<PAGE>
Filed Pursuant to Rule 424(b)(2)
Registration No. 33-99298
PROSPECTUS SUPPLEMENT
(To Prospectus dated March 7, 1997)
$638,625,000
CASE EQUIPMENT LOAN TRUST 1997-A
$71,500,000 CLASS A-1 5.597% ASSET BACKED NOTES
$282,000,000 CLASS A-2 6.00% ASSET BACKED NOTES
$259,125,000 CLASS A-3 6.45% ASSET BACKED NOTES
$26,000,000 CLASS B 6.70% ASSET BACKED NOTES
CASE RECEIVABLES II INC.
SELLER
CASE CREDIT CORPORATION
SERVICER
The Case Equipment Loan Trust 1997-A (the "Trust") will be formed pursuant to
a Trust Agreement, to be dated as of March 1, 1997, between Case Receivables
II Inc. (the "Seller") and Chase Manhattan Bank Delaware, as Trustee, and will
issue the Class A-1 5.597% Asset Backed Notes (the "A-1 Notes"), the Class A-2
6.00% Asset Backed Notes (the "A-2 Notes"), the Class A-3 6.45% Asset Backed
Notes (the "A-3 Notes"; together with the A-1 Notes and the A-2 Notes, the
"Class A Notes") and the Class B 6.70% Asset Backed Notes (the "Class B
Notes"; and together with the Class A Notes, the "Notes") offered hereby. The
Notes will be issued pursuant to an Indenture, to be dated as of March 1, 1997
(the "Indenture"), between the Trust and Harris Trust and Savings Bank, as
Indenture Trustee. The Trust will also issue $11,375,000 6.70% Asset Backed
Certificates (the "Certificates"), but the Certificates are not offered
hereby. The assets
(continued on following page)
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "RISK
FACTORS" HEREIN ON PAGE S-16 AND ON PAGE 10 OF THE ACCOMPANYING PROSPECTUS.
THE NOTES REPRESENT OBLIGATIONS OF THE TRUST ONLY AND DO NOT REPRESENT
OBLIGATIONS OF OR INTERESTS IN THE SELLER, THE SERVICER OR ANY OF THEIR
RESPECTIVE AFFILIATES. NEITHER THE NOTES NOR THE RECEIVABLES ARE INSURED OR
GUARANTEED BY ANY GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT THE SELLER(1)(2)
<S> <C> <C> <C>
Per A-1 Note......................... 100.00000% .125% 99.87500%
Per A-2 Note......................... 99.95316% .175% 99.77816%
Per A-3 Note......................... 99.96813% .250% 99.71813%
Per Class B Note..................... 99.98449% .500% 99.48449%
Total................................ $638,406,295 $1,360,688 $637,045,607
</TABLE>
- -------------------------------------------------------------------------------
(1)Plus accrued interest, if any, from March 18, 1997.
(2)Before deducting expenses, estimated to be $600,000.
The Notes are offered by the Underwriters when, as and if issued and accepted
by the Underwriters and subject to their right to reject orders in whole or in
part. It is expected that delivery of the Notes will be made in book-entry
form only through the Same Day Funds Settlement System of The Depository Trust
Company, Cedel Bank, societe anonyme, and the Euroclear System on or about
March 18, 1997.
UNDERWRITERS OF THE CLASS A NOTES
SALOMON BROTHERS INC
BANCAMERICA SECURITIES, INC.
CHASE SECURITIES INC.
CITICORP SECURITIES, INC.
FIRST UNION CAPITAL MARKETS CORP.
MERRILL LYNCH & CO.
UNDERWRITERS OF THE CLASS B NOTES
SALOMON BROTHERS INC MERRILL LYNCH & CO.
The date of this Prospectus Supplement is March 11, 1997
<PAGE>
(continued from preceding page)
of the Trust will include a pool of fixed rate retail installment sale
contracts (the "Receivables"), secured by security interests in the
agricultural and construction equipment financed thereby, and certain monies
due or received thereunder on or after March 1, 1997 and monies on deposit in
a trust account (the "Pre-Funding Account"). Additional fixed rate retail
installment contracts (the "Subsequent Receivables") will be purchased by the
Trust from the Seller from time to time on or before the September 1997
Payment Date with funds on deposit in the Pre-Funding Account. The Notes will
be secured by the assets of the Trust pursuant to the Indenture.
Interest on the Notes will accrue at the respective fixed per annum interest
rate specified above for each class of Notes (each a "Class"). Interest on the
Notes will be payable on the fifteenth day of each calendar month or, if such
day is not a business day, on the next business day (each, a "Payment Date"),
commencing April 15, 1997. Principal of the Notes will be payable on each
Payment Date to the extent described herein. No principal will be paid on the
A-2 Notes until the A-1 Notes have been paid in full. No principal will be
paid on the A-3 Notes until the A-2 Notes have been paid in full. No principal
will be paid on the Class B Notes until the A-3 Notes have been paid in full.
Distributions of principal and interest on the Class B Notes will be
subordinated in priority to payments due on the Class A Notes to the extent
described herein.
The Certificates will bear interest at the rate per annum specified above,
except that during the Funding Period no interest will accrue on the Pre-
Funded Percentage of the Certificate Balance. Distributions of interest and
principal on the Certificates will be subordinated in priority of payment to
interest and principal on the Notes to the extent described herein.
The final scheduled Payment Date for the A-1 Notes will be the March 1998
Payment Date, and the final scheduled Payment Date for the A-2 Notes, the A-3
Notes and the Class B Notes will be the March 2004 Payment Date. However,
payment in full of any Class of the Notes could occur earlier than such date
as described herein. In addition, the A-3 Notes and Class B Notes will be
subject to redemption on any Payment Date after the A-1 Notes and the A-2
Notes have been repaid in full and the Servicer exercises its option to
purchase the Receivables when the aggregate principal balance of the
Receivables has declined to 10% or less of the initial aggregate principal
balance of the Receivables purchased by the Trust. Any funds remaining in the
Pre-Funding Account at the end of the Funding Period will be applied towards
the mandatory redemption of (a) the A-1 Notes and (b) if the A-1 Notes are
redeemed in full, the A-2 Notes, in each case at a premium to the extent
described herein. In the unlikely event that the A-2 Notes are redeemed in
full and there are any remaining funds in the Pre-Funding Account, such funds
will be applied towards the redemption of the A-3 Notes, at a premium.
----------------
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT THE
OFFERING OF THE NOTES. ADDITIONAL INFORMATION IS CONTAINED IN THE PROSPECTUS,
AND PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS IN FULL. SALES OF THE NOTES MAY NOT BE CONSUMMATED UNLESS
THE PURCHASER HAS RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
TO THE EXTENT ANY STATEMENTS IN THIS PROSPECTUS SUPPLEMENT CONFLICT WITH
STATEMENTS IN THE PROSPECTUS, THE STATEMENTS IN THIS PROSPECTUS SUPPLEMENT
SHALL CONTROL.
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN, OR OTHERWISE AFFECT THE PRICE OF THE NOTES, INCLUDING
STABILIZING TRANSACTIONS AND SYNDICATE COVERING TRANSACTIONS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
Upon receipt of a request by an investor, or his or her representative, within
the period during which there is a prospectus delivery obligation, the
Underwriters will transmit or cause to be transmitted promptly, without
charge, a paper copy of this Prospectus Supplement and a Prospectus or this
Prospectus Supplement and a Prospectus encoded in an electronic format.
S-2
<PAGE>
REPORTS TO NOTEHOLDERS
Unless and until Definitive Notes are issued, monthly unaudited reports
containing information concerning the Receivables will be prepared by the
Servicer and sent on behalf of the Trust only to Cede & Co. ("Cede"), as
nominee of The Depository Trust Company ("DTC") and registered holder of the
Notes. See "Certain Information Regarding the Offered Securities--Book-Entry
Registration" and "--Reports to Offered Securityholders" in the accompanying
Prospectus (the "Prospectus"). Such reports will not constitute financial
statements prepared in accordance with generally accepted accounting
principles. The Seller, as originator of the Trust, will file with the
Securities and Exchange Commission (the "Commission") such periodic reports as
are required under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations of the Commission thereunder.
S-3
<PAGE>
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere herein and in the Prospectus. Certain
capitalized terms used herein are defined elsewhere in this Prospectus
Supplement on the pages indicated in the "Index of Terms" or, to the extent not
defined herein, have the meanings assigned to such terms in the Prospectus.
ISSUER...................... Case Equipment Loan Trust 1997-A (the "Trust" or
the "Issuer"), a Delaware business trust to be
formed by the Seller and the Trustee pursuant to
the Trust Agreement, to be dated as of March 1,
1997 (the "Trust Agreement") between the Seller
and the Trustee, acting thereunder not in its in-
dividual capacity but solely as Trustee.
SELLER...................... Case Receivables II Inc. (the "Seller"), a Dela-
ware corporation and a wholly-owned subsidiary of
Case Credit Corporation.
SERVICER.................... Case Credit Corporation, a Delaware corporation
(the "Servicer" or "Case Credit").
INDENTURE TRUSTEE........... Harris Trust and Savings Bank, as indenture
trustee under the Indenture (the "Indenture
Trustee").
TRUSTEE..................... Chase Manhattan Bank Delaware, as trustee under
the Trust Agreement (the "Trustee").
THE CLASS A NOTES........... Class A-1 5.597% Asset Backed Notes (the "A-1
Notes") in the aggregate principal amount of
$71,500,000.
Class A-2 6.00% Asset Backed Notes (the "A-2
Notes") in the aggregate principal amount of
$282,000,000.
Class A-3 6.45% Asset Backed Notes (the "A-3
Notes"; together with the A-1 Notes and A-2
Notes, the "Class A Notes") in the aggregate
principal amount of $259,125,000.
THE CLASS B NOTES........... Class B 6.70% Asset Backed Notes (the "Class B
Notes"; together with the Class A Notes, the
"Notes") in the aggregate principal amount of
$26,000,000. The Class B Notes will be subordi-
nated to the Class A Notes to the extent de-
scribed herein.
The Notes will be issued pursuant to an Inden-
ture, to be dated as of March 1, 1997 (the "In-
denture"), between the Issuer and the Indenture
Trustee and will be secured by the assets of the
Trust pursuant to the Indenture. The aggregate
outstanding principal amount of the Notes from
time to time is referred to herein as the "Note
Balance."
THE TRUST................... The Trust will be established under the laws of
the State of Delaware by the Trust Agreement. The
activities of the Trust will be limited by the
terms of the Trust Agreement to purchasing, own-
ing and managing the Receivables and other activ-
ities related thereto. The Trust property will
include (i) the Receivables and all monies (in-
cluding accrued interest) paid thereunder on or
after the applicable Cutoff Date, (ii) the Cer-
tificate Distribution Account, the Col-
S-4
<PAGE>
lection Account, the Negative Carry Account, the
Note Distribution Account, the Pre-Funding Ac-
count and the Spread Account, (iii) security in-
terests in the Financed Equipment, (iv) the
rights to proceeds from certain insurance poli-
cies covering the Financed Equipment or the Obli-
gors, (v) the interest of the Seller in any pro-
ceeds from recourse to Dealers on Receivables
(but excluding any amounts contained in Dealers'
reserve accounts), and (vi) any property acquired
by the Trust that secured a Receivable. In addi-
tion to the Notes, the Trust will also issue
6.70% Asset Backed Certificates (the "Certifi-
cates") in the aggregate principal amount of
$11,375,000. The Seller, the Servicer and/or one
of their affiliates will initially purchase the
entire principal amount of the Certificates. The
Certificates represent fractional undivided in-
terests in the Trust and will be issued pursuant
to the Trust Agreement. The Certificates are not
offered hereby.
THE RECEIVABLES............. The Receivables consist of retail installment
sale contracts ("Contracts") secured by new or
used agricultural or construction equipment, in-
cluding rights to receive certain payments made
with respect to such Receivables, and security
interests in the equipment financed thereby (the
"Financed Equipment"), and the proceeds thereof.
On March 18, 1997 (the "Closing Date"), the
Seller will purchase Contracts (the "Purchased
Contracts") having an aggregate Contract Value
(calculated for the Standard Precomputed Receiv-
ables using a discount rate equal to the APR of
each such Standard Precomputed Receivable and for
the Precomputed Simple Rebate Receivables using
the current balance on the Servicer's records) of
approximately $97,388,399 as of February 28, 1997
(the "Initial Cutoff Date"), from Case Credit
pursuant to a Purchase Agreement, to be dated as
of March 1, 1997 (the "Purchase Agreement"), be-
tween Case Credit and the Seller. As of the Ini-
tial Cutoff Date, the Seller owned Contracts pur-
chased from Case Credit pursuant to the Liquidity
Receivables Purchase Agreement (the "Owned Con-
tracts," and, together with the Purchased Con-
tracts, the "Initial Receivables") having an ag-
gregate Contract Value (calculated for the Stan-
dard Precomputed Receivables using a discount
rate equal to the APR of each such Standard
Precomputed Receivable and for the Precomputed
Simple Rebate Receivables using the current bal-
ance on the Servicer's records) of approximately
$239,051,411, which will be sold to the Trust.
The Seller will sell the Initial Receivables to
the Trust pursuant to a Sale and Servicing Agree-
ment, to be dated as of March 1, 1997 (the "Sale
and Servicing Agreement"), among the Seller, the
Servicer and the Trust. On and following the
Closing Date, pursuant to the Sale and Servicing
Agreement, the Seller will be obligated, subject
only to the availability thereof, to sell, and
the Trust will be obligated to purchase, subject
to the satisfaction of certain conditions set
forth therein, Subsequent Receivables from time
to time during the Funding Period having an ag-
gregate Contract Value of approximately
$314,947,499, such amount being equal to the
amount on deposit in the Pre-Funding Account on
the
S-5
<PAGE>
Closing Date (the "Initial Pre-Funded Amount").
The Seller will designate as a cutoff date (each,
a "Subsequent Cutoff Date") the date as of which
particular Subsequent Receivables are conveyed to
the Trust. It is expected that Subsequent Receiv-
ables will be conveyed to the Trust monthly on
dates specified by the Seller (each date on which
Subsequent Receivables are conveyed being re-
ferred to as a "Subsequent Transfer Date") occur-
ring during the Funding Period. The "Subsequent
Receivables" together with the "Initial Receiv-
ables" are referred to herein as the "Receiv-
ables." As used herein, the "Funding Period"
means the period from and including the Closing
Date until the earliest of (a) the Determination
Date on which the amount on deposit in the Pre-
Funding Account (after giving effect to any
transfers therefrom in connection with the trans-
fer of Subsequent Receivables to the Issuer on or
before such Determination Date) is less than
$100,000, (b) the occurrence of an Event of De-
fault under the Indenture or a Servicer Default
under the Sale and Servicing Agreement, (c) the
occurrence of certain events of insolvency with
respect to the Seller or the Servicer and (d) the
close of business on the September 1997 Payment
Date. See "Description of the Transfer and Ser-
vicing Agreement--Sale and Assignment of Initial
Receivables and Subsequent Receivables."
The Receivables arose and will arise from financ-
ing provided in connection with retail sales by
dealers (the "Dealers") of new or used agricul-
tural and construction equipment and were pur-
chased by Case Credit pursuant to agreements with
the Dealers or were originated directly by retail
outlets owned by Case Corporation ("Case") and
immediately assigned to Case Credit. The Owned
Contracts were sold on a monthly basis by Case
Credit to the Seller pursuant to the Liquidity
Receivables Purchase Agreement. The Initial Re-
ceivables have been selected, and the Subsequent
Receivables will be selected, from the portfolio
of Contracts owned by the Seller based on the
criteria specified in the Sale and Servicing
Agreement. See "The Receivables Pool" below and
"The Receivables Pools" in the Prospectus. Each
Initial Receivable is a Precomputed Receivable,
including some Precomputed Simple Rebate Receiv-
ables. As of the Initial Cutoff Date, the
weighted average annual percentage rate (the
"APR") of the Initial Receivables was approxi-
mately 8.823%, the weighted average remaining ma-
turity (i.e., the period from but excluding the
Initial Cutoff Date to and including each Initial
Receivable's maturity date) of the Initial Re-
ceivables was approximately 49.46 months and the
weighted average original maturity of the Initial
Receivables was approximately 51.98 months. No
Initial Receivable has, and no Subsequent Receiv-
able will have, a scheduled maturity later than
the date that is six months prior to the Final
Scheduled Maturity Date.
Subsequent Receivables may be originated by the
Dealers or by the retail outlets owned by Case at
a later date using credit criteria different from
those that were applied to the Initial Receiv-
ables and may be of a different credit quality
and seasoning. In addition,
S-6
<PAGE>
following the transfer of Subsequent Receivables
to the Trust, the characteristics of the entire
pool of Receivables included in the Trust may
vary from those of the Initial Receivables. See
"Risk Factors--The Receivables and the Pre-Fund-
ing Account" and "The Receivables Pool."
The "Pool Balance" at any time represents the sum
of the aggregate Contract Values of the Receiv-
ables at the beginning of a Collection Period,
after giving effect to all payments received from
Obligors and Purchase Amounts to be remitted by
the Servicer or the Seller, as the case may be,
with respect to the preceding Collection Period
and all losses realized on Receivables liquidated
during such preceding Collection Period. The
"Contract Value" of the Receivables means gener-
ally, with respect to any day (including the Ini-
tial Cutoff Date), the present value of the
scheduled and unpaid payments on the Receivables
discounted monthly at an annual rate equal to (a)
in the case of the Initial Receivables, the Ini-
tial Cutoff Date APR and (b) in the case of Sub-
sequent Receivables, the applicable Subsequent
Cutoff Date APR. In effect, the Contract Value of
the Receivables is generally equivalent to the
aggregate principal balance of the Receivables.
TERMS OF THE NOTES:
A. INTEREST PAYMENTS........ The A-1 Notes will bear interest at the rate of
5.597% per annum (the "A-1 Note Rate"); the A-2
Notes will bear interest at the rate of 6.00% per
annum (the "A-2 Note Rate"); the A-3 Notes will
bear interest at the rate of 6.45% per annum (the
"A-3 Note Rate"); and the Class B Notes will bear
interest at the rate of 6.70% per annum (the
"Class B Rate") (in each case calculated on the
basis of a 360-day year of twelve 30-day months).
Interest on the outstanding principal amount of
the Notes will accrue from the Closing Date, or
from the most recent Payment Date on which
interest has been paid, to but excluding the
following Payment Date. Interest on the Class A
Notes will be payable on the fifteenth day of
each calendar month or, if any such date is not a
business day, on the next business day (each, a
"Payment Date"), commencing April 15, 1997 to the
holders of record of the A-1 Notes (the "A-1
Noteholders"), the holders of record of the A-2
Notes (the "A-2 Noteholders") and the holders of
record of the A-3 Notes (the "A-3 Noteholders";
together with the A-1 Noteholders and the A-2
Noteholders, the "Class A Noteholders") as of the
fourteenth day of the calendar month in which
such Payment Date will occur or, if Definitive
Notes are issued, the close of business on the
last day of the calendar month preceding the
month of such Payment Date, whether or not such
day is a Business Day (the "Record Date").
Interest on the Class B Notes will not be paid on
any Payment Date until interest payments on the
Class A Notes have been paid in full. Subject to
the foregoing, interest on the Class B Notes will
be paid
S-7
<PAGE>
on each Payment Date to the holders of record of
the Class B Notes (the "Class B Noteholders"; to-
gether with the Class A Noteholders, the "Note-
holders") as of the Record Date for such Payment
Date.
Interest payments on the Notes will generally be
funded from the Total Distribution Amount remain-
ing after the payment of the Administration Fee,
the Servicing Fee (if neither Case Credit nor an
affiliate of Case Credit is the Servicer) and, in
the case of the Class B Notes, payments of inter-
est on the Class A Notes, and from amounts on de-
posit in the Spread Account. If the amount of in-
terest on the Class A Notes payable on any Pay-
ment Date exceeds the amounts available from
these sources, the A-1 Noteholders, A-2 Notehold-
ers and A-3 Noteholders will receive their rata-
ble share (based upon the total amount of inter-
est due to each of them) of the amount available
to be distributed in respect of interest on the
Class A Notes.
Interest on the Certificates will only be paid on
any Payment Date generally to the extent of funds
available following payment of the Servicing Fee
(if Case Credit or an affiliate of Case Credit is
not the Servicer), the Administration Fee and
distributions in respect of the Notes from the
Collection Account and the Spread Account.
B. PRINCIPAL PAYMENTS....... Principal of the Notes will be payable on each
Payment Date in an amount generally equal to the
Principal Distribution Amount for such Payment
Date to the extent of funds available therefor as
described herein. The Principal Distribution
Amount for a Payment Date will be based upon the
decrease in the sum of the Contract Value of the
Receivables (including the decrease resulting
from losses in respect of principal of the Re-
ceivables) and the amount on deposit in the Pre-
Funding Account during the related Collection Pe-
riod. "Collection Period" means, with respect to
any Payment Date, the period from and including
the end of the previous Collection Period (or, if
for the first Payment Date, the day after the
Initial Cutoff Date) to but excluding the sixth
day of the calendar month in which the Payment
Date occurs. See "Description of the Transfer and
Servicing Agreements--Distributions."
On each Payment Date before the Payment Date on
which the A-1 Notes have been paid in full, prin-
cipal of the A-1 Notes will be payable in an
amount equal to 100% of the Principal Distribu-
tion Amount. On each Payment Date on and after
the Payment Date on which the A-1 Notes have been
paid in full, principal of the A-2 Notes will be
payable, until the A-2 Notes have been paid in
full, in an amount equal to 100% of the Principal
Distribution Amount (less any portion of the
Principal Distribution Amount applied on such
Payment Date to reduce the outstanding principal
amount of the A-1 Notes to zero). On each Payment
Date on and after the Payment Date on which the
A-2 Notes have been paid in full, principal of
the A-3 Notes will be payable, until the A-3
Notes have been paid in full, in an amount equal
to 100% of the Principal Distribution
S-8
<PAGE>
Amount (less any portion of the Principal Distri-
bution Amount applied on such Payment Date to re-
duce the outstanding principal amount of the A-2
Notes to zero). On each Payment Date on and after
the A-3 Notes have been paid in full, principal
of the Class B Notes will be payable, until the
Class B Notes have been paid in full, in an
amount equal to 100% of the Principal Distribu-
tion Amount (less any portion of the Principal
Distribution Amount applied on such Payment Date
to reduce the outstanding principal amount of the
A-3 Notes to zero).
No principal will be paid with respect to the
Certificates until the Notes have been paid in
full.
The outstanding principal amount, if any, of the
A-1 Notes will be payable in full on the March
1998 Payment Date (the "A-1 Note Final Scheduled
Maturity Date"), and the outstanding principal
amount, if any, of the A-2 Notes, the A-3 Notes
and the Class B Notes will be payable in full on
the March 2004 Payment Date (the "Final Scheduled
Maturity Date"), in each case from funds avail-
able therefor. After an Event of Default and ac-
celeration of the Notes (and, if any Notes remain
outstanding, on and after the Final Scheduled Ma-
turity Date), principal payments will be made
first to the Class A Noteholders ratably accord-
ing to the amounts due and payable on the Class A
Notes for principal until paid in full and then
to the Class B Noteholders until the outstanding
principal amount of the Class B Notes has been
paid in full.
Principal payments on the Class A Notes will gen-
erally be derived from the Total Distribution
Amount remaining after the payment of the Admin-
istration Fee, the Servicing Fee (if neither Case
Credit nor any of its affiliates is the
Servicer), the Class A Noteholders' Interest Dis-
tributable Amount and the Class B Noteholders'
Interest Distributable Amount and from amounts on
deposit in the Spread Account. Principal payments
on the Class B Notes will generally be derived
from the Total Distribution Amount remaining af-
ter the payment of the amounts listed above, as
well as principal payments on the Class A Notes,
and from amounts on deposit in the Spread Ac-
count. See "Description of the Transfer and Ser-
vicing Agreements--Distributions" and "--Spread
Account."
C. OPTIONAL REDEMPTION...... The A-3 Notes and the Class B Notes will be pre-
paid in whole, but not in part, at the A-3 Note
Redemption Price and the Class B Redemption
Price, respectively, on the Payment Date after
the A-1 Notes and the A-2 Notes have been paid in
full on which the Servicer exercises its option
to purchase the Receivables. The Servicer may
purchase the Receivables from the Trust when the
Pool Balance declines to 10% or less of the Ini-
tial Pool Balance. The redemption price for the
A-3 Notes (the "A-3 Note Redemption Price") will
equal the unpaid principal balance of the A-3
Notes,
S-9
<PAGE>
plus accrued and unpaid interest thereon. The re-
demption price for the Class B Notes (the "Class
B Redemption Price") will equal the unpaid prin-
cipal balance of the Class B Notes, plus accrued
and unpaid interest thereon.
The "Initial Pool Balance" will equal the sum of
(i) the Pool Balance as of the Initial Cutoff
Date plus (ii) the aggregate Contract Value of
all Subsequent Receivables sold to the Issuer as
of their respective Subsequent Cutoff Dates.
