had to be sold, the net proceeds of that sale
available to pay principal on the notes would
be paid first to Class A before any remaining
net proceeds would be available for payments
due to Class B. See "Description of the
Securities--Description of the
Notes--Subordination" in this supplement.
Class C is subordinated to Class A and Class
B. Principal allocations to Class C will not
begin until Class A and Class B are repaid.
If principal collections allocated to the
series certificate are reallocated to make
interest allocations and not reimbursed, the
full amount of Class C principal may not be
repaid. If receivables had to be sold, the
net proceeds of that sale available to pay
principal would be paid first to Class A,
then to Class B, before any remaining net
proceeds would be available for payments due
to Class C. See "Description of the
Securities--Description of the
Notes--Subordination" in this supplement.
CHASE CREDIT CARD MASTER TRUST PORTFOLIO
Defined terms are indicated by boldface type. Both the attached
prospectus and this supplement contain a glossary of important terms, where
definitions can be found.
GENERAL
The assets of the master trust include credit card receivables
generated through accounts that Chase USA has designated as master trust
accounts. The master trust accounts are accounts designated when the master
trust was established and additional accounts that have been designated
since that time. CHASE USA is permitted to add accounts, and at times is
required to add accounts, to the master trust. CHASE USA can remove
accounts from the master trust if the conditions to removal are satisfied.
As a result, the composition of the master trust is expected to change over
time. See "The Receivables" in the attached prospectus for a general
description of the receivables in the master trust.
DELINQUENCY AND LOSS EXPERIENCE
The following table provides you with delinquency experience for the
MASTER TRUST PORTFOLIO as of the indicated dates. Number of Days Delinquent
means the number of days after the first billing date following the
original billing date; for example, 30 days delinquent means that the
minimum payment was not received within 60 days of the original billing
date. Delinquencies are calculated as a percentage of outstanding
receivables as of the end of the indicated month.
DELINQUENCY EXPERIENCE
MASTER TRUST PORTFOLIO
(DOLLAR AMOUNTS IN MILLIONS)
<TABLE>
<CAPTION>
As of December 31,
MARCH 31, -----------------------------------------------------------------------------
1999 1998 1997 1996
------------------------ ------------------------ ------------------------ -----------------------
PERCENTAGE PERCENTAGE PERCENTAGE PERCENTAGE
NUMBER OF DAYS DELINQUENT OF TOTAL DELINQUENT OF TOTAL DELINQUENT OF TOTAL DELINQUENT OF TOTAL
DELINQUENT AMOUNT RECEIVABLES AMOUNT RECEIVABLES AMOUNT RECEIVABLES AMOUNT RECEIVABLES
- ----------------- ---------- ----------- ---------- ----------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
30 to 59 Days.... $235 1.34% $264 1.49% $238 1.67% $244 1.73%
60 to 89 Days.... 157 0.89% 177 1.00 166 1.17 169 1.21
90 Days or More.. 344 1.95% 369 2.08 328 2.31 335 2.38
---------- ----------- ---------- ----------- ---------- ----------- ---------- -----------
TOTAL...... $736 4.18% $810 4.57% $732 5.15% $748 5.32%
========== =========== ========== =========== ========== =========== ========== ===========
</TABLE>
The following table provides you with loss experience for the MASTER
TRUST PORTFOLIO for the indicated periods. Average Principal Receivables
Outstanding is the average of the beginning of the month balance of master
trust Principal Receivables outstanding during the indicated period. [Gross
Charge-Offs shown include only the principal portion of charged-off
receivables and exclude charges relating to changes in CHASE USA's
charge-off policies]. Also excluded from Gross Charge-Offs is the amount of
any reductions in Average Principal Receivables Outstanding due to fraud,
returned goods or customer disputes. The percentage reflected for the three
months ended March 31, 1999 is an annualized figure.
LOSS EXPERIENCE
MASTER TRUST PORTFOLIO
(DOLLAR AMOUNTS IN MILLIONS)
THREE MONTHS YEAR ENDED DECEMBER 31,
ENDED MARCH 31, -----------------------------
1999 1998 1997 1996
------- ------- ------- -------
Average Principal Receivables
Outstanding................... $17,332 $15,658 $13,394 $8,787
Gross Charge-Offs................ 294 1,109 1,016 588
Recoveries....................... 23 84 75 53
Net Charge-Offs.................. 271 1,025 941 535
Net Charge-Offs as a Percentage
of Average Receivables
Outstanding.................... 6.26% 6.55% 7.03% 6.09%
[The increase in Net Charge-Offs as a Percentage of Average Principal
Receivables Outstanding for the MASTER TRUST PORTFOLIO for the years ended
December 31, 1997 and December 31, 1998, when compared with the year ended
December 31, 1996, reflects, among other factors, higher levels of personal
bankruptcies.]
CHARACTERISTICS OF RECEIVABLES PORTFOLIO
The receivables and the accounts in the MASTER TRUST PORTFOLIO, as of
the beginning of the day on April 1, 1999:
o included approximately $17.1 billion of PRINCIPAL RECEIVABLES
and $0.5 billion of FINANCE CHARGE RECEIVABLES;
o had an average principal receivables balance of $1,564;
o had an average credit limit of $7,022, of which the average
principal receivables balance represented approximately 23%; and
o represented approximately 56% of aggregate receivables in the
BANK PORTFOLIO.
o had an average age of 81 months;
o had billing addresses in all 50 states and the District of
Columbia;
o approximately 65% were standard accounts, representing
approximately 62% of outstanding PRINCIPAL RECEIVABLES balances;
and
o approximately 35% were premium accounts, representing
approximately 38% of outstanding PRINCIPAL RECEIVABLES balances.
The following tables summarize characteristics of the MASTER TRUST
PORTFOLIO as of the beginning of the day on April 1, 1999. Because the
composition of the MASTER TRUST PORTFOLIO may change in the future, these
tables are not necessarily indicative of the composition of the MASTER
TRUST PORTFOLIO at any subsequent time.
<TABLE>
<CAPTION>
Composition by Account Balance
Master Trust Portfolio
Percentage of Percentage of
Number of Total Number Receivables Total
Account Balance Accounts of Accounts Outstanding Receivables
- ------------------------- ---------- ------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Credit Balance .......... 143,926 1.31% $ (17,334,025) (0.10)%
No Balance .............. 4,707,331 42.89% 0 0.00%
$0.01 to $1,500.00 ...... 2,925,683 26.65% 1,388,620,747 7.88%
$1,500.01 to $5,000.00 .. 1,860,622 16.95% 5,564,828,848 31.59%
$5,000.01 to $10,000.00 . 1,138,442 10.37% 8,297,009,613 47.10%
$10,000.01 to $20,000.00 199,232 1.82% 2,349,367,369 13.34%
Over $20,000.00 ......... 1,279 0.01% 33,015,744 0.19%
---------- ------------- ---------------- --------------
TOTAL ................... 10,976,515 100.00% $ 17,615,508,296 100.00%
========== ============= ================ ==============
</TABLE>
<TABLE>
<CAPTION>
Composition by Credit Limit
Master Trust Portfolio
Percentage of Percentage of
Number of Total Number Receivables Total
Credit Limit Accounts of Accounts Outstanding PReceivables
- ------------------------------ ------------ --------------- ---------------- -------------
<C> <C> <C> <C> <C>
$0.00......................... 7,232 0.07% $ 53,089 0.00%
$0.01 to $1,500.00............ 854,834 7.79% 452,066,004 2.57%
$1,500.01 to $5,000.00........ 2,949,829 26.87% 3,084,684,555 17.51%
$5,000.01 to $10,000.00....... 5,606,070 51.07% 9,384,579,846 53.27%
Over $10,000.00............... 1,558,550 14.20% 4,694,124,802 26.65%
------------ --------------- ---------------- -------------
TOTAL................... 10,976,515 100.00% $17,615,508,296 100.00%
============ =============== ================ =============
</TABLE>
<TABLE>
<CAPTION>
Composition by Period of Delinquency
Master Trust Portfolio
Percentage of Percentage of
Number of Total Number Receivables Total
Payment Status Accounts of Accounts Outstanding Receivables
- ------------------------------ ------------ ------------- ---------------- -------------
<S> <C> <C> <C> <C> <C>
Current to 29 days delinquent. 10,587,428 96.46% $ 16,145,299,837 91.65%
30 to 59 days delinquent...... 215,624 1.96% 734,311,365 4.17%
60 to 89 days delinquent...... 60,548 0.55% 235,489,135 1.34%
90 to 119 days delinquent..... 37,321 0.34% 156,848,098 0.89%
120 days delinquent or more... 75,594 0.69% 343,559,861 1.95%
------------ ------------- ---------------- -------------
TOTAL................... 10,976,515 100.00% $ 17,615,508,296 100.00%
============ ============= ================ =============
</TABLE>
In the Composition by Account Seasoning table below, account age is
determined by the number of months elapsed since the account was originally
opened, except that for some accounts converted from standard to premium
accounts, account age is determined by the number of months since the
account was converted.
<TABLE>
<CAPTION>
Composition by Account Seasoning
Master Trust Portfolio
Percentage of Percentage of
Number of Total Number Receivables Total
Account Age Accounts of Accounts Outstanding Receivables
- --------------------------- ------------ -------------- ----------------- ------------
<S> <C> <C> <C> <C> <C>
Not More than 6 Months......... 31,690 0.29% $ 70,486,019 0.40%
Over 6 Months to 12 Months..... 241,861 2.20% 380,122,312 2.16%
Over 12 Months to 24 Months.... 1,149,138 10.47% 1,627,170,184 9.24%
Over 24 Months to 36 Months.... 1,485,521 13.53% 1,886,570.477 10.71%
Over 36 Months to 48 Months.... 1,700,718 15.49% 2,505,305,942 14.22%
Over 48 Months to 60 Months.... 1,132,390 10.32% 2,028,195,436 11.51%
Over 60 Months to 120 Months... 2,938,337 26.77% 5,122,087,541 29.08%
Over 120 Months................ 2,296,860 20.93% 3,995,570,385 22.68%
------------ -------------- ----------------- ------------
TOTAL 10,976,515 100.00% $17,615,508,296 100.00%
============ ============== ================= ============
</TABLE>
<TABLE>
<CAPTION>
Geographic Distribution of Accounts
Master Trust Portfolio
Percentage
Percentage of of
Number of Total Number Receivables Total
State Accounts of Accounts Outstanding Receivables
- --------------------------------- ------------ ------------- --------------- -----------
<S> <C> <C> <C> <C>
California....................... 1,421,011 12.95% $2,423,473,952 13.76%
New York......................... 1,484,959 13.53% 2,380,428,995 13.51%
Texas............................ 729,276 6.64% 1,287,375,591 7.31%
Florida.......................... 735,511 6.70% 1,160,846,728 6.59%
New Jersey....................... 613,228 5.59% 945,379,163 5.37%
Illinois......................... 563,565 5.14% 878,608,664 4.99%
Ohio............................. 382,191 3.48% 607,865,747 3.45%
Pennsylvania..................... 387,929 3.53% 562,200,877 3.19%
Massachusetts.................... 405,296 3.69% 557,999,689 3.17%
Michigan......................... 348,034 3.17% 525,490,003 2.98%
Virginia......................... 235,310 2.14% 398,267,738 2.26%
Maryland......................... 211,011 1.92% 338,735,357 1.92%
Georgia.......................... 193,238 1.76% 337,147,446 1.91%
Indiana.......................... 211,494 1.93% 330,789,845 1.88%
North Carolina................... 190,915 1.74% 313,757,133 1.78%
Connecticut...................... 199,768 1.82% 296,774,916 1.68%
Missouri......................... 160,777 1.47% 257,036,661 1.46%
Washington....................... 141,913 1.29% 245,078,535 1.39%
Tennessee........................ 150,606 1.37% 243,968,158 1.38%
Arizona.......................... 136,943 1.25% 238,163,477 1.35%
Minnesota........................ 156,330 1.43% 225,908,213 1.28%
Wisconsin........................ 161,993 1.48% 224,200,559 1.27%
Louisiana........................ 143,354 1.31% 216,170,312 1.23%
Colorado......................... 134,931 1.23% 215,472,597 1.22%
Alabama.......................... 122,269 1.11% 201,482,932 1.15%
Kentucky......................... 108,462 0.99% 160,743,564 0.92%
Oklahoma......................... 95,904 0.88% 157,315,257 0.90%
Oregon........................... 92,658 0.85% 153,678,212 0.88%
South Carolina................... 90,981 0.84% 151,403,516 0.87%
Nevada........................... 71,138 0.66% 137,496,947 0.79%
Arkansas......................... 79,060 0.72% 128,471,593 0.73%
Kansas........................... 71,598 0.65% 114,819,939 0.65%
Mississippi...................... 69,374 0.63% 106,995,527 0.61%
Iowa............................. 69,381 0.63% 98,436,048 0.56%
Rhode Island..................... 67,923 0.62% 96,267,999 0.55%
New Hampshire.................... 56,293 0.51% 92,281,731 0.52%
New Mexico....................... 51,481 0.47% 84,440,913 0.48%
Hawaii........................... 41,627 0.38% 76,413,843 0.43%
Maine............................ 44,907 0.41% 70,468,521 0.40%
West Virginia.................... 41,815 0.38% 64,220,915 0.37%
Nebraska......................... 41,960 0.38% 63,674,968 0.36%
Utah............................. 37,851 0.35% 60,353,697 0.34%
Idaho............................ 27,574 0.25% 44,796,856 0.25%
Vermont.......................... 27,119 0.25% 44,072,719 0.25%
Delaware......................... 23,411 0.21% 42,282,840 0.24%
Montana.......................... 24,010 0.22% 37,302,256 0.21%
Washington, D.C.................. 21,513 0.20% 36,953,772 0.21%
Alaska........................... 16,465 0.15% 32,723,705 0.19%
Wyoming.......................... 15,414 0.14% 25,784,068 0.15%
South Dakota..................... 15,814 0.14% 23,675,444 0.14%
North Dakota..................... 15,468 0.14% 23,291,380 0.13%
Other............................ 35,463 0.32% 74,518,778 0.42%
------------ ------------- --------------- -----------
TOTAL 10,976,515 100.00% $17,615,508,296 100.00%
============ ============= =============== ===========
</TABLE>
MATURITY CONSIDERATIONS
Each class of notes is scheduled to receive principal as follows:
o the Class A scheduled note payment date is the ___________
distribution date, following the controlled accumulation;
o the Class B scheduled note payment date is the ___________
distribution date, following payment of Class A; and
o the Class C scheduled note payment date is the ___________
distribution date, following payment of Class B.
CONTROLLED ACCUMULATION
Principal for payment to Class A will accumulate in the PRINCIPAL
FUNDING ACCOUNT during the CONTROLLED ACCUMULATION PERIOD. The CONTROLLED
ACCUMULATION PERIOD is scheduled to begin at the close of business on the
last day of the ___________ MONTHLY PERIOD, but may be delayed based on
recent payment rate experience and the amount of principal collections
expected to be available for sharing from other series. On each TRANSFER
DATE during the CONTROLLED ACCUMULATION PERIOD, the master trust trustee
shall deposit into the PRINCIPAL FUNDING ACCOUNT for the benefit of the
Class A noteholders, the least of:
o the CONTROLLED DEPOSIT AMOUNt,
o AVAILABLE INVESTOR PRINCIPAL COLLECTIONs, and
o ADJUSTED INVESTOR INTERESt prior to any deposits on such
TRANSFER DATE.
The length of the CONTROLLED ACCUMULATION PERIOD may be adjusted if
CHASE USA believes that, based on expected collections of principal, Class
A will be fully repaid on its SCHEDULED NOTE PAYMENT DATE. Whether or not
the CONTROLLED ACCUMULATION PERIOD is shortened, we can give no assurance
that principal adequate to repay Class A will be available on Class A's
SCHEDULED NOTE PAYMENT DATE.
Note that if the RAPID AMORTIZATION PERIOD begins before the
CONTROLLED ACCUMULATION PERIOD, there will be no accumulation of principal.
If the RAPID AMORTIZATION PERIOD begins during the CONTROLLED ACCUMULATION
PERIOD, all principal in the PRINCIPAL FUNDING ACCOUNT will be paid to
Class A on the next DISTRIBUTION DATE.
See "Description of the Securities--Description of the Series
Certificate--Description of the Series Certificate--Principal Allocations"
and "--Controlled Accumulation" in this supplement for a more detailed
discussion.
Principal for payment to Class B and Class C is expected to be
available in one lump sum on the ________ DISTRIBUTION DATE without a
CONTROLLED ACCUMULATION PERIOD. Principal will not be paid to Class B until
Class A is fully repaid, and no principal will be paid to Class C until
Class A and Class B are fully repaid.
RAPID AMORTIZATION PERIOD
If a PAY OUT EVENT occurs, a rapid amortization will begin and any
principal in the PRINCIPAL FUNDING ACCOUNT and principal allocated to the
SERIES CERTIFICATE will be distributed to Class A on the following
DISTRIBUTION DATE. If Class A is not paid in full on its SCHEDULED NOTE
PAYMENT DATE, all principal allocated to the SERIES CERTIFICATE on each
subsequent monthly DISTRIBUTION DATE will be paid to Class A until Class A
is fully repaid. After Class A is repaid, any remaining principal allocated
to the SERIES CERTIFICATE will be paid to Class B on each monthly
DISTRIBUTION DATE until Class B, net of charge-offs, is repaid, and finally
to Class C on each monthly DISTRIBUTION DATE until Class C, net of
charge-offs, is repaid. If charge-offs are allocated to your class of notes
and not reimbursed, principal will be paid to you only up to your principal
balance net of these charge-offs.
See "Description of the Securities--Description of the Series
Certificate--Principal Allocations" and "--Pay Out Events" in this
supplement for a more detailed discussion.
HISTORICAL PAYMENT RATES
The following table provides you with the highest and lowest
cardholder monthly payment rates for the MASTER TRUST PORTFOLIO during any
month in the periods shown, and the average cardholder monthly payment rate
for all months in the periods shown. These payment rates are calculated as
total payments collected during each month as a percentage of total
outstanding master trust receivables at the beginning of the month. Monthly
averages are shown as an arithmetic average of the payment rate for each
month during the indicated period. Payment rates shown in this table are
based on total cash payments toward principal and finance charges made by
cardholders whose receivables are included in the master trust.
CARDHOLDER MONTHLY PAYMENT RATES
MASTER TRUST PORTFOLIO
THREE MONTHS YEAR ENDED DECEMBER 31,
ENDED MARCH 31, -------------------------------------
1999 1998 1997 1996
------- --------- ----------- ------------
Highest Month........ 13.94% 12.70% 12.09% 11.79%
Lowest Month......... 12.21% 10.96% 10.33% 10.09%
Monthly Average...... 12.80% 12.11% 11.44% 10.76%
We can give no assurance that cardholder monthly payment rates in the
future will be similar to this historical experience. If there is a
slowdown in the payment rate below the payment rate used to determine the
amount deposited in the PRINCIPAL FUNDING ACCOUNT during the CONTROLLED
ACCUMULATION PERIOD, we cannot assure you that there will be sufficient
time to accumulate the PRINCIPAL COLLECTIONS necessary to pay you principal
on the SCHEDULED NOTE PAYMENT DATE of your notes. See "Maturity
Considerations" in the attached prospectus.
RECEIVABLE YIELD CONSIDERATIONS
Gross revenues from finance charges and fees collected from accounts
in the MASTER TRUST PORTFOLIO for each of the three calendar years 1998,
1997 and 1996 and for the three months ended on March 31, 1999 are set
forth in the following table. In the following table:
o Finance Charges and Fees Collected include periodic and minimum
finance charges, annual membership fees, late charges, cash
advance transaction fees, INTERCHANGE, overlimit fees and fees
for returned checks;
o Average Principal Receivables Outstanding is the average of
the beginning of the month balance of master trust PRINCIPAL
RECEIVABLES outstanding;
o Yield from Finance Charges and Fees Collected is calculated as
a percentage of Average Principal Receivables Outstanding;
o historical yield figures are calculated on a cash
collections basis; and
o the percentage reflected for the three months ended March
31, 1999 is an annualized figure.
PORTFOLIO YIELD
MASTER TRUST PORTFOLIO
(DOLLAR AMOUNTS IN MILLIONS)
THREE MONTHS YEAR ENDED DECEMBER 31,
ENDED MARCH 31, ------------------------------
1999 1998 1997 1996
--------- --------- -------- -------
Finance Charges and Fees
Collected....................... $ 803 $2,795 $2,348 $1,505
Average Principal Receivables
Outstanding..................... $17,332 $15,658 $13,394 $8,787
Yield from Finance Charges and
Fees Billed..................... 18.54% 17.85% 17.53% 17.13%
CREATION OF THE OWNER TRUST
CHASE USA and ______________, a Delaware banking corporation, will
form Chase Credit Card Owner Trust 1999-___ as a Delaware [statutory
business] [common law] trust. The TRUST AGREEMENT for the owner trust
provides that the owner trust has been formed for a limited purpose and may
not engage in any activities other than:
o acquiring, owning and managing the assets of the owner trust,
o issuing and making payments on the notes, and
o engaging in activities incidental to the above.
Because of its limited activities, the owner trust has contracted with CMB
to provide administrative services, including providing notices to you and
directions to the INDENTURE TRUSTEE. You should refer to the TRUST
AGREEMENT and the DEPOSIT AND ADMINISTRATION AGREEMENT for a complete
description of the owner trust's activities.
The owner trust's assets include:
o the SERIES CERTIFICATE and
o the OWNER TRUST SPREAD ACCOUNT.
Only the Class C notes will receive any benefit from the Owner Trust Spread
Account.
The owner trust will not have any other assets and payments of principal
and interest on the notes will only be made to the extent that the master
trust allocates finance charge and principal collections to the SERIES
CERTIFICATE.
The owner trust's address is ________________________, in care of the
OWNER TRUSTEE and its telephone number at that address is ( ) - .
USE OF PROCEEDS
The net proceeds from the sale of your notes will be:
o used to make an initial deposit into the OWNER TRUST
SPREAD ACCOUNT; and
o paid to CHASE USA in consideration for the SERIES
CERTIFICATE.
CHASE USA will use the proceeds it receives for general corporate purposes.
DESCRIPTION OF THE SECURITIES
The following is a summary of the material provisions of the Notes
and Series Certificate for your series. This summary is not a complete
description of the terms of the Notes or the Series Certificate for your
series. You should refer to "Description of the Securities" in the attached
prospectus as well as the Indenture, the Pooling and Servicing Agreement
and the Series 1999-__ Supplement for a complete description.
DESCRIPTION OF THE SERIES CERTIFICATE
The owner trust will hold the SERIES CERTIFICATE to be issued through
the SERIES 1999-__ SUPPLEMENT. The owner trust will pledge the SERIES
CERTIFICATE including its allocations of principal and interest from the
master trust to the INDENTURE TRUSTEE
for your benefit.
GENERAL
The SERIES CERTIFICATE represents the right to receive its allocation
of cardholder payments which have been transferred to the master trust. The
SERIES CERTIFICATE will be allocated:
o a FLOATING ALLOCATION PERCENTAGE of collections of FINANCE
CHARGE RECEIVABLES that will be used to pay interest on your
notes;
o a FLOATING ALLOCATION PERCENTAGE of DEFAULT AMOUNTS that will
reduce your INVESTOR INTEREST if not paid from collections of
FINANCE CHARGE RECEIVABLES or REALLOCATED PRINCIPAL
COLLECTIONS;
o only during the REVOLVING PERIOD, a FLOATING ALLOCATION
PERCENTAGE of collections of PRINCIPAL RECEIVABLES; and
o during the CONTROLLED ACCUMULATION PERIOD or a RAPID
AMORTIZATION PERIOD, a FIXED ALLOCATION PERCENTAGE of PRINCIPAL
RECEIVABLES that will be used to repay your principal.
The master trust trustee will also allocate to your series:
o SHARED PRINCIPAL COLLECTIONs and
o EXCESS FINANCE CHARGE COLLECTIONS.
Class A will also be entitled to amounts in the PRINCIPAL FUNDING ACCOUNT
and the ACCUMULATION PERIOD RESERVE ACCOUNT as well as investment earnings
on those amounts.
The SERIES CERTIFICATE is included in GROUP I. The series listed
under "--Other Series Issued and Outstanding" below are also included in
GROUP I and additional series issued by the master trust may also be
included in GROUP I.
The SERIES CERTIFICATE will not be subordinated to any other series
of certificates.
INTEREST ALLOCATIONS
Interest payments on the SERIES CERTIFICATE for your series will be
funded from:
o finance charge receivables collected during the prior month
allocated to the SERIES CERTIFICATE other than INTERCHANGE used
to pay a portion of the servicing fee;
o investment earnings on amounts deposited in the PRINCIPAL
FUNDING ACCOUNT for the prior month; and
o amounts deposited in the ACCUMULATION PERIOD RESERVE
Account but only if necessary to pay interest to you.
The owner trust will receive the amount described above that is not
applied to:
o the INVESTOR SERVICING FEE,
o the INVESTOR DEFAULT AMOUNT,
o the INVESTOR CHARGE-OFFs and unreimbursed REALLOCATEd
PRINCIPAL COLLECTIONS, and
o EXCESS FINANCE CHARGE COLLECTIONs paid to other series.
The owner trust will receive these amounts on the business day preceding
the 15th day of each month.
PRINCIPAL ALLOCATIONS
Principal payments on the SERIES CERTIFICATE for your series will be
funded from:
o PRINCIPAL RECEIVABLES allocated to the SERIES CERTIFICATE
collected during the prior month minus
o PRINCIPAL RECEIVABLES reallocated to other series plus
o SHARED PRINCIPAL COLLECTIONS allocated to your series.
During the REVOLVING PERIOD, these amounts will be treated as SHARED
PRINCIPAL COLLECTIONS and be used to pay principal to other series or to
CHASE USA.
During the CONTROLLED ACCUMULATION PERIOD, an amount equal to the
least of:
o AVAILABLE INVESTOR PRINCIPAL COLLECTIONS allocated to the
SERIES CERTIFICATE,
o the CONTROLLED DEPOSIT AMOUNT and
o excess of the Class A note principal balance over the
amount on deposit in the PRINCIPAL FUNDING ACCOUNT
will be deposited in the PRINCIPAL FUNDING ACCOUNT to be paid to the owner
trust on each TRANSFER DATE for distribution to Class A noteholders on the
___________ distribution date.
After payment has been made to Class A, AVAILABLE INVESTOR PRINCIPAL
COLLECTIONS will be available to pay Class B and Class C. There is no
PRINCIPAL FUNDING ACCOUNT for Class B and Class C.
During the RAPID AMORTIZATION PERIOD, AVAILABLE INVESTOR PRINCIPAL
COLLECTIONS will be paid to the owner trust on each TRANSFER DATE until the
SERIES CERTIFICATE is paid in full and will be used to pay Class A, then to
pay Class B and then to pay Class C notes.
CONTROLLED ACCUMULATION
The CONTROLLED ACCUMULATION PERIOD is scheduled to last 12 months.
However, the SERVICER may elect to extend the REVOLVING PERIOD and postpone
the CONTROLLED ACCUMULATION PERIOD by providing a notice to the master
trust trustee. The SERVICER can make this election only if the number of
months needed to fund the PRINCIPAL FUNDING ACCOUNT based on expected
principal collections needed to pay principal on Class A is less than
twelve months. On each determination date from the ___, 200_ determination
date until the CONTROLLED ACCUMULATION PERIOD begins, the SERVICER will
review the amount of expected principal collections until the Class A
Scheduled Note PAYMENT DATE and may elect to postpone the CONTROLLED
ACCUMULATION. In making its decision, the SERVICER is required to assume
that the principal payment rate will be no greater than the lowest monthly
payment rate for the prior twelve months and will consider the amount of
principal expected to be allocable to certificateholders of all other
Series which are not expected to be amortizing or accumulating principal.
In no case will the CONTROLLED ACCUMULATION PERIOD be reduced to less than
one month.