D. MANDATORY REDEMPTION..... On the Payment Date on or immediately following
the last day of the Funding Period, any funds re-
maining in the Pre-Funding Account (after giving
effect to the purchase of all Subsequent Receiv-
ables, including any such purchase on such date)
will be applied to redeem the A-1 Notes then out-
standing in whole or in part, and if the A-1
Notes are redeemed in whole, any such funds re-
maining will be applied to redeem the A-2 Notes
in whole or in part (each, a "Mandatory Redemp-
tion"). The aggregate principal amount of the A-1
Notes to be redeemed will equal the lesser of (a)
the remaining Pre-Funded Amount and (b) the full
outstanding principal amount of the A-1 Notes.
The aggregate principal amount of the A-2 Notes
to be redeemed will equal the lesser of (a) the
remaining Pre-Funded Amount, after giving effect
to the redemption of A-1 Notes in full, and (b)
the full outstanding principal amount of the A-2
Notes.
In the unlikely event that the A-2 Notes are re-
deemed in full and there are any remaining funds
in the Pre-Funding Account, such funds will be
applied towards the redemption of the A-3 Notes.
A limited recourse mandatory prepayment premium
(the "Noteholders' Prepayment Premium") will be
payable by the Trust to the A-1 Noteholders if
the aggregate principal amount of the A-1 Notes
to be redeemed pursuant to a Mandatory Redemption
exceeds $100,000 and to the A-2 Noteholders (and
the A-3 Noteholders) if any portion of the A-2
Notes (or the A-3 Notes) is redeemed in a Manda-
tory Redemption. The Noteholders' Prepayment Pre-
mium, if any, with respect to the A-1 Notes will
equal the excess, if any, discounted as described
below, of (i) the amount of interest that would
have accrued on the principal amount of the A-1
Notes that is being redeemed (the "A-1 Note Re-
demption Amount") at the A-1 Note Rate during the
period commencing on and including the Payment
Date on which the A-1 Note Redemption Amount is
required to be distributed to the A-1 Noteholders
to but excluding September 15, 1997 over (ii) the
amount of interest that would have accrued on the
A-1 Note Redemption Amount over the same period
at a per annum rate of interest equal to the bond
equivalent yield to maturity on the Determination
Date preceding such Payment Date on the 5.75%
United States Treasury Note due September 30,
1997.
S-10
<PAGE>
Such excess will be discounted on a monthly basis
to a present value on such Payment Date at the
applicable yield described in clause (ii) above.
The Noteholders' Prepayment Premium, if any, with
respect to the A-2 Notes and the A-3 Notes will
be calculated in the same manner, but substitut-
ing (w) the principal amount of the A-2 Notes (or
the A-3 Notes) that is being redeemed for the A-1
Note Redemption Amount, (x) the A-2 Note Rate (or
the A-3 Note Rate) for the A-1 Note Rate, (y) the
date May 15, 1998 (or February 15, 2000, in the
case of the A-3 Notes) for the date September 15,
1997 and (z) the 6.125% United States Treasury
Note due May 15, 1998 (or the 5.875% United
States Treasury Note due February 15, 2000, in
the case of the A-3 Notes) for the reference
Treasury Note referred to above.
The Trust's obligation to pay the Noteholders'
Prepayment Premium will be limited to funds that
are received from the Seller under the Sale and
Servicing Agreement as liquidated damages for the
failure to deliver Subsequent Receivables. No
other assets of the Trust will be available for
the purpose of making such payment. If the aggre-
gate Noteholders' Prepayment Premium exceeds the
amount available, the A-1 Noteholders and the A-2
Noteholders (and, if applicable, the A-3 Note-
holders) will receive their ratable share (based
upon the total amount of Noteholders' Prepayment
Premium due to each of them) of the amount avail-
able to be distributed in respect of the Note-
holders' Prepayment Premium.
PRE-FUNDING ACCOUNT......... On or prior to the Closing Date, the Pre-Funding
Account will be established as a trust account in
the name of the Indenture Trustee. The amount on
deposit in the Pre-Funding Account (the "Pre-
Funded Amount") will initially equal the Initial
Pre-Funded Amount of $314,947,499, and, during
the Funding Period, will be reduced by the amount
thereof used to purchase Subsequent Receivables
in accordance with the Sale and Servicing Agree-
ment and the amounts thereof deposited in the
Spread Account in connection with the purchase of
such Subsequent Receivables. The Seller expects
that the Pre-Funded Amount will be reduced to
less than $100,000 by the September 1997 Payment
Date. Any Pre-Funded Amount remaining at the end
of the Funding Period will be payable (a) first,
to the A-1 Noteholders, (b) second, to the A-2
Noteholders and (c) third (in the unlikely event
that the A-2 Notes are repaid in full), to the A-
3 Noteholders as described in "Description of the
Notes--Mandatory Redemption." Prior to being used
to purchase Subsequent Receivables or paid to the
Noteholders, the Pre-Funded Amount will be in-
vested from time to time in Eligible Investments.
See "Description of the Transfer and Servicing
Agreements--Accounts" in the Prospectus.
NEGATIVE CARRY ACCOUNT...... In order to maintain the rating of the Notes at
their initial levels, the Servicer will establish
and maintain in the name of the Indenture
S-11
<PAGE>
Trustee an account (the "Negative Carry Account")
as a Trust Account for the benefit of the Note-
holders. The Negative Carry Account will be cre-
ated with an initial deposit by the Seller of
$5,577,380 (the "Negative Carry Account Initial
Deposit"). On each Payment Date, the Servicer
will instruct the Indenture Trustee to withdraw
from the Negative Carry Account and deposit into
the Collection Account an amount equal to the
Negative Carry Amount for such Collection Period.
For each Collection Period, the "Negative Carry
Amount" will be calculated by the Servicer as the
difference (if positive) between (i) the product
of (a) the sum of the Class A Noteholders' Inter-
est Distributable Amount and the Class B Note-
holders' Interest Distributable Amount multiplied
by (b) the Pre-Funded Percentage minus (ii) the
investment earnings on the Pre-Funded Amount. The
"Pre-Funded Percentage" for each Collection Pe-
riod is the percentage derived from the fraction
the numerator of which is the Pre-Funded Amount
and the denominator of which is the sum of the
Pool Balance and the Pre-Funded Amount, after
taking into account all transfers of Subsequent
Receivables during such Collection Period.
Amounts on deposit in the Negative Carry Account
in excess of the Required Negative Carry Account
Balance will be released to the Seller on each
Payment Date, and all amounts remaining on de-
posit in the Negative Carry Account on the Pay-
ment Date on or immediately following the last
day of the Funding Period (after giving effect to
all withdrawals therefrom on such Payment Date)
will be released to the Seller.
SPREAD ACCOUNT.............. The Servicer will establish and maintain in the
name of the Indenture Trustee a collateral
account (the "Spread Account") into which funds
will be deposited from time to time as described
herein. Funds on deposit in the Spread Account
will be available on each Payment Date to cover
shortfalls in distributions of interest and
principal on the Notes to the extent described
herein. Funds on deposit in the Spread Account
will not be used to cover shortfalls in any
distributions on the Certificates. The Spread
Account will be created with an initial deposit
by the Seller of $6,701,050, which equals the
Initial Pool Balance multiplied by 2.00%. On each
Subsequent Transfer Date, cash or Eligible
Investments having a value approximately equal to
2.00% of the aggregate Contract Value of the
Subsequent Receivables conveyed to the Trust on
such Subsequent Transfer Date will be withdrawn
from the Pre-Funding Account from amounts
otherwise distributable to the Seller in
connection with the sale of Subsequent
Receivables and deposited in the Spread Account.
The amount initially deposited in the Spread
Account by the Seller together with the aggregate
amount transferred from the Pre-Funding Account
to the Spread Account on each Subsequent Transfer
Date is referred to as the "Spread Account
Initial Deposit." The Spread Account Initial
Deposit will be augmented on each Payment Date by
the deposit in the Spread Account of amounts
remaining after deposit in the Note Distribution
Account and the Certificate Distribution Account
of amounts to be
S-12
<PAGE>
distributed to Noteholders and holders of the
Certificates (the "Certificateholders") and the
payment of the Administration Fee and the
Servicing Fee.
Amounts in the Spread Account on any Payment Date
(after giving effect to all distributions to be
made on such Payment Date) in excess of the Spec-
ified Spread Account Balance for such Payment
Date will be released to the Seller. The "Speci-
fied Spread Account Balance" with respect to any
Payment Date generally will be equal to the
lesser of (a) 2.00% of the Initial Pool Balance
and (b) the Note Balance. The Specified Spread
Account Balance may be reduced or the definition
thereof otherwise modified without the consent of
the Noteholders if the Rating Agencies confirm in
writing that such reduction or modification will
not result in a reduction or withdrawal of the
rating of the Notes. See "Description of the
Transfer and Servicing Agreements--Spread Ac-
count."
THE CERTIFICATES............ On the Closing Date, the Trust will issue
Certificates in an aggregate principal amount of
$11,375,000. The Seller will initially purchase
the entire principal amount of the Certificates.
The Certificates will bear interest at the rate
of 6.70% per annum, except that during the
Funding Period no interest will accrue on the
Pre-Funded Percentage of the Certificate Balance.
Distributions of interest and principal on the
Certificates will be subordinated in priority of
payment to interest and principal due on the
Notes to the extent described herein. See
"Description of the Certificates" in this
Prospectus Supplement.
COLLECTION ACCOUNT;
PRIORITY OF
DISTRIBUTIONS..............
The Servicer will establish and maintain in the
name of the Indenture Trustee an account (the
"Collection Account") into which all payments
made on or with respect to the Receivables will
be deposited and held until the distribution
thereof to Noteholders and Certificateholders as
described herein. Except under certain conditions
described herein, the Servicer will be required
to remit collections received with respect to the
Receivables within two business days of receipt
thereof to the Collection Account. Pursuant to
the Sale and Servicing Agreement, the Servicer
will have the revocable power to instruct the In-
denture Trustee to withdraw funds on deposit in
the Collection Account and to apply such funds on
each Payment Date to the following (in the prior-
ity indicated): (i) the Administration Fee for
the prior Collection Period and any overdue Ad-
ministration Fees to the Administrator; (ii) the
Class A Noteholders' Interest Distributable
Amount into the Note Distribution Account; (iii)
the Class B Noteholders' Interest Distributable
Amount into the Note Distribution Account; (iv)
the A-1 Noteholders' Principal Distributable
Amount into the Note Distribution Account; (v)
the A-2 Noteholders' Principal Distributable
Amount into the Note Distribu-
S-13
<PAGE>
tion Account; (vi) the A-3 Noteholders' Principal
Distributable Amount into the Note Distribution
Account; (vii) the Class B Noteholders' Principal
Distributable Amount into the Note Distribution
Account; (viii) the Certificateholders' Interest
Distributable Amount into the Certificate Distri-
bution Account; (ix) the Certificateholders'
Principal Distributable Amount into the Certifi-
cate Distribution Account; (x) the Servicing Fee
for the prior Collection Period and any overdue
Servicing Fees to the Servicer, except that if
Case Credit or an affiliate of Case Credit is not
the Servicer, the amounts described in this
clause will be paid prior to any other applica-
tion of funds on deposit in the Collection Ac-
count; and (xi) the remaining balance, if any, to
the Spread Account. After an Event of Default and
acceleration of the Notes (and, if any Notes re-
main outstanding, on and after the Final Sched-
uled Maturity Date), principal payments will be
made first to Class A Noteholders ratably accord-
ing to the amounts due on the Class A Notes for
principal and then to the Class B Noteholders un-
til the outstanding principal amount of the Class
B Notes has been paid in full. See "Description
of the Transfer and Servicing Agreements--Distri-
butions."
TAX STATUS.................. In the opinion of Mayer, Brown & Platt ("Federal
Tax Counsel"), for Federal income tax purposes
the Notes will be characterized as debt and the
Trust will not be characterized as an association
(or publicly traded partnership) taxable as a
corporation. In the opinion of Foley & Lardner
("Wisconsin Tax Counsel"), the same characteriza-
tions should apply for Wisconsin income tax pur-
poses as for Federal income tax purposes. Each
Noteholder, by the acceptance of a Note, will
agree to treat the Notes as indebtedness. See
"Certain Federal Income Tax Consequences" and
"Certain State Tax Consequences" in the Prospec-
tus for additional information concerning the ap-
plication of Federal and Wisconsin tax laws to
the Trust and the Notes.
ERISA CONSIDERATIONS........ Subject to the considerations discussed under
"ERISA Considerations," the Notes are eligible
for purchase by employee benefit plans.
REGISTRATION OF NOTES....... The Notes initially will be represented by Secu-
rities registered in the name of Cede, as the
nominee of DTC. No Noteholder will be entitled to
receive a Definitive Note, except under the lim-
ited circumstances described herein. Noteholders
may elect to hold their Notes through DTC (in the
United States) or Cedel or Euroclear (in Europe).
Transfers will be made in accordance with the
rules and operating procedures described herein.
See "Certain Information Regarding the Securi-
ties--Definitive Securities" in the Prospectus.
LEGAL INVESTMENT............ The A-1 Notes will be eligible securities for
purchase by money market funds under paragraph
(a)(9) of Rule 2a-7 under the Investment Company
Act of 1940, as amended.
S-14
<PAGE>
RATING OF THE NOTES......... It is a condition to the issuance of the Notes
that the A-1 Notes be rated in the highest short-
term rating category, that the A-2 Notes and the
A-3 Notes be rated in the highest long-term rat-
ing category and that the Class B Notes be rated
at least in the "A" category or its equivalent,
in each case by at least two nationally recog-
nized statistical rating agencies (the "Rating
Agencies"). The rating agencies do not evaluate,
and the ratings do not address, the likelihood
that the Noteholders' Prepayment Premium will be
paid. There can be no assurance that such ratings
will not be lowered or withdrawn by a rating
agency if circumstances so warrant. See "Risk
Factors--Ratings of the Notes."
S-15
<PAGE>
RISK FACTORS
Limited Liquidity. There is currently no secondary market for the Notes.
Each Underwriter currently intends to make a market in the Notes for which it
is an Underwriter, but is under no obligation to do so. There can be no
assurance that a secondary market will develop or, if a secondary market does
develop, that it will provide the Noteholders with liquidity of investment or
that it will continue for the life of the Notes.
The Receivables and the Pre-Funding Account. On the Closing Date, the Seller
will transfer to the Trust the approximately $336,439,810 of Initial
Receivables (calculated for the Standard Precomputed Receivables by using a
discount rate equal to the APR of each such Standard Precomputed Receivable
and for the Precomputed Simple Rebate Receivables using the current balance on
the Servicer's records; or $335,052,501 calculated for all of the Initial
Receivables using a discount rate equal to the Initial Cutoff Date APR) and
the approximately $314,947,499 Initial Pre-Funded Amount to be deposited in
the Pre-Funding Account. If the principal amount of eligible Receivables
originated by Dealers or by retail outlets owned by Case and purchased by Case
Credit during the Funding Period is less than the Initial Pre-Funded Amount,
the Seller will have insufficient Receivables to sell to the Trust on the
Subsequent Transfer Dates, thereby resulting in a prepayment of principal to
the Noteholders as described below. See "Economic and Other Factors" and
"Trust's Relationship to the Seller, Case Credit Corporation and Case
Corporation" below.
Any conveyance of Subsequent Receivables is subject to the satisfaction, on
or before the related Subsequent Transfer Date, of the following conditions
precedent, among others: (i) each such Subsequent Receivable must satisfy the
eligibility criteria specified in the Sale and Servicing Agreement; (ii) the
Seller shall not have selected such Subsequent Receivables in a manner that it
believes is adverse to the interests of the Noteholders or the
Certificateholders; (iii) as of the related Subsequent Cutoff Date, the
Receivables in the Trust at that time, including the Subsequent Receivables to
be conveyed by the Seller as of such Subsequent Cutoff Date, shall satisfy the
parameters described under "The Receivables Pool" herein and under "The
Receivables Pools" in the Prospectus; (iv) the applicable Spread Account
Initial Deposit for such Subsequent Transfer Date shall have been made; (v)
the Seller shall have executed and delivered to the Trust (with a copy to the
Indenture Trustee) a written assignment conveying such Subsequent Receivables
to the Trust (including a schedule identifying such Subsequent Receivables);
(vi) the Seller shall have delivered certain opinions of counsel to the
Trustee, the Indenture Trustee and the Rating Agencies with respect to the
transfer of all such Subsequent Receivables conveyed during such Collection
Period; (vii) the Trust and the Indenture Trustee shall have received written
confirmation from a firm of certified independent public accountants that, as
of the end of the preceding Collection Period, the Receivables in the Trust at
that time, including the Subsequent Receivables conveyed by the Seller during
such Collection Period, satisfied the parameters described under "The
Receivables Pool" herein and under "The Receivables Pools" in the Prospectus;
and (viii) Moody's Investors Service, Inc. ("Moody's") shall have received
written notification from the Seller of the addition of all such Subsequent
Receivables.
To the extent that amounts on deposit in the Pre-Funding Account have not
been fully applied to the conveyance of Subsequent Receivables to the Trust by
the end of the Funding Period, any such amounts remaining will be applied (a)
first, to redeem the A-1 Notes, in whole or in part, (b) second (if the A-1
Notes are redeemed in whole), to redeem the A-2 Notes, in whole or in part and
(c) third (in the unlikely event that the A-2 Notes are redeemed in whole), to
redeem the A-3 Notes, in whole or in part. If the aggregate mandatory
redemption of the A-1 Notes exceeds $100,000, the A-1 Noteholders will be
entitled to receive a Noteholders' Prepayment Premium. The A-2 Noteholders and
A-3 Noteholders will be entitled to receive a Noteholders' Prepayment Premium
if there is any mandatory redemption or prepayment of the A-2 Notes or A-3
Notes, respectively.
Any such prepayment will shorten the weighted average life of the affected
Notes to an extent that cannot be predicted with assurance, since the amount
of such prepayment cannot be predicted with assurance. The Noteholders'
Prepayment Premium is intended to compensate Noteholders for any reinvestment
risks resulting from any such prepayment in excess of the amounts specified
above. Holders of Notes purchased at a premium
S-16
<PAGE>
should consider the risk that such a prepayment could result in an actual
yield that is less than the anticipated yield.
Each Subsequent Receivable must satisfy the eligibility criteria specified
in the Sale and Servicing Agreement at the time of its addition. However,
except for such criteria, there will be no required characteristics of the
Subsequent Receivables. Subsequent Receivables may be originated by the
Dealers or by the retail outlets owned by Case at a later date using credit
criteria different from those that were applied to the Initial Receivables and
may be of a different credit quality and seasoning. In addition, following the
transfer of Subsequent Receivables to the Trust, the characteristics of the
entire Receivables Pool, including the composition of the Receivables, the
distribution by APR, equipment type, payment frequency, average maturity,
current Contract Value and geographic distribution, may vary from those of the
Initial Receivables. See "The Receivables Pool." Since the weighted average
life of the Notes will be influenced by the rate at which the principal
balances of the Receivables are paid, some of these variations will affect the
weighted average life of the Notes. See "Weighted Average Life of the
Securities" in the Prospectus. The requirements that no Receivables have a
remaining term in excess of 72 months and that on each Subsequent Transfer
Date the weighted average original term of the Receivables in the Trust will
not be greater than 55 months are intended to minimize the effect of the
addition of Subsequent Receivables on the weighted average life of the Notes.
Seasonality of Cash Flow. Payments on the Receivables may be made on a
monthly, quarterly, semiannual, annual or an irregular basis. The majority of
the Initial Receivables (representing approximately 69% of the aggregate
Contract Value of the Receivables as of the Initial Cutoff Date) are
agricultural equipment retail installment sale contracts and tend to have
payment dates that correspond to periods in which farmers have stronger cash
flows. As a result, the amounts of cash distributed to Noteholders will tend
to share in this seasonality, with higher amounts of principal paid on the
Payment Dates occurring in the first and fourth calendar quarters in each year
and relatively lower amounts paid on other Payment Dates. See "The Receivables
Pool."
Economic and Other Factors. The ability of the Dealers and of the retail
stores owned by Case to sell agricultural and construction equipment and
thereby generate Subsequent Receivables is affected by the general level of
activity in the agricultural and construction industries, including the rate
of United States farm production and demand, government subsidies for the
agricultural sector, weather conditions, commodity prices, interest rates,
prevailing levels of construction (especially housing starts), and levels of
total industry capacity and equipment inventory. However, Case and the Seller
are unable to determine and have no basis to predict whether or to what extent
these factors will affect the level of sales of agricultural or construction
equipment.
Subordination. Distributions of interest on the Class B Notes will be
subordinated in priority of payment to interest due on the Class A Notes, and
distributions of principal on the Class B Notes will be subordinated in
priority of payment to principal due on the Class A Notes, in each case, to
the extent described herein. Consequently, the Class B Noteholders will not
receive any distributions of interest with respect to a Collection Period
until the full amount of interest on the Class A Notes relating to such
Collection Period has been deposited in the Note Distribution Account. No
distributions of principal with respect to the Class B Notes will be made
until funds sufficient to pay the Class A Notes in full have been deposited in
the Note Distribution Account. Distributions of interest and principal on the
Certificates will be subordinated in priority of payment to interest and
principal due on the Notes.
Limited Assets. The Trust does not have, nor is it permitted or expected to
have, any significant assets or sources of funds other than the Receivables,
the Pre-Funding Account, the Negative Carry Account and the Spread Account.
Holders of the Notes must rely for repayment upon payments on the Receivables
and, if and to the extent available, amounts on deposit in the Negative Carry
Account and the Spread Account. Amounts to be deposited in the Spread Account
are limited in amount and will be reduced as the Pool Balance is reduced. If
the Negative Carry Account and the Spread Account are exhausted, the Trust
will depend solely on current distributions on the Receivables to make
payments on the Notes and the Certificates.
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<PAGE>
Ratings of the Notes. It is a condition to the issuance of the Notes that
the A-1 Notes be rated in the highest short-term investment rating category,
that the A-2 Notes and the A-3 Notes be rated in the highest long-term
investment rating category and the Class B Notes be rated at least in the "A"
category or its equivalent, in each case by at least two Rating Agencies. A
rating is not a recommendation to purchase, hold or sell the Notes, inasmuch
as such rating does not comment as to market price or suitability for a
particular investor. The ratings of the Notes address the likelihood of the
timely payment of interest on and the ultimate payment of principal of the
Notes pursuant to their terms. The Rating Agencies do not evaluate, and the
ratings do not address, the likelihood that the Noteholders' Prepayment
Premium will be paid. There can be no assurance that a rating will remain for
any given period of time or that a rating will not be lowered or withdrawn
entirely by a Rating Agency if in its judgment circumstances in the future so
warrant.
Trust's Relationship to the Seller, Case Credit Corporation and Case
Corporation. Neither the Seller, Case Credit, Case nor any of their affiliates
is generally obligated to make payments in respect of the Notes or the
Receivables. However, the ability of the Seller to convey Subsequent
Receivables on Subsequent Transfer Dates is completely dependent on the
generation of additional receivables by Case Credit. The ability of Case
Credit to generate receivables in turn depends on the sales of agricultural
and construction equipment manufactured or distributed by Case. If, during the
Funding Period, Case were temporarily or permanently no longer manufacturing
or distributing agricultural or construction equipment, the rate of sales of
agricultural and construction equipment manufactured or distributed by Case
would decrease, adversely affecting the ability of the Seller to sell
Subsequent Receivables to the Trust. The use of incentive programs (e.g.,
manufacturer's rebate programs), may also affect retail sales. There can be no
assurance, therefore, that Case Credit will continue to generate receivables
at the same rate as in prior years. Moreover, in connection with the sale of
the Receivables by Case Credit to the Seller pursuant to the Liquidity
Receivables Purchase Agreement or the Purchase Agreement, Case Credit has made
or will make representations and warranties with respect to the
characteristics of such Receivables and, in certain circumstances, Case Credit
may be required to repurchase Receivables with respect to which any such
representation or warranty has been breached. See "Description of the Transfer
and Servicing Agreements--Sale and Assignment of Receivables" and "--
Commercial Paper Program" in the Prospectus. In addition, under certain
circumstances, the Servicer may be required to purchase Receivables. See
"Description of the Transfer and Servicing Agreements--Servicing Procedures"
in the Prospectus. Moreover, if Case Credit were to cease acting as Servicer,
delays in processing payments on the Receivables and information in respect
thereof could occur and result in delays in payments to the Noteholders.
Case is a leading worldwide designer, manufacturer, marketer and distributor
of farm equipment and light- and medium-sized construction equipment, which is
sold worldwide through independent dealers and retail outlets owned by Case
and its affiliates. For the year ended December 31, 1996, Case reported
operating earnings (industrial earnings before interest, taxes, changes in
accounting principles and extraordinary items, including net income of the
finance companies on an equity basis) of $579 million (compared to $509
million for the year ended December 31, 1995), and net income of $316 million
(compared to $337 million for the year ended December 31, 1995) on net sales
of $5.2 billion (compared to $4.9 billion for the year ended December 31,
1995). At December 31, 1996, Case's consolidated equity was $1.9 billion.
Case Credit had consolidated net income of $85 million for the year ended
December 31, 1996, compared with net income of $94 million for the year ended
December 31, 1995. The $9 million decrease is primarily due to increased
interest expense as a result of maintaining higher average debt levels
necessary to fund the growth in both the finance lease and operating lease
equipment programs. In addition, Case Credit's 1996 net income was lower as a
result of lower interest rate margins on the sale of retail notes under asset-
backed securitization transactions. Revenues for the year ended December 31,
1996 were $244 million, compared to $217 million for the year ended December
31, 1995. At December 31, 1996, total gross receivables serviced by Case
Credit were $4.3 billion, up 14% from December 31, 1995.