ALLOCATION PERCENTAGES
The master trust trustee will use the FLOATING ALLOCATION PERCENTAGE
to allocate to the Series Certificate collections of FINANCE CHARGE
RECEIVABLES and DEFAULT AMOUNTS at any time and collections of PRINCIPAL
RECEIVABLES during the REVOLVING PERIOD.
o The FLOATING ALLOCATION PERCENTAGE for each month will
equal a fraction
- the numerator of which is equal to the ADJUSTED
INVESTOR INTEREST; and
- the denominator is equal to the greater of:
- the sum of the amount of PRINCIPAL RECEIVABLES in the
master trust and any amount on deposit in the EXCESS
FUNDING ACCOUNT as of the close of business on the last
day of the prior month; and
- the sum of the numerators used to calculate the
investor percentages for allocations of FINANCE CHARGE
RECEIVABLES, DEFAULT AMOUNTS or PRINCIPAL RECEIVABLES for
the other master trust series outstanding.
the master trust trustee will use the FIXED ALLOCATION PERCENTAGE to
allocate to the Series Certificate collections of PRINCIPAL RECEIVABLES
during the CONTROLLED ACCUMULATION PERIOD
and the RAPID AMORTIZATION PERIOD.
o The FIXED ALLOCATION PERCENTAGe for each month will be
equal to a fraction:
- the numerator of which is equal to the INVESTOR
INTEREST as of the last day of the REVOLVING PERIOD and
- the denominator is equal to the greater of:
o the sum of the amount of principal receivables in
the master trust and any amount on deposit in the
EXCESS FUNDING ACCOUNT as of the close of business
on the last day of the prior month; and
o the sum of the numerators used to calculate the
INVESTOR PERCENTAGE for principal receivables for
other master trust series outstanding.
When there has been an addition or removal of receivables during the prior
month, the denominator used to determine these percentages will be
adjusted.
REALLOCATION OF CASH FLOWS
On each TRANSFER DATE, the SERVICER will allocate principal
collections to make interest allocations and to pay Class A and B interest
in an amount equal to the REALLOCATED PRINCIPAL COLLECTIONS.
If REALLOCATED PRINCIPAL COLLECTIONS are greater than zero, then
principal collections allocated to the INVESTOR INTEREST will be treated as
finance charge collections and be available to pay Class A and B interest
and the INVESTOR INTEREST will be reduced accordingly. A reduction in the
INVESTOR INTEREST will reduce the allocation of finance charge and
principal collections to the SERIES CERTIFICATE.
APPLICATION OF COLLECTIONS
On each TRANSFER DATE, the SERVICER will direct the master trust
trustee to apply AVAILABLE INVESTOR FINANCE CHARGE COLLECTIONS from the
prior month in the following order:
o deposit an amount equal to the CLASS A INTEREST REQUIREMENT for
the related DISTRIBUTION DATE into the DISTRIBUTION ACCOUNT for
distribution to the owner trust on that DISTRIBUTION DATE;
o deposit an amount equal to the CLASS B INTEREST REQUIREMENT for
the related DISTRIBUTION DATE into the DISTRIBUTION ACCOUNT for
distribution to the owner trust on that DISTRIBUTION DATE;
o pay an amount equal to the NET INVESTOR SERVICING FEE plus
the amount of any overdue NET INVESTOR SERVICING FEE, to the
SERVICER;
o treat an amount equal to the INVESTOR DEFAULT AMOUNT, if any,
for the related MONTHLY PERIOD, as AVAILABLE INVESTOR PRINCIPAL
COLLECTIONS and deposit it into the PRINCIPAL ACCOUNT;
o treat an amount equal to the sum of the INVESTOR Charge-Offs
and the amount of unreimbursed REALLOCATED PRINCIPAL
COLLECTIONS as AVAILABLE INVESTOR PRINCIPAL COLLECTIONS and
deposit it into the PRINCIPAL ACCOUNT;
o deposit an amount equal to the NET CLASS C INTEREST REQUIREMENT
for the related DISTRIBUTION DATE into the DISTRIBUTION ACCOUNT
for distribution to the owner trust on that DISTRIBUTION DATE;
o deposit into the ACCUMULATION PERIOD RESERVE ACCOUNT on and
after the RESERVE ACCOUNT FUNDING DATE, but prior to the date
on which the ACCUMULATION PERIOD RESERVE ACCOUNT terminates an
amount equal to the excess, if any, of the REQUIRED ACCUMULATION
PERIOD RESERVE ACCOUNT AMOUNT over the AVAILABLE ACCUMULATION
PERIOD RESERVE ACCOUNT AMOUNT;
o pay to the SERVICER an amount equal to the INVESTOR SERVICING
FEE less SERVICER INTERCHANGE that has not already been paid to
the SERVICER; and
o pay to the owner trust an amount equal to the excess, if any,
of the REQUIRED OWNER TRUST SPREAD ACCOUNT AMOUNT over the
amount then on deposit in the OWNER TRUST SPREAD ACCOUNT.
All remaining amounts will be treated as EXCESS FINANCE CHARGE COLLECTIONS
and will be available to cover any shortfalls in finance charge collections
for other outstanding series. After payment of shortfalls, the remaining
amount will be paid to CHASE USA as the owner of the equity interest in the
owner trust.
The following diagram provides you with an outline of the allocation
of finance charge collections.
ALLOCATIONS OF COLLECTIONS OF FINANCE CHARGE RECEIVABLES
[GRAPHIC OMITTED]
The SERVICER will direct the master trust trustee to apply AVAILABLE
INVESTOR PRINCIPAL COLLECTIONS - after reallocating principal collections
to cover shortfalls in amounts payable from FINANCE CHARGE COLLECTIONS --
in the following order:
o during the REVOLVING PERIOD, treat as SHARED PRINCIPAL
COLLECTIONS and make available to cover any shortfalls in
principal collections for other outstanding series and will be
shared between series as described below under "--Shared
Principal Collections";
o during the CONTROLLED ACCUMULATION PERIOD, deposit the
CONTROLLED DEPOSIT AMOUNT in the PRINCIPAL FUNDING ACCOUNT and
treat any remaining amount as SHARED PRINCIPAL COLLECTIONS; or
o during the RAPID AMORTIZATION PERIOD, distribute to the
owner trust to make principal payments to you.
The following diagram provides you with an outline of the allocation
of principal collections.
ALLOCATIONS OF COLLECTIONS OF PRINCIPAL RECEIVABLES
[GRAPHIC OMITTED]
SHARED EXCESS FINANCE CHARGE COLLECTIONS
Finance charge collections -- and other amounts treated like finance
charge collections -- in excess of the amount required to make payments or
deposits for the SERIES CERTIFICATE for your series will be made available
to other series included in GROUP I whose allocation of finance charge
collections is not sufficient to make its required payments or deposits. We
call these collections EXCESS FINANCE CHARGE COLLECTIONS. If the SERIES
CERTIFICATE for your series requires more finance charge collections than
allocated through the INVESTOR PERCENTAGE, it will have access to finance
charge collections -- and other amounts treated like finance charge
collections -- from other series in GROUP I. Each series that is part of
GROUP I and has a shortfall will receive a share of the total amount of
EXCESS FINANCE CHARGE COLLECTIONS available for that month based on the
amount of shortfall for that series divided by the total shortfall for all
series for that same month.
SHARED PRINCIPAL COLLECTIONS
Collections of PRINCIPAL RECEIVABLES allocated to the INVESTOR
INTEREST in excess of the CONTROLLED DEPOSIT AMOUNT during the CONTROLLED
ACCUMULATION PERIOD and principal payments to the owner trust, as the
Certificateholder, during the RAPID AMORTIZATION PERIOD, will be made
available to other series whose allocation of principal collections is not
sufficient to make payments or deposits required to be made from principal
collections allocated to those series. We call these collections SHARED
PRINCIPAL COLLECTIONS. If the SERIES CERTIFICATE for your series requires
more PRINCIPAL COLLECTIONS than allocated through the INVESTOR PERCENTAGE,
it will share in the excess available from other series in GROUP I. Each
series that is part of GROUP I and has a shortfall will receive a share of
the total amount of SHARED PRINCIPAL COLLECTIONS available for that month
based on the amount of shortfall for that series divided by the total
shortfall for all series for that same month. SHARED PRINCIPAL COLLECTIONS
will not, however, be available to cover INVESTOR CHARGE-OFFS for any
series.
If SHARED PRINCIPAL COLLECTIONS exceed shortfalls, the master trust
trustee will distribute the remaining amount to the holder of the
TRANSFEROR CERTIFICATE or, under certain circumstances, deposit it into the
EXCESS FUNDING ACCOUNT.
DEFAULTED RECEIVABLES
The DEFAULT AMOUNT represents the investor's share of losses from the
MASTER TRUST PORTFOLIO.
On each TRANSFER DATE, CMB as SERVICER will calculate the DEFAULT
AMOUNT by multiplying:
o the FLOATING ALLOCATION PERCENTAGE for that month, by
o the total amount of receivables in MASTER TRUST PORTFOLIO
accounts that were charged-off for that month.
If the DEFAULT AMOUNT exceeds the amount of finance charge
collections allocated to fund this amount for the prior month, then the
INVESTOR INTEREST will be reduced by the excess. If the INVESTOR INTEREST
is reduced to zero, the SERIES CERTIFICATE will not receive any further
allocations of finance charge and principal collections. The INVESTOR
INTEREST will also be reduced by the amount of any REALLOCATED PRINCIPAL
COLLECTIONS used to cover any DEFAULT AMOUNTS. In no event, however, shall
the INVESTOR INTEREST be reduced below zero. Reductions in the INVESTOR
INTEREST from both of these items may be reimbursed from subsequent finance
charge collections allocated for reimbursement, if available.
PRINCIPAL FUNDING ACCOUNT
The master trust trustee will establish an account in which it will
collect principal collections (other than REALLOCATED PRINCIPAL
COLLECTIONS), including SHARED PRINCIPAL COLLECTIONS, during the CONTROLLED
ACCUMULATION PERIOD. The amounts collected will be distributed to the owner
trust to make principal payments to you on your SCHEDULED NOTE PAYMENT
DATE. However, if a rapid amortization occurs, those amounts will be paid
to you on the first DISTRIBUTION DATE after the RAPID AMORTIZATION PERIOD
begins.
The SERVICER will direct the master trust trustee to invest money on
deposit in this account in short-term, highly rated liquid investments
permitted under the terms of the POOLING AND SERVICING AGREEMENT. As stated
above, investment earnings on these investments will be treated as finance
charge collections. We call these amounts PRINCIPAL FUNDING INVESTMENT
PROCEEDS. If for any month, the PRINCIPAL FUNDING INVESTMENT PROCEEDS are
less than the product of:
o the balance of the PRINCIPAL FUNDING ACCOUNT as of the
RECORD DATE, and
o the [weighted average] interest rate on the Class A[, B and
Class C] notes in effect for that month, and
o a fraction that is equal to the actual number of days in
the monthly payment period divided by 360,
then the MASTER TRUST TRUSTEE will withdraw the shortfall from the
ACCUMULATION PERIOD RESERVE ACCOUNT and treat those amounts as finance
charge collections.
ACCUMULATION PERIOD RESERVE ACCOUNT
The master trust trustee will establish an account that it will use
to fund investment earnings shortfalls during the CONTROLLED ACCUMULATION
PERIOD. At least three months prior to the beginning of the CONTROLLED
ACCUMULATION PERIOD, the master trust trustee will begin to deposit
AVAILABLE INVESTOR FINANCE CHARGE COLLECTIONS into this account until the
account balance equals the REQUIRED ACCUMULATION PERIOD RESERVE ACCOUNT
AMOUNT.
CHASE USA may change the formula for calculating the REQUIRED
ACCUMULATION PERIOD RESERVE ACCOUNT AMOUNT if the rating agencies agree
that the modification to the formula will not result in negative rating
action on the notes and an authorized officer of CHASE USA certifies that,
in the reasonable belief of CHASE USA, the modification will not result in
a PAY OUT EVENT.
CMB as SERVICER will direct the master trust trustee to invest money
on deposit in this account in short-term, highly rated liquid investments
permitted under the terms of the POOLING AND SERVICING AGREEMENT.
Investment earnings (net of expenses and losses) will be retained in this
account. The master trust trustee will withdraw money from this account in
excess of the REQUIRED ACCUMULATION PERIOD RESERVE ACCOUNT AMOUNT on each
TRANSFER DATE and the amount withdrawn will be used to fund any shortfall
in PRINCIPAL FUNDING INVESTMENT PROCEEDS.
On each TRANSFER DATE during the CONTROLLED ACCUMULATION PERIOD, and
on the first TRANSFER DATE during the RAPID AMORTIZATION PERIOD, the
SERVICER will withdraw from the ACCUMULATION PERIOD RESERVE ACCOUNT and
treat as AVAILABLE INVESTOR FINANCE CHARGE COLLECTIONS the lesser of:
o the AVAILABLE ACCUMULATION PERIOD RESERVE ACCOUNt AMOUNt, and
o the PRINCIPAL FUNDING INVESTMENT SHORTFALl with respect to
that TRANSFER DATE.
The ACCUMULATION PERIOD RESERVE ACCOUNT will terminate on the earlier
to occur of:
o the termination date of the master trust, and
o if the CONTROLLED ACCUMULATION PERIOd has not begun, the first
TRANSFER DATE after the RAPID AMORTIZATION PERIOD has begun, or
o if the CONTROLLED ACCUMULATION PERIOd has begun, the earlier of:
- the first TRANSFER DATE with respect to the RAPID
AMORTIZATION PERIOD, and
- the TRANSFER DATE immediately preceding the SCHEDULED
PRINCIPAL ALLOCATION COMMENCEMENT DATE.
Upon termination of this account, funds in this account will be treated as
AVAILABLE INVESTOR FINANCE CHARGE COLLECTIONS and used to pay interest to
you.
PAY OUT EVENTS
The REVOLVING PERIOD will continue until the scheduled date for the
beginning of the CONTROLLED ACCUMULATION PERIOD unless one of the events
identified in the chart on the following page occurs. The chart also
indicates whether each listed PAY OUT EVENT is an automatic event or an
event that requires a majority vote of the noteholders to declare the
occurrence of a PAY OUT EVENT. Additionally, some events cause a rapid
amortization of the SERIES CERTIFICATE while others will cause a rapid
amortization for all series issued by the master trust and outstanding when
the event occurs.
<TABLE>
<CAPTION>
REQUIRES A CAUSES RAPID CAUSES RAPID
MAJORITY VOTE OF AMORTIZATION OF AMORTIZATION
PAY OUT EVENT NOTEHOLDERS(1) SERIES 1999-[ ] OF ALL SERIES
- ------------- ---------------- ---------------- -----------------
<S> <C> <C> <C>
1. CHASE USA fails to make a payment or deposit X X
when required to under the POOLING AND
SERVICING AGREEMENT or within five days
after that date.
2. CHASE USA fails to observe or perform any X X
covenant or agreement and that failure has
a material adverse effect on you and the
failure continues unremedied for 60 days
after written notice to CHASE USA.
3. CHASE USA makes a representation or warranty X X
that was materially incorrect when made and
that continues to be materially incorrect
for 60 days after written notice to CHASE
USA and as a result you are materially and
adversely affected, unless CHASE USA
accepts reassignment of the related
Receivables.
4. CHASE USA provides materially incorrect X X
information about the master trust accounts
and that information continues to be
materially incorrect for 60 days after
written notice to CHASE USA and as a result
you are materially and adversely affected,
unless CHASE USA accepts reassignment of
the related Receivables.
5. The average of the PORTFOLIO YIELDS for three X
consecutive MONTHLY PERIODS is less than the
average of the BASE RATES for the same period.
6. CHASE USA fails to transfer receivables under X
additional accounts or participations when
required under the POOLING AND SERVICING
AGREEMENT.
7. A Servicer Default occurs which has a material X X
adverse effect on you.
8. There are insufficient funds in the X X
DISTRIBUTION ACCOUNT to pay the INVESTOR
INTEREST in full on the second DISTRIBUTION
DATE following the SCHEDULED PRINCIPAL
ALLOCATION COMMENCEMENT DATE.
9. CHASE USA becomes bankrupt or insolvent or X
enters receivership or conservatorship.
10. CHASE USA becomes unable to transfer X
Receivables to the master trust in accordance
with the Pooling and Servicing Agreement.
11. The master trust becomes subject to regulation X
as an "investment company" under the Investment
Company Act of 1940, as amended.
12. An Event of Default occurs under the INDENTURE. X
</TABLE>
- -------------
(1) Each specified PAY OUT EVENT requires the vote of noteholders holding
more than 50% of the notes by aggregate principal amount or the vote
of the master trust trustee. Unless otherwise specified, PAY OUT
EVENTS are declared upon occurrence without the necessity for a vote.
Once a rapid amortization begins, principal will begin to be
distributed to the owner trust on the first DISTRIBUTION DATE following the
month in which the PAY OUT EVENT occurred or was declared. If a rapid
amortization begins, the average life of the notes you hold may be
shortened.
SERVICING FEES AND EXPENSES
The MASTER TRUST TRUSTEE will pay the SERVICER a 2% annual SERVICING
FEE payable in twelve equal monthly installments. We expect to pay half of
the SERVICING FEE from finance charge collections and half of the SERVICING
FEE from INTERCHANGE allocated to the INVESTOR INTEREST. INTERCHANGE paid
to the SERVICER is limited to 1% of the INVESTOR INTEREST less amounts on
deposit in the PRINCIPAL FUNDING ACCOUNT. If there is not enough
INTERCHANGE to pay half of the SERVICING FEE, none of the master trust, the
INDENTURE TRUSTEE nor the Noteholders will be responsible for paying the
SERVICER the amount of any shortfall.
The SERVICER will pay expenses out of the SERVICING FEE it receives,
including the fees and expenses of any MASTER TRUST TRUSTEE and independent
certified public accountants and other fees not stated to be paid by the
master trust. Chase Manhattan Bank as the SERVICER will not be responsible
for the payment of any federal, state or local taxes on your Notes or on
any Certificates.
DESCRIPTION OF THE NOTES
The following is a summary of the material terms of the notes. You
should refer to "Description of the Notes" in the attached prospectus as
well as the Indenture for a complete description of the notes.
GENERAL
The Class A, Class B and Class C Notes will be issued under an
INDENTURE between the owner trust and _____________, as INDENTURE TRUSTEE.
The form of the INDENTURE has been filed as an exhibit to the Registration
Statement and a copy will be filed with the SEC after the Notes are issued.
The Notes are obligations of the owner trust and payments on the notes will
only be made if the owner trust receives payment on the SERIES CERTIFICATE.
Notes will be issued in $1,000 denominations and will be available
only in book-entry form through DTC. As described in the attached
prospectus, as long as the notes are held in book-entry form, you will only
be able to transfer your notes through the facilities of DTC. You will
receive payments and notices through DTC and its participants. Payments of
interest and principal will be made to the Noteholders in whose names notes
are registered on the RECORD DATE, to the extent of available funds, on
each PAYMENT DATE.
The RECORD DATE for the notes is the last business day of the
calendar month before the PAYMENT DATE.
SUBORDINATION
The Class B Notes and the Class C Notes are subordinated
to the Class A Notes. Interest payments will be made to the Class A Notes
prior to the Class B Notes and the Class C Notes. Interest payments will be
made to the Class B Notes prior to the Class C Notes. Principal payments to
the Class B Notes will not begin until the Class A Notes have been paid in
full. Principal payments to the Class C Notes will not begin until the
Class A Notes and the Class B Notes have been paid in full. If principal
collections allocated to the SERIES CERTIFICATE are reallocated to pay the
Class A Notes, the principal amount of the Class C Notes and the Class B
Notes may not be repaid. If principal collections allocated to the SERIES
CERTIFICATE are reallocated to pay interest on the Class B Notes, the
principal amount of the Class C Notes may not be repaid. If receivables are
sold after an EVENT OF DEFAULT or PAY OUT EVENT, the net proceeds of that
sale which are available to pay principal on the notes would be paid first
to the Class A Notes before any remaining net proceeds would be available
for payments due to the Class B Notes or the Class C Notes.
INTEREST PAYMENTS
Interest will begin to accrue on the notes beginning on the CLOSING
DATE and will be paid to you on the 15th of ___________ and the 15th day of
each following month. If such date is not a business day, you will be paid
interest on the following business day but you will not receive any
additional interest because of the delay.
On each PAYMENT DATE, you will receive an interest payment based on
the interest rate for your class and the outstanding balance of your notes
as follows:
o the Class A interest rate is _____% per annum above
one-month LIBOR;
o the Class B interest rate is _____% per annum above
one-month LIBOR; and
o the Class C interest rate is _____% per annum above
one-month LIBOR.
The INDENTURE TRUSTEE will calculate the amount of interest to be
paid to you by multiplying:
o the note balance of your class as of the last RECORD DATE by
o the interest rate for your class by
o a fraction equal to the number of actual days for that
interest period divided by 360.
An interest period is the period from the prior PAYMENT DATE through the
day before the current PAYMENT DATE. The owner trust will pay interest from
money it received from the SERIES CERTIFICATE and deposited in the NOTE
DISTRIBUTION ACCOUNT. Interest on each class of NOTES will be paid from
amounts on deposit in the NOTE DISTRIBUTION ACCOUNT, however, Class C
interest will also be paid from the OWNER TRUST SPREAD ACCOUNT. Class A
will receive interest payments prior to Class B and Class C. Class B will
receive interest payments prior to Class C, except to the extent Class C
interest payments are paid from the OWNER TRUST SPREAD ACCOUNT.
If you do not receive your interest in full on any PAYMENT DATE, you
will be paid the shortfall on a following PAYMENT DATE as well as interest
at the interest rate for your class on those unpaid amounts to the extent
of available funds.
The initial interest payment and the initial interest period will be
adjusted to account for a [shortened] first period.
A calculation agent will determine one-month LIBOR on the second
business day prior to the beginning of each interest period by referring to
the rate for dollar deposits for one month on Telerate Page 3750 at 11 a.m.
London time. If the rate does not appear, the calculation agent will
request four major banks in the London interbank market to provide quotes
for interest rates on dollar deposits for one month and will use the
arithmetic mean of the quotes. If less than two London banks provide
quotes, the calculation agent will request major New York City banks to
provide quotes for interest rates on dollar deposits to be lent to European
banks for one month and will use the arithmetic mean of the quotes.
Chase Manhattan Bank will be the initial calculation agent. The
calculation agent may not resign until a successor calculation agent is
appointed.
You can call the calculation agent at 212-___-____ to obtain the
Class A, B and C interest rates for the prior and current interest periods.
The ADMINISTRATOR of the owner trust will also notify the Luxembourg Stock
Exchange by the first day of the interest period of the Class A, B and C
interest rates and the amount of interest to be paid to each class of notes
on that date. This information will also be included in the monthly
noteholder statement.
PRINCIPAL PAYMENTS
The notes will mature on the _________ DISTRIBUTION DATE which is the
NOTE MATURITY DATE and are required to be paid on that date. The Notes may,
however, be repaid or redeemed
before or after the SCHEDULED NOTE PAYMENT DATE.
Class A note is scheduled to be repaid in full on the ________
DISTRIBUTION DATE from the amounts deposited in the PRINCIPAL FUNDING
ACCOUNT.
If the Class A notes are repaid, the Class B notes will be repaid in
full on the ________ DISTRIBUTION DATE.
If the Class A and Class B notes are repaid, the Class C notes will
be repaid in full on the ________ DISTRIBUTION DATE.
The INDENTURE TRUSTEE is required to use the amount on deposit in the
NOTE DISTRIBUTION ACCOUNT to pay principal on the scheduled note PAYMENT
Date for each class of notes. If there is an outstanding principal balance
of any class of notes after its SCHEDULED NOTE PAYMENT DATE, principal will
be paid on the following DISTRIBUTION Dates until the full balance is
repaid. After an EVENT OF DEFAULT has been declared, if the INDENTURE
TRUSTEE and the noteholders determine that the principal amount of the
notes is due and payable, such amounts will be paid to each class in order
of seniority. If the full balance is not repaid by the NOTE MATURITY DATE,
an EVENT OF DEFAULT will be declared. You may suffer a loss if principal is
not repaid to you by the NOTE MATURITY DATE.
OPTIONAL REDEMPTION
The owner trust will redeem the notes if the TRANSFEROR chooses to
repurchase the SERIES CERTIFICATE. If a redemption occurs, you will receive
your remaining principal balance plus accrued but unpaid interest through
the PAYMENT DATE on which the notes are redeemed. Please refer to
"Description of the Securities--Description of the Certificates--Final
Payment of Principal; Series Termination" in the attached prospectus for a
description of the option of the TRANSFEROR to repurchase a series.
DISTRIBUTIONS
On each TRANSFER DATE for the SERIES CERTIFICATE, the master trust
trustee will allocate finance charge and principal collections to pay
interest, principal, fees and other amounts on the notes. The timing,
calculation, distribution, order, source and priority for payment of these
amounts by or on behalf of the INDENTURE TRUSTEE are provided below:
o deposit the CLASS A INTEREST REQUIREMENt into the NOTE
DISTRIBUTION ACCOUNT for distribution to the Class A
Noteholders on the related DISTRIBUTION DATE;
o deposit the CLASS B INTEREST REQUIREMENt into the NOTE
DISTRIBUTION ACCOUNT for distribution to the Class B
Noteholders on the related DISTRIBUTION DATE;
o deposit the CLASS C INTEREST REQUIREMENt into the NOTE
DISTRIBUTION ACCOUNT for distribution to the Class C
Noteholders on the related DISTRIBUTION DATE;
o deposit the CLASS A NOTEHOLDERS' PRINCIPAL DISTRIBUTION AMOUNT
into the NOTE DISTRIBUTION ACCOUNT for distribution to the
Class A Noteholders on the related DISTRIBUTION DATE;
o deposit the CLASS B NOTEHOLDERS' PRINCIPAL DISTRIBUTION AMOUNT
into the NOTE DISTRIBUTION ACCOUNT for distribution to the
Class B Noteholders on the related Distribution Date;
o deposit the CLASS C NOTEHOLDERS' PRINCIPAL DISTRIBUTION AMOUNT
into the NOTE DISTRIBUTION ACCOUNT for distribution to the
Class C Noteholders on the related DISTRIBUTION DATE; and
o deposit into the OWNER TRUST SPREAD ACCOUNT, the excess, if
any, of
- the REQUIRED OWNER TRUST SPREAD ACCOUNT AMOUNT for such
TRANSFER DATE over
- the amount on deposit in the OWNER TRUST SPREAD ACCOUNT
on such TRANSFER DATE; not taking into account the amount
deposited into the OWNER TRUST SPREAD ACCOUNT on such
TRANSFER DATE described by this clause.
Any remaining funds will be distributed to CHASE USA as the owner of the
equity interest in the owner trust.
The INDENTURE TRUSTEE can also use the funds on deposit in the
OWNER TRUST SPREAD ACCOUNT to pay:
o Class C interest to Class C noteholders and
o Class C principal on or after the Class C scheduled
maturity date if
- the Class A and B notes have been repaid or
- the INVESTOR INTEREST of the SERIES CERTIFICATE is
zero.
On each PAYMENT DATE, money on deposit in the NOTE DISTRIBUTION ACCOUNT
will be distributed to you.
OWNER TRUST SPREAD ACCOUNT
The INDENTURE TRUSTEE will establish this account for the benefit of
the Class C Notes only. It will be funded from allocations of funds from
the SERIES CERTIFICATE after payment of the CLASS A, CLASS B AND CLASS C
INTEREST REQUIREMENTS and the Class A and Class B Noteholders Principal
Distribution Amounts for such TRANSFER DATE. The balance of such account
will be used to pay Class C interest and principal as described in the
preceding section. The availability of funds in this account is intended to
increase the likelihood that Class C noteholders will receive the full
amount of principal and interest owed to them and to decrease the
likelihood that Class C noteholders will suffer a loss of principal. If you
purchase Class C notes, you should note that the funds deposited in this
account are limited and may not be available when needed to make up
interest or principal shortfalls.
The required balance of the OWNER TRUST SPREAD ACCOUNT will initially
equal $_______ and will adjust each TRANSFER DATE based on the average
amount of EXCESS SPREAD available to the SERIES CERTIFICATE for the prior
three months based on the following chart.
Percentage of
Average Excess Spread Initial Note Balance
--------------------- --------------------
Greater than 4.5% _____%
Less than 4.5% but greater than 3.5% _____%
Less than 3.5% but greater than 2.5% _____%
Less than 2.5% but greater than 1.5% _____%
Less than 1.5% _____%
The ADMINISTRATOR will be able to modify the method for calculating
the REQUIRED OWNER TRUST SPREAD ACCOUNT AMOUNT if the rating agencies agree
that the modification will not result in negative rating action on the
notes and an authorized officer of CHASE USA certifies to the INDENTURE
TRUSTEE that the modification will not result in an EVENT OF DEFAULT. The
ADMINISTRATOR/TRANSFEROR will not be able to modify this formula if a Pay
Out Event relating to the nonpayment of interest or principal has occurred.
The ADMINISTRATOR will direct the INDENTURE TRUSTEE to invest money
on deposit in this account in short-term, highly rated liquid investments
permitted under the terms of the INDENTURE. Investment earnings (net of
expenses and losses) will be deposited in the NOTE DISTRIBUTION ACCOUNT and
will be used to pay Class C interest.
Amounts in excess of the REQUIRED OWNER TRUST SPREAD ACCOUNT AMOUNT
will be distributed to CHASE USA as the holder of the equity interest in
the owner trust. After the payment in full of the Class C notes, the
balance of this account will be distributed to CHASE USA as the holder of
the equity interest in the owner trust.