For additional information regarding the Seller, Case Credit or Case, see
"The Seller, Case Credit Corporation and Case Corporation" in the Prospectus.
S-18
<PAGE>
THE TRUST
GENERAL
Case Equipment Loan Trust 1997-A is a trust formed under the laws of the
State of Delaware pursuant to the Trust Agreement for the transactions
described in this Prospectus Supplement. After its formation, the Trust will
not engage in any activity other than (i) acquiring, holding and managing the
Receivables, the Pre-Funding Account and the other assets of the Trust and
proceeds therefrom, (ii) issuing the Notes and the Certificates, (iii) making
payments on the Notes and the Certificates and (iv) engaging in other
activities that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith.
The Trust will initially be capitalized with equity of $11,375,000 excluding
amounts deposited in the Negative Carry Account and the Spread Account,
representing the initial principal balance of the Certificates. Certificates
representing the entire principal balance initially will be sold to the
Seller. The equity of the Trust, together with the proceeds from the initial
sale of the Notes, will be used by the Trust to purchase the Receivables from
the Seller pursuant to the Sale and Servicing Agreement. The Servicer will
initially service the Receivables pursuant to the Sale and Servicing Agreement
and will be compensated for acting as the Servicer. See "Description of the
Transfer and Servicing Agreements--Servicing Compensation and Payment of
Expenses." To facilitate servicing and to minimize administrative burden and
expense, the Servicer will be appointed custodian for the Receivables by the
Trustee, but will not stamp the Receivables to reflect the sale and assignment
of the Receivables to the Trust, or amend or assign the financing statements
filed to perfect the security interest in the Financed Equipment or, where
applicable, the certificates of title of the Financed Equipment. In the
absence of amendments to the financing statements or certificates of title,
the Trust may not have perfected security interests in the Financed Equipment
securing the Receivables originated in some states. See "Certain Legal Aspects
of the Receivables" in the Prospectus.
If the protection provided to the Noteholders by the Negative Carry Account,
the Spread Account and the subordination of the Certificates is insufficient,
the Noteholders must rely solely on payments from the Obligors on the
Receivables and the proceeds from the repossession and sale of Financed
Equipment that secure defaulted Receivables. In such event, certain factors,
such as the Trust's not having first priority perfected security interests in
some of the Financed Equipment, may affect the Trust's ability to realize on
the collateral securing the Receivables, and thus may reduce the proceeds to
be distributed to Noteholders with respect to the Notes. See "Description of
the Transfer and Servicing Agreements-- Distributions," "--Negative Carry
Account" and "--Spread Account" herein and "Certain Legal Aspects of the
Receivables" in the Prospectus.
The Trust's principal offices are in Wilmington, Delaware, in care of Chase
Manhattan Bank Delaware, as Trustee, at the address listed below under "--The
Trustee."
CAPITALIZATION OF THE TRUST
The following table illustrates the capitalization of the Trust as of the
Cutoff Date, as if the issuance and sale of the Notes and the Certificates had
taken place on such date:
<TABLE>
<S> <C>
Class A-1 5.597% Asset Backed Notes............................ $ 71,500,000
Class A-2 6.00% Asset Backed Notes............................. 282,000,000
Class A-3 6.45% Asset Backed Notes............................. 259,125,000
Class B 6.70% Asset Backed Notes............................... 26,000,000
6.70% Asset Backed Certificates................................ 11,375,000
------------
Total........................................................ $650,000,000
============
</TABLE>
THE TRUSTEE
Chase Manhattan Bank Delaware is the Trustee under the Trust Agreement.
Chase Manhattan Bank Delaware is a Delaware banking corporation and its
principal offices are located at 1201 North Market Street, Wilmington,
Delaware 19801. In the ordinary course of its business, the Trustee and its
affiliates have engaged and may in the future engage in commercial banking or
financial advisory transactions with Case Credit and its affiliates.
S-19
<PAGE>
THE RECEIVABLES POOL
The pool of Receivables (the "Receivables Pool") will include the Initial
Receivables purchased as of the Initial Cutoff Date and any Subsequent
Receivables purchased as of any applicable Subsequent Cutoff Date (the Initial
Cutoff Date or any Subsequent Cutoff Date being individually referred to
herein as a "Cutoff Date").
The Initial Receivables were selected, and the Subsequent Receivables will
be selected, from the Seller's portfolio using several criteria, some of which
are set forth in the Prospectus under "The Receivables Pools," as well as that
each Receivable (i) is not more than 90 days past due as of the applicable
Cutoff Date, (ii) has an APR that is equal to or greater than 3%, (iii) has a
remaining term to maturity (i.e., the period from but excluding the applicable
Cutoff Date to and including the Receivable's maturity date) of not more than
72 months and (iv) has a Contract Value as of the applicable Cutoff Date that
(when combined with the Contract Value of any other Receivables with the same
or an affiliated Obligor) does not exceed 1% of the aggregate Contract Value
of all the Receivables. The Receivables will include Contracts with respect to
which the first payment has not been made and interest waiver contracts
pursuant to which interest will not begin to accrue for some designated period
of time. As of the applicable Cutoff Date, no Obligor on any Receivable was or
will be noted in the records of the Servicer as being the subject of a
bankruptcy proceeding. No selection procedures believed by the Seller to be
adverse to Noteholders were or will be used in selecting the Receivables.
According to the eligibility criteria set forth in the Sale and Servicing
Agreement, the obligation of the Trust to purchase the Subsequent Receivables
on a Subsequent Transfer Date will be subject to the Receivables in the Trust,
including the Subsequent Receivables to be conveyed to the Trust on such
Subsequent Transfer Date, meeting the following criteria: (i) the weighted
average original term of the Receivables in the Trust will not be greater than
55 months; and (ii) not more than 40% of the principal balances of the
Receivables in the Trust will represent Contracts for the financing of
construction equipment.
The Initial Receivables will represent approximately 52% of the sum of
Initial Note Balance and the initial Certificate Balance. However, except for
the criteria described in the preceding paragraphs, there will be no required
characteristics of the Subsequent Receivables. Therefore, following the
transfer of Subsequent Receivables to the Trust, the aggregate characteristics
of the entire Receivables Pool, including the composition of the Receivables,
the distribution by APR, equipment type, payment frequency, current Contract
Value and geographic distribution described in the following tables, may vary
from those of the Initial Receivables. Following the end of the Funding
Period, the Seller will file a report on Form 8-K containing information
comparable to that contained in the tables set forth below regarding the
aggregate characteristics of the entire Receivables Pool, after the addition
of the Subsequent Receivables.
The composition, distribution by APR, equipment type, payment frequency,
current Contract Value and geographic distribution, in each case of the
Initial Receivables as of the Initial Cutoff Date, are as set forth in the
following tables. For purposes of the data in the following tables, "Contract
Value" (a) for each Standard Precomputed Receivable has been calculated as the
sum of the present value of the scheduled and unpaid payments on such Standard
Precomputed Receivable as of the Initial Cutoff Date discounted monthly at an
annual rate equal to the APR of such Standard Precomputed Receivable and (b)
for each Precomputed Simple Rebate Receivable has been deemed to equal the
current balance of that Receivable on the Servicer's records as of the Initial
Cutoff Date.
COMPOSITION OF THE RECEIVABLES POOL
AS OF THE INITIAL CUTOFF DATE
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE WEIGHTED WEIGHTED AVERAGE
APR OF AGGREGATE NUMBER OF AVERAGE AVERAGE CONTRACT
RECEIVABLES CONTRACT VALUE RECEIVABLES REMAINING TERM ORIGINAL TERM VALUE
- ----------- --------------- ----------- -------------- ------------- ----------
<S> <C> <C> <C> <C> <C>
8.823% $336,439,809.97 9,476 49.46 months 51.98 months $35,504.41
</TABLE>
S-20
<PAGE>
DISTRIBUTION BY APR OF THE RECEIVABLES POOL
AS OF THE INITIAL CUTOFF DATE
<TABLE>
<CAPTION>
PERCENT OF
AGGREGATE
NUMBER OF AGGREGATE CONTRACT
APR RANGE RECEIVABLES CONTRACT VALUE VALUE
--------- ----------- --------------- ----------
<S> <C> <C> <C>
3.00% to 3.99%......................... 75 $ 1,065,092.97 .32%
4.00% to 4.99%......................... 39 1,811,582.90 .54
5.00% to 5.99%......................... 148 8,145,905.16 2.42
6.00% to 6.99%......................... 719 13,009,609.00 3.87
7.00% to 7.99%......................... 2,707 87,541,874.82 26.02
8.00% to 8.99%......................... 1,810 97,178,675.46 28.88
9.00% to 9.99%......................... 1,245 70,390,660.07 20.92
10.00% to 10.99%........................ 2,311 51,450,902.33 15.29
11.00% to 11.99%........................ 293 3,854,398.38 1.15
12.00% to 12.99%........................ 68 979,960.76 .29
13.00% to 13.99%........................ 53 905,370.04 .27
14.00% to 14.99%........................ 6 92,881.19 .03
15.00% to 15.99%........................ 2 12,896.89 .00
----- --------------- ------
Total................................. 9,476 $336,439,809.97 100.00%
===== =============== ======
</TABLE>
DISTRIBUTION BY EQUIPMENT TYPE OF THE RECEIVABLES POOL
AS OF THE INITIAL CUTOFF DATE
<TABLE>
<CAPTION>
PERCENT OF
AGGREGATE
NUMBER OF AGGREGATE CONTRACT
TYPE RECEIVABLES CONTRACT VALUE VALUE
---- ----------- --------------- ----------
<S> <C> <C> <C>
Agricultural
New................................... 2,456 $ 94,924,367.18 28.21%
Used.................................. 4,111 136,116,077.26 40.46
Construction
New................................... 1,731 70,889,957.57 21.07
Used.................................. 1,178 34,509,407.96 10.26
----- --------------- ------
Total............................... 9,476 $336,439,809.97 100.00%
===== =============== ======
</TABLE>
DISTRIBUTION BY PAYMENT FREQUENCY OF THE RECEIVABLES POOL
AS OF THE INITIAL CUTOFF DATE
<TABLE>
<CAPTION>
PERCENT OF
AGGREGATE
NUMBER OF AGGREGATE CONTRACT
FREQUENCY RECEIVABLES CONTRACT VALUE VALUE
--------- ----------- --------------- ----------
<S> <C> <C> <C>
Annual(1)................................ 5,229 $200,872,223.59 59.70%
Semiannual............................... 427 15,225,253.96 4.53
Quarterly................................ 67 1,574,009.15 0.47
Monthly.................................. 3,753 118,768,323.27 35.30
----- --------------- ------
Total.................................. 9,476 $336,439,809.97 100.00%
===== =============== ======
</TABLE>
- --------
(1) Approximately 32.50%, 19.84%, 18.62%, 8.69%, and 7.28%, of the annual
Receivables have scheduled payments within the Collection Periods relating
to the Payment Dates in January, February, December, September and March,
respectively.
S-21
<PAGE>
DISTRIBUTION BY CURRENT CONTRACT VALUE OF THE RECEIVABLES POOL
AS OF THE INITIAL CUTOFF DATE
<TABLE>
<CAPTION>
PERCENT OF
AGGREGATE
NUMBER OF AGGREGATE CONTRACT
CONTRACT VALUE RANGE RECEIVABLES CONTRACT VALUE VALUE
-------------------- ----------- --------------- ----------
<S> <C> <C> <C>
$ 0.00 to $ 5,000.00................ 697 $ 2,370,713.48 .70%
5,000.01 to 10,000.00................ 1,445 10,723,890.81 3.19
10,000.01 to 15,000.00................ 1,181 14,632,241.58 4.35
15,000.01 to 20,000.00................ 908 15,746,136.11 4.68
20,000.01 to 25,000.00................ 655 14,610,877.73 4.34
25,000.01 to 30,000.00................ 565 15,533,931.07 4.62
30,000.01 to 35,000.00................ 490 15,799,214.93 4.70
35,000.01 to 40,000.00................ 457 17,135,415.47 5.09
40,000.01 to 45,000.00................ 456 19,325,644.85 5.74
45,000.01 to 50,000.00................ 403 18,993,530.04 5.65
50,000.01 to 55,000.00................ 330 17,270,082.84 5.13
55,000.01 to 60,000.00................ 294 16,888,047.84 5.02
60,000.01 to 65,000.00................ 210 13,109,214.67 3.90
65,000.01 to 70,000.00................ 200 13,499,032.06 4.01
70,000.01 to 75,000.00................ 149 10,798,075.15 3.21
75,000.01 to 100,000.00................ 556 47,994,196.57 14.27
100,000.01 to 200,000.00................ 422 52,221,967.41 15.52
200,000.01 to 300,000.00................ 32 7,839,076.67 2.33
300,000.01 and over..................... 26 11,948,520.69 3.55
----- --------------- ------
Total................................. 9,476 $336,439,809.97 100.00%
===== =============== ======
</TABLE>
S-22
<PAGE>
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES POOL
AS OF THE INITIAL CUTOFF DATE
<TABLE>
<CAPTION>
PERCENT OF PERCENT OF
AGGREGATE AGGREGATE
CONTRACT CONTRACT
STATE(1) VALUE STATE(1) VALUE
- -------- ---------- -------- ----------
<S> <C> <C> <C>
Alabama.......................... .81% Nebraska......................... 4.29%
Alaska........................... .13 Nevada........................... .51
Arizona.......................... 1.83 New Hampshire.................... .27
Arkansas......................... 4.66 New Jersey....................... 1.01
California....................... 2.50 New Mexico....................... .19
Colorado......................... 2.06 New York......................... 1.93
Connecticut...................... .24 North Carolina................... 2.27
Delaware......................... .35 North Dakota..................... 1.58
Florida.......................... 1.46 Ohio............................. 4.90
Georgia.......................... 2.83 Oklahoma......................... 1.14
Hawaii........................... .06 Oregon........................... 1.79
Idaho............................ 1.29 Pennsylvania..................... 2.02
Illinois......................... 6.88 Rhode Island..................... .01
Indiana.......................... 3.23 South Carolina................... .86
Iowa............................. 6.78 South Dakota..................... 2.85
Kansas........................... 3.06 Tennessee........................ 2.38
Kentucky......................... 1.89 Texas............................ 6.49
Louisiana........................ 1.76 Utah............................. .73
Maine............................ .40 Vermont.......................... .17
Maryland......................... 1.02 Virginia......................... 1.17
Massachusetts.................... .16 Washington....................... 1.99
Michigan......................... 2.35 Washington, D.C.................. .01
Minnesota........................ 4.25 West Virginia.................... .31
Mississippi...................... 2.50 Wisconsin........................ 2.11
Missouri......................... 4.86 Wyoming.......................... .37
------
Montana.......................... 1.29 Total............................ 100.00%
======
</TABLE>
- --------
(1) Based on billing addresses of Obligors.
S-23
<PAGE>
DELINQUENCIES, REPOSSESSIONS, AND NET LOSSES
Set forth below is certain information concerning Case Credit's experience
pertaining to the entire portfolio of United States retail agricultural and
construction equipment receivables that it services, including receivables
previously sold to trusts under prior asset-backed securitizations and
receivables that remained with Tenneco Credit Corporation as a part of the
Reorganization. In the year 1992, delinquencies, repossessions and net losses
on construction contracts were adversely affected by the economic recession,
which resulted in declines in housing starts and nonresidential construction.
However, beginning in 1993, delinquencies, repossessions and net losses on
construction contracts improved principally as a result of improvements in the
economy, and also as a result of improvements in Case Credit's collection
systems. Delinquencies, repossessions and net losses on agricultural contracts
may be affected by weather conditions such as flood and drought, commodity
market prices and the level of farmers' income. However, delinquencies,
repossessions and net losses on agricultural contracts have remained generally
stable during the years shown below. There can be no assurance that the
delinquency, repossession and net loss experience on the Receivables of the
Trust will be comparable to that set forth below.
DELINQUENCY EXPERIENCE(1)
<TABLE>
<CAPTION>
AT DECEMBER 31,
--------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
------------------ ------------------ ------------------ ------------------ ------------------
NUMBER NUMBER NUMBER NUMBER NUMBER
OF OF OF OF OF
CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT
--------- -------- --------- -------- --------- -------- --------- -------- --------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Portfolio.............. 135,211 $3,262.4 135,722 $3,093.1 128,891 $2,641.0 128,562 $2,434.0 138,711 $2,549.8
Period of Delinquency
31-60 days............ 2,031 45.9 1,927 33.5 1,457 18.4 2,033 27.2 4,877 71.7
60 Days or More....... 1,778 36.3 1,509 18.5 855 9.4 2,145 22.5 6,177 78.3
------- -------- ------- -------- ------- -------- ------- -------- ------- --------
Total Delinquencies.... 3,809 $ 82.2 3,436 $ 52.0 2,312 $ 27.8 4,178 $ 49.7 11,054 $ 150.0
Total Delinquencies as
a Percent of the
Portfolio............. 2.8% 2.5% 2.5% 1.7% 1.8% 1.0% 3.2% 2.0% 8.0% 5.9%
</TABLE>
- --------
(1) Except as indicated, all amounts and percentages are based on the gross
amount scheduled to be paid on each retail installment sale contract,
including unearned finance and other charges. The information in the table
includes an immaterial amount of retail installment sale contracts on
equipment other than agricultural and construction equipment and includes
the receivables that remained with Tenneco Credit Corporation and
previously sold contracts that Case Credit continues to service.
S-24
<PAGE>
CREDIT LOSS/ REPOSSESSION EXPERIENCE(1)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Average Gross Portfolio
Outstanding During the
Period..................... $3,155.5 $2,857.7 $2,511.2 $2,487.1 $2,512.7
Repossessions as a Percent
of Average Gross Portfolio
Outstanding................ 1.07% 1.14% 1.33% 1.83% 2.68%
Net Losses as a Percent of
Liquidations(2)(3)(4)...... 0.15% 0.22% 0.36% 0.61% 1.23%
Net Losses as Percent of
Average Gross Portfolio
Outstanding(2)(3).......... 0.08% 0.11% 0.19% 0.31% 0.67%
</TABLE>
- --------
(1) Except as indicated, all amounts and percentages are based on the gross
amount scheduled to be paid on each retail installment sale contract,
including unearned finance and other charges. The information in the table
includes an immaterial amount of retail installment sale contracts on
equipment other than agricultural and construction equipment and includes
the receivables that remained with Tenneco Credit Corporation and
previously sold contracts that Case Credit continues to service.
(2) A portion of the contracts provide for recourse to Dealers. See "The
Receivables Pools--The Retail Equipment Financing Business--Dealer
Agreements" in the Prospectus. Approximately 25%, 22%, 22%, 22% and 27% of
the aggregate amounts scheduled to be paid on the contracts acquired
during the years ended December 31, 1996, 1995, 1994, 1993 and 1992,
provide for recourse to Dealers (excluding contracts which provide for
recourse to Dealers through the Dealers' reserve accounts). In the event
of defaults by the obligor under any such contract, the contract is
required to be repurchased by the Dealer for an amount generally equal to
all amounts due and unpaid thereunder. As a result, any losses under any
such contract are incurred by the Dealer and are not included in the net
loss figures set forth above.
(3) Net losses are equal to the aggregate of the principal balances of all
contracts (plus accrued but unpaid interest thereon) that are determined
to be uncollectible in the period, less any recoveries on contracts
charged off in the period or any prior periods, excluding any losses
resulting from repossession expenses and excluding any recoveries from
Dealers' reserve accounts.
(4) Liquidations represent a reduction in the outstanding balances of the
contracts as a result of cash payments and charge-offs.
The net loss figures above reflect the fact that Case Credit had recourse to
Dealers on a portion of the Contracts. See "The Receivables Pools--The Retail
Equipment Financing Business--Dealer Agreements" in the Prospectus. This fact
was taken into consideration in determining the principal balance of the
Certificates and the Specified Spread Account Balance. In the event of a
Dealer's bankruptcy, a bankruptcy trustee, a creditor or the Dealer as debtor
in possession might attempt to characterize recourse sales of Contracts as
loans to the Dealer secured by the Contracts. Such an attempt, if successful,
could result in payment delays or losses on the affected Receivables.
WEIGHTED AVERAGE LIFE OF THE NOTES
Information regarding certain maturity and prepayment considerations with
respect to the Notes is set forth under "Weighted Average Life of the
Securities" in the Prospectus. As the rate of payment of principal of the
Notes depends primarily on the rate of payment (including prepayments) of the
principal balance of the Receivables, final payment of each Class of Notes
could occur significantly earlier than the A-1 Note Final Scheduled Maturity
Date or the Final Scheduled Maturity Date, as applicable. Noteholders will
bear the risk of being able to reinvest principal payments of the Notes at
yields at least equal to the yield on their respective Notes.
S-25
<PAGE>
Prepayments on retail installment sale contracts can be measured relative to
a prepayment standard or model. The model used in this Prospectus Supplement
is based on a constant prepayment rate ("CPR"). CPR is determined by the
percentage of principal outstanding at the beginning of a period that prepays
during that period, stated as an annualized rate. The CPR prepayment model,
like any prepayment model, does not purport to be either an historical
description of prepayment experience or a prediction of the anticipated rate
of prepayment.
The tables on pages S-27 and S-28, have been prepared on the basis of
certain assumptions, including that: (a) the Receivables prepay in full at the
specified monthly CPR, with no repurchases, (b) each scheduled payment on the
Receivables is made on the last day of each Collection Period, (c)
distributions are made on each Payment Date in respect of the Notes in
accordance with the description set forth under "Description of the Transfer
and Servicing Agreements--Distributions," (d) the balance in the Spread
Account on any day is equal to the Specified Spread Account Balance, (e) the
Closing Date occurs on March 18, 1997 and (f) the Servicer exercises its
option to purchase the Receivables on the Payment Date after the Pool Balance
declines to 10% of the Initial Pool Balance. The table indicates the projected
weighted average life of each Class of Notes and sets forth the percent of the
initial principal balance of each class of Notes that is projected to be
outstanding after each of the Payment Dates shown at various CPR percentages.
The table also assumes that the Receivables have been aggregated into four
hypothetical pools with all of the Receivables within each such pool having
the following characteristics:
<TABLE>
<CAPTION>
AGGREGATE WEIGHTED
POOL CONTRACT VALUE AVERAGE APR
---- -------------- -----------
<S> <C> <C>
1................................................. $335,052,501 8.823%
2................................................. 100,000,000 8.823
3................................................. 145,000,000 8.823
4................................................. 69,947,499 8.823
------------
$650,000,000
============
</TABLE>
Hypothetical pool 1 has the same Contract Value and cashflow characteristics
as the Initial Receivables. Hypothetical pools 2, 3 and 4 have Contract Values
equal in the aggregate to the Initial Pre-Funded Amount. The cash flow
characteristics of hypothetical pools 2, 3 and 4 are proportionately identical
to hypothetical pool 1.
The information included in the following tables represents forward-looking
statements and involves risks and uncertainties that could cause actual
results to differ materially from those in the forward-looking statements. The
actual characteristics and performance of the Receivables will differ from the
assumptions used in constructing the tables on pages S-27 and S-28. The
assumptions used are hypothetical and have been provided only to give a
general sense of how the principal cash flows might behave under varying
prepayment scenarios. For example, it is highly unlikely that the Receivables
will prepay at a constant CPR until maturity or that all of the Receivables
will prepay at the same CPR. Similarly, the aggregate Contract Value of
Subsequent Receivables may be less than the Pre-Funded Amount. Moreover, the
diverse terms of Receivables within each of the three hypothetical pools could
produce slower or faster principal distributions than indicated in the table
at the various CPR specified. Any difference between such assumptions and the
actual characteristics and performance of the Receivables, or actual
prepayment experience, will affect the percentages of initial balances
outstanding over time and the weighted average lives of the Notes.
S-26
<PAGE>
PERCENT OF INITIAL PRINCIPAL AMOUNT OF THE NOTES AT VARIOUS CPR PERCENTAGES
<TABLE>
<CAPTION>
A-1 NOTES A-2 NOTES
------------------------ ------------------------
PAYMENT DATE 0% 13% 15% 17% 19% 0% 13% 15% 17% 19%
------------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Closing Date................ 100 100 100 100 100 100 100 100 100 100
April 1997.................. 95 89 89 88 87 100 100 100 100 100
May 1997.................... 91 79 77 75 73 100 100 100 100 100
June 1997................... 85 64 61 57 54 100 100 100 100 100
July 1997................... 79 48 43 38 33 100 100 100 100 100
August 1997................. 73 32 26 19 12 100 100 100 100 100
September 1997.............. 62 12 4 0 0 100 100 100 99 97
October 1997................ 54 0 0 0 0 100 99 97 94 92
November 1997............... 43 0 0 0 0 100 94 91 89 86
December 1997............... 21 0 0 0 0 100 87 84 81 78
January 1998................ 0 0 0 0 0 96 76 73 69 66
February 1998............... 0 0 0 0 0 86 65 62 59 56
March 1998.................. 0 0 0 0 0 79 57 53 50 46
April 1998.................. 0 0 0 0 0 74 51 47 43 40
May 1998.................... 0 0 0 0 0 71 46 43 39 35
June 1998................... 0 0 0 0 0 70 43 39 35 31
July 1998................... 0 0 0 0 0 68 40 36 32 28
August 1998................. 0 0 0 0 0 66 37 33 29 24
September 1998.............. 0 0 0 0 0 64 33 29 24 20
October 1998................ 0 0 0 0 0 62 30 26 21 16
November 1998............... 0 0 0 0 0 59 27 22 17 12
December 1998............... 0 0 0 0 0 53 20 16 11 6
January 1999................ 0 0 0 0 0 44 12 7 2 0
February 1999............... 0 0 0 0 0 34 3 0 0 0
March 1999.................. 0 0 0 0 0 27 0 0 0 0
April 1999.................. 0 0 0 0 0 21 0 0 0 0
May 1999.................... 0 0 0 0 0 19 0 0 0 0
June 1999................... 0 0 0 0 0 17 0 0 0 0
July 1999................... 0 0 0 0 0 15 0 0 0 0
August 1999................. 0 0 0 0 0 13 0 0 0 0
September 1999.............. 0 0 0 0 0 11 0 0 0 0
October 1999................ 0 0 0 0 0 8 0 0 0 0
November 1999............... 0 0 0 0 0 5 0 0 0 0
December 1999............... 0 0 0 0 0 0 0 0 0 0
Weighted Average Life
(years)(1)................. 0.58 0.35 0.32 0.31 0.29 1.71 1.26 1.20 1.15 1.10
</TABLE>
- --------
(1) The weighted average life of an A-1 Note or A-2 Note is determined by: (a)
multiplying the amount of each principal payment on the applicable Note by
the number of years from the date of issuance of such Note to the related
Payment Date, (b) adding the results, and (c) dividing the sum by the
related initial principal amount of such Note.