EVENTS OF DEFAULT
Each of the following events is an EVENT OF DEFAULT under the
INDENTURE:
o Class A, B or C principal is not paid on the Note Maturity
Date;
o the owner trust fails to pay interest on the notes (other than a
Note Interest Shortfall) and the failure continues for 65 days;
o the owner trust becomes bankrupt or insolvent; or
o the owner trust becomes subject to regulation as an "investment
company" under the Investment Company Act of 1940.
If an EVENT OF DEFAULT occurs, the INDENTURE TRUSTEE or the holders
of a majority of the notes may declare the notes to be immediately due and
payable. If the notes are accelerated, the INDENTURE TRUSTEE can:
o begin proceedings to collect amounts due from the OWNER TRUSTEE
or exercise other remedies available to it as a secured party;
o foreclose on the SERIES CERTIFICATE;
o sell the SERIES CERTIFICATE in accordance with the restrictions
described in the base prospectus and use the proceeds from the
sale to repay you; and
o allow the OWNER TRUSTEE to continue to hold the SERIES
CERTIFICATE and pass through any payments on the SERIES
CERTIFICATE to you.
If an EVENT OF DEFAULT is declared and the notes are accelerated, you
may receive principal prior to the scheduled note payment date for your
notes.
NOTEHOLDER REPORTS
You will receive a monthly report from the ADMINISTRATOR as described
in the attached prospectus. In addition, the report will specify if any
money is withdrawn from the OWNER TRUST SPREAD ACCOUNT.
So long as the notes are listed on the Luxembourg Stock Exchange, we
will publish a notice in a daily newspaper in Luxembourg that provides the
information contained in the monthly report. We expect initially to publish
the notice in the Luxemburger Wort.
If definitive notes are issued, the monthly notice will be mailed to
your address as it appears on the INDENTURE TRUSTEE'S register.
LISTING AND GENERAL INFORMATION
We have applied to the Luxembourg Stock Exchange to list the Class A
notes, the Class B notes and the Class C notes. In connection with the
listing application, the Organization Certificate and By-laws of the Bank,
and legal notice relating to the issuance of the Class A notes, the Class B
notes and the Class C notes will be deposited before we list with the Chief
Registrar of the District Court of Luxembourg, where you may obtain copies
of those documents. The Class A notes, the Class B notes and the Class C
notes have been accepted for clearance through the facilities of DTC,
CEDELBANK and EUROCLEAR.
The securities identification numbers for the notes are listed below:
International
Securities
Identification
CUSIP Number Number (ISIN) Common Code
------------ -------------- -----------
Class A
Class B
Class C
As of the date of this supplement, neither the master trust nor the
owner trust is involved in any litigation or arbitration proceeding
relating to claims that are material in the context of the issuance of the
Notes, nor so far as Chase USA is aware are any of those proceedings
pending or threatened.
Except as disclosed in this prospectus supplement, there has been no
material adverse change in the financial position of the master trust since
___________, 199__ through the date of this prospectus supplement.
The transactions described in this prospectus supplement were
authorized by resolutions adopted by CHASE USA'S Board of Directors on
__________, 199__ and by CHASE USA'S Asset and Loan Securitization
Committee as of ________, 199__.
Copies of the POOLING AND SERVICING AGREEMENT, the SERIES 1999-__
SUPPLEMENT, the applicable Indenture, Deposit and Administration Agreement
and the Trust Agreement, the annual report of independent certified public
accountants described in "Description of the Securities--Description of the
Certificates--Evidence as to Compliance" in the attached prospectus, the
documents referred to under "Where You Can Find More Information" and the
reports to noteholders referred to under "Reports to Securityholders" and
"Description of the Securities--Description of the Notes--Reports to
Noteholders" in the attached prospectus will be available free of charge at
the office of the LISTING AGENT in Luxembourg. Financial information
regarding CHASE USA is included in the consolidated financial statements of
The Chase Manhattan Corporation in The Chase Manhattan Corporation's Annual
Report on Form 10-K for the fiscal year ended December 31, 1997. Such
report is available, and reports for subsequent years will be available, at
the office of the LISTING AGENT.
So long as there is no PAYING AGENT and transfer agent in Luxembourg,
Banque Generale du Luxembourg, S.A. will act as intermediary agent in
Luxembourg. If securities are issued in fully registered, certificated form
under the circumstances described in the attached prospectus, a PAYING
AGENT and transfer agent will be appointed in Luxembourg.
The notes, the POOLING AND SERVICING AGREEMENT, the SERIES 1999-__
SUPPLEMENT, the INDENTURE and the DEPOSIT AND ADMINISTRATION AGREEMENT are
governed by the laws of the State of New York. The TRUST AGREEMENT is
governed by the laws of the State of Delaware.
This prospectus supplement and the attached prospectus have been
prepared by CHASE USA solely for use in connection with the offering and
listing of the notes described in this prospectus supplement. CHASE USA has
taken reasonable care to ensure that facts stated in this prospectus
supplement and the attached prospectus are true and accurate in all
material respects and there have not been omitted material facts the
omission of which would make misleading any statements of fact or opinion
in this prospectus supplement or the prospectus. CHASE USA accepts
responsibility accordingly.
UNDERWRITING
CHASE USA has agreed to sell to the underwriters listed below the
amount of securities of each class set forth next to each underwriter's
name. Each underwriter has agreed to purchase that amount of those
securities.
Class A Notes Principal Amount
------------- ----------------
Chase Securities Inc. $____________
_____________________ $____________
-------------
Total $
=============
Class B Notes
-------------
Chase Securities Inc. $____________
Class C Notes
-------------
Chase Securities Inc. $____________
The price to public, Underwriters' discounts and commissions, the
concessions that the Underwriters may allow to certain dealers, and the
discounts that such dealers may reallow to certain other dealers, each
expressed as a percentage of the principal amount of each class of notes
are as follows:
Underwriting Selling
Price to discounts and concessions, Reallowance,
Public commissions not to exceed not to exceed
------------- ------------- -------------- -------------
Class A Notes ____% ____% ____% ____%
Class B Notes ____% ____% ____% ____%
Class C Notes ____% ____% ____% ____%
After the offering is completed, CHASE USA will receive the proceeds,
after deduction of the underwriting and other expenses, listed below:
Proceeds to
Transferor
(as % of the
principal Underwriting
Proceeds to amount of the discounts and
Transferor notes) concessions
--------------- ----------------- ---------------
Class A Notes $_______ ____% $_______
Class B Notes $_______ ____% $_______
Class C Notes $_______ ____% $_______
After the public offering, the public offering price and other
selling terms may be changed by the underwriters.
The underwriters' obligations to acquire any Series 1999__ notes will
be subject to certain conditions. The underwriters will offer the Series
1999__ notes for sale only if the owner trust issues the notes, and all
conditions to the issuance of the notes are satisfied or waived. The
underwriters have agreed either to purchase all of the Series 1999__ notes,
or none of them.
The underwriters may reject any orders in whole or in part.
Chase Securities Inc. is a wholly-owned subsidiary of The Chase
Manhattan Corporation and an affiliate of CHASE USA.
Each underwriter has represented and agreed that (a) it only issued
or passed on and will only issue or pass on in the United Kingdom any
document received by it in connection with the issue of the notes to a
person who is of a kind described in Article 11(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 (as
amended) or who is a person to whom the document may otherwise lawfully be
issued or passed on, (b) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 and other
applicable laws and resolutions with respect to anything done by it in
relation to the Notes in, from or otherwise involving the United Kingdom
and (c) if that Underwriter is an authorized person under the Financial
Services Act 1986, it has only promoted and will only promote (as that term
is defined in Regulation 1.02 of the Financial Services (Promotion of
Unregulated Schemes) Regulations 1991) to any person in the United Kingdom
the scheme described herein if that person is of a kind described either in
Section 76(2) of the Financial Services Act 1986 or in Regulation 1.04 of
the Financial Services (Promotion of Unregulated Schemes) Regulations 1991.
This prospectus supplement and the attached prospectus may be used by
Chase Securities Inc. in connection with offers and sales related to
market-making transactions in the notes. 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 notes and any such
market-making may be discontinued at any time without notice, in its sole
discretion. Chase Securities Inc. is among the underwriters participating
in the initial distribution of the notes.
OTHER SERIES ISSUED AND OUTSTANDING
The table below discusses the principal characteristics of the nineteen
other Series of Certificates previously issued by the master trust and
currently outstanding. For more specific information with respect to any
Series, any prospective investor should contact The Chase Manhattan Bank at
(212) 270-6000. The Chase Manhattan Bank will provide, without charge, to
any prospective investor, a copy of the disclosure documents for any other
publicly issued series.
SERIES 1995-2
1. Class A Certificates
Initial Investor Interest...................................$600,000,000
Certificate Rate.................................................. 6.23%
Controlled Accumulation Amount (subject to adjustment).......$50,000,000
Commencement of Controlled Accumulation Period
(subject to adjustment).............................September 30, 1999
Annual Servicing Fee Percentage.....................................2.0%
Initial Collateral Interest...............................$47,728,181.82
Other Enhancement................. Subordination of Class B Certificates
Scheduled Payment Date..................................October 15, 2000
Series 1995-2 Termination Date.............................June 15, 2003
Series Issuance Date....................................October 19, 1995
2. Class B Certificates
Initial Investor Interest....................................$34,090,000
Certificate Rate.................................................. 6.38%
Annual Servicing Fee Percentage.....................................2.0%
Initial Collateral Interest.......Same as above for Class A Certificates
Scheduled Payment Date.................................November 15, 2000
Series 1995-2 Termination Date....Same as above for Class A Certificates
Series Issuance Date..............Same as above for Class A Certificates
SERIES 1995-3
1. Class A Certificates
Initial Investor Interest...................................$450,000,000
Certificate Rate.................................................. 6.23%
Controlled Accumulation Amount (subject to adjustment).......$37,500,000
Commencement of Controlled Accumulation Period
(subject to adjustment)..................................July 31, 2001
Annual Servicing Fee Percentage.....................................2.0%
Initial Collateral Interest...............................$35,795,636.36
Other Enhancement..................Subordination of Class B Certificates
Scheduled Payment Date...................................August 15, 2002
Series 1995-3 Termination Date............................April 15, 2005
Series Issuance Date...................................November 21, 1995
2. Class B Certificates
Initial Investor Interest....................................$25,568,000
Certificate Rate.................................................. 6.39%
Annual Servicing Fee Percentage.....................................2.0%
Initial Collateral Interest.......Same as above for Class A Certificates
Scheduled Payment Date................................September 15, 2002
Series 1995-3 Termination Date....Same as above for Class A Certificates
Series Issuance Date..............Same as above for Class A Certificates
SERIES 1995-4
1. Class A Certificates
Initial Investor Interest...................................$300,000,000
Certificate Rate...............................Three Month LIBOR + 0.20%
Controlled Accumulation Amount (subject to adjustment).......$25,000,000
Commencement of Controlled Accumulation Period
(subject to adjustment)...............................October 31, 2001
Annual Servicing Fee Percentage.....................................2.0%
Initial Collateral Interest...............................$35,714,857.14
Other Enhancement................. Subordination of Class B Certificates
Scheduled Payment Date.................................November 25, 2002
Series 1995-4 Termination Date.............................July 25, 2005
Series Issuance Date...................................November 29, 1995
2. Class B Certificates
Initial Investor Interest....................................$21,428,000
Certificate Rate...............................Three Month LIBOR + 0.32%
Annual Servicing Fee Percentage.....................................2.0%
Initial Collateral Interest.......Same as above for Class A Certificates
Scheduled Payment Date................................ November 25, 2002
Series 1995-4 Termination Date....Same as above for Class A Certificates
Series Issuance Date..............Same as above for Class A Certificates
SERIES 1996-1
1. Class A Certificates
Initial Investor Interest...................................$700,000,000
Certificate Rate.................................................. 5.55%
Controlled Accumulation Amount (subject to adjustment)....$58,333,333.33
Commencement of Controlled Accumulation Period
(subject to adjustment)..............................December 31, 1999
Annual Servicing Fee Percentage ....................................2.0%
Initial Collateral Interest...............................$55,682,545.45
Other Enhancement..................Subordination of Class B Certificates
Scheduled Payment Date..................................January 15, 2001
Series 1996-1 Termination Date........................September 15, 2003
Series Issuance Date....................................January 23, 1996
2. Class B Certificates
Initial Investor Interest....................................$39,772,000
Certificate Rate.................................................. 5.71%
Annual Servicing Fee Percentage.....................................2.0%
Initial Collateral Interest.......Same as above for Class A Certificates
Scheduled Payment Date.................................February 15, 2001
Series 1996-1 Termination Date....Same as above for Class A Certificates
Series Issuance Date..............Same as above for Class A Certificates
SERIES 1996-2
1. Class A Certificates
Initial Investor Interest...................................$550,000,000
Certificate Rate.................................................. 5.98%
Controlled Accumulation Amount (subject to adjustment)....$45,833,333.33
Commencement of Controlled Accumulation Period
(subject to adjustment)..............................December 31, 2004
Annual Servicing Fee Percentage.....................................2.0%
Initial Collateral Interest...............................$43,750,000.00
Other Enhancement................. Subordination of Class B Certificates
Scheduled Payment Date..................................January 15, 2006
Series 1996-2 Termination Date........................September 15, 2008
Series Issuance Date....................................January 23, 1996
2. Class B Certificates
Initial Investor Interest....................................$31,250,000
Certificate Rate.................................................. 6.16%
Annual Servicing Fee Percentage.....................................2.0%
Initial Collateral Interest.......Same as above for Class A Certificates
Scheduled Payment Date.................................February 15, 2006
Series 1996-2 Termination Date....Same as above for Class A Certificates
Series Issuance Date..............Same as above for Class A Certificates
SERIES 1996-3
1. Class A Certificates
Initial Investor Interest...................................$411,983,000
Certificate Rate.................................................. 7.09%
Controlled Accumulation Amount (subject to adjustment)....$34,331,916.67
Commencement of Controlled Accumulation Period
(subject to adjustment)...................................May 31, 2005
Annual Servicing Fee Percentage.....................................2.0%
Initial Collateral Interest...............................$32,772,440.86
Other Enhancement................. Subordination of Class B Certificates
Scheduled Payment Date.....................................June 15, 2006
Series 1996-3 Termination Date.........................February 15, 2009
Series Issuance Date....................................... May 30, 1996
2. Class B Certificates
Initial Investor Interest....................................$23,408,000
Certificate Rate.................................................. 7.27%
Annual Servicing Fee Percentage.....................................2.0%
Initial Collateral Interest.......Same as above for Class A Certificates
Scheduled Payment Date.....................................July 15, 2006
Series 1996-3 Termination Date....Same as above for Class A Certificates
Series Issuance Date..............Same as above for Class A Certificates
SERIES 1996-4
1. Class A Certificates
Initial Investor Interest.................................$1,400,000,000
Certificate Rate................................ One Month LIBOR + 0.13%
Controlled Accumulation Amount (subject to adjustment)...$116,666,666.67
Commencement of Controlled Accumulation Period
(subject to adjustment)...............................October 31, 2002
Annual Servicing Fee Percentage.................................... 2.0%
Initial Collateral Interest..............................$150,000,666.67
Other Enhancement..................Subordination of Class B Certificates
Scheduled Payment Date.................................November 17, 2003
Series 1996-4 Termination Date.............................July 17, 2006
Series Issuance Date...................................November 14, 1996
2. Class B Certificates
Initial Investor Interest.................................. $116,666,000
Certificate Rate................................ One Month LIBOR + 0.35%
Annual Servicing Fee Percentage.....................................2.0%
Initial Collateral Interest.......Same as above for Class A Certificates
Scheduled Payment Date.................................December 15, 2003
Series 1996-4 Termination Date....Same as above for Class A Certificates
Series Issuance Date..............Same as above for Class A Certificates
SERIES 1997-1
1. Class A Certificates
Initial Investor Interest.................................$1,150,000,000
Certificate Rate................................ One Month LIBOR + 0.09%
Controlled Accumulation Amount (subject to adjustment)....$95,833,333.33
Commencement of Controlled Accumulation Period
(subject to adjustment)...............................January 31, 2003
Annual Servicing Fee Percentage.....................................2.0%
Initial Collateral Interest.................................$123,214,619
Other Enhancement..................Subordination of Class B Certificates
Scheduled Payment Date.................................February 15, 2004
Series 1997-1 Termination Date..........................October 15, 2006
Series Issuance Date...................................February 24, 1997
2. Class B Certificates
Initial Investor Interest....................................$95,833,000
Certificate Rate................................. One Month LIBOR 0.29%
Annual Servicing Fee Percentage.....................................2.0%
Initial Collateral Interest...... Same as above for Class A Certificates
Scheduled Payment Date................................... March 15, 2004
Series 1997-1 Termination Date....Same as above for Class A Certificates
Series Issuance Date..............Same as above for Class A Certificates
SERIES 1997-2
1. Class A Certificates
Initial Investor Interest.................................$1,500,000,000
Certificate Rate.................................................. 6.30%
Controlled Accumulation Amount (subject to adjustment)......$125,000,000
Commencement of Controlled Accumulation Period
(subject to adjustment)..................................July 31, 1999
Annual Servicing Fee Percentage.....................................2.0%
Initial Collateral Interest.................................$119,318,455
Other Enhancement................. Subordination of Class B Certificates
Scheduled Payment Date...................................August 15, 2000
Series 1997-2 Termination Date............................April 15, 2003
Series Issuance Date.....................................August 18, 1997
2. Class B Certificates
Initial Investor Interest....................................$85,227,000
Certificate Rate.................................................. 6.45%
Annual Servicing Fee Percentage.....................................2.0%
Initial Collateral Interest................... Same as above for Class A
Scheduled Payment Date................................September 15, 2000
Series 1997-2 Termination Date....Same as above for Class A Certificates
Series Issuance Date..............Same as above for Class A Certificates
SERIES 1997-3
1. Class A Certificates
Initial Investor Interest...................................$250,000,000
Certificate Rate................................................. 6.777%
Controlled Accumulation Amount (subject to
adjustment)..............One-twelfth of outstanding balance of Class A
Commencement of Controlled Accumulation Period
(subject to adjustment)................................August 31, 2003
Annual Servicing Fee Percentage.....................................2.0%
Initial Collateral Interest..................................$26,786,048
Other Enhancement..................Subordination of Class B Certificates
Scheduled Payment Date................................September 15, 2004
Series 1997-3 Termination Date..............................May 15, 2007
Series Issuance Date..................................September 22, 2997
2. Class B Certificates
Initial Investor Interest....................................$20,833,000
Certificate Rate.................................One Month LIBOR + 0.35%
Annual Servicing Fee Percentage.....................................2.0%
Initial Collateral Interest...... Same as above for Class A Certificates
Scheduled Payment Date..................................October 15, 2004
Series 1997-3 Termination Date....Same as above for Class A Certificates
Series Issuance Date..............Same as above for Class A Certificates
SERIES 1997-4
1. Class A Certificates
Initial Investor Interest...................................$600,000,000
Certificate Rate.................................One Month LIBOR + 0.16%
Controlled Accumulation Amount (subject to adjustment).......$50,000,000
Commencement of Controlled Accumulation Period
(subject to adjustment)..............................November 30, 2001
Annual Servicing Fee Percentage.....................................2.0%
Initial Collateral Interest..................................$64,285,715
Other Enhancement................. Subordination of Class B Certificates
Scheduled Payment Date.................................December 15, 2002
Series 1997-1 Termination Date...........................August 15, 2005
Series Issuance Date....................................December 8, 1997
2. Class B Certificates
Initial Investor Interest....................................$50,000,000
Certificate Rate.................................One Month LIBOR + 0.36%
Annual Servicing Fee Percentage.....................................2.0%
Initial Collateral Interest.......Same as above for Class A Certificates
Scheduled Payment Date..................................January 15, 2003
Series 1997-1 Termination Date....Same as above for Class A Certificates
Series Issuance Date..............Same as above for Class A Certificates
SERIES 1997-5
1. Class A Certificates
Initial Investor Interest...................................$500,000,000
Certificate Rate................................................. 6.194%
Controlled Accumulation Amount (subject to adjustment).......$41,666,667
Commencement of Controlled Accumulation Period
(subject to adjustment)..............................November 30, 2001
Annual Servicing Fee Percentage.....................................2.0%
Initial Collateral Interest..................................$39,772,819
Other Enhancement................. Subordination of Class B Certificates
Scheduled Payment Date.................................December 15, 2002
Series 1997-5 Termination Date.......................... August 15, 2005
Series Issuance Date...................................December 23, 1997
2. Class B Certificates
Initial Investor Interest....................................$28,409,000
Certificate Rate................................................. 6.388%
Annual Servicing Fee Percentage.....................................2.0%
Initial Collateral Interest.......Same as above for Class A Certificates
Scheduled Payment Date..................................January 15, 2003
Series 1997-5 Termination Date....Same as above for Class A Certificates
Series Issuance Date..............Same as above for Class A Certificates
SERIES 1998-1
1. Class A-1 Certificates
Initial Investor Interest...................................$273,822,563
Certificate Rate................................One Month LIBOR + 0.231%
Controlled Accumulation Amount (subject to adjustment).......$22,818,547
Commencement of Controlled Accumulation Period
(subject to adjustment)...............................January 31, 2004
Annual Servicing Fee Percentage.....................................2.0%
Enhancement........................Subordination of Class B Certificates
and Initial Collateral Interest
Scheduled Payment Date.................................February 15, 2005
Series 1998-1 Termination Date..........................October 15, 2007
Series Issuance Date...................................February 12, 1998
Class A-2 Certificates
Initial Investor Interest...................................$245,278,391
Certificate Rate...............................One Month LIBOR + 0.1885%
Controlled Accumulation Amount (subject to adjustment)...... $20,439,866
Commencement of Controlled Accumulation Period
(subject to adjustment)...............................January 31, 2004
Annual Servicing Fee Percentage.....................................2.0%
Enhancement........................Subordination of Class B Certificates
and Initial Collateral Interest
Scheduled Payment Date.................................February 15, 2005
Series 1998-1 Termination Date..........................October 15, 2007
Series Issuance Date...................................February 12, 1998
Class A-3 Certificates
Initial Investor Interest...................................$243,131,534
Certificate Rate...............................One Month LIBOR + 0.2445%
Controlled Accumulation Amount (subject to adjustment).......$20,260,961
Commencement of Controlled Accumulation Period
(subject to adjustment)...............................January 31, 2004
Annual Servicing Fee Percentage.....................................2.0%
Enhancement........................Subordination of Class B Certificates
and Initial Collateral Interest
Scheduled Payment Date.................................February 15, 2005
Series 1998-1 Termination Date..........................October 15, 2007
Series Issuance Date...................................February 12, 1998
2. Class B Certificates
Initial Investor Interest....................................$63,519,000
Certificate Rate.................................One Month LIBOR + 0.37%
Annual Servicing Fee Percentage.....................................2.0%
Initial Collateral Interest..................................$81,668,141
Scheduled Payment Date....................................March 15, 2005
Series 1998-1 Termination Date....Same as above for Class A Certificates
Series Issuance Date..............Same as above for Class A Certificates
SERIES 1998-2
1. Class A Certificates
Initial Investor Interest...................................$800,000,000
Certificate Rate..............................Federal Funds Rate + 0.24%
Controlled Accumulation Amount (subject to adjustment).......$66,666,667
Commencement of Controlled Accumulation Period
(subject to adjustment)...............................January 31, 2000
Annual Servicing Fee Percentage.....................................2.0%
Initial Collateral Interest..................................$85,714,953
Other Enhancement..................Subordination of Class B Certificates
Scheduled Payment Date.................................February 15, 2001
Series 1998-2 Termination Date.........................February 15, 2003
Series Issuance Date.......................................March 9, 1998
2. Class B Certificates
Initial Investor Interest....................................$66,666,000
Certificate Rate................................ One Month LIBOR + 0.25%
Annual Servicing Fee Percentage.....................................2.0%
Initial Collateral Interest...... Same as above for Class A Certificates
Scheduled Payment Date....................................March 15, 2003
Series 1998-2 Termination Date... Same as above for Class A Certificates
Series Issuance Date............. Same as above for Class A Certificates
SERIES 1998-3
1. Class A Certificates
Initial Investor Interest...................................$600,000,000
Certificate Rate................................................. 6.000%
Controlled Accumulation Amount (subject to adjustment).......$50,000,000
Commencement of Controlled Accumulation Period
(subject to adjustment).................................March 31, 2002
Annual Servicing Fee Percentage.....................................2.0%
Initial Collateral Interest..................................$47,728,182
Other Enhancement..................Subordination of Class B Certificates
Scheduled Payment Date....................................April 15, 2003
Series 1998-3 Termination Date.............................August 15, 20
Series Issuance Date.........................................May 1, 1998
2. Class B Certificates
Initial Investor Interest....................................$34,090,000
Certificate Rate................................................. 6.150%
Annual Servicing Fee Percentage.....................................2.0%
Initial Collateral Interest...... Same as above for Class A Certificates
Scheduled Payment Date......................................May 15, 2003
Series 1998-3 Termination Date ...Same as above for Class A Certificates
Series Issuance Date..............Same as above for Class A Certificates
SERIES 1998-4
1. Class A Certificates
Initial Investor Interest...................................$552,486,188
Certificate Rate............................... One Month LIBOR + 0.134%
Controlled Accumulation Amount (subject to adjustment).......$46,040,516
Commencement of Controlled Accumulation Period
(subject to adjustment).................................. July 31, 2007
Annual Servicing Fee Percentage.....................................2.0%
Initial Collateral Interest..................................$59,195,465
Other Enhancement................. Subordination of Class B Certificates
Scheduled Payment Date.................................. August 15, 2008
Series 1998-4 Termination Date.........................December 15, 2010
Series Issuance Date...................................... July 28, 1998
2. Class B Certificates
Initial Investor Interest....................................$46,040,000
Certificate Rate.................................One Month LIBOR + 0.36%
Annual Servicing Fee Percentage.....................................2.0%
Initial Collateral Interest...... Same as above for Class A Certificates
Scheduled Payment Date................................September 15, 2008
Series 1998-4 Termination Date... Same as above for Class A Certificates
Series Issuance Date............. Same as above for Class A Certificates
SERIES 1998-5
1. Class A Certificates
Initial Investor Interest...................................$650,000,000
Certificate Rate.................................One Month LIBOR + 0.16%
Controlled Accumulation Amount (subject to adjustment).......$54,166,667
Commencement of Controlled Accumulation Period
(subject to adjustment)................................August 31, 2002
Annual Servicing Fee Percentage.....................................2.0%
Initial Collateral Interest..................................$69,643,524
Other Enhancement................. Subordination of Class B Certificates
Scheduled Payment Date................................September 15, 2003
Series 1998-5 Termination Date..........................January 15, 2006
Series Issuance Date..................................September 24, 1998
2. Class B Certificates
Initial Investor Interest....................................$54,166,000
Certificate Rate.................................One Month LIBOR + 0.36%
Annual Servicing Fee Percentage.....................................2.0%
Initial Collateral Interest...... Same as above for Class A Certificates
Scheduled Payment Date..................................October 15, 2003
Series 1998-5 Termination Date... Same as above for Class A Certificates
Series Issuance Date............. Same as above for Class A Certificates
SERIES 1998-6
1. Class A Certificates
Initial Investor Interest...................................$650,000,000
Certificate Rate............................... One Month LIBOR + 0.26%
Controlled Accumulation Amount (subject to adjustment).......$54,166,667
Commencement of Controlled Accumulation Period
(subject to adjustment)..................................April 30, 2001
Annual Servicing Fee Percentage.....................................2.0%
Initial Collateral Interest..................................$69,643,524
Other Enhancement..................Subordination of Class B Certificates
Scheduled Payment Date......................................May 15, 2002
Series 1998-6 Termination Date........................September 15, 2004
Series Issuance Date...................................November 24, 1998
2. Class B Certificates
Initial Investor Interest....................................$54,166,000
Certificate Rate................................ One Month Libor + 0.51%
Annual Servicing Fee Percentage.....................................2.0%
Initial Collateral Interest.......Same as above for Class A Certificates
Scheduled Payment Date.....................................June 15, 2002
Series 1998-6 Termination Date....Same as above for Class A Certificates
Series Issuance Date..............Same as above for Class A Certificates
SERIES 1999-1
1. Class A Certificates
Initial Investor Interest...................................$750,000,000
Certificate Rate.................................One Month LIBOR + 0.16%
Controlled Accumulation Amount (subject to adjustment).......$62,500,000
Commencement of Controlled Accumulation Period
(subject to adjustment).................................April 30, 2001
Annual Servicing Fee Percentage.....................................2.0%
Initial Collateral Interest..................................$80,357,143
Other Enhancement................. Subordination of Class B Certificates
Scheduled Payment Date......................................May 15, 2004
Series 1999-1 Termination Date........................September 15, 2006
Series Issuance Date.......................................March 4, 1999
2. Class B Certificates
Initial Investor Interest....................................$62,500,000
Certificate Rate.................................One Month LIBOR + 0.39%
Annual Servicing Fee Percentage.....................................2.0%
Initial Collateral Interest.......Same as above for Class A Certificates
Scheduled Payment Date.....................................June 15, 2004
Series 1999-1 Termination Date....Same as above for Class A Certificates
Series Issuance Date..............Same as above for Class A Certificates
GLOSSARY OF TERMS FOR PROSPECTUS SUPPLEMENT
"ADJUSTED INVESTOR INTEREST" means, for any date of determination, an
amount equal to:
o the Investor Interest as of such date, minus
o the amount on deposit in the Principal Funding Account for
such date.