THIS TABLE HAS BEEN PREPARED BASED ON THE ASSUMPTIONS DESCRIBED ON PAGE S-26
(INCLUDING THE ASSUMPTIONS REGARDING THE CHARACTERISTICS AND PERFORMANCE OF
THE RECEIVABLES, WHICH WILL DIFFER FROM THE ACTUAL CHARACTERISTICS AND
PERFORMANCE THEREOF) AND SHOULD BE READ IN CONJUNCTION THEREWITH.
S-27
<PAGE>
PERCENT OF INITIAL PRINCIPAL AMOUNT OF THE NOTES AT VARIOUS CPR PERCENTAGES
<TABLE>
<CAPTION>
A-3 NOTES CLASS B NOTES
------------------------ ------------------------
PAYMENT DATE 0% 13% 15% 17% 19% 0% 13% 15% 17% 19%
- ------------ ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Closing Date................ 100 100 100 100 100 100 100 100 100 100
April 1997.................. 100 100 100 100 100 100 100 100 100 100
May 1997.................... 100 100 100 100 100 100 100 100 100 100
June 1997................... 100 100 100 100 100 100 100 100 100 100
July 1997................... 100 100 100 100 100 100 100 100 100 100
August 1997................. 100 100 100 100 100 100 100 100 100 100
September 1997.............. 100 100 100 100 100 100 100 100 100 100
October 1997................ 100 100 100 100 100 100 100 100 100 100
November 1997............... 100 100 100 100 100 100 100 100 100 100
December 1997............... 100 100 100 100 100 100 100 100 100 100
January 1998................ 100 100 100 100 100 100 100 100 100 100
February 1998............... 100 100 100 100 100 100 100 100 100 100
March 1998.................. 100 100 100 100 100 100 100 100 100 100
April 1998.................. 100 100 100 100 100 100 100 100 100 100
May 1998.................... 100 100 100 100 100 100 100 100 100 100
June 1998................... 100 100 100 100 100 100 100 100 100 100
July 1998................... 100 100 100 100 100 100 100 100 100 100
August 1998................. 100 100 100 100 100 100 100 100 100 100
September 1998.............. 100 100 100 100 100 100 100 100 100 100
October 1998................ 100 100 100 100 100 100 100 100 100 100
November 1998............... 100 100 100 100 100 100 100 100 100 100
December 1998............... 100 100 100 100 100 100 100 100 100 100
January 1999................ 100 100 100 100 98 100 100 100 100 100
February 1999............... 100 100 98 93 89 100 100 100 100 100
March 1999.................. 100 95 91 86 81 100 100 100 100 100
April 1999.................. 100 90 85 80 76 100 100 100 100 100
May 1999.................... 100 86 81 77 72 100 100 100 100 100
June 1999................... 100 84 79 74 70 100 100 100 100 100
July 1999................... 100 81 76 72 67 100 100 100 100 100
August 1999................. 100 79 74 69 64 100 100 100 100 100
September 1999.............. 100 75 71 66 61 100 100 100 100 100
October 1999................ 100 73 68 63 59 100 100 100 100 100
November 1999............... 100 70 65 60 55 100 100 100 100 100
December 1999............... 100 64 59 55 51 100 100 100 100 100
January 2000................ 89 56 52 48 44 100 100 100 100 100
February 2000............... 79 49 45 41 37 100 100 100 100 100
March 2000.................. 71 42 39 35 32 100 100 100 100 100
April 2000.................. 65 38 35 31 28 100 100 100 100 100
May 2000.................... 62 36 32 29 26 100 100 100 100 100
June 2000................... 61 34 30 27 24 100 100 100 100 100
July 2000................... 59 32 29 26 23 100 100 100 100 100
August 2000................. 57 31 27 24 21 100 100 100 100 100
September 2000.............. 55 29 25 22 19 100 100 100 100 100
October 2000................ 53 27 24 21 18 100 100 100 100 100
November 2000............... 50 25 22 19 16 100 100 100 100 100
December 2000............... 44 21 18 15 13 100 100 100 100 100
January 2001................ 34 15 12 0 0 100 100 100 0 0
February 2001............... 26 0 0 0 0 100 0 0 0 0
March 2001.................. 19 0 0 0 0 100 0 0 0 0
April 2001.................. 15 0 0 0 0 100 0 0 0 0
May 2001.................... 13 0 0 0 0 100 0 0 0 0
June 2001................... 13 0 0 0 0 100 0 0 0 0
July 2001................... 12 0 0 0 0 100 0 0 0 0
August 2001................. 12 0 0 0 0 100 0 0 0 0
September 2001.............. 11 0 0 0 0 100 0 0 0 0
October 2001................ 0 0 0 0 0 0 0 0 0 0
Weighted Average Life
(years)(1)................. 3.58 3.02 2.94 2.85 2.78 4.58 3.91 3.91 3.83 3.83
</TABLE>
- --------
(1) The weighted average life of an A-3 Note or Class B Note is determined by:
(a) multiplying the amount of each principal payment on the applicable
security by the number of years from the date of issuance of the security
to the related Payment Date, (b) adding the results, and (c) dividing the
sum by the related initial principal amount of the security.
THIS TABLE HAS BEEN PREPARED BASED ON THE ASSUMPTIONS DESCRIBED ON PAGE S-26
(INCLUDING THE ASSUMPTIONS REGARDING THE CHARACTERISTICS AND PERFORMANCE OF
THE RECEIVABLES, WHICH WILL DIFFER FROM THE ACTUAL CHARACTERISTICS AND
PERFORMANCE THEREOF) AND SHOULD BE READ IN CONJUNCTION THEREWITH.
S-28
<PAGE>
DESCRIPTION OF THE NOTES
GENERAL
The Notes will be issued pursuant to the terms of the Indenture, a form of
which has been filed as an exhibit to the Registration Statement. The
following summarizes the material terms of the Notes and the Indenture. The
summary does not purport to be complete and is qualified in its entirety by
reference to the provisions of the Notes and the Indenture. The following
summary supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the notes of any given
series and the related indenture set forth in the Prospectus.
PAYMENTS OF INTEREST
The Notes will constitute Fixed Rate Securities, as such term is defined
under "Certain Information Regarding the Securities--Fixed Rate Securities" in
the Prospectus. Interest on the principal balance of the Notes will accrue at
the A-1 Rate, in the case of the A-1 Notes, the A-2 Rate, in the case of the
A-2 Notes, the A-3 Rate, in the case of the A-3 Notes, and the Class B Rate,
in the case of the Class B Notes, and, in each case, will be payable monthly
on each Payment Date, commencing April 15, 1997.
Interest payments on the Notes will be derived from the Total Distribution
Amount remaining after the payment of the Administration Fee, the Servicing
Fee (if neither Case Credit nor any of its affiliates is the Servicer) and, in
the case of the Class B Notes, payments of interest on the Class A Notes, and
from amounts on deposit in the Spread Account. If the amount of interest on
the Class A Notes payable on any Payment Date exceeds the amounts available
from these sources, the A-1 Noteholders, A-2 Noteholders and A-3 Noteholders
will receive their ratable share (based upon the total amount of interest due
to each of them) of the amount available to be distributed in respect of
interest on the Class A Notes. See "Description of the Transfer and Servicing
Agreements--Distributions" and "--Spread Account."
Interest on the Class B Notes will not be paid on any Payment Date until
interest on the Class A Notes has been paid in full.
Interest on the Certificates will only be paid on any Payment Date generally
to the extent of funds available following payment of the Servicing Fee (if
Case Credit or an affiliate of Case Credit is not the Servicer), the
Administration Fee and distributions in respect of the Notes from the
Collection Account.
PAYMENTS OF PRINCIPAL
Principal payments will be made to the Noteholders on each Payment Date as
follows. Principal payments will be made to the A-1 Noteholders in an amount
generally equal to the Principal Distribution Amount until the A-1 Notes have
been repaid in full. Commencing on the Payment Date on which the A-1 Notes are
repaid in full, principal payments will be made to the A-2 Noteholders in an
amount generally equal to the Principal Distribution Amount (less any amount
applied to repay the A-1 Notes) until the A-2 Notes have been repaid in full.
Commencing on the Payment Date on which the A-2 Notes are repaid in full,
principal payments will be made to the A-3 Noteholders in an amount generally
equal to the Principal Distribution Amount (less any amount applied to repay
the A-2 Notes) until the A-3 Notes have been repaid in full. Commencing on the
Payment Date on which the A-3 Notes are repaid in full, principal payments
will be made to the Class B Noteholders in an amount generally equal to the
Principal Distribution Amount (less any amount applied to repay the A-3 Notes)
until the Class B Notes have been repaid in full. No principal distributions
will be made with respect to the Certificates until the Class B Notes have
been repaid in full.
Principal payments on the Class A Notes will generally be derived from the
Total Distribution Amount remaining after the payment of the Administration
Fee, the Servicing Fee (if neither Case Credit nor any of its affiliates is
the Servicer), the Class A Noteholders' Interest Distributable Amount and the
Class B Noteholders' Interest Distributable Amount, and from amounts on
deposit in the Spread Account. Principal payments on the
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<PAGE>
Class B Notes will generally be derived from the Total Distribution Amount
remaining after the payment of the amounts listed above, as well as principal
payments on the Class A Notes, and from amounts on deposit in the Spread
Account. See "Description of the Transfer and Servicing Agreements--
Distributions" and "--Spread Account."
MANDATORY REDEMPTION
On the Payment Date on or immediately following the last day of the Funding
Period, any funds remaining in the Pre-Funding Account (after giving effect to
the purchase of all Subsequent Receivables, including any such purchase on
such date) will be applied to redeem the A-1 Notes then outstanding in whole
or in part, and if the A-1 Notes are redeemed in whole, any such funds
remaining will be applied to redeem the A-2 Notes in whole or in part (each, a
"Mandatory Redemption"). The aggregate principal amount of the A-1 Notes to be
redeemed will equal the lesser of (a) the remaining Pre-Funded Amount and (b)
the full outstanding principal amount of the A-1 Notes. The aggregate
principal amount of the A-2 Notes to be redeemed will equal the lesser of (i)
the remaining Pre-Funded Amount, after giving effect to the redemption of A-1
Notes in full, and (ii) the full outstanding principal amount of the A-2
Notes. In the unlikely event that the A-2 Notes are redeemed in full and there
are any remaining funds in the Pre-Funding Account, such funds will be applied
towards the redemption of the A-3 Notes.
The Noteholders' Prepayment Premium will be payable by the Trust to the A-1
Noteholders if the aggregate principal amount of the A-1 Notes to be redeemed
pursuant to a Mandatory Redemption exceeds $100,000 and to the A-2 Noteholders
(and the A-3 Noteholders) if any portion of the A-2 Notes (or the A-3 Notes)
is redeemed. The Noteholders' Prepayment Premium, if any, with respect to the
A-1 Notes will equal the excess, if any, discounted as described below, of (i)
the A-1 Note Redemption Amount at the A-1 Note Rate during the period
commencing on and including the Payment Date on which the A-1 Note Redemption
Amount is required to be distributed to the A-1 Noteholders to but excluding
September 15, 1997, over (ii) the amount of interest that would have accrued
on the A-1 Note Redemption Amount over the same period at a per annum rate of
interest equal to the bond equivalent yield to maturity on the Determination
Date preceding such Payment Date on the 5.75% United States Treasury Note due
September 30, 1997. Such excess will be discounted on a monthly basis to a
present value on such Payment Date at the applicable yield described in clause
(ii) above. The Noteholders' Prepayment Premium, if any, with respect to the
A-2 Notes (and the A-3 Notes) will be calculated in the same manner, but
substituting (w) the principal amount of the A-2 Notes (or the A-3 Notes) that
is being redeemed for the A-1 Note Redemption Amount, (x) the A-2 Note Rate
(or the A-3 Note Rate) for the A-1 Note Rate, (y) the date May 15, 1998 (or
February 15, 2000, in the case of the A-3 Notes) for the date September 15,
1997 and (z) the 6.125% United States Treasury Note due May 15, 1998 (or the
5.875% United States Treasury Note due February 15, 2000, in the case of the
A-3 Notes) for the reference Treasury Note referred to above.
The Trust's obligation to pay the Noteholders' Prepayment Premium will be
limited to funds that are received from the Seller under the Sale and
Servicing Agreement as liquidated damages for the failure to deliver
Subsequent Receivables. No other assets of the Trust will be available for the
purpose of making such payment. If the aggregate Noteholders' Prepayment
Premium exceeds the amount available, A-1 Noteholders, A-2 Noteholders and A-3
Noteholders will receive their ratable share (based upon the total amount of
Noteholders' Prepayment Premium due to each of them) of the amount available
to be distributed in respect of Noteholders' Prepayment Premium.
OPTIONAL REDEMPTION
The A-3 Notes and the Class B Notes will be redeemed in whole, but not in
part, at the A-3 Note Redemption Price (or the Class B Redemption Price), on
any Payment Date, after the date on which the A-1 Notes and the A-2 Notes have
been paid in full, on which the Servicer exercises its option to purchase the
S-30
<PAGE>
Receivables. The Servicer may purchase the Receivables from the Trust if the
Pool Balance declines to 10% or less of the Initial Pool Balance, as described
in the Prospectus under "Description of the Transfer and Servicing
Agreements--Termination." The A-3 Note Redemption Price will equal the unpaid
principal amount of the A-3 Notes, plus accrued and unpaid interest thereon.
The Class B Redemption Price will equal the unpaid principal balance of the
Class B Notes, plus accrued and unpaid interest thereon.
REGISTRATION OF NOTES
The Notes initially will be represented by securities registered in the name
of Cede, as nominee of DTC. Unless and until Definitive Securities are issued,
all references herein to actions by Noteholders (or any class thereof) shall
refer to actions taken by DTC upon instructions from DTC Participants and all
references herein to distributions, notices, reports and statements to
Noteholders shall refer to distributions, notices, reports and statements to
DTC or Cede, as the registered holder of the Noteholders, for distribution to
beneficial owners in accordance with DTC procedures. Noteholders may hold
their Notes through DTC (in the United States) or Cedel or 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 Notes. Cedel and Euroclear will hold omnibus positions on
behalf of the Cedel Participants and the Euroclear Participants, respectively,
through customers' securities accounts in Cedel's and Euroclear's names on the
books of their respective Depositaries which in turn will hold such positions
in customers' securities accounts in the Depositaries' names on the books of
DTC. See "Certain Information Regarding the Securities--Book-Entry
Registration" and "--Definitive Securities" in the Prospectus.
THE INDENTURE TRUSTEE
Harris Trust and Savings Bank is the Indenture Trustee under the Indenture.
Harris Trust and Savings Bank is an Illinois banking corporation, and its
corporate trust offices are located at 311 West Monroe Street, Chicago,
Illinois 60606. In the ordinary course of its business, the Indenture Trustee
and its affiliates have engaged and may in the future engage in commercial
banking or financial advisory transactions with Case Credit and its
affiliates.
Pursuant to 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 trustee for either the Class A Notes or the Class B Notes if a default
occurs under the Indenture. The Indenture will provide for a successor trustee
to be appointed for one or both Classes of Notes in these circumstances, so
that there will be separate trustees for the Class A Notes and the Class B
Notes. In these circumstances, the Class A Noteholders and Class B Noteholders
will continue to vote as a single group. So long as any amounts remain unpaid
with respect to the Class A Notes, only the trustee for the Class A
Noteholders will have the right to exercise remedies under the Indenture (but
the Class B Noteholders will be entitled to their share of any proceeds of
enforcement, subject to the subordination of the Class B Notes to the Class A
Notes as described herein). Upon repayment of the Class A Notes in full, all
rights to exercise remedies under the Indenture will transfer to the trustee
for the Class B Notes. Any resignation of the original Indenture Trustee as
described above with respect to any class of Notes will become effective only
upon the appointment of a successor trustee for such class of Notes and such
successor's acceptance of such appointment.
DESCRIPTION OF THE CERTIFICATES
The Certificates will be issued pursuant to the Trust Agreement. The Seller
will initially purchase the entire principal amount of the Certificates. The
Certificates will bear interest at the rate of 6.70% per annum, except that
during the Funding Period no interest will accrue on the Pre-Funded Percentage
of the Certificate Balance.
Distributions of interest and principal on the Certificates will be
subordinated in priority of payment to interest and principal due on the Notes
to the extent described herein. Funds on deposit in the Spread Account will
not be available to cover scheduled payments with respect to the Certificates.
S-31
<PAGE>
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summarizes the material terms of the Sale and Servicing
Agreement, the Purchase Agreement, the Administration Agreement and the Trust
Agreement (collectively, the "Transfer and Servicing Agreements," forms of
which have been filed as exhibits to the Registration Statement). The summary
does not purport to be complete and is subject to, and qualified in its
entirety by reference to, the provisions of the Transfer and Servicing
Agreements. The following summary supplements, and to the extent inconsistent
therewith replaces, the description of the general terms and provisions of the
Transfer and Servicing Agreements set forth under the heading "Description of
the Transfer and Servicing Agreements" in the Prospectus.
SALE AND ASSIGNMENT OF INITIAL RECEIVABLES AND SUBSEQUENT RECEIVABLES
Certain information with respect to the conveyance prior to the Closing Date
of the Owned Contracts from Case Credit to the Seller pursuant to the
Liquidity Receivables Purchase Agreement and on the Closing Date of the
Initial Receivables from the Seller to the Trust pursuant to the Sale and
Servicing Agreement is set forth under "Description of the Transfer and
Servicing Agreements--Sale and Assignment of Receivables" and "--Commercial
Paper Program" in the Prospectus. In addition, during the Funding Period,
pursuant to the Sale and Servicing Agreement, the Seller will be obligated to
sell to the Trust Subsequent Receivables having an aggregate Contract Value of
approximately $314,947,499, such amount being equal to the Initial Pre-Funded
Amount.
During the Funding Period, on each Subsequent Transfer Date, subject to the
conditions described below, the Seller will sell and assign to the Trust,
without recourse, the Seller's entire interest in the Subsequent Receivables
designated by the Seller as of the related Subsequent Cutoff Date and
identified in a schedule attached to an assignment relating to such Subsequent
Receivables executed on such date by the Seller. Upon the conveyance of
Subsequent Receivables to the Trust on a Subsequent Transfer Date, (i) the
Pool Balance will increase in an amount equal to the aggregate Contract Value
of the Subsequent Receivables, (ii) an amount equal to 2.00% of the aggregate
Contract Value of the Subsequent Receivables will be withdrawn from the Pre-
Funding Account and deposited in the Spread Account, and (iii) an amount equal
to the excess of the aggregate Contract Value of such Subsequent Receivables
over the amount described in clause (ii) will be withdrawn from the Pre-
Funding Account and paid to the Seller.
Any conveyance of Subsequent Receivables is subject to the satisfaction, on
or before the related Subsequent Transfer Date, of the following conditions
precedent, among others: (i) each such Subsequent Receivable must satisfy the
eligibility criteria specified in the Sale and Servicing Agreement (see "The
Receivables Pool"); (ii) the Seller shall not have selected such Subsequent
Receivables in a manner that it believes is adverse to the interests of the
Noteholders or the Certificateholders; (iii) as of the related Subsequent
Cutoff Date, the Receivables, including any Subsequent Receivables conveyed by
the Seller as of such Subsequent Cutoff Date, must satisfy the criteria
described under "The Receivables Pool" herein and "The Receivables Pools" in
the Prospectus; (iv) the applicable Spread Account Initial Deposit for such
Subsequent Transfer Date shall have been made; (v) the Seller shall have
executed and delivered to the Trust (with a copy to the Indenture Trustee) a
written assignment conveying such Subsequent Receivables to the Trust
(including a schedule identifying such Subsequent Receivables); (vi) the
Seller shall have delivered certain opinions of counsel to the Trustee, the
Indenture Trustee and the Rating Agencies with respect to the transfer of all
such Subsequent Receivables conveyed during such Collection Period; (vii) the
Trust and the Indenture Trustee shall have received written confirmation from
a firm of certified independent public accountants that, as of the end of the
preceding Collection Period, the Receivables in the Trust at that time,
including the Subsequent Receivables conveyed by the Seller during each
Collection Period, satisfied the parameters described under "The Receivables
Pool" herein and under "The Receivables Pools" in the Prospectus; and (viii)
Moody's shall have received written notification from the Seller of the
addition of all such Subsequent Receivables.
Except for the criteria described in the preceding paragraph, there will be
no required characteristics of the Subsequent Receivables. Therefore,
following the transfer of Subsequent Receivables to the Trust, the aggregate
characteristics of the entire Receivables Pool may vary from those of the
Initial Receivables. See "Risk Factors--The Receivables and the Pre-Funding
Account" and "The Receivables Pool."
S-32
<PAGE>
ACCOUNTS
In addition to the Accounts referred to in the Prospectus under "Description
of the Transfer and Servicing Agreements--Accounts," the Servicer will
establish and maintain the Pre-Funding Account, the Negative Carry Account and
the Spread Account, each in the name of the Indenture Trustee and on behalf of
the Noteholders and the Certificateholders.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
The Servicing Fee Rate with respect to the Servicing Fee to be paid to the
Servicer will be 1.00% per annum of the Pool Balance as of the first day of
each Collection Period. The Servicing Fee (together with any portion of the
Servicing Fee that remains unpaid from prior Payment Dates) will be paid
solely to the extent of the Total Distribution Amount and will be paid after
the distribution of any portion of the Total Distribution Amount to the
Noteholders and the Certificateholders. However, if the Servicer is not Case
Credit or an affiliate of Case Credit, the Servicing Fee will be paid prior to
the distribution of any portion of the Total Distribution Amount to the
Noteholders or the Certificateholders. See "Description of the Transfer and
Servicing Agreements--Servicing Compensation and Payment of Expenses" in the
Prospectus.
DISTRIBUTIONS
Deposits to Collection Account. By the third business day prior to a Payment
Date (the "Determination Date"), the Servicer will provide the Indenture
Trustee with certain information with respect to the preceding Collection
Period, including the amount of aggregate collections on the Receivables, the
aggregate Purchase Amount of Receivables to be repurchased by the Seller or to
be purchased by the Servicer and the Negative Carry Amount to be withdrawn
from the Negative Carry Account.
On or before the business day preceding each Payment Date, the Servicer will
cause the Total Distribution Amount to be deposited into the Collection
Account. The "Total Distribution Amount" for a Payment Date will be the
aggregate collections on the Receivables (including collections received after
the end of the preceding calendar month on any Subsequent Receivables added to
the Trust after the end of that preceding calendar month and on or prior to
that Payment Date) with respect to the related Collection Period (including
any Liquidation Proceeds, the Purchase Amount of any Receivables repurchased
by the Seller or purchased by the Servicer and Investment Earnings for such
Payment Date) plus the Negative Carry Amount for such Collection Period.
"Liquidated Receivables" means defaulted Receivables in respect of which the
Financed Equipment has been sold or otherwise disposed of and "Liquidation
Proceeds" means all proceeds of the Liquidated Receivables obtained through
the sale or other disposition of the Financed Equipment, net of expenses
incurred by the Servicer in connection with such liquidation and any amounts
required by law to be remitted to the Obligor on such Liquidated Receivables.
The Total Distribution Amount on any Payment Date will exclude: (i) all
payments and proceeds (including Liquidation Proceeds) of any Receivables the
Purchase Amount of which has been included in the Total Distribution Amount in
a prior Collection Period; (ii) any monies collected with respect to any
Liquidated Receivable (other than from the sale or other disposition of the
Financed Equipment) during any Collection Period after the Collection Period
in which such Receivable became a Liquidated Receivable; or (iii) amounts
released from the Pre-Funding Account.
Deposits to the Distribution Accounts. On each Payment Date, the Servicer
will instruct the Indenture Trustee to make the deposits and distributions set
forth below, to the extent of the Total Distribution Amount in the following
order of priority:
(i) to the Administrator, from the Interest Distribution Amount, the
Administration Fee and all unpaid Administration Fees from prior Collection
Periods;
(ii) to the Note Distribution Account, the Class A Noteholders' Interest
Distributable Amount;
(iii) to the Note Distribution Account, the Class B Noteholders' Interest
Distributable Amount;
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<PAGE>
(iv) to the Note Distribution Account, the A-1 Noteholders' Principal
Distributable Amount;
(v) to the Note Distribution Account, the A-2 Noteholders' Principal
Distributable Amount;
(vi) to the Note Distribution Account, the A-3 Noteholders' Principal
Distributable Amount;
(vii) to the Note Distribution Account, the Class B Noteholders'
Principal Distributable Amount;
(viii) to the Certificate Distribution Account, the Certificateholders'
Interest Distributable Amount;
(ix) to the Certificate Distribution Account, the Certificateholders'
Principal Distributable Amount;
(x) to the Servicer, the Servicing Fee and all unpaid Servicing Fees from
prior Collection Periods; provided that if Case Credit or an affiliate of
Case Credit is not the Servicer, the amounts described in this clause (x)
will be paid prior to any other application of funds on deposit in the
Collection Account; and
(xi) to the Spread Account, the remaining Total Distribution Amount.
After an Event of Default and acceleration of the Notes (and, if any Notes
remain outstanding, on and after the Final Scheduled Maturity Date), principal
payments will be made first to the Class A Noteholders ratably according to
the amounts due and payable on the Class A Notes for principal until paid in
full and then to the Class B Noteholders until the outstanding principal
amount of the Class B Notes has been paid in full.
"A-1 Noteholders' Monthly Principal Distributable Amount" means, with
respect to any Payment Date until the Payment Date on which the outstanding
principal amount of the A-1 Notes has been reduced to zero, 100% of the
Principal Distribution Amount for such Payment Date.
"A-1 Noteholders' Principal Carryover Shortfall" means, with respect to
any Payment Date, the excess of the A-1 Noteholders' Principal
Distributable Amount for the preceding Payment Date over the amount that
was actually deposited in the Note Distribution Account in respect of
principal of the A-1 Notes on such preceding Payment Date.
"A-1 Noteholders' Principal Distributable Amount" means, with respect to
any Payment Date, the sum of (i) the A-1 Noteholders' Monthly Principal
Distributable Amount for such Payment Date and (ii) the A-1 Noteholders'
Principal Carryover Shortfall for such Payment Date; provided, however,
that the sum of clauses (i) and (ii) above shall not exceed the outstanding
principal amount of the A-1 Notes, and on the A-1 Note Final Scheduled
Maturity Date, the A-1 Noteholders' Principal Distributable Amount will
include the amount, to the extent of available funds, necessary (after
giving effect to the other amounts to be deposited in the Note Distribution
Account on such Payment Date and allocable to principal) to reduce the
outstanding principal amount of the A-1 Notes to zero.
"A-2 Noteholders' Monthly Principal Distributable Amount" means, with
respect to each Payment Date on or after the Payment Date on which an
amount sufficient to reduce the outstanding principal amount of the A-1
Notes to zero has been deposited in the Note Distribution Account, 100% of
the Principal Distribution Amount (less the portion thereof, if any,
applied to reduce the outstanding principal amount of the A-1 Notes to zero
on such Payment Date).
"A-2 Noteholders' Principal Carryover Shortfall" means, with respect to
any Payment Date, the excess of the A-2 Noteholders' Principal
Distributable Amount for the preceding Payment Date over the amount that
was actually deposited in the Note Distribution Account in respect of
principal of the A-2 Notes on such preceding Payment Date.
"A-2 Noteholders' Principal Distributable Amount" means, with respect to
any Payment Date, the sum of (i) the A-2 Noteholders' Monthly Principal
Distributable Amount for such Payment Date and (ii) the A-2 Noteholders'
Principal Carryover Shortfall for such Payment Date; provided, however,
that, until an amount sufficient to reduce the outstanding principal amount
of the A-1 Notes to zero has been deposited in the Note Distribution
Account, the A-2 Noteholders' Principal Distributable Amount shall be zero;
provided, further, that the sum of clauses (i) and (ii) shall not exceed
the outstanding principal amount of the A-2 Notes, and on the Final
Scheduled Maturity Date, the A-2 Noteholders' Principal Distributable
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<PAGE>
Amount will include the amount, to the extent of available funds, necessary
(after giving effect to the other amounts to be deposited in the Note
Distribution Account on such Payment Date and allocable to principal) to
reduce the outstanding principal amount of the A-2 Notes to zero.
"A-3 Noteholders' Monthly Principal Distributable Amount" means, with
respect to each Payment Date on or after the Payment Date on which an
amount sufficient to reduce the outstanding amount of the A-2 Notes to zero
has been deposited in the Note Distribution Account, 100% of the Principal
Distribution Amount (less the portion thereof, if any, applied to reduce
the outstanding principal amount of the A-2 Notes to zero on such Payment
Date).
"A-3 Noteholders' Principal Carryover Shortfall" means, with respect to
any Payment Date, the excess of the A-3 Noteholders' Principal
Distributable Amount for the preceding Payment Date over the amount that
was actually deposited in the Note Distribution Account in respect of
principal of the A-3 Notes on such preceding Payment Date.
"A-3 Noteholders' Principal Distributable Amount" means, with respect to
any Payment Date, the sum of (i) the A-3 Noteholders' Monthly Principal
Distributable Amount for such Payment Date and (ii) the A-3 Noteholders'
Principal Carryover Shortfall for such Payment Date; provided, however,
that, until an amount sufficient to reduce the outstanding amount of the A-
2 Notes to zero has been deposited in the Note Distribution Account, the A-
3 Noteholders' Principal Distributable Amount shall be zero; provided,
further, that the sum of clauses (i) and (ii) shall not exceed the
outstanding principal amount of the A-3 Notes, and on the Final Scheduled
Maturity Date, the A-3 Noteholders' Principal Distributable Amount will
include the amount, to the extent of available funds, necessary (after
giving effect to the other amounts to be deposited in the Note Distribution
Account on such Payment Date and allocable to principal) to reduce the
outstanding principal amount of the A-3 Notes to zero.
"Certificate Balance" equals, initially, $11,375,000 and, thereafter,
equals such amount reduced by all amounts allocable to principal previously
distributed to Certificateholders.
"Certificateholders' Interest Carryover Shortfall" means, with respect to
any Payment Date (the "current Payment Date"), the excess of the
Certificateholders' Interest Distributable Amount for the preceding Payment
Date over the amount in respect of interest that was actually deposited in
the Certificate Distribution Account on such preceding Payment Date, plus
interest on such excess, to the extent permitted by law, at the Pass-
Through Rate from such preceding Payment Date to but excluding the current
Payment Date.
"Certificateholders' Interest Distributable Amount" means, with respect
to any Payment Date (the "current Payment Date"), the sum of (i) interest
accrued from and including the preceding Payment Date (or, in the case of
the first Payment Date, the Closing Date) to but excluding the current
Payment Date at the Pass-Through Rate on the Certificate Balance on the
preceding Payment Date after giving effect to all changes therein on such
preceding Payment Date (or, in the case of the first Payment Date, on the
Closing Date), except that during the Funding Period no interest will
accrue on the Pre-Funded Percentage of the Certificate Balance plus (ii)
the Certificateholders' Interest Carryover Shortfall for the current
Payment Date.
"Certificateholders' Principal Carryover Shortfall" means, with respect
to any Payment Date, the excess of the Certificateholders' Principal
Distributable Amount for the preceding Payment Date over the amount in
respect of principal that was actually deposited in the Certificate
Distribution Account on such preceding Payment Date.
"Certificateholders' Principal Distributable Amount" means, with respect
to any Payment Date on or after the Payment Date on which an amount
sufficient to reduce the outstanding amount of the Class B Notes to zero
has been deposited in the Note Distribution Account, the sum of (i) 100% of
the Principal Distribution Amount (less the portion thereof, if any,
applied to reduce the outstanding principal amount of the Class B Notes to
zero on such Payment Date), plus (ii) the Certificateholders' Principal
Carryover Shortfall for such Payment Date; provided, however, that, until
an amount sufficient to reduce the outstanding amount of the Class B Notes
to zero has been deposited in the Note Distribution Account, the
Certificateholders' Principal Distributable Amount shall be zero; provided,
further, that the Certificateholders' Principal Distributable Amount will
not exceed the Certificate Balance.
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<PAGE>
"Class A Noteholders' Distributable Amount" means, with respect to any
Payment Date, the sum of (i) the A-1 Noteholders' Principal Distributable
Amount, (ii) the A-2 Noteholders' Principal Distributable Amount, (iii) the
A-3 Noteholders' Principal Distributable Amount and (iv) the Class A
Noteholders' Interest Distributable Amount.
"Class A Noteholders' Interest Carryover Shortfall" means, with respect
to any Payment Date (the "current Payment Date"), the excess of the Class A
Noteholders' Interest Distributable Amount for the preceding Payment Date
over the amount in respect of interest on the Class A Notes that was
actually deposited in the Note Distribution Account on such preceding
Payment Date, plus interest on such excess, to the extent permitted by law,
at a rate per annum equal to the interest rate on the applicable Class of
Class A Notes from such preceding Payment Date to but excluding the current
Payment Date.
"Class A Noteholders' Interest Distributable Amount" means, with respect
to any Payment Date (the "current Payment Date"), an amount equal to the
sum of (i) the aggregate amount of interest accrued on the Class A Notes at
their respective interest rates from and including the preceding Payment
Date (or, in the case of the initial Payment Date, from and including the
Closing Date) to but excluding the current Payment Date (based on a 360-day
year of twelve 30-day months) plus (ii) the Class A Noteholders' Interest
Carryover Shortfall for the current Payment Date.
"Class B Noteholders' Distributable Amount" means, with respect to any
Payment Date, the sum of (i) the Class B Noteholders' Interest
Distributable Amount and (ii) the Class B Noteholders' Principal
Distributable Amount.
"Class B Noteholders' Interest Carryover Shortfall" means, with respect
to any Payment Date (the "current Payment Date"), the excess of the Class B
Noteholders' Interest Distributable Amount for the preceding Payment Date
over the amount in respect of interest on the Class B Notes that was
actually deposited in the Note Distribution Account on such preceding
Payment Date, plus interest on such excess, to the extent permitted by law,
at a rate per annum equal to the Class B Rate from such preceding Payment
Date to but excluding the current Payment Date.
"Class B Noteholders' Interest Distributable Amount" means, with respect
to any Payment Date (the "current Payment Date"), an amount equal to the
sum of (i) the aggregate amount of interest accrued on the Class B Notes at
the Class B Rate from and including the preceding Payment Date (or, if
later, the issuance date for the Class B Notes) to but excluding the
current Payment Date plus (ii) the Class B Noteholders' Interest Carryover
Shortfall for the current Payment Date.
"Class B Noteholders' Monthly Principal Distributable Amount" means, with
respect to each Payment Date on or after the Payment Date on which an
amount sufficient to reduce the outstanding amount of the A-3 Notes to zero
has been deposited in the Note Distribution Account, 100% of the Principal
Distribution Amount (less the portion thereof, if any, applied to reduce
the outstanding principal amount of the A-3 Notes to zero on such Payment
Date).
"Class B Noteholders' Principal Carryover Shortfall" means, with respect
to any Payment Date, the excess of the Class B Noteholders' Principal
Distributable Amount for the preceding Payment Date over the amount that
was actually deposited in the Note Distribution Account in respect of
principal of the Class B Notes on such preceding Payment Date.
"Class B Noteholders' Principal Distributable Amount" means, with respect
to any Payment Date, the sum of (i) the Class B Noteholders' Monthly
Principal Distributable Amount for such Payment Date and (ii) the Class B
Noteholders' Principal Carryover Shortfall for such Payment Date; provided,
however, that, until the Payment Date on which an amount sufficient to
reduce the outstanding amount of the A-3 Notes to zero has been deposited
in the Note Distribution Account, the Class B Noteholders' Principal
Distributable Amount shall be zero; and provided further, that the sum of
clauses (i) and (ii) shall not exceed the outstanding principal amount of
the Class B Notes, and on the Final Scheduled Maturity Date, the Class B
Noteholders' Principal Distributable Amount will include the amount, to the
extent of available funds, necessary (after giving effect to the other
amounts to be deposited in the Note Distribution Account on such
S-36
<PAGE>
Payment Date and allocable to principal) to reduce the outstanding
principal amount of the Class B Notes to zero.
"Initial Cutoff Date APR" means 8.823%, which is the weighted average APR
of the Initial Receivables as of the Initial Cutoff Date.
"Interest Distribution Amount" means, with respect to any Payment Date,
the excess, if any, of the Total Distribution Amount over the Principal
Distribution Amount for such Payment Date.
"Noteholders' Distributable Amount" means, with respect to any Payment
Date, the sum of the Class A Noteholders' Distributable Amount and the
Class B Noteholders' Distributable Amount.
"Principal Distribution Amount" means, with respect to any Payment Date,
the amount (not less than zero) equal to (i) the sum of the Contract Value
of all Receivables and the Pre-Funded Amount as of the beginning of the
immediately preceding Collection Period less (ii) the sum of the Contract
Value of all Receivables and the Pre-Funded Amount as of the beginning of
the current Collection Period.
"Subsequent Cutoff Date APR" means, with respect to any Subsequent Cutoff
Date, the weighted average APR of the Subsequent Receivables sold as of
such Subsequent Cutoff Date.
On each Payment Date, all amounts on deposit in the Note Distribution
Account will be distributed to the Noteholders.
NEGATIVE CARRY ACCOUNT
The Servicer will establish and maintain in the name of the Indenture
Trustee the Negative Carry Account as a Trust Account for the benefit of the
Noteholders. The Negative Carry Account will be created with an initial
deposit by the Seller of $5,577,380 (the "Negative Carry Account Initial
Deposit"), which is equal to the Maximum Negative Carry Amount as of the
Closing Date. The "Maximum Negative Carry Amount" is equal to the product of
(i) the difference between (a) the weighted average of the interest rate on
each Class of the Notes minus (b) 2.5%, multiplied by (ii) the Note Percentage
of the amount on deposit in the Pre-Funding Account multiplied by (iii) the
fraction of a year represented by the number of days until the expected end of
the Funding Period (calculated on the basis of a 360-day year of twelve 30-day
months). At any time, the "Note Percentage" means the percentage equivalent of
a fraction the numerator of which is the Note Balance and the denominator of
which is the sum of the Note Balance and Certificate Balance. On each Payment
Date, the Servicer will instruct the Indenture Trustee to withdraw from the
Negative Carry Account and deposit into the Collection Account an amount equal
to the Negative Carry Amount for such Collection Period. For each Collection
Period, the "Negative Carry Amount" will be calculated by the Servicer as the
difference (if positive) between (1) the product of (A) the sum of the Class A
Noteholders' Interest Distributable Amount and the Class B Noteholders'
Interest Distributable Amount multiplied by (B) the Pre-Funded Percentage, as
of the immediately prior Payment Date, or in the case of the first Payment
Date, the Closing Date, minus (2) the investment earnings on the Pre-Funded
Amount. The "Pre-Funded Percentage" for each Collection Period is the
percentage derived from the fraction the numerator of which is the Pre-Funded
Amount and the denominator of which is the sum of the Pool Balance and the
Pre-Funded Amount, after taking into account all transfers of Subsequent
Receivables during such Collection Period. The amount required to be on
deposit in the Negative Carry Account (the "Required Negative Carry Account
Balance") as of the beginning of each Collection Period will be equal to the
lesser of (x) the Negative Carry Account Initial Deposit minus all previous
withdrawals from the Negative Carry Account and (y) the Maximum Negative Carry
Amount as of such day. If the amount on deposit in the Negative Carry Account
on any Payment Date (after giving effect to the withdrawal of the Negative
Carry Amount for such Payment Date) is greater than the Required Negative
Carry Account Balance, the excess will be released to the Seller. All amounts
remaining on deposit in the Negative Carry Account on the Payment Date on or
immediately following the last day of the Funding Period (after giving effect
to all withdrawals therefrom on such Payment Date) will be released to the
Seller.
SPREAD ACCOUNT
The rights of the Certificateholders to receive distributions with respect
to the Receivables will be subordinated to the rights of the Noteholders in
the event of defaults and delinquencies on the Receivables as
S-37
<PAGE>
provided in the Sale and Servicing Agreement. The rights of the Class B
Noteholders to receive distributions with respect to the Receivables will be
subordinated to the rights of the Class A Noteholders to the extent described
herein. The protection afforded to the each Class of Noteholders through
subordination will be effected both by the preferential right of that Class of
Noteholders to receive current distributions with respect to the Receivables
to the extent described herein and by the establishment of the Spread Account.
The Spread Account will be created with the initial deposit by the Seller of
$6,701,050, which is equal to the Pool Balance as of the Initial Cutoff Date
multiplied by 2.00%. On each Subsequent Transfer Date, cash or Eligible
Investments having a value approximately equal to 2.00% of the aggregate
Contract Value of the Subsequent Receivables conveyed to the Trust on such
Subsequent Transfer Date will be withdrawn from the Pre-Funding Account from
amounts otherwise distributable to the Seller in connection with the sale of
Subsequent Receivables and deposited in the Spread Account. The amount
initially deposited in the Spread Account by the Seller together with the
aggregate amount transferred from the Pre-Funding Account to the Spread
Account on each Subsequent Transfer Date is referred to as the "Spread Account
Initial Deposit." The Spread Account Initial Deposit will be augmented on each
Payment Date by the deposit in the Spread Account of amounts remaining after
the deposit in the Note Distribution Account and the Certificate Distribution
Account of amounts to be distributed to Noteholders and Certificateholders and
the payment of the Administration Fee and the Servicing Fee. Subject to
certain limitations, amounts on deposit in the Spread Account will be released
to the Seller to the extent that the amount on deposit in the Spread Account
exceeds the Specified Spread Account Balance. The Seller may at any time,
without consent of the Noteholders, sell, transfer, convey or assign in any
manner its rights to and interests in distributions from the Spread Account,
including interest earnings thereon, provided that certain conditions are
satisfied, including that the Rating Agencies confirm in writing that such
action will not result in a reduction or withdrawal of the rating of the
Notes.
"Specified Spread Account Balance" means, with respect to any Payment
Date, the lesser of (a) 2.00% of the Initial Pool Balance and (b) the Note
Balance. The Specified Spread Account Balance may be reduced or the
definition thereof otherwise modified without the consent of the
Noteholders if the Rating Agencies confirm in writing that such reduction
or modification will not result in a reduction or withdrawal of the rating
of the Notes.
If the amount on deposit in the Spread Account on any Payment Date (after
giving effect to all deposits or withdrawals therefrom on such Payment Date)
is greater than the Specified Spread Account Balance for such Payment Date,
the Servicer will instruct the Indenture Trustee to distribute the amount of
the excess to the Seller; provided, however, that if, after giving effect to
all payments made on the Notes on such Payment Date, the sum of the Pool
Balance plus the Pre-Funded Amount as of the first day of the Collection
Period in which such Payment Date occurs is less than the sum of the Note
Balance and the Certificate Balance, such excess amount will not be
distributed to the Seller and will be retained in the Spread Account. Upon the
Final Scheduled Payment Date or after payment of all interest and principal of
the Notes, the Servicer will instruct the Indenture Trustee to distribute the
Spread Account balance to the Seller. Upon any distribution to the Seller of
amounts from the Spread Account made in accordance with the Sale and Servicing
Agreement, the Noteholders will not have any rights in, or claims to, such
amounts.
Subject to the limitations described in the preceding paragraph, amounts
held from time to time in the Spread Account will continue to be held for the
benefit of Noteholders. Funds will be withdrawn from the Spread Account to the
extent that the Total Distribution Amount (after the payment of the
Administration Fee (and the Servicing Fee if Case Credit or an affiliate of
Case Credit is not the Servicer)) with respect to any Collection Period is
less than the Noteholders' Distributable Amount and will be deposited in the
Note Distribution Account and used to cover shortfalls in the Noteholders'
Distributable Amount in the same order of priority applicable to distributions
from the Collection Account. Funds on deposit in the Spread Account will not
be used to cover shortfalls in any distributions to the Certificateholders.
The Spread Account and the subordination of the Certificates and the Class B
Notes to the Class A Notes are intended to enhance the likelihood of receipt
by Class A Noteholders of the full amount of principal and
S-38
<PAGE>
interest due them and to decrease the likelihood that the Class A Noteholders
will experience losses. In addition, the Spread Account and the subordination
of the Certificates to the Class B Notes are intended to enhance the
likelihood of receipt by Class B Noteholders of the full amount of principal
and interest due them and to decrease the likelihood that the Class B
Noteholders will experience losses. However, in certain circumstances, the
Spread Account could be depleted. If the amount required to be withdrawn from
the Spread Account to cover shortfalls in collections on the Receivables
exceeds the amount of cash in the Spread Account, Noteholders could incur
losses or a temporary shortfall in the amounts distributed to the Noteholders
could result, which could, in turn, increase the average life of the Notes.
LEGAL INVESTMENT
The A-1 Notes will be eligible for purchase by money market funds under
paragraph (a)(9) of Rule 2a-7 under the Investment Company Act of 1940, as
amended.
ERISA CONSIDERATIONS
The Seller has been advised that, although there is little guidance on the
subject, the Notes will not be treated as "equity interests" in the Trust
under the Plan Asset Regulation. As a result, the Notes may be purchased by an
employee benefit plan or an individual retirement account (a "Plan") subject
to the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
or Section 4975 of the Internal Revenue Code of 1986, as amended.
However, without regard to whether the Notes are treated as equity interests
for purposes of the Plan Asset Regulation, the acquisition or holding of Notes
by or on behalf of a Plan could be considered to give rise to a "prohibited
transaction" if the Issuer, the Servicer or the Trustee is or becomes a "party
in interest" or a "disqualified person" with respect to such Plan. Certain
exemptions from the prohibited transaction rules could be applicable to the
purchase and holding of Notes by a Plan depending on the type and
circumstances of the plan fiduciary making the decision to acquire such Notes.
Included among these exemptions are: Prohibited Transaction Class Exemption
("PTCE") 75-1, regarding transactions between registered broker-dealers and
plans; PTCE 90-1, regarding investments by insurance company pooled separate
accounts; PTCE 91-38, regarding investments by bank collective investment
funds; PTCE 84-14, regarding transactions effected by "qualified professional
asset managers"; PTCE 95-60, regarding transactions by insurance company
general accounts; and PTCE 96-23, regarding certain transactions determined by
in-house asset managers.
For additional information regarding treatment of the Notes under ERISA, see
"ERISA Considerations" in the Prospectus.
S-39
<PAGE>
UNDERWRITING
CLASS A NOTES
Subject to the terms and conditions set forth in an underwriting agreement
(the "Class A Note Underwriting Agreement"), the Seller has agreed to cause
the Trust to sell to each of the Underwriters named below (the "Class A Note
Underwriters"), and each of the Class A Note Underwriters has severally agreed
to purchase, the principal amount of the Class A Notes set forth opposite its
name below:
A-1 NOTES
<TABLE>
<CAPTION>
PRINCIPAL
CLASS A NOTE UNDERWRITERS AMOUNT
- ------------------------- ------------
<S> <C>
Salomon Brothers Inc.............................................. $ 12,000,000
BancAmerica Securities, Inc. ..................................... 11,900,000
Chase Securities Inc. ............................................ 11,900,000
Citicorp Securities, Inc. ........................................ 11,900,000
First Union Capital Markets Corp. ................................ 11,900,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated............................................. 11,900,000
------------
$ 71,500,000
============
A-2 NOTES
<CAPTION>
PRINCIPAL
CLASS A NOTE UNDERWRITERS AMOUNT
- ------------------------- ------------
<S> <C>
Salomon Brothers Inc.............................................. $ 47,000,000
BancAmerica Securities, Inc. ..................................... 47,000,000
Chase Securities Inc. ............................................ 47,000,000
Citicorp Securities, Inc. ........................................ 47,000,000
First Union Capital Markets Corp. ................................ 47,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated............................................. 47,000,000
------------
$282,000,000
============
A-3 NOTES
<CAPTION>
PRINCIPAL
CLASS A NOTE UNDERWRITERS AMOUNT
- ------------------------- ------------
<S> <C>
Salomon Brothers Inc.............................................. $ 43,187,500
BancAmerica Securities, Inc. ..................................... 43,187,500
Chase Securities Inc. ............................................ 43,187,500
Citicorp Securities, Inc. ........................................ 43,187,500
First Union Capital Markets Corp.................................. 43,187,500
Merrill Lynch, Pierce, Fenner & Smith
Incorporated............................................. 43,187,500
------------
$259,125,000
============
</TABLE>
The Seller has been advised by the Class A Note Underwriters that they
propose initially to offer the Class A Notes to the public at the prices set
forth herein, and to certain dealers at such prices less the initial
concession not in excess of 0.100% per A-1 Note, 0.125% per A-2 Note and
0.200% per A-3 Note. The Class A Note Underwriters may allow and such dealers
may reallow a concession not in excess of 0.075% per A-1 Note, 0.100% per A-2
Note and 0.150% per A-3 Note to certain other dealers. After the initial
public offering of the Class A Notes, the public offering prices and such
concessions may be changed.
In the ordinary course of their respective businesses, the Class A Note
Underwriters and their respective affiliates have engaged and may in the
future engage in investment banking or commercial banking transactions with
Case Credit and its affiliates.