"AVAILABLE ACCUMULATION PERIOD RESERVE ACCOUNT AMOUNT" will equal the
lesser of
o the amount on deposit in the Accumulation Period Reserve
Account -- after giving effect to the interest and earnings
retained in such account but before giving effect to any
deposit to be made to the Accumulation Period Reserve Account
on a Transfer Date -- and
o the Required Accumulation Period Reserve Account Amount for
such Transfer Date.
"AVAILABLE INVESTOR FINANCE CHARGE COLLECTIONS" means, with respect
to any Monthly Period, the sum of
o the Floating Allocation Percentage of collections of Finance
Charge Receivables with respect to that Monthly Period
excluding collections of Finance Charge Receivables
attributable to Interchange which are allocable to Servicer
Interchange,
o investment earnings on amounts in the Principal Funding
Account, if any, with respect to the related Transfer Date, and
o amounts, if any, to be withdrawn from the Accumulation Period
Reserve Account which are required to be included in Available
Investor Finance Charge Collections under the
Series 1999-__ Supplement.
"AVAILABLE INVESTOR PRINCIPAL COLLECTIONS" means, with respect to any
Monthly Period, the sum of:
o the Investor Principal Collections received during that Monthly
Period and amounts applied to cover the Investor Default Amount
and Investor Charge-Offs and previously reimbursed Reallocated
Principal Collections on the related Transfer Date, plus
o any Shared Principal Collections with respect to other
Series that are allocated to Series 1999-__, minus
o the amount of Reallocated Principal Collections used to
fund the Required Amount.
"BASE RATE" means, with respect to any Monthly Period, the annualized
percentage equivalent of a fraction,
o the numerator of which is the sum of
- the CLASS A INTEREST REQUIREMENT,
- the CLASS B INTEREST REQUIREMENT,
- the NET CLASS C INTEREST REQUIREMENT, and
- the INVESTOR SERVICING FEE with respect to that
Monthly Period, and
o the denominator of which is the Investor Interest as of the
close of business on the last
day of such Monthly Period.
"CLASS A INTEREST REQUIREMENT" means, with respect to any Payment
Date, the sum of
o the Class A Monthly Note Interest, and
o any unpaid Class A Note Interest Shortfall.
"CLASS A MONTHLY NOTE INTEREST" means the product of:
o the Class A Note Interest Rate for the related Note
Interest Period, and
o a fraction,
- the numerator of which is the actual number of days
in such Note Interest Period and
- the denominator of which is 360, and
o the Class A Note Principal Balance on the related Record Date
or, with respect to the initial Payment Date, the Class A Note
Initial Principal Balance.
"CLASS A NOTEHOLDERS' PRINCIPAL DISTRIBUTION AMOUNT" means, with
respect to any Payment Date on and after the earlier to occur of
o the Class A Scheduled Note Payment Date, and
o any Note Principal Due Date,
the Class A Note Principal Balance on that Payment Date.
"CLASS A NOTE INITIAL PRINCIPAL BALANCE" means $ .
"CLASS A NOTE INTEREST RATE" means a rate of ___% per annum above
LIBOR.
"CLASS A NOTE INTEREST SHORTFALL" means, with respect to any Payment
Date, the sum of
o the excess, if any, of
o the Class A Interest Requirement for the preceding Payment
Date, over
o the amount of interest paid on the Class A Notes for the
preceding Payment Date, plus
- interest on the amount of overdue interest owed to
the Class A Noteholders on the preceding Payment Date,
to the extent permitted by law, at the Class A Note
Interest Rate from and including the preceding Payment
Date to but excluding the current Payment Date.
"CLASS A NOTE PRINCIPAL BALANCE" means:
o the Class A Note Initial Principal Balance, minus
o the aggregate amount of any principal allocations paid to
the Class A Noteholders prior to such date.
"CLASS A SCHEDULED NOTE PAYMENT DATE" means the _____ Payment Date.
"CLASS B INTEREST REQUIREMENT" means, with respect to any Payment
Date, the sum of:
o the Class B Monthly Note Interest, and
o any unpaid Class B Note Interest Shortfall.
"CLASS B MONTHLY NOTE INTEREST" means the product of:
o the Class B Note Interest Rate for the related Note Interest
Period,
o a fraction,
- the numerator of which is the actual number of days
in such Note Interest Period, and
- the denominator of which is 360, and
o the Class B Note Principal Balance on the related Record Date
or, with respect to the initial Payment Date, the Class B Note
Initial Princpal Balance.
"CLASS B NOTEHOLDERS' PRINCIPAL DISTRIBUTION AMOUNT" means, with
respect to any Payment Date on and after the earlier to occur of
o the Class B Scheduled Note Payment Date, and
o any Note Principal Due Date,
the Class B Note Principal Balance on that Payment Date.
"CLASS B NOTE INITIAL PRINCIPAL BALANCE" means $ .
"CLASS B NOTE INTEREST RATE" means a rate of ___% per annum above
LIBOR.
"CLASS B NOTE INTEREST SHORTFALL" means, with respect to any Payment
Date, the sum of
o the excess, if any, of
o the Class B Interest Requirement for the preceding Payment
Date, over
o the amount of interest paid on the Class B Notes for the
preceding Payment Date, plus
- interest on the amount of overdue interest owed to
the Class B Noteholders on the preceding Payment Date,
to the extent permitted by law, at the Class B Note
Interest Rate from and including the preceding Payment
Date to but excluding the current Payment Date.
"CLASS B NOTE PRINCIPAL BALANCE" means:
o the Class B Note Initial Principal Balance, minus
o the aggregate amount of any principal allocations paid to
the Class B Noteholders prior to such date.
"CLASS B SCHEDULED NOTE PAYMENT DATE" means the _____ Payment Date.
"CLASS C INTEREST REQUIREMENT" means, with respect to any Payment
Date, the sum of:
o the Class C Monthly Note Interest, and
o the amount of any Class C Note Interest Shortfall.
"CLASS C MONTHLY NOTE INTEREST" means the product of:
o the Class C Note Interest Rate for the related Note Interest
Period,
o a fraction,
- the numerator of which is the actual number of days
in such Note Interest Period and
- the denominator of which is 360, and
o the Class C Note Principal Balance on the related Record Date
or, with respect to the initial Payment Date, the Class C Note
Initial Principal Balance.
"CLASS C NOTEHOLDERS' PRINCIPAL DISTRIBUTION AMOUNT" means, with
respect to any Payment Date on and after the earlier to occur of:
o the Class C Scheduled Note Payment Date, and
o any Note Principal Due Date,
the Class C Note Principal Balance on that Payment Date.
"CLASS C NOTE INITIAL PRINCIPAL BALANCE" means $ .
"CLASS C NOTE INTEREST RATE" means a rate of ___% per annum above
LIBOR.
"CLASS C NOTE INTEREST SHORTFALL" means the sum of
o the excess, if any, of
- the Class C Interest Requirement for the preceding
Payment Date, over
- the amount of interest paid on the Class C Notes for
the preceding Payment Date, plus
- interest on the amount of overdue interest owed to
the Class C Noteholders to the extent permitted by law,
at the Class C Note Interest Rate from and including such
preceding Payment Date to but excluding the current
Payment Date.
"CLASS C NOTE PRINCIPAL BALANCE" means:
o the Class C Note Initial Principal Balance, minus
o the aggregate amount of any principal allocations paid to
the Class C Noteholders prior to such date.
"CLASS C SCHEDULED NOTE PAYMENT DATE" means the_____ Payment Date.
"CONTROLLED ACCUMULATION AMOUNT" means the amount scheduled to be
deposited in the Principal Funding Account on each Transfer Date during the
Controlled Accumulation Period which is initially scheduled to be $_____
but can become a larger amount if the Controlled Accumulation Period is
shorter than twelve months.
"DEFAULT AMOUNT" means the amount of Receivables in Defaulted
Accounts for any monthly period.
"DISTRIBUTION DATE" means the 15th day of each month -- or, if that
day is not a business day, the next succeeding business day -- on which
distributions of interest or principal are to be made to
certificateholders, including the owner trust as holder of the Series
Certificate.
"EVENTS OF DEFAULT" means, with respect to the notes, those events
described under "Description of the Notes--Events of Default" in this
supplement.
"EXCESS FINANCE CHARGE COLLECTIONS" means those finance charge
collections described under "Description of the Series Certificate--Shared
Excess Finance Charge Collections" in this supplement.
"EXCESS SPREAD PERCENTAGE" means, with respect to any Monthly Period,
the amount, if any, by which the Portfolio Yield exceeds the Base Rate.
"FIXED ALLOCATION PERCENTAGE" means the Investor Percentage described
under "Description of the Series Certificate--Allocation Percentages" in
this supplement.
"FLOATING ALLOCATION PERCENTAGE" means the Investor Percentage
described under "Description of the Series Certificate--Allocation
Percentages" in this supplement.
"GROUP I" means the group of series under the master trust to which
the Series Certificate for your series belongs.
"INVESTOR INTEREST" means:
o the initial principal amount of the Series Certificate, minus
o the amount of principal previously paid to the owner trust
as certificateholder, minus
o the amount of unreimbursed Investor Charge-Off and
Reallocated Principal Collections.
"INVESTOR PRINCIPAL FUNDING INVESTMENT PROCEEDS" means the investment
earnings on funds in the Principal Funding Account, net of investment
expenses and losses for a single monthly period.
"INVESTOR SERVICING FEE" means an amount equal to one-twelfth of
the product of
o 2.0%, and
o the Adjusted Investor Interest as of the last day of the
Monthly Period preceding such Transfer Date; provided, however,
with respect to the first Transfer Date, the Investor Servicing
Fee shall be equal to the product of
- a fraction, the numerator of which is the number of
days from and including the Closing Date to and including
the last day of the _________ Monthly Period and the
denominator of which is 360,
- 2.0%, and
- the Investor Interest on the Closing Date.
"LISTING AGENT" means Banque Generale du Luxembourg, S.A., 50 Avenue
J.F. Kennedy, L-2951, Luxembourg, phone number (352) 42421.
"NET CLASS C INTEREST REQUIREMENT" means:
o the CLASS C INTEREST REQUIREMENt, minus
o the investment earnings on amounts in the OWNER TRUST
SPREAD ACCOUNT.
"NET INVESTOR SERVICING FEE" means the share of the Investor
Servicing Fee allocable to the Certificateholder with respect to any
Transfer Date which is equal to one-twelfth of the product of
o 1.0%, and
o the Adjusted Investor Interest as of the last day of the
Monthly Period preceding such Transfer Date;
provided, however, that with respect to the first Transfer Date, the Net
Investor Servicing Fee shall be equal to the product of
o a fraction, the numerator of which is the number of days
from and including the Closing Date to and including the last
day of the _____ Monthly Period, and
o the denominator of which is 360,
o the Net Servicing Fee Rate, and
o the Investor Interest on the Closing Date.
"NOTE DISTRIBUTION ACCOUNT" means an account in which payments made
to the owner trust by the master trust with respect to the Series
Certificate are deposited and from which payments to the noteholders are
made.
"NOTE DOCUMENTS" means the Indenture, the Trust Agreement and the
Deposit and Administration Agreement.
"NOTE INTEREST PERIOD" means, with respect to any Payment Date, the
period from the previous Payment Date through the day preceding such
Payment Date, except that the initial Note Interest Period will be the
period from the Closing Date through the day preceding the initial Payment
Date.
"NOTE MATURITY DATE" means __________, 20xx, the final Payment Date
on which payments may be made to the noteholders of your series.
"NOTE PRINCIPAL DUE DATE" means any of (a) the date on which the
master trust is terminated, (b) the date on which the Investor Interest is
paid in full, (c) the Note Maturity Date, (d) the Payment Date on which the
Transferor exercises its option to repurchase the Series Certificates and
(e) the Payment Date in the month following the Monthly Period in which a
Pay Out Event (including an Event of Default) occurs.
"NOTE RATE" means the interest rate per annum for a class of notes
set forth under "Summary of Terms" in this supplement.
"OWNER TRUST SPREAD ACCOUNT" means the spread account maintained by
the owner trust for the benefit of the Class C notes.
"OWNER TRUSTEE" means _____________, as Owner Trustee of the
owner trust.
"PAYMENT DATE" means the 15th day of each month - or, if that day is
not a business day, the next succeeding business day -- on which
distributions of interest or principal are to be made to noteholders.
"PAY OUT EVENT" means, for the Series Certificate of your series,
any of the events described under "Description of the Series
Certificate--Pay Out Events" in this supplement.
"PORTFOLIO YIELD" means the annualized percentage equivalent of:
o a fraction, the numerator of which is the sum of
- collections of Finance Charge Receivables,
- Principal Funding Investment Proceeds, and
- amounts withdrawn from the Accumulation Period Reserve
Account, and
deposited into the Finance Charge Account for such Monthly Period,
calculated on a cash basis after subtracting the Investor Default Amount
for such Monthly Period,
o and the denominator of which is the Investor Interest as of
the close of business on the last day of such Monthly Period.
"PRINCIPAL FUNDING INVESTMENT SHORTFALL" means, during the Controlled
Accumulation Period, a deficiency that occurs when the Principal Funding
Investment Proceeds for such transfer date are less than the product of
o a fraction,
- the numerator of which is the actual number of days
in the related Note Interest Period; and
- the denominator of which is 360, times
o the weighted average of the
- Class A Note Interest Rate,
- the Class B Note Interest Rate; and
- the Class C Note Interest Rate, times
o the balance in the Principal Funding Account as of the
Record Date preceeding such Transfer Date.
"QUARTERLY EXCESS SPREAD PERCENTAGE" means, with respect to any
Monthly Period, the average of the current Excess Spread Percentage and the
Excess Spread Percentages for the two immediately preceding Monthly
Periods.
"RAPID AMORTIZATION PERIOD" means, for the Series Certificate, a
period:
o beginning on the day a Pay Out Event occurs or such other
date as may be specified in this supplement, and
o ending on the earlier of:
- the date on which the Investor Interest of the Series
Certificate has been paid in full or
- the Series Termination Date; and
during which the portion of collections of Principal Receivables allocable
to the Series Certificate of your series will be paid on each Distribution
Date to the owner trust as the holder of the Series Certificate.
"REALLOCATED PRINCIPAL COLLECTIONS" means those principal collections
allocated by the Servicer to pay interest on the Class A Notes and Class B
Notes.
"RECORD DATE" means the last business day of the calendar month
before the Payment Date, as of which a noteholder must be the registered
holder of a note to receive a payment on the following Payment Date.
"REQUIRED ACCUMULATION PERIOD RESERVE ACCOUNT AMOUNT" means, with
respect to any Transfer Date on or after which principal is deposited into
the Accumulation Period Reserve Account, an amount equal to
o the product of
- ___%,
- the Initial Investor Interest, and
- 0.5%, or
o any other amount designated by the Transferor; provided,
that if the designation is of a lesser amount, the Transferor
- provides to the Servicer and the Trustee evidence
that the Rating Agency Condition has been satisfied, and
- deliver to the Trustee a certificate of an authorized
officer to the effect that, based on the facts known to
such officer at such time, in the reasonable belief of
the Transferor, such designation will not cause a
Pay Out Event or an event that, after the giving of
notice or the lapse of time, would cause a Pay Out Event
to occur with respect to Series 1999-[ ].
"REQUIRED OWNER TRUST SPREAD ACCOUNT AMOUNT" means the minimum amount
required to be held in the Owner Trust Spread Account for the benefit of
the Class C Noteholders, equal to $___ unless the Quarterly Excess Spread
Percentage:
o is less than 4.50% per annum but greater than or equal to 3.50%
per annum, in which case the Required Owner Trust Spread
Account Amount will be increased to an amount equal to % of the
Note Initial Principal Balance;
o is less than 3.50% per annum but greater than or equal to 2.50%
per annum, in which case the Required Owner Trust Spread
Account Amount will be increased to an amount equal to % of the
Note Initial Principal Balance;
o is less than 2.50% per annum but greater than or equal to 1.50%
per annum, in which case the Required Owner Trust Spread
Account Amount will be increased to an amount equal to % of the
Note Initial Principal Balance; and
o is less than 1.50% per annum, in which case the Required Owner
Trust Spread Account Amount will be increased to an amount
equal to % of the Note Initial Principal Balance.
"RESERVE ACCOUNT FUNDING DATE" means the Transfer Date with respect
to the Monthly Period which commences no later than three months prior to
the commencement of the Controlled Accumulation Period, or an earlier date
determined by the Servicer.
"SCHEDULED NOTE PAYMENT DATE" means the ___ Payment Date.
"SCHEDULED PRINCIPAL ALLOCATION COMMENCEMENT DATE" means the [ ]
Distribution Date.
"SERVICER INTERCHANGE" means, for any Monthly Period, an amount equal
to:
o Finance Charge Receivables allocated to the Investor
Interest with respect to that Monthly Period which are
attributable to Interchange;
o but not in excess of one-twelfth of the product of:
- the Adjusted Investor Interest, as of the last day of
such Monthly Period; and
- 1.0%.
"SHARED PRINCIPAL COLLECTIONS" means those principal collections
described under "Description of the Series Certificate--Shared Principal
Collections" in this supplement.
"TRUST AGREEMENT" means the agreement under which the owner trust
will be established to be entered into by Chase USA, as the Depositor, and
____ as the Owner Trustee.
Part II
Item 14. Other Expenses of Issuance and Distribution
The following is an itemized list of the estimated expenses to be
incurred in connection with the offering of the securities being offered
hereunder other than underwriting discounts and commissions.
Registration Fee.................................. $278
Printing and Engraving ........................... *
Trustee's Fees ................................... *
Legal Fees and Expenses .......................... *
Blue Sky Fees and Expenses ....................... *
Accountants' Fees and Expenses ................... *
Rating Agency Fees ............................... *
Miscellaneous Fees ...............................
---------
Total........................................$ *
===========
- ---------
*to be provided by amendment.
Item 15. Indemnification of Directors and Officers
Article IX of the By-laws of Chase Manhattan Bank USA, National
Association ("Chase USA") provide that any person who was or is made a
party or is threatened to be made a party to or is otherwise involved in
any action, suit or proceeding, whether civil, criminal, administrative or
investigative (a "proceeding"), by reason of the fact that he or she is or
was a director or officer of Chase USA or is or was serving at the request
of Chase USA as a director, officer, employee or agent or another
corporation or of a partnership, joint venture, trust or other enterprise,
including service with respect to an employee benefit plan (an
"indemnitee"), whether the basis for such proceeding is alleged action in
an official capacity as a director, officer, employee or agent or in any
other capacity while serving as a director, officer, employee or agent,
shall be indemnified and held harmless by Chase USA to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or
may hereafter be amended (but, in the case of any such amendment, only to
the extent that such amendment permits Chase USA to provide broader
indemnification rights than permitted prior thereto), against all expense,
liability and loss (including attorneys' fees, judgments, fines, ERISA
excise taxes or penalties and amounts paid in settlement) reasonably
incurred or suffered by such indemnitee in connection therewith and such
indemnification shall continue as to an indemnitee who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
indemnitee's heirs, executors and administrators; provided, however, that,
except as provided in the second following paragraph with respect to
proceedings to enforce rights to indemnification, Chase USA shall indemnify
any such indemnitee in connection with a proceeding (or part thereof)
initiated by such indemnitee only if such proceeding (or part thereof) was
authorized by the board of directors of Chase USA.
The right to indemnification described in the immediately preceding
paragraph shall include the right to be paid by Chase USA the expenses
incurred in defending any proceeding for which such right to
indemnification is applicable in advance of its final disposition
(hereafter an "advancement of expenses"); provided, however, that, if the
Delaware General Corporation Law requires an advancement of expenses
incurred by an indemnitee in his or her capacity as a director or officer
(and not in any other capacity in which service was or is rendered by such
indemnitee, including, without limitation, service to an employee benefit
plan) shall be made only upon delivery to Chase USA of an undertaking
(hereinafter an "undertaking"), by or on behalf of such indemnitee, to
repay all amounts so advanced if it shall ultimately be determined by final
judicial decision from which there is no further right to appeal
(hereinafter a "final adjudication") that such indemnitee is not entitled
to be indemnified for such expenses under such Article IX or otherwise.
The rights to indemnification and to the advancement of expenses
described in the two preceding paragraphs are contract rights. If a claim
under either of such paragraphs is not paid in full by Chase USA within
sixty days after a written claim has been received by Chase USA except in
the case of a claim for an advancement of expenses, in which case the
applicable period shall be twenty days, the indemnitee may at any time
thereafter bring suit against Chase USA to recover the unpaid amount of the
claim. If successful in whole or in part in any such suit, or in a suit
brought by Chase USA to recover an advancement of expenses pursuant to the
terms of an undertaking, the indemnitee shall be entitled to be paid also
the expense of prosecuting or defending such suit. In any suit brought b
the indemnitee to enforce a right to indemnification under such Article IX
(but not in a suit brought by the indemnitee to enforce a right to an
advancement of expenses) it shall be a defense that, and in any suit by
Chase USA to recover an advancement of expenses pursuant to the terms of an
undertaking, Chase USA shall be entitled to recover such expense upon a
final adjudication that, the indemnitee has not met any applicable standard
for indemnification set forth in the Delaware General Corporation Law.
Neither the failure of Chase USA (including its board of directors,
independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such suit that indemnification
of the indemnitee is proper in the circumstances because the indemnitee has
met the applicable standard of conduct set forth in the Delaware General
Corporation Law, nor an actual determination by Chase USA (including its
board of directors, independent legal counsel, or its stockholders) that
the indemnitee has not met such applicable standard of conduct shall create
a presumption that the indemnitee has not met such applicable standard of
conduct or, in the case of such a suit brought by the indemnitee, be a
defense to such suit. In any suit brought by the indemnitee to enforce a
right to indemnification or to an advancement of expenses under such
Article IX, or by Chase USA to recover an advancement of expenses pursuant
to the terms of an undertaking, the burden of proving that the indemnitee
is not entitled to be indemnified, or to such advancement of expenses,
under such Article IX or otherwise shall be on Chase USA.
Article IX of Chase USA's By-Laws also provides that the foregoing
right of indemnification or reimbursement shall not be exclusive of other
rights to which any person may be entitled under any statute, Articles of
Association, by-law, agreement, or vote of stockholders of disinterested
stockholders or otherwise. Section 145 of the Delaware General Corporation
Law provides that a Delaware corporation must indemnify a director or
officer who has defended successfully, on the merits or otherwise, any
proceeding against him or any claim, matter or issue therein, for
reasonable expenses actually incurred in such defense.
There are directors and officers liability insurance policies
presently outstanding which insure directors and officers of Chase USA,
Chase USA's parent and certain of its subsidiaries. The policies cover
losses for which Chase USA, Chase USA's parent or any of those subsidiaries
shall be required or permitted by law to indemnify directors and officers
and which result from claims made against such directors or officers based
upon the commission of wrongful acts in the performance of their duties.
The policies also cover losses which the directors or officers must pay as
the result of claims brought against them based upon the commission of
wrongful acts in the performance of their duties and for which they are not
indemnified by Chase USA, Chase USA's parent or any of those subsidiaries.
The losses covered by the policies are subject to certain exclusions and do
not include fines or penalties imposed by law or other matters deemed
uninsurable under the law. The policies contain self-insured retention
provisions.
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
1.1--Form of Underwriting Agreement for Certificates
(incorporated by reference to Exhibit 1.1 to the
Registration Statement on Form S-3 of Chemical Bank (No.
33- 94190)).*
1.2--Form of Underwriting Agreement for Notes.*
4.1--Amended and Restated Pooling and Servicing Agreement,
dated as of June 1, 1996, among the Registrant, Chemical
Bank and Chase USA of New York (incorporated by
reference to Exhibit 4.2 to the Registration Statement
on From S-3 of the Registrant (No. 333-04607)).*
4.2--Form of Trust Agreement of Chase Credit Card Owner Trust
199__ between the Transferor and the Owner Trustee.*
4.3--Form of Deposit and Administration Agreement among the
Transferor, the Administrator and Chase Credit Card
Owner Trust 199__.*
4.4--Form of Indenture between Chase Credit Card Owner Trust
199__ and the Indenture Trustee *
4.5--Form of Note (contained in Exhibit 4.4)*
5.1--Opinion of Simpson Thacher & Bartlett.*
8.1--Opinion of Simpson Thacher & Bartlett with respect to
certain tax matters(included in opinion to be filed
as Exhibit 5.1).*
23.1--Consent of Simpson Thacher & Bartlett (included in
opinion to be filed as Exhibit 5.1).*
24.1--Powers of Attorney.**
25.1--Form T-1 of Indenture Trustee *
- ------------------------
* to be filed by amendment
** previously filed
(b) Financial Statements
All financial statements, schedules and historical financial
information have been omitted as they are not applicable.
Item 17. Undertakings
The undersigned Registrants hereby undertake as follows:
(a) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement: (i) to include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933 (the "Act"); notwithstanding the
foregoing, any increase or decrease in the volume of securities
offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in
the form of prospectus filed with the SEC pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no more
than 20 percent change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the effective
registration statement; (ii) to reflect in the prospectus any facts
or events arising after the effective date of the Registration
Statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration Statement;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement; provided, however, that (a)(i) and (a)(ii) will not apply
if the information required to be included in a post-effective
amendment thereby is contained in periodic reports filed pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in this Registration Statement.
(b) That, for the purpose of determining any liability under
the Act, each such post-effective amendment shall be deemed to be a
new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered that remain unsold
at the termination of the offering.
(d) That, for purposes of determining any liability under the
Act, each filing of the Master Trust's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration Statement
shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(e) That insofar as indemnification for liabilities arising
under the Act may be permitted to directors, officers and controlling
persons of the Registrants pursuant to the provisions described under
Item 15 above, or otherwise, the Registrant have been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrants of expenses incurred or paid by a director, officer
or controlling person of the Registrants in the successful defense of
any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being
registered, the Registrants will, unless in the opinion of counsel
the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
(f) That, for purposes of determining any liability under the
Act, the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrants pursuant
to Rule 424(b)(1) or (4) under the Act shall be deemed to be part of
this Registrant Statement as of the time it was declared effective.
(g) That, for the purpose of determining any liability under
the Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
Signatures
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrants certify that they have reasonable ground to
believe that they meet all the requirements for filing on Form S-3 and have
duly caused this Registration Statement to be signed on their behalf by the
undersigned, thereunto duly authorized, in the City of Wilmington, State of
Delaware, on June __, 1999
CHASE MANHATTAN BANK USA, NATIONAL
ASSOCIATION
as originator of the Trust
By: /s/ Keith Schuck
--------------------------------
Keith Schuck
Controller
CHASE CREDIT CARD MASTER TRUST
(Co-Registrant)
By: The Chase Manhattan Bank,
in its capacity as Servicer
By: /s/ Patricia Garvey
--------------------------------
Patricia Garvey
Vice President
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Registration Statement has been signed on June __, 1999 by
the following persons
in the capacities indicated.
Signatures Title
---------- -----
*
_________________________________ Chairman of the Board and Director
Donald L. Boudreau
*
_________________________________ President (Chief Executive Officer)
and
Michael Barrett Director
_________________________________ Director
Luke S. Hayden
*
_________________________________ Director
William H. Hoefling
_________________________________ Director
Kevin T. Hurley
*
_________________________________ Director
Thomas Jacob
*
_________________________________ Director
John M. Nuzum
*
_________________________________ Director
Peter Schleif
_________________________________ Director
Michael Urkowitz
/s/ Keith Schuck
_________________________________ Vice President and Controller (Chief
Keith Schuck Financial Officer and Principal
Accounting Officer)
- ------------------------
* The undersigned, by signing his name hereto, does hereby sign this
Registration Statement on behalf of each of the above-indicated
directors and officers of The Chase Manhattan Bank USA, National
Association pursuant to powers of attorney signed by such directors
and officers.
/s/ Keith Schuck
_____________________________________
Keith Schuck
Attorney-in-Fact