S-40
<PAGE>
Salomon Brothers Inc, on behalf of the Class A Note Underwriters, may engage
in stabilizing transactions and syndicate covering transactions in accordance
with Rule 104 under the Exchange Act. Stabilizing transactions permit bids to
purchase the underlying security so long as the stabilizing bids do not exceed
a specified maximum. Syndicate covering transactions involve purchases of the
Class A Notes in the open market after the distribution has been completed in
order to cover syndicate short positions. Such stabilizing transactions and
syndicate covering transactions may cause the price of the Class A Notes to be
higher than it would otherwise be in the absence of such transactions. These
transactions, if commenced, may be discontinued at any time.
CLASS B NOTES
Subject to the terms and conditions set forth in an underwriting agreement
(the "Class B Note Underwriting Agreement"), the Seller has agreed to cause
the Trust to sell to each of the Underwriters named below (the "Class B Note
Underwriters"; and together with the Class A Note Underwriters, the
"Underwriters"), and each of the Class B Note Underwriters has severally
agreed to purchase, the principal amount of Class B Notes set forth opposite
its name below:
<TABLE>
<CAPTION>
PRINCIPAL
CLASS B NOTE UNDERWRITERS AMOUNT
- ------------------------- -----------
<S> <C>
Salomon Brothers Inc............................................... $13,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.............................................. 13,000,000
-----------
$26,000,000
===========
</TABLE>
The Seller has been advised by the Class B Note Underwriters that they
propose initially to offer the Class B Notes to the public at the prices set
forth herein, and to certain dealers at such prices less the initial
concession not in excess of 0.40% per Class B Note. The Class B Note
Underwriters may allow and such dealers may reallow a concession not in excess
of 0.30% per Class B Note to certain other dealers. After the initial public
offering of the Class B Notes, the public offering prices and such concessions
may be changed.
In the ordinary course of their respective businesses, the Class B Note
Underwriters and their respective affiliates have engaged and may in the
future engage in investment banking or commercial banking transactions with
Case Credit and its affiliates.
Salomon Brothers Inc, on behalf of the Class B Note Underwriters, may engage
in stabilizing transactions and syndicate covering transactions in accordance
with Rule 104 under the Exchange Act. Stabilizing transactions permit bids to
purchase the underlying security so long as the stabilizing bids do not exceed
a specified maximum. Syndicate covering transactions involve purchases of the
Class B Notes in the open market after the distribution has been completed in
order to cover syndicate short positions. Such stabilizing transactions and
syndicate covering transactions may cause the price of the Class B Notes to be
higher than it would otherwise be in the absence of such transactions. These
transactions, if commenced, may be discontinued at any time.
LEGAL OPINIONS
Certain legal matters relating to the Notes will be passed upon for the
Trust, the Seller and the Servicer by Richard S. Brennan, General Counsel and
Secretary of Case, and by Mayer, Brown & Platt. Certain legal matters relating
to the Notes will be passed upon for the Underwriters by Cravath, Swaine &
Moore. Certain Federal income tax and other matters will be passed upon for
the Trust by Mayer, Brown & Platt. Certain Wisconsin state tax matters will be
passed upon for the Trust by Foley & Lardner. Mr. Brennan is also a partner at
Mayer, Brown & Platt. Case has been advised by Mr. Brennan that, at December
31, 1996, he owned 2,000 shares of common stock and options to purchase 31,000
shares of common stock of Case. Cravath, Swaine & Moore and Foley & Lardner
have also provided legal services to Case, Case Credit and the Seller.
S-41
<PAGE>
INDEX OF TERMS
Set forth below is a list of the defined terms used in this Prospectus
Supplement and the pages on which the definitions of such terms may be found.
<TABLE>
<CAPTION>
PAGE
----------
<S> <C>
A-1 Note Final Scheduled Maturity Date............................. S-9
A-1 Note Rate...................................................... S-7
A-1 Note Redemption Amount......................................... S-10
A-1 Noteholders.................................................... S-7
A-1 Noteholders' Monthly Principal Distributable Amount............ S-34
A-1 Noteholders' Principal Carryover Shortfall..................... S-34
A-1 Noteholders' Principal Distributable Amount.................... S-34
A-1 Notes.......................................................... 1, S-4
A-2 Note Rate...................................................... S-7
A-2 Noteholders.................................................... S-7
A-2 Noteholders' Monthly Principal Distributable Amount............ S-34
A-2 Noteholders' Principal Carryover Shortfall..................... S-34
A-2 Noteholders' Principal Distributable Amount.................... S-34
A-2 Notes.......................................................... 1, S-4
A-3 Note Rate...................................................... S-7
A-3 Note Redemption Price.......................................... S-9
A-3 Noteholders.................................................... S-7
A-3 Noteholders' Monthly Principal Distributable Amount............ S-35
A-3 Noteholders' Principal Carryover Shortfall..................... S-35
A-3 Noteholders' Principal Distributable Amount.................... S-35
A-3 Notes.......................................................... 1, S-4
APR................................................................ S-6
Case............................................................... S-6
Case Credit........................................................ S-4
Cede............................................................... S-3
Certificate Balance................................................ S-35
Certificateholders................................................. S-13
Certificateholders' Interest Carryover Shortfall................... S-35
Certificateholders' Interest Distributable Amount.................. S-35
Certificateholders' Principal Carryover Shortfall.................. S-35
Certificateholders' Principal Distributable Amount................. S-35
Certificates....................................................... 1, S-5
Class.............................................................. S-2
Class A Note Underwriters.......................................... S-40
Class A Note Underwriting Agreement................................ S-40
Class A Noteholders................................................ S-7
Class A Noteholders' Distributable Amount.......................... S-36
Class A Noteholders' Interest Carryover Shortfall.................. S-36
Class A Noteholders' Interest Distributable Amount................. S-36
Class A Notes...................................................... 1, S-4
Class B Note Underwriters.......................................... S-41
Class B Note Underwriting Agreement................................ S-41
Class B Noteholders................................................ S-8
Class B Noteholders' Distributable Amount.......................... S-36
Class B Noteholders' Interest Carryover Shortfall.................. S-36
Class B Noteholders' Interest Distributable Amount................. S-36
</TABLE>
S-42
<PAGE>
<TABLE>
<CAPTION>
PAGE
----------
<S> <C>
Class B Noteholders' Monthly Principal Distributable Amount........ S-36
Class B Noteholders' Principal Carryover Shortfall................. S-36
Class B Noteholders' Principal Distributable Amount................ S-36
Class B Notes...................................................... 1, S-4
Class B Rate....................................................... S-7
Class B Redemption Price........................................... S-10
Closing Date....................................................... S-5
Collection Account................................................. S-13
Collection Period.................................................. S-8
Commission......................................................... S-3
Contract Value..................................................... S-7
Contracts.......................................................... S-5
CPR................................................................ S-26
Cutoff Date........................................................ S-20
Dealers............................................................ S-6
Determination Date................................................. S-33
DTC................................................................ S-3
ERISA.............................................................. S-39
Exchange Act....................................................... S-3
Federal Tax Counsel................................................ S-14
Final Scheduled Maturity Date...................................... S-9
Financed Equipment................................................. S-5
Funding Period..................................................... S-6
Indenture.......................................................... 1, S-4
Indenture Trustee.................................................. S-4
Initial Cutoff Date................................................ S-5
Initial Cutoff Date APR............................................ S-37
Initial Pool Balance............................................... S-10
Initial Pre-Funded Amount.......................................... S-5
Initial Receivables................................................ S-5
Interest Distribution Amount....................................... S-37
Issuer............................................................. S-4
Liquidated Receivables............................................. S-33
Liquidation Proceeds............................................... S-33
Mandatory Redemption............................................... S-10, S-30
Maximum Negative Carry Amount...................................... S-37
Moody's............................................................ S-16
Negative Carry Account............................................. S-12
Negative Carry Account Initial Deposit............................. S-12, S-37
Negative Carry Amount.............................................. S-12, S-37
Note Balance....................................................... S-4
Note Percentage.................................................... S-37
Noteholders........................................................ S-8
Noteholders' Distributable Amount.................................. S-37
Noteholders' Prepayment Premium.................................... S-10
Notes.............................................................. 1, S-4
Owned Contracts.................................................... S-5
Payment Date....................................................... S-5, S-7
Plan............................................................... S-39
Pool Balance....................................................... S-7
Pre-Funded Amount.................................................. S-11
</TABLE>
S-43
<PAGE>
<TABLE>
<CAPTION>
PAGE
----------
<S> <C>
Pre-Funded Percentage.............................................. S-12, S-37
Pre-Funding Account................................................ S-2
Principal Distribution Amount...................................... S-37
Prospectus......................................................... S-3
PTCE............................................................... S-39
Purchase Agreement................................................. S-5
Purchased Contracts................................................ S-5
Rating Agencies.................................................... S-15
Receivables........................................................ S-2, S-6
Receivables Pool................................................... S-20
Record Date........................................................ S-7
Required Negative Carry Account Balance............................ S-37
Sale and Servicing Agreement....................................... S-5
Seller............................................................. 1, S-4
Servicer........................................................... S-4
Specified Spread Account Balance................................... S-13, S-38
Spread Account..................................................... S-12
Spread Account Initial Deposit..................................... S-12
Subsequent Cutoff Date............................................. S-6
Subsequent Cutoff Date APR......................................... S-37
Subsequent Receivables............................................. S-2
Subsequent Transfer Date........................................... S-6
Total Distribution Amount.......................................... S-33
Transfer and Servicing Agreements.................................. S-32
Trust.............................................................. 1, S-4
Trust Agreement.................................................... S-4
Trustee............................................................ S-4
Underwriters....................................................... S-41
Wisconsin Tax Counsel.............................................. S-14
</TABLE>
S-44
<PAGE>
PROSPECTUS
CASE EQUIPMENT LOAN TRUSTS
ASSET BACKED NOTES
ASSET BACKED CERTIFICATES
CASE RECEIVABLES II INC.
SELLER
CASE CREDIT CORPORATION
SERVICER
The Asset Backed Notes (the "Notes") and the Asset Backed Certificates (the
"Certificates" and, together with the Notes, the "Securities") described
herein may be sold from time to time in one or more series, in amounts, at
prices and on terms to be determined at the time of sale and to be set forth
in a supplement to this Prospectus (a "Prospectus Supplement"). Each series of
Securities, which will include one or more classes of Notes and one or more
classes of Certificates, will be issued by a trust to be formed with respect
to such series (each, a "Trust"). Each Trust will be formed pursuant to a
Trust Agreement to be entered into between Case Receivables II Inc., as seller
(the "Seller"), and the trustee specified in the related Prospectus Supplement
(the "Trustee"). The Notes of each series will be issued and secured pursuant
to an Indenture between the Trust and the indenture trustee specified in the
related Prospectus Supplement (the "Indenture Trustee") and will represent
indebtedness of the related Trust. The Certificates of each series will
represent fractional undivided interests in the related Trust. The property of
each Trust will include a pool of retail installment sale contracts secured by
new or used agricultural and construction equipment (the "Receivables"),
certain monies due or received thereunder on and after the applicable Cutoff
Date set forth in the related Prospectus Supplement, security interests in the
equipment financed thereby and certain other property, all as described herein
and in the related Prospectus Supplement. In addition, if so specified in the
related Prospectus Supplement, the property of the Trust will include monies
on deposit in a trust account (the "Pre-Funding Account") to be established
with the Indenture Trustee, which will be used to purchase additional retail
installment sale contracts secured by new or used agricultural or construction
equipment (the "Subsequent Receivables") from the Seller from time to time
during the Funding Period specified in the related Prospectus Supplement.
Except as otherwise provided in the related Prospectus Supplement, each
class of Securities of any series will represent the right to receive a
specified amount of payments of principal and interest on the related
Receivables, at the rates, on the dates and in the manner described herein and
in the related Prospectus Supplement. The right of each class of Securities to
receive payments may be senior or subordinate to the rights of one or more of
the other classes of such series. Distributions on Certificates of a series
may be subordinated in priority to payments due on the related Notes to the
extent described herein and in the related Prospectus Supplement. A series may
include one or more classes of Notes and Certificates that differ as to the
timing and priority of payment, interest rate or amount of distributions in
respect of principal or interest or both.
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "RISK
FACTORS" HEREIN ON PAGE 10 AND IN THE RELATED PROSPECTUS SUPPLEMENT.
EXCEPT AS OTHERWISE SPECIFIED IN THE RELATED PROSPECTUS SUPPLEMENT, THE NOTES
OF A GIVEN SERIES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES OF SUCH
SERIES REPRESENT BENEFICIAL INTERESTS IN, THE RELATED TRUST ONLY AND DO NOT
REPRESENT OBLIGATIONS OF OR INTERESTS IN, AND ARE NOT GUARANTEED OR INSURED
BY, CASE RECEIVABLES II INC. OR CASE CREDIT CORPORATION OR ANY OF THEIR
RESPECTIVE AFFILIATES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
Retain this Prospectus for future reference. This Prospectus may not be used
to consummate sales of Securities offered hereby unless accompanied by a
Prospectus Supplement.
The date of this Prospectus is March 7, 1997
<PAGE>
A series may also include one or more classes of Notes or Certificates
entitled to distributions in respect of principal with disproportionate,
nominal or no interest distributions, or to interest distributions with
disproportionate, nominal or no distributions in respect of principal. The
rate of payment in respect of principal of the Notes and distributions in
respect of the Certificate Balance of the Certificates of any class will
depend on the priority of payment of such class and the rate and timing of
payments (including prepayments, defaults, liquidations and repurchases of
Receivables) on the related Receivables. A rate of payment lower or higher
than that anticipated may affect the weighted average life of each class of
Securities in the manner described herein and in the related Prospectus
Supplement.
AVAILABLE INFORMATION
The Seller, as originator of each Trust, has filed with the Securities and
Exchange Commission (the "Commission") a Registration Statement (together with
all amendments and exhibits thereto, the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Notes and the Certificates offered pursuant to this Prospectus. For further
information, reference is made to the Registration Statement that may be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549; and at the
Commission's regional offices at Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511 and 7 World Trade Center, Suite 1300,
New York, New York 10048. Copies of the Registration Statement may be obtained
from the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed by the Seller, as originator of any Trust, pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), subsequent to the date of this Prospectus and
prior to the termination of the offering of the Securities shall be deemed to
be incorporated by reference in this Prospectus. Any statement contained
herein or in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any
subsequently filed document that also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.
The Seller will provide without charge to each person, including any
beneficial owner of Securities, to whom a copy of this Prospectus is
delivered, on the written or oral request of any such person, a copy of any or
all of the documents incorporated herein or in any related Prospectus
Supplement by reference, except the exhibits to such documents (unless such
exhibits are specifically incorporated by reference in such documents).
Requests for such copies should be directed to Case Receivables II Inc., 233
Lake Avenue, Racine, Wisconsin 53403, Attention: Vice President (Telephone
414-636-6564).
2
<PAGE>
SUMMARY OF TERMS
The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Prospectus and by reference to
the information with respect to the Securities of any series contained in the
related Prospectus Supplement to be prepared and delivered in connection with
the offering of such Securities. Certain capitalized terms used in this summary
are defined elsewhere in this Prospectus on the pages indicated in the "Index
of Terms."
ISSUER...................... With respect to each series of Securities, the
Trust to be formed pursuant to a trust agreement
(as amended and supplemented from time to time, a
"Trust Agreement") between the Seller and the
Trustee for such Trust (the "Trust" or the "Issu-
er").
SELLER...................... Case Receivables II Inc. (the "Seller" or "CRC"),
a wholly-owned subsidiary of Case Credit Corpora-
tion.
SERVICER.................... Case Credit Corporation, a Delaware corporation
(the "Servicer" or "Case Credit").
INDENTURE TRUSTEE........... With respect to each series of Securities, the
Indenture Trustee specified in the related Pro-
spectus Supplement.
TRUSTEE..................... With respect to each series of Securities, the
Trustee specified in the related Prospectus Sup-
plement.
THE NOTES................... Each series of Securities will include one or
more classes of Notes, which will be issued pur-
suant to an indenture between the related Trust
and the Indenture Trustee (as amended and supple-
mented from time to time, an "Indenture").
Unless otherwise specified in the related Pro-
spectus Supplement, Notes will be available for
purchase in denominations of $1,000 and integral
multiples thereof and will be available in book-
entry form only. Unless otherwise specified in
the related Prospectus Supplement, holders of
Notes ("Noteholders") will be able to receive De-
finitive Notes only in the limited circumstances
described herein or in the related Prospectus
Supplement. See "Certain Information Regarding
the Securities--Definitive Securities."
Unless otherwise specified in the related Pro-
spectus Supplement, each class of Notes will have
a stated principal amount and will bear interest
at a specified rate or rates (with respect to
each class of Notes, the "Interest Rate"). Each
class of Notes may have a different Interest
Rate, which may be a fixed, variable or adjust-
able Interest Rate, or any combination of the
foregoing. The related Prospectus Supplement will
specify the Interest Rate for each class of
Notes, or the method for determining the Interest
Rate.
With respect to a series that includes two or
more classes of Notes, each class may differ as
to the timing and priority of payments, seniori-
ty, allocations of losses, Interest Rate or
amount of payments of principal or interest, or
payments of principal or interest in re-
3
<PAGE>
spect of any such class or classes may or may not
be made upon the occurrence of specified events
or on the basis of collections from designated
portions of the Receivables in the related Trust.
In addition, a series may include one or more
classes of Notes ("Strip Notes") entitled to (i)
principal payments with disproportionate, nominal
or no interest payments or (ii) interest payments
with disproportionate, nominal or no principal
payments.
If the Servicer exercises its option to purchase
the Receivables of a Trust in the manner and on
the respective terms and conditions described un-
der "Description of the Transfer and Servicing
Agreements--Termination," the outstanding Notes
will be redeemed as set forth in the related Pro-
spectus Supplement. In addition, if the related
Prospectus Supplement provides that the property
of a Trust will include a Pre-Funding Account,
the outstanding Notes may be subject to partial
redemption on or immediately following the end of
the Funding Period (as such term is defined in
the related Prospectus Supplement, the "Funding
Period") in an amount and manner specified in the
related Prospectus Supplement. In the event of
such partial redemption, the Noteholders may be
entitled to receive a redemption premium from the
Trust, in the amount and to the extent provided
in the related Prospectus Supplement.
THE CERTIFICATES............ Each series of Securities will include one or
more classes of Certificates, which will be is-
sued pursuant to a Trust Agreement.
Unless otherwise specified in the related Pro-
spectus Supplement, Certificates will be avail-
able for purchase in denominations of $1,000 and
integral multiples thereof and will be available
in book-entry form only. Unless otherwise speci-
fied in the related Prospectus Supplement, hold-
ers of Certificates ("Certificateholders" and,
together with the Noteholders, "Securityholders")
will be able to receive Definitive Certificates
only in the limited circumstances described
herein or in the related Prospectus Supplement.
See "Certain Information Regarding the Securi-
ties--Definitive Securities."
Unless otherwise specified in the related Pro-
spectus Supplement, each class of Certificates
will have a stated Certificate Balance specified
in the related Prospectus Supplement (the "Cer-
tificate Balance") and will accrue interest on
such Certificate Balance at a specified rate
(with respect to each class of Certificates, the
"Pass-Through Rate"). Each class of Certificates
may have a different Pass-Through Rate, which may
be a fixed, variable or adjustable Pass-Through
Rate, or any combination of the foregoing. The
related Prospectus Supplement will specify the
Pass-Through Rate for each class of Certificates
or the method for determining the Pass-Through
Rate.
With respect to a series that includes two or
more classes of Certificates, each class may dif-
fer as to timing and priority of distributions,
seniority, allocations of losses, Pass-Through
Rates or amount of distributions in respect of
principal or interest, or distributions in
4
<PAGE>
respect of principal or interest in respect of
any such class or classes may or may not be made
upon the occurrence of specified events or on the
basis of collections from designated portions of
the Receivables in the related Trust. In addi-
tion, a series may include one or more classes of
Certificates ("Strip Certificates") entitled to
(i) distributions in respect of principal with
disproportionate, nominal or no interest distri-
butions or (ii) interest distributions with
disproportionate, nominal or no distributions in
respect of principal.
To the extent specified in the related Prospectus
Supplement, distributions in respect of the Cer-
tificates may be subordinated in priority of pay-
ment to payments on the Notes.
If the Servicer exercises its option to purchase
the Receivables of a Trust, in the manner and on
the respective terms and conditions described un-
der "Description of the Transfer and Servicing
Agreements--Termination," Certificateholders will
receive as a prepayment an amount in respect of
the Certificates as specified in the related Pro-
spectus Supplement. In addition, if the related
Prospectus Supplement provides that the property
of a Trust will include a Pre-Funding Account,
Certificateholders may receive a partial prepay-
ment of principal on or immediately following the
end of the Funding Period in an amount and manner
specified in the related Prospectus Supplement.
In the event of such partial prepayment, the
Certificateholders may be entitled to receive a
prepayment premium from the Trust, in the amount
and to the extent provided in the related Pro-
spectus Supplement.
THE TRUST PROPERTY.......... The property of each Trust will include a pool of
retail installment sale contracts ("Contracts")
secured by new or used agricultural and construc-
tion equipment, including rights to receive cer-
tain payments made with respect to such Con-
tracts, security interests in the equipment fi-
nanced thereby (the "Financed Equipment") and any
proceeds from claims on certain related insurance
policies. The property of each Trust will also
include amounts on deposit in certain trust ac-
counts, including the related Collection Account,
any Spread Account, any Pre-Funding Account and
any other account identified in the applicable
Prospectus Supplement, and the proceeds thereof.
On the Closing Date specified in the related Pro-
spectus Supplement with respect to a Trust, the
Seller will sell Contracts (the "Initial Receiv-
ables") having an aggregate principal balance
specified in the related Prospectus Supplement as
of a date specified therein (the "Initial Cutoff
Date") to such Trust pursuant to a Sale and Ser-
vicing Agreement among the Seller, the Servicer
and the Trust (as amended and supplemented from
time to time, a "Sale and Servicing Agreement").
To the extent provided in the related Prospectus
Supplement, the Seller will be obligated (subject
only to the availability thereof) to sell, and
the related Trust will be obligated to purchase
(subject to the satisfaction of certain condi-
tions described in the applicable Sale and Ser-
vicing Agreement), the Subsequent Receivables
from time to
5
<PAGE>
time during the Funding Period specified in the
related Prospectus Supplement having an aggregate
principal balance approximately equal to the
amount on deposit in the Pre-Funding Account (the
"Pre-Funded Amount") on such Closing Date, plus
any additional amount specified in the related
Prospectus Supplement.
The Receivables arise from financing provided in
connection with retail sales by dealers (the
"Dealers") and are purchased by Case Credit pur-
suant to agreements with the Dealers or are orig-
inated directly by retail outlets owned by Case
Corporation ("Case") and immediately assigned to
Case Credit. The Receivables are generally sold
on a monthly basis by Case Credit to the Seller
pursuant to the Liquidity Receivables Purchase
Agreement, but may also be sold by Case Credit to
the Seller pursuant to a Purchase Agreement in
connection with the issuance of a series of Secu-
rities. The Receivables sold to a Trust will be
selected from the portfolio of Contracts owned by
the Seller based on the criteria specified in the
applicable Sale and Servicing Agreement and de-
scribed herein and in the related Prospectus Sup-
plement.
CREDIT AND CASH FLOW If and to the extent specified in the related
ENHANCEMENT................ Prospectus Supplement, credit enhancement with
respect to a Trust or any class or classes of Se-
curities may include any one or more of the fol-
lowing: subordination of one or more other clas-
ses of Securities, Spread Accounts, over-
collateralization, letters of credit, credit or
liquidity facilities, surety bonds, guaranteed
investment contracts, swaps or other interest
rate protection agreements, repurchase obliga-
tions, other agreements with respect to third
party payments or other support, cash deposits or
other arrangements. Unless otherwise specified in
the related Prospectus Supplement, any form of
credit enhancement will have certain limitations
and exclusions from coverage thereunder, which
will be described in the related Prospectus Sup-
plement, and may be replaced with another form of
credit enhancement provided the Rating Agencies
confirm in writing that such substitution will
not result in a reduction or withdrawal of the
rating of any class of Securities.
SPREAD ACCOUNT.............. Unless otherwise specified in the related Pro-
spectus Supplement, a Spread Account will be cre-
ated for each Trust with an initial deposit by
the Seller of cash or certain investments having
a value equal to the amount specified in the re-
lated Prospectus Supplement. To the extent speci-
fied in the related Prospectus Supplement, funds
in the Spread Account will thereafter be supple-
mented by the deposit of amounts remaining on any
Payment Date after making all other distributions
required on such date and any amounts deposited
from time to time from the Pre-Funding Account in
connection with the purchase of Subsequent Re-
ceivables. Amounts in the Spread Account will be
available to cover shortfalls in amounts due to
the holders of those classes of Securities speci-
fied in the related Prospectus Supplement in the
manner and under the circumstances specified
therein. The related Prospectus Supplement will
also spec-
6
<PAGE>
ify to whom and the manner and circumstances un-
der which amounts on deposit in the Spread Ac-
count (after giving effect to all other required
distributions to be made by the applicable Trust)
in excess of the Specified Spread Account Balance
(as defined in the related Prospectus Supplement)
will be distributed.
TRANSFER AND SERVICING With respect to each Trust, the Seller will sell
AGREEMENTS................. the related Receivables to such Trust pursuant to
a Sale and Servicing Agreement. The rights and
benefits of such Trust under the Sale and Servic-
ing Agreement will be assigned to the Indenture
Trustee as collateral for the Notes of the re-
lated series. The Servicer will agree with such
Trust to be responsible for servicing, managing,
maintaining custody of and making collections on
the Receivables. In addition, Case Credit will
undertake certain administrative duties with re-
spect to such Trust under an Administration
Agreement.
Unless otherwise provided in the related Prospec-
tus Supplement, the Seller will be obligated to
repurchase any Receivable if the interest of the
applicable Trust in such Receivable is materially
adversely affected by a breach of any representa-
tion or warranty made by the Seller with respect
to the Receivable that has not been cured follow-
ing the discovery by or notice to the Seller of
the breach. Case Credit will, in most cases, be
obligated to repurchase from the Seller any Re-
ceivable that the Seller is obligated to repur-
chase from the related Trust.
Unless otherwise provided in the related Prospec-
tus Supplement, the Servicer will be obligated to
purchase any Receivable if, among other things,
it extends the date for final payment by the Ob-
ligor of such Receivable beyond the applicable
Final Scheduled Maturity Date (as defined in the
related Prospectus Supplement, the "Final Sched-
uled Maturity Date"), decreases the annual per-
centage rate ("APR") or a loss is incurred due to
its failure to maintain a perfected security in-
terest in the related Financed Equipment.
Unless otherwise specified in the related Pro-
spectus Supplement, the Servicer will be entitled
to receive a fee for servicing the Receivables of
each Trust equal to a specified percentage of the
aggregate principal balance of such Receivables,
as set forth in the related Prospectus Supple-
ment. See "Description of the Transfer and Ser-
vicing Agreements--Servicing Compensation and
Payment of Expenses" herein and in the related
Prospectus Supplement.
CERTAIN LEGAL ASPECTS OF
THE RECEIVABLES;
REPURCHASE OBLIGATIONS.....
In connection with the sale of Receivables to a
Trust, security interests in the Financed Equip-
ment securing such Receivables will be assigned
by the Seller to such Trust. A first priority
perfected security interest in the Financed
Equipment is obtained by Case Credit when Case
Credit finances the purchase of equipment by a
customer. Case Equipment Loan Trust 1994-B, a
Delaware trust organized by Case Credit, cur-
rently has a first priority security interest in
certain of the
7
<PAGE>
Receivables owned by the Seller, but will termi-
nate its security interest (and make such filings
necessary to evidence such termination) upon the
sale of such Receivables to a Trust by the Seller
and the receipt by the Seller of the proceeds of
such sale. Unless otherwise specified in the re-
lated Prospectus Supplement, the Seller will be
obligated to repurchase any Receivable sold to a
Trust as to which a first priority perfected se-
curity interest in the name of Case Credit in the
Financed Equipment securing such Receivable shall
not exist as of the date such Receivable is pur-
chased by such Trust, if such breach shall mate-
rially adversely affect such Receivable and if
such failure or breach shall not have been cured
by the last day of the second (or, if the Seller
elects, the first) month following the discovery
by or notice to the Trustee of such breach. If
such Trust does not have a perfected security in-
terest in an item of Financed Equipment, its
ability to realize on such item in the event of a
default may be adversely affected. To the extent
the security interest is perfected, such Trust
will have a prior claim over subsequent purchas-
ers of such Financed Equipment and holders of
subsequently perfected security interests. Howev-
er, as against liens for repairs of Financed
Equipment or for taxes unpaid by an Obligor under
a Receivable, or because of fraud or negligence,
such Trust could lose the priority of its secu-
rity interest or its security interest in Fi-
nanced Equipment. Neither the Seller nor the
Servicer will have any obligation to repurchase a
Receivable as to which any of the aforementioned
occurrences result in a Trust's losing the prior-
ity of its security interest or its security in-
terest in such Financed Equipment after the Clos-
ing Date. Federal and state consumer protection
laws impose requirements upon creditors in con-
nection with extensions of credit and collections
of retail installment loans, and certain of these
laws make an assignee of such a loan liable to
the obligor thereon for any violation by the
lender. Unless otherwise specified in the related
Prospectus Supplement, the Seller will be obli-
gated to repurchase any Receivable that fails to
comply with such requirements.
TAX STATUS.................. Upon the issuance of each series of Securities,
except as otherwise provided in the related Pro-
spectus Supplement, (a) Federal Tax Counsel to
the applicable Trust will deliver an opinion to
the effect that, for Federal income tax purposes:
(i) the Notes of such series will be character-
ized as debt and (ii) such Trust will not be
characterized as an association (or a publicly
traded partnership) taxable as a corporation and
(b) Wisconsin Tax Counsel to such Trust will de-
liver an opinion to the effect that the same
characterizations would apply for Wisconsin in-
come tax purposes as would apply for Federal in-
come tax purposes. Each Noteholder, by the ac-
ceptance of a Note of a given series, will agree
to treat such Note as indebtedness. See "Certain
Federal Income Tax Consequences" and "Certain
State Tax Consequences" for additional informa-
tion concerning the application of Federal and
Wisconsin tax laws.
8
<PAGE>
ERISA CONSIDERATIONS........ Subject to the considerations discussed under
"ERISA Considerations" herein and in the related
Prospectus Supplement, and unless otherwise spec-
ified therein, the Notes of each series are eli-
gible for purchase by employee benefit plans.
Unless otherwise specified in the related Pro-
spectus Supplement, the Certificates of any se-
ries may not be acquired by any employee benefit
plan subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or by
any individual retirement account. See "ERISA
Considerations" herein and in the related Pro-
spectus Supplement.
9
<PAGE>
RISK FACTORS
Certain Legal Aspects--Security Interests in Financed Equipment. In
connection with the sale of Receivables to a Trust, security interests in the
Financed Equipment securing such Receivables will be assigned by the Seller to
such Trust simultaneously with the sale of such Receivables to such Trust. A
first priority perfected security interest in the Financed Equipment is
obtained by Case Credit when Case Credit finances the purchase of equipment by
a customer. Case Equipment Loan Trust 1994-B, a Delaware trust organized by
Case Credit, currently has a first priority security interest in certain of
the Receivables owned by the Seller, but will terminate its security interest
(and make such filings necessary to evidence such termination) upon the sale
of such Receivables to a Trust by the Seller and the receipt by the Seller of
the proceeds of such sale. See "Description of the Transfer and Servicing
Agreements--Commercial Paper Program." Unless otherwise provided in the
related Prospectus Supplement, the Seller will be obligated to repurchase any
Receivable sold to such Trust as to which a perfected security interest in the
name of Case Credit in the Financed Equipment securing such Receivable will
not exist as of the date such Receivable is transferred to such Trust, if such
breach will materially adversely affect the interest of such Trust in such
Receivable and if such failure or breach will not have been cured by the last
day of the second (or, if the Seller elects, the first) month following the
discovery by or notice to the Seller of such breach. If such Trust does not
have a perfected security interest in an item of Financed Equipment, its
ability to realize on such Financed Equipment in the event of a default may be
adversely affected. To the extent the security interest is perfected, such
Trust will have a prior claim over subsequent purchasers of such Financed
Equipment and holders of subsequently perfected security interests. However,
as against liens for repairs of Financed Equipment or for taxes unpaid by an
Obligor under a Receivable, or through fraud or negligence, such Trust could
lose the priority of its security interest or its security interest in such
Financed Equipment. Neither the Seller nor the Servicer will have any
obligation to repurchase a Receivable as to which any of the aforementioned
occurrences result in such Trust's losing the priority of its security
interest or its security interest in such Financed Equipment after the date
such security interest was assigned to such Trust. Federal and state consumer
protection laws impose requirements on creditors in connection with extensions
of credit and collections of retail installment loans, and certain of these
laws make an assignee of such a loan (such as such Trust) liable to the
obligor thereon for any violation by the lender. Unless otherwise specified in
the related Prospectus Supplement, the Seller will be obligated to repurchase
any Receivable that fails to comply with such requirements.
Certain Legal Aspects--Bankruptcy Considerations. The Seller will take steps
in structuring the transactions contemplated hereby that are intended to
ensure that the voluntary or involuntary application for relief by Case Credit
under the United States Bankruptcy Code or similar applicable state laws
("Insolvency Laws") will not result in consolidation of the assets and
liabilities of the Seller with those of Case Credit. These steps include the
creation of the Seller as a separate, limited-purpose subsidiary pursuant to a
certificate of incorporation containing certain limitations (including
restrictions on the nature of the Seller's business and a restriction on the
Seller's ability to commence a voluntary case or proceeding under any
Insolvency Law without the prior unanimous affirmative vote of all its
directors). However, there can be no assurance that the activities of the
Seller would not result in a court concluding that the assets and liabilities
of the Seller should be consolidated with those of Case Credit in a proceeding
under any Insolvency Law.
Case Credit has warranted, in the Liquidity Receivables Purchase Agreement,
and will warrant, in any Purchase Agreement related to a Trust, that the sale
of Receivables by Case Credit to the Seller is a valid sale. See "Description
of the Transfer and Servicing Agreements--Sale and Assignment of Receivables"
and "--Commercial Paper Program." If Case Credit were to become a debtor in a
bankruptcy case and a creditor or trustee-in-bankruptcy of such debtor or such
debtor itself were to take the position that the sale of Receivables to the
Seller should instead be treated as a pledge of such Receivables to secure a
borrowing of such debtor, then delays in payments of collections of
Receivables to the Seller could occur or (should the court rule in favor of
any such trustee, debtor or creditor) reductions in the amount of such
payments could result. If the transfer of Receivables to the Seller pursuant
to the Liquidity Receivables Purchase Agreement or the applicable Purchase
Agreement is treated as a pledge instead of a sale, a tax or government lien
on the property of Case Credit arising
10
<PAGE>
before the transfer of a Receivable to the Seller may have priority over the
Seller's interest in such Receivable. If the transactions contemplated herein
and in the Liquidity Receivables Purchase Agreement are treated as a sale, the
Receivables would not be part of Case Credit's bankruptcy estate and would not
be available to Case Credit's creditors, except under certain limited
circumstances. In addition, while Case Credit is the Servicer, cash
collections on the Receivables will, under certain circumstances, be
commingled with the funds of Case Credit and, in the event of the bankruptcy
of Case Credit, a Trust may not have a perfected interest in such collections.
A substantial portion of the Receivables was originated by Dealers and
purchased by Case Credit. See "The Receivables Pools--The Retail Equipment
Financing Business." A significant portion of all the Receivables purchased by
Case Credit from Dealers provide for recourse to the originating Dealer for
defaults by the Obligors. In addition, the Dealers retain the right to
repurchase at any time the Receivables originated by them. In the event of a
Dealer's bankruptcy, a creditor or bankruptcy trustee of the Dealer or the
Dealer as a debtor in possession might attempt to characterize the sales of
Receivables to Case Credit as loans to the Dealer secured by the Receivables;
such an attempt, if successful, could result in payment delays or losses on
the affected Receivables. However, in connection with the sale of the
Receivables by Case Credit to the Seller, Case Credit has warranted, pursuant
to the Liquidity Receivables Purchase Agreement, or will warrant pursuant to
the applicable Purchase Agreement, that at the time of such sale it had good
title to the Receivables.
In a 1993 case decided by the U.S. Court of Appeals for the Tenth Circuit,
Octagon Gas System, Inc. v. Rimmer, the court determined that "accounts," as
defined under the Uniform Commercial Code, would be included in the bankruptcy
estate of a transferor regardless of whether the transfer is treated as a sale
or a secured loan. Although the Receivables are likely to be viewed as
"chattel paper," as defined under the Uniform Commercial Code, rather than as
accounts, the rationale behind the Octagon holding is equally applicable to
chattel paper. The circumstances under which the Octagon ruling would apply
are not fully known and the extent to which the Octagon decision will be
followed in other courts or outside of the Tenth Circuit is not certain. If
the holding in the Octagon case were applied in a Case Credit bankruptcy,
however, even if the transfer of Receivables to the Seller pursuant to the
Liquidity Receivables Purchase Agreement or the applicable Purchase Agreement
and to the Trust pursuant to the Sale and Servicing Agreement were treated as
a sale, the Receivables would be part of Case Credit's bankruptcy estate and
would be subject to claims of certain creditors and delays and reductions in
payments to the Seller and Securityholders could result.
Trusts' Relationships to the Seller, Case Credit Corporation and their
Affiliates. The Receivables will be serviced by Case Credit. Case Credit and
its subsidiaries are engaged primarily in the business of financing farm and
construction equipment. None of the Seller or Case Credit or their affiliates
is generally obligated to make any payments in respect of the Notes, the
Certificates or the Receivables of a given Trust. However, if Case Credit were
to cease acting as Servicer, delays in processing payments on the Receivables
and information in respect thereof could occur and result in delays in
payments to the Securityholders. In addition, under certain circumstances, the
Servicer may be required to purchase Receivables.
In connection with the sale of Receivables by Case Credit to the Seller
pursuant to the Liquidity Receivables Purchase Agreement or the applicable
Purchase Agreement, Case Credit has made or will make representations and
warranties with respect to the characteristics of such Receivables and, in
certain circumstances, Case Credit may be required to repurchase Receivables
with respect to which such representations and warranties have been breached.
See "Description of the Transfer and Servicing Agreements--Sale and Assignment
of Receivables" and "--Commercial Paper Program."
The related Prospectus Supplement may set forth certain additional
information regarding the Seller and Case Credit.
Subordination; Limited Assets. To the extent specified in the related
Prospectus Supplement, distributions of interest and principal on the
Certificates of a series will be subordinated in priority of payment to
interest and principal due on the Notes of such series. Moreover, each Trust
will not have, nor is it permitted or expected to have, any significant assets
or sources of funds other than the Receivables and, to the extent provided in
the
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related Prospectus Supplement, a Spread Account and any other credit
enhancement. The Notes of any series will represent obligations solely of, and
the Certificates of such series will represent interests solely in, the
related Trust, and neither the Notes nor the Certificates of any such series
will be insured or guaranteed by the Seller, the Servicer, the applicable
Trustee, the applicable Indenture Trustee or any other person or entity.
Consequently, holders of the Securities of any series must rely for repayment
upon payments on the related Receivables and, if and to the extent available,
amounts on deposit in the Pre-Funding Account (if any), the Spread Account (if
any) and any other credit enhancement, all as specified in the related
Prospectus Supplement.
Maturity and Prepayment Considerations. All the Receivables are prepayable
at any time. (For this purpose the term "prepayments" includes prepayments in
full, partial prepayments (including those related to insurance premiums), and
liquidations due to default, as well as receipts of proceeds from physical
damage and term life insurance policies and certain other Receivables
repurchased for administrative or other reasons.) Each prepayment will shorten
the average remaining term of the Receivables and the average life of the
Notes and the Certificates. The rate of prepayments on the Receivables may be
influenced by a variety of economic, climatic and other factors, including the
fact that an Obligor generally may not sell or transfer the Financed Equipment
securing a Receivable without the consent of Case Credit. For example, the
majority of the Receivables are agricultural equipment retail installment sale
contracts. The amount of prepayments on that type of receivable has
historically tended to increase during periods in which farmers have strong
cash flows. In addition, under certain circumstances, the Seller will be
obligated to repurchase Receivables pursuant to a Sale and Servicing
Agreement, as a result of breaches of representations and warranties and,
under certain circumstances, the Servicer will be obligated to purchase
Receivables pursuant to such Sale and Servicing Agreement as a result of
breaches of certain covenants. See "Description of the Transfer and Servicing
Agreements--Sale and Assignment of Receivables." On the other hand, the
payment schedule under a Receivable may be extended or revised under certain
circumstances. An extension or revision may lengthen the average remaining
term of the Receivables and the average life of the Notes and the
Certificates. See "The Receivables Pools--The Retail Equipment Financing
Business--Extension/Revision Procedures." Any reinvestment risks resulting
from a faster or slower incidence of prepayment of Receivables held by a given
Trust will be borne entirely by the Securityholders of the related series of
Securities. See also "Description of the Transfer and Servicing Agreements--
Termination" regarding the Servicer's option to purchase the Receivables of a
Trust.
Holders of Notes and Certificates should consider, in the case of Securities
purchased at a discount, the risk that a slower than anticipated rate of
principal payments on the Receivables could result in an actual yield that is
less than the anticipated yield and, in the case of Securities purchased at a
premium, the risk that a faster than anticipated rate of principal payments on
the Receivables could result in an actual yield that is less than the
anticipated yield.
Risk of Commingling. With respect to each Trust, the Servicer will deposit
all payments on the related Receivables (from whatever source) and all
proceeds of such Receivables collected during each Collection Period into the
Collection Account of such Trust within two business days of receipt thereof.
However, in the event that Case Credit satisfies certain requirements for
monthly or less frequent remittances and the Rating Agencies (as such term is
defined in the related Prospectus Supplement, the "Rating Agencies") affirm
their ratings of the related Securities at the initial level, then for so long
as Case Credit is the Servicer and provided that (i) there exists no Servicer
Default and (ii) each other condition to making such monthly or less frequent
deposits as may be specified by the Rating Agencies and described in the
related Prospectus Supplement is satisfied, the Servicer will not be required
to deposit such amounts into the Collection Account of such Trust until on or
before the business day preceding each Payment Date. The Servicer will deposit
the aggregate Purchase Amount of Receivables purchased by the Servicer into
the applicable Collection Account on or before the business day preceding each
Payment Date. Pending deposit into such Collection Account, collections may be
invested by the Servicer at its own risk and for its own benefit and will not
be segregated from funds of the Servicer. If the Servicer were unable to remit
such funds, the applicable Securityholders might incur a loss. To the extent
set forth in the related Prospectus Supplement, the Servicer may, in order to
satisfy the requirements described above, obtain a letter of credit or other
security for the benefit of the related Trust to secure timely remittances
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of collections on the related Receivables and payment of the aggregate
Purchase Amount with respect to Receivables purchased by the Servicer.
Servicer Default. Unless otherwise provided in the related Prospectus
Supplement with respect to a given series of Securities, in the event a
Servicer Default occurs, the Indenture Trustee or Noteholders evidencing 25%
or more of the outstanding principal amount of the Notes with respect to such
series, as described under "Description of the Transfer and Servicing
Agreements--Rights upon Servicer Default," may remove the Servicer without the
consent of the Trustee or any of the Certificateholders with respect to such
series. Neither the Trustee nor the Certificateholders with respect to such
series will have the ability to remove the Servicer if a Servicer Default
occurs. In addition, the Noteholders of such series have the ability, with
certain specified exceptions, to waive defaults by the Servicer, including
defaults that could materially adversely affect the Certificateholders of such
series. See "Description of the Transfer and Servicing Agreements--Waiver of
Past Defaults."
Book-Entry Registration. Each class of the Notes and the Certificates of a
given series will be initially represented by one or more certificates
registered in the name of Cede & Co. ("Cede"), or any other nominee for The
Depository Trust Company ("DTC") set forth in the related Prospectus
Supplement (Cede, or such other nominee, "DTC's Nominee"), and will not be
registered in the names of the holders of the Securities of such series or
their nominees. Because of this, unless and until Definitive Securities for
such series are issued, holders of such Securities will not be recognized by
the applicable Indenture Trustee or Trustee as "Noteholders,"
"Certificateholders" or "Securityholders," as the case may be (as such terms
are used herein or in the related Indenture and Trust Agreement). Hence, until
Definitive Securities are issued, holders of such Securities will only be able
to exercise the rights of Securityholders indirectly through DTC and its
participating organizations. See "Certain Information Regarding the
Securities--Book-Entry Registration" and "--Definitive Securities."
THE TRUSTS
With respect to each series of Securities, the Seller will establish a
separate Trust pursuant to the respective Trust Agreement for the transactions
described herein and in the related Prospectus Supplement. The property of
each Trust will include a pool of Contracts (the "Receivables") between the
Dealers and retail purchasers (the "Obligors") of new and used agricultural
and construction equipment and the obligations of the Obligor thereunder
including all moneys paid thereunder (including any late fees, non-sufficient
funds fees and other administrative fees or similar charges allowable by
applicable law with respect to Receivables) on or after the applicable Cutoff
Date (as such term is defined in the related Prospectus Supplement, a "Cutoff
Date"). The Receivables were or will be originated by the Dealers and
purchased by Case Credit pursuant to agreements with Dealers ("Dealer
Agreements") or were originated directly by retail outlets owned by Case and
immediately assigned to Case Credit. Such Receivables will continue to be
serviced by the Servicer and evidence indirect financing made available by
Case Credit to the Obligors. The Receivables either were sold previously by
Case Credit to the Seller on a monthly basis pursuant to the Liquidity
Receivables Purchase Agreement or will be sold by Case Credit to the Seller on
the applicable Closing Date pursuant to a Purchase Agreement related to the
applicable Trust. See "Description of the Transfer and Servicing Agreements--
Sale and Assignment of Receivables" and "--Commercial Paper Program." On the
applicable Closing Date, after the issuance of the Notes and the Certificates
of a given series, the Seller will sell the Initial Receivables to the Trust.
To the extent so provided in the related Prospectus Supplement, Subsequent
Receivables will be conveyed to the Trust as frequently as daily during the
Funding Period. Any Subsequent Receivables so conveyed will also be assets of
the applicable Trust, subject to the prior rights of the related Indenture
Trustee and the Noteholders therein. The property of each Trust will also
include (i) such amounts as from time to time may be held in separate trust
accounts established and maintained pursuant to the related Sale and Servicing
Agreement and the proceeds of such accounts, as described herein and in the
related Prospectus Supplement; (ii) security interests in the Financed
Equipment and any other interest of the Seller in such Financed Equipment;
(iii) the rights to proceeds from claims on certain physical damage and term
life insurance policies covering the Financed Equipment or the Obligors, as
the case may be; (iv) the interest of the Seller in any proceeds from recourse
to Dealers with respect
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to Receivables (but excluding any amounts contained in Dealers' reserve
accounts); (v) any property that secures a Receivable and that has been
acquired by the applicable Trust; and (vi) any and all proceeds of the
foregoing. To the extent specified in the related Prospectus Supplement, a
Pre-Funding Account, a Spread Account or other form of credit enhancement may
be a part of the property of any given Trust or may be held by the Trustee or
the Indenture Trustee for the benefit of holders of the related Securities.
Additionally, pursuant to contracts between the Servicer and the Dealers, the
Dealers have an obligation after origination to repurchase Receivables as to
which Dealers have made certain misrepresentations.
In connection with an asset-backed commercial paper program established by
Case Credit in August 1994, Case Credit generally sells to the Seller on the
13th day of each month pursuant to the Liquidity Receivables Purchase
Agreement all of the Receivables meeting certain eligibility requirements that
it purchased from Dealers or retail outlets owned by Case in the preceding
calendar month. The Seller has granted Case Equipment Loan Trust 1994-B a
first perfected security interest in the Receivables purchased. Case Equipment
Loan Trust 1994-B has agreed, pursuant to the Loan and Security Agreement, to
release its security interest in certain Receivables when those Receivables
are sold to a Trust and the Seller receives the proceeds from such sale. See
"Description of the Transfer and Servicing Agreements--Commercial Paper
Program."
The Servicer will continue to service the Receivables held by each Trust and
will receive fees for such services. See "Description of the Transfer and
Servicing Agreements--Servicing Compensation and Payment of Expenses" herein
and in the related Prospectus Supplement. To facilitate the servicing of the
Receivables, the Seller and each Trustee will authorize the Servicer to retain
physical possession of the Receivables held by each Trust and other documents
relating thereto as custodian for each such Trust. See "Certain Legal Aspects
of the Receivables" and "Description of the Transfer and Servicing
Agreements--Sale and Assignment of Receivables."
If the protection provided to Noteholders of a given series by the
subordination of the related Certificates and by the Spread Account, if any,
or other credit enhancement for such series or the protection provided to
Certificateholders by such Spread Account or other credit enhancement is
insufficient, such Noteholders or Certificateholders, as the case may be,
would have to look principally to the Obligors on the related Receivables, the
proceeds from the repossession and sale of Financed Equipment that secure
defaulted Receivables and the proceeds from any recourse against Dealers with
respect to such Receivables. In such event, certain factors, such as the
applicable Trust's not having first priority perfected security interests in
the Financed Equipment in all states, may affect the Servicer's ability to
repossess and sell the collateral securing the Receivables, and thus may
reduce the proceeds to be distributed to the holders of the Securities of such
series. See "Description of the Transfer and Servicing Agreements--
Distributions" and "--Credit and Cash Flow Enhancement" and "Certain Legal
Aspects of the Receivables."
The principal offices of each Trust and the related Trustee will be
specified in the applicable Prospectus Supplement.
THE TRUSTEE
The Trustee for each Trust will be specified in the related Prospectus
Supplement. The Trustee's liability in connection with the issuance and sale
of the related Securities is limited solely to the express obligations of such
Trustee set forth in the related Trust Agreement and Sale and Servicing
Agreement. A Trustee may resign at any time, in which event the Servicer will
be obligated to appoint a successor trustee. The Administrator of a Trust may
also remove the Trustee if the Trustee ceases to be eligible to continue as
Trustee under the related Trust Agreement or if the Trustee becomes insolvent.
In such circumstances, the Administrator will be obligated to appoint a
successor trustee. Any resignation or removal of a Trustee and appointment of
a successor trustee will not become effective until acceptance of the
appointment by the successor trustee.
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THE RECEIVABLES POOLS
GENERAL
The Receivables in each Trust consist of Contracts evidencing the credit
sale of new and used agricultural and construction equipment to purchasers.
The Contracts are purchased by Case Credit as described below and are
generally sold on a monthly basis to the Seller pursuant to the Liquidity
Receivables Purchase Agreement, but may also be sold by Case Credit to the
Seller pursuant to a Purchase Agreement in connection with the issuance of a
series of Securities. Case Credit continues to service all Contracts sold to
the Seller.
The Receivables to be held by each Trust will be selected from the Seller's
portfolio using several criteria, including that, unless otherwise provided in
the related Prospectus Supplement, each Receivable (i) is secured by new or
used agricultural or construction equipment, (ii) was originated in the United
States, (iii) provides for payments that fully amortize the amount financed
over its original term to maturity, (iv) is a Precomputed Receivable or a
Simple Interest Receivable and (v) satisfies the other criteria, if any, set
forth in the related Prospectus Supplement. No selection procedures believed
by the Seller to be adverse to the Securityholders of any series were or will
be used in selecting the related Receivables.
If so specified in the related Prospectus Supplement, the Receivables to be
held by a Trust may include Receivables satisfying the applicable criteria
that were purchased by Case Credit from Tenneco Credit Corporation out of the
$1.1 billion pool of retail receivables retained by Tenneco Credit Corporation
in connection with the Reorganization. Except to the extent otherwise provided
in the related Prospectus Supplement, all discussion in this Prospectus
relating to the Receivables will apply equally to any Receivables purchased by
Case Credit from Tenneco Credit Corporation.
Precomputed Receivables provide for allocation of payments according to the
"sum of periodic balances" or "sum of monthly payments" method, similar to the
"Rule of 78's" ("Rule of 78's Receivables") or are monthly actuarial
receivables ("Actuarial Receivables" and, together with Rule of 78's
Receivables, "Precomputed Receivables"). An Actuarial Receivable provides for
amortization of the loan over a series of fixed level payment installments.
Each installment, including the installment representing the final payment on
the Receivable, consists of an amount of interest equal to 1/12 of the APR of
the loan multiplied by the unpaid principal balance of the loan, and an amount
of principal equal to the remainder of the installment. A Rule of 78's
Receivable provides for the payment by the obligor of a specified total amount
of payments, payable in equal installments on each due date, which total
represents the principal amount financed and add-on interest in an amount
calculated on the basis of the stated APR for the term of the receivable. The
rate at which such amount of add-on interest is earned and, correspondingly,
the amount of each fixed monthly payment allocated to reduction of the
outstanding principal are calculated in accordance with the "Rule of 78's."
"Simple Interest Receivables" are receivables that provide for the
amortization of the amount financed under each receivable over a series of
fixed level monthly payments. However, unlike the monthly payment under an
Actuarial Receivable, each monthly payment consists of an installment of
interest that is calculated on the basis of the outstanding principal balance
of the receivable multiplied by the stated APR and further multiplied by the
period elapsed (as a fraction of a calendar year) since the preceding payment
of interest was made. As payments are received under a Simple Interest
Receivable, they are applied first to interest accrued to the date of payment
and the balance is applied to reduce the unpaid principal balance.
Accordingly, if an obligor pays a fixed monthly installment before its
scheduled due date, the portion of the payment allocable to interest for the
period since the preceding payment was made will be less than it would have
been had the payment been made as scheduled, and the portion of the payment
applied to reduce the unpaid principal balance will be correspondingly
greater. Conversely, if an obligor pays a fixed monthly installment after its
scheduled due date, the portion of the payment allocable to interest for the
period since the preceding payment was made will be greater than it would have
been had the payment been made as scheduled, and the portion of the payment
applied to reduce the unpaid principal balance will be correspondingly less.
In either case, the obligor pays a fixed monthly installment until the final
scheduled payment date, at which time the amount of the final installment is
increased or decreased as necessary to repay the then outstanding principal
balance.
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In the event of the prepayment in full (voluntarily or by acceleration) of a
Rule of 78's Receivable, under the terms of the contract, a "refund" or
"rebate" will be made to the obligor of the portion of the total amount of
payments then due and payable under the Contract allocable to "unearned" add-
on interest, calculated in accordance with a method equivalent to the Rule of
78's. If an Actuarial Receivable is prepaid in full, with minor variations
based upon state law, the Actuarial Receivable requires that the rebate be
calculated on the basis of a constant interest rate. If a Simple Interest
Receivable is prepaid, rather than receive a rebate, the obligor is required
to pay interest only to the date of prepayment. The amount of a rebate under a
Rule of 78's Receivable generally will be less than the amount of a rebate on
an Actuarial Receivable and generally will be less than the remaining
scheduled payments of interest that would have been due under a Simple
Interest Receivable for which all payments were made on schedule. However, the
amount of the rebate for certain Precomputed Receivables ("Precomputed Simple
Rebate Receivables") will equal approximately the remaining scheduled payments
of interest that would have been due under a Simple Interest Receivable for
which all payments were made on schedule. Precomputed Receivables that are not
Precomputed Simple Rebate Receivables are called "Standard Precomputed
Receivables."
Unless otherwise provided in the related Prospectus Supplement, all the
Receivables included in a Trust will be Precomputed Receivables. Information
with respect to each pool of Receivables will be set forth in the related
Prospectus Supplement, including, to the extent appropriate, the composition
of the Receivables, the distribution by APR, type of equipment, payment
frequency and contract value of the Receivables and the geographic
distribution of the Receivables.
THE RETAIL EQUIPMENT FINANCING BUSINESS
Case Credit purchases Contracts primarily from Dealers. Case Credit also
finances Contracts originated through retail outlets owned by Case that are
immediately thereafter assigned to Case Credit. As of December 31, 1996, there
were approximately 1,224 independently owned Dealer outlets in the United
States and approximately 3 retail outlets owned by Case in the United States.
The agricultural equipment financed by Case Credit includes tractors,
combines, cotton pickers and implements and equipment used for hay and forage,
soil conditioning and crop production. The construction equipment financed by
Case Credit includes wheel loaders, skid steer loaders, crawler dozers and
loaders, excavators, rough terrain forklifts, trenchers and loader/backhoes.
New equipment financed by Case Credit is almost exclusively manufactured by
Case.
Origination Process. Each prospective customer is required to complete a
credit application that lists the applicant's liabilities, income, credit and
employment history and other demographic and personal information. Credit
applications, which are obtained by the Dealer, are sent by the Dealer to one
of four regional finance offices maintained by Case Credit. The application is
processed by Case Credit and additional information is obtained in order to
evaluate the prospective customer's creditworthiness. The extent of the
additional information varies based primarily on the amount of financing
requested. In most cases, Case Credit obtains a credit bureau report on the
applicant from an independent credit bureau and credit references provided by
the applicant, typically banks or finance companies or suppliers that have
furnished credit to the applicant, are checked. In certain cases, audited or
certified financial statements of the applicant are obtained. Case Credit also
maintains five-year loan histories on all past and present Case Credit
customers that are reviewed.
Creditworthiness is evaluated based on criteria established by Case Credit's
management. The same credit criteria are applied regardless of which of Case
Credit's regional finance offices reviews the application and regardless of
whether the applicant is purchasing equipment from a Dealer or from a Case
retail outlet.
Dealer Agreements. At the time Case Credit approves the customer's
application and fully executed copies of all required agreements and
instruments are delivered by the Dealer to Case Credit, the related Contract
is sold by the Dealer to Case Credit pursuant to a Dealer Agreement that Case
Credit enters into with each Dealer. A significant portion of all Contracts
purchased by Case Credit from Dealers provide for recourse to the originating
Dealer for defaults by the obligor under the Contract. A large portion of such
Contracts provide for
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recourse to the Dealers through a "reserve account" maintained with Case
Credit in which Dealers are required to maintain certain amounts on deposit.
The Seller will assign to the Trusts its rights to recourse against the
Dealers except for the Dealers' reserve accounts and, therefore, any recourse
to the Dealers through the reserve accounts will not be assigned to the
Trusts. The level of recourse to Dealers varies and, depending on the level of
recourse, is subject to certain conditions. An insignificant portion of
Contracts are assigned to Case Credit with no recourse to Dealers in the event
of defaults by obligors under the Contracts. The Trusts will also be assigned
rights arising under the Dealer Agreements as a result of the breach by the
Dealer of certain representations and warranties made therein. Neither the
Seller nor the Servicer makes any representation as to the financial condition
of any of the Dealers, and there can be no assurances as to the ability of any
Dealer to perform its obligations under any Dealer Agreement.
Contract Terms. Case Credit offers Contracts with a variety of repayment
schedules tailored to the applicant's anticipated cash flows, such as annual,
semi-annual, quarterly and monthly payments. Contracts secured by construction
equipment are normally financed with equal monthly payments. However, a "skip
payment" schedule, under which payments in up to three predetermined
consecutive months are "skipped" to coincide with slow work periods, can be
selected by the obligor at the time the Contract is originated. For example,
contractors in areas with colder winters normally elect to skip payments in
January, February and March, in which case the normal twelve payments are
amortized over a nine-month period.
The maximum amount that Case Credit will finance under a Contract varies
based on the obligor's credit history, the type of equipment financed and
whether the equipment is new or used, the payment schedule and the length of
the Contract. The amount financed is calculated as a percentage of the value
of the related equipment. For new equipment, such value is based on Dealer's
cost for the related equipment plus freight charges. The value of used
equipment is based on the "as-is" value of the related equipment reported in
the most recent edition of the North American Equipment Dealers Association
guidebook or other comparable guidebook. Obligors are required to obtain and
maintain physical damage insurance covering the financed equipment. Dealers
are responsible for verifying insurance coverage on the equipment at the time
the Contract is originated. If a Dealer fails to verify insurance coverage and
the obligor did not obtain insurance coverage at the time the Contract was
originated, the Dealer will be responsible for any resulting loss. At the time
the Contract is originated, Case Credit offers customers physical damage
insurance and term life insurance that can be financed under the Contract.
The equipment securing the Contracts depreciates in value over time.
However, Case Credit's practice is to provide for repayment schedules under
the Contracts that will generally result in the outstanding principal balance
of the Contract at any time in the life of the Contract being less than the
anticipated value of the equipment at the time.
Extension/Revision Procedures. Contracts may be extended or revised when
payment delinquencies result from temporary interruptions in an obligor's cash
flow. An extension provides for one or more payments to be moved to a future
date either within the original maturity of the Contract or beyond the
original maturity. A revision is a restructuring of the entire Contract,
normally with lower payments and a longer term. Case Credit charges obligors
an extension fee that is payable at the time a Contract is extended. The
extension fee is generally equal to interest accrued on the unpaid balance of
the Contract during the period that payments are not required to be made as a
result of the extension.
DELINQUENCIES, REPOSSESSIONS AND NET LOSSES
Certain information concerning the experience of Case Credit pertaining to
delinquencies, repossessions and net losses with respect to its entire
portfolio of Contracts serviced by Case Credit (including receivables
previously sold that Case Credit continues to service) will be set forth in
each Prospectus Supplement. There can be no assurance that the delinquency,
repossession and net loss experience on any Receivables will be comparable to
prior experience or to such information.
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WEIGHTED AVERAGE LIFE OF THE SECURITIES
The weighted average life of the Notes and the Certificates of any series
will generally be influenced by the rate at which the principal balances of
the related Receivables are paid, which payment may be in the form of
scheduled amortization or prepayments. (For this purpose, the term
"prepayments" includes prepayments in full, partial prepayments (including
those related to rebates of insurance premiums), liquidations due to default,
and receipts of proceeds from physical damage and term life insurance policies
and certain other Receivables repurchased by the Seller or the Servicer for
administrative reasons.) All of the Receivables are prepayable at any time
without penalty to the Obligor. Each prepayment will shorten the average
remaining term of the Receivables and the average life of the Securities. The
rate of prepayment of Contracts is influenced by a variety of economic,
climatic and other factors. For example, the large majority of the Receivables
are agricultural equipment retail installment sale contracts. The amount of
prepayments on that type of receivable may tend to increase during periods in
which farmers have strong cash flows. However, Case Credit does not maintain
historical prepayment data with respect to its portfolio of retail installment
sale contracts. In addition, under certain circumstances, the Seller will be
obligated to repurchase such Receivables from the related Trust pursuant to
the related Sale and Servicing Agreement, as a result of breaches of
representations and warranties, and the Servicer will be obligated to purchase
Receivables from such Trust pursuant to such Sale and Servicing Agreement as a
result of breaches of certain covenants. See "Description of the Transfer and
Servicing Agreements--Sale and Assignment of Receivables" and "--Servicing
Procedures." See also "Description of the Transfer and Servicing Agreements--
Termination" regarding the Servicer's option to purchase the Receivables from
a given Trust. On the other hand, the payment schedule under a Contract may be
extended or revised by the Servicer under certain circumstances. An extension
or revision may lengthen the average remaining term of the Receivables and the
average life of the Securities. See "The Receivables Pools--The Retail
Equipment Financing Business--Extension/Revision Procedures."
In light of the above considerations, there can be no assurance as to the
amount of principal payments to be made on the Notes or the Certificates of a
given series on each Payment Date, since such amount will depend, in part, on
the amount of principal collected on the related Receivables during the
applicable Collection Period. Any reinvestment risks resulting from a faster
or slower incidence of prepayment of Receivables will be borne entirely by the
Noteholders and the Certificateholders of a given series. Such reinvestment
risks may include the risk that interest rates are lower at the time
Securityholders receive payments from the Trust than interest rates would
otherwise have been had such prepayments not been made or had such prepayments
been made at a different time. The related Prospectus Supplement may set forth
certain additional information with respect to the maturity and prepayment
considerations applicable to the particular Receivables and the related series
of Securities.
POOL FACTORS AND TRADING INFORMATION
The "Note Pool Factor" for each class of Notes will be a seven-digit decimal
that the Servicer will compute with respect to such class of Notes indicating
the remaining outstanding principal balance of such class of Notes, as of the
applicable Payment Date (after giving effect to payments to be made on such
Payment Date), as a fraction of the initial outstanding principal balance of
such class of Notes. The "Certificate Pool Factor" for each class of
Certificates will be a seven-digit decimal that the Servicer will compute with
respect to such class of Certificates indicating the remaining Certificate
Balance of such class of Certificates, as of the applicable Payment Date
(after giving effect to distributions to be made on such Payment Date), as a
fraction of the initial Certificate Balance of such class of Certificates.
Each Note Pool Factor and each Certificate Pool Factor will initially be
1.0000000 and thereafter will decline to reflect reductions in the outstanding
principal balance of the applicable class of Notes, or the reduction of the
Certificate Balance of the applicable class of Certificates, as the case may
be. A Noteholder's portion of the aggregate outstanding principal balance of
the related class of Notes is the product of (i) the original denomination of
such Noteholder's Note and (ii) the applicable Note Pool Factor. A
Certificateholder's portion of the aggregate outstanding Certificate Balance
for the related class of Certificates is the product of (a) the original
denomination of such Certificateholder's Certificate and (b) the applicable
Certificate Pool Factor.
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Unless otherwise provided in the related Prospectus Supplement with respect
to each Trust, the Noteholders will receive reports on or about each Payment
Date concerning the Receivables, the Pool Balance (as such term is defined in
the related Prospectus Supplement, the "Pool Balance"), each Note Pool Factor
and various other items of information, and the Certificateholders will
receive reports on or about each Payment Date concerning the Receivables, the
Pool Balance, each Certificate Pool Factor and various other items of
information. In addition, Securityholders of record during any calendar year
will be furnished information for tax reporting purposes not later than the
latest date permitted by law. See "Certain Information Regarding the
Securities--Reports to Securityholders."
USE OF PROCEEDS
Unless otherwise provided in the related Prospectus Supplement, the net
proceeds from the sale of the Securities of a given series will be applied by
the applicable Trust (i) to the purchase of the Receivables from the Seller,
(ii) to make the initial deposit into the Spread Account, if any, and (iii) to
make the deposit of the Pre-Funded Amount into the Pre-Funding Account, if
any. Unless otherwise specified in the related Prospectus Supplement, the
Seller will use that portion of such net proceeds paid to it with respect to
any such Trust to repay outstanding indebtedness under the Loan and Security
Agreement or to purchase related Receivables from Case Credit.
THE SELLER, CASE CREDIT CORPORATION AND CASE CORPORATION
CASE RECEIVABLES II INC.
The Seller, a wholly-owned subsidiary of Case Credit, was incorporated in
the State of Delaware on June 15, 1994. The Seller was organized for the
limited purpose of purchasing receivables from Case Credit and transferring
such receivables to third parties and any activities incidental to and
necessary or convenient for the accomplishment of such purposes. The principal
executive offices of the Seller are located at 233 Lake Avenue, Racine,
Wisconsin 53403, and its telephone number is (414) 636-6564.
The Seller has taken steps in structuring the transactions contemplated
hereby and by the related Prospectus Supplement that are intended to ensure
that the voluntary or involuntary application for relief by Case Credit under
any Insolvency Law will not result in consolidation of the assets and
liabilities of the Seller with those of Case Credit. These steps include the
creation of the Seller as a separate, limited-purpose subsidiary pursuant to a
certificate of incorporation containing certain limitations (including
restrictions on the nature of the Seller's business and a restriction on the
Seller's ability to commence a voluntary case or proceeding under any
Insolvency Law without the prior unanimous affirmative vote of all of its
directors). However, there can be no assurance that the activities of the
Seller would not result in a court's concluding that the assets and
liabilities of the Seller should be consolidated with those of Case Credit in
a proceeding under any Insolvency Law. See "Risk Factors--Certain Legal
Aspects--Bankruptcy Considerations."
In addition, the Indenture Trustee, the Trustee, all Noteholders and all
Certificateholders will covenant that they will not at any time institute
against the Seller any bankruptcy, reorganization or other proceeding under
any Federal or state bankruptcy or similar law.
Case Credit has warranted, in the Liquidity Receivables Purchase Agreement
or will warrant, in the applicable Purchase Agreement, that the sale of the
Receivables to the Seller is a valid sale, and has taken all actions required
to perfect the Seller's ownership interest in such Receivables.
Notwithstanding the foregoing, if Case Credit were to become a debtor in a
bankruptcy case and a creditor or trustee-in-bankruptcy of such debtor or such
debtor itself were to take the position that the sale of Receivables to the
Seller should be recharacterized as a pledge of such Receivables to secure a
borrowing of such debtor, then delays in payments of collections of
Receivables to the Seller could occur or (should the court rule in favor of
any such trustee, debtor or creditor) reductions in the amount of such
payments could result. If the transfer of Receivables to the Seller pursuant
to
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the Liquidity Receivables Purchase Agreement or the applicable Purchase
Agreement is recharacterized as a pledge, a tax or government lien on the
property of Case Credit arising before the transfer of Receivables to the
Seller, may have priority over the Seller's interest in such Receivables. If
the transactions contemplated herein are treated as a sale, the Receivables
would not be part of Case Credit's bankruptcy estate and would not be
available to Case Credit's creditors, except under certain limited
circumstances.
CASE CREDIT CORPORATION
Case Credit provides and administers financing for the retail purchase of
new and used Case agricultural and construction equipment and other new and
used agricultural and construction equipment. Case offers various retail
financing to end-use customers through Case Credit to facilitate the sale of
its products in the United States. Case Credit's business principally involves
purchasing retail installment sale contracts from Case Dealers. In addition,
Case Credit also offers insurance products to retail customers in an agent
capacity, leases Case equipment to retail customers and provides financing for
Case Dealers and Case rental equipment in the United States.
Case Credit's headquarters are located at 233 Lake Avenue, Racine, Wisconsin
53403, and its telephone number is (414) 636-6011. Case Credit is subject to
the informational requirements of the Exchange Act and in accordance therewith
files reports and other information with the Commission. For further
information regarding Case Credit, reference is made to such reports and other
information that are available as described under "Available Information."
CASE CORPORATION
Case Corporation, a Delaware corporation, is a leading worldwide designer,
manufacturer, marketer and distributor of farm equipment and light- and
medium-sized construction equipment, which are sold worldwide through
independent dealers and retail outlets owned by Case and its affiliates.
Case's business is affected by the general level of activity in the
agricultural and construction industries, including the rate of worldwide
agricultural production and demand and prevailing levels of construction. Crop
production and commodity prices are strongly affected by weather and can
fluctuate significantly. Housing starts and other construction activities are
sensitive to interest rates and government spending. Some of the other
significant factors for Case include general economic conditions, the cyclical
nature of the business, foreign currency movements, access to credit,
political uncertainty and civil unrest in various areas of the world, pricing,
product initiatives and other actions taken by competitors, disruptions in
production capacity, excess inventory levels, the effect of changes in laws
and regulations (including government subsidies and international trade
regulations), changes in environmental laws, and employee relations. The
agricultural and construction equipment industries are highly competitive.
Both United States and international manufacturers of agricultural and
construction equipment compete on a worldwide basis in such markets.
Case Corporation and its subsidiaries acquired the farm and construction
equipment business of subsidiaries of Tenneco Inc. on June 23, 1994. The
acquisition of such business is referred to herein as the "Reorganization."
Case's offices are located at 700 State Street, Racine, Wisconsin 53404, and
its telephone number is (414) 636-6011. Case is subject to the informational
requirements of the Exchange Act and in accordance therewith files reports and
other information with the Commission. For further information regarding Case,
reference is made to such reports and other information that are available as
described under "Available Information."
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DESCRIPTION OF THE NOTES
GENERAL
With respect to each Trust, one or more classes of Notes of a given series
will be issued pursuant to the terms of an indenture, a form of which has been
filed as an exhibit to the Registration Statement. The following summary does
not purport to be complete and is subject to, and is qualified in its entirety
by reference to, all the provisions of the Notes and the Indenture.
Unless otherwise specified in the related Prospectus Supplement, each class
of Notes will initially be represented by one or more Notes, in each case
registered in the name of DTC's Nominee (together with any successor
depository selected by the Trust, the "Depository") except as set forth below.
Unless otherwise specified in the related Prospectus Supplement, the Notes
will be available for purchase in denominations of $1,000 and integral
multiples thereof in book-entry form only. The Seller has been informed by DTC
that DTC's Nominee will be Cede, unless another nominee is specified in the
related Prospectus Supplement. Accordingly, such nominee is expected to be the
holder of record of the Notes of each class. Unless and until Definitive Notes
are issued under the limited circumstances described herein or in the related
Prospectus Supplement, no Noteholder will be entitled to receive a physical
certificate representing a Note. All references herein and in the related
Prospectus Supplement to actions by Noteholders refer to actions taken by DTC
upon instructions from its participating organizations (the "Participants")
and all references herein and in the related Prospectus Supplement to
distributions, notices, reports and statements to Noteholders refer to
distributions, notices, reports and statements to DTC or its nominee, as the
registered holder of the Notes, as the case may be, for distribution to
Noteholders in accordance with DTC's procedures with respect thereto. See
"Certain Information Regarding the Securities--Book-Entry Registration" and
"--Definitive Securities."
PRINCIPAL AND INTEREST ON THE NOTES
The timing and priority of payment, seniority, allocations of losses,
Interest Rate and amount of or method of determining payments of principal and
interest on each class of Notes of a given series will be described in the
related Prospectus Supplement. The right of holders of any class of Notes to
receive payments of principal and interest may be senior or subordinate to the
rights of holders of any other class or classes of Notes of such series, as
described in the related Prospectus Supplement. Unless otherwise provided in
the related Prospectus Supplement, payments of interest on the Notes of such
series will be made prior to payments of principal thereon. To the extent
provided in the related Prospectus Supplement, a series may include one or
more classes of Strip Notes entitled to (i) principal payments with
disproportionate, nominal or no interest payments or (ii) interest payments
with disproportionate, nominal or no principal payments. Each class of Notes
may have a different Interest Rate, which may be a fixed, variable or
adjustable Interest Rate (and that may be zero for certain classes of Strip
Notes), or any combination of the foregoing. The related Prospectus Supplement
will specify the Interest Rate for each class of Notes of a given series or
the method for determining such Interest Rate. See also "Certain Information
Regarding the Securities--Fixed Rate Securities" and "--Floating Rate
Securities." One or more classes of Notes of a series may be redeemable in
whole or in part under the circumstances specified in the related Prospectus
Supplement, including at the end of the Funding Period (if any) or as a result
of the Servicer's exercising its option to purchase the Receivables of the
related Trust.
To the extent specified in any Prospectus Supplement, one or more classes of
Notes of a given series may have fixed principal payment schedules, as set
forth in such Prospectus Supplement; Noteholders of such Notes would be
entitled to receive as payments of principal on any given Payment Date the
applicable amounts set forth on such schedule with respect to such Notes, in
the manner and to the extent set forth in the related Prospectus Supplement.
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Unless otherwise specified in the related Prospectus Supplement, payments to
Noteholders of all classes within a series in respect of interest will have
the same priority. Under certain circumstances, the amount available for such
payments could be less than the amount of interest payable on the Notes on any
of the dates specified for payments in the related Prospectus Supplement
(each, a "Payment Date"), in which case, unless otherwise provided in the
related Prospectus Supplement, each class of Noteholders will receive its
ratable share (based upon the aggregate amount of interest due to such class
of Noteholders) of the aggregate amount available to be distributed in respect
of interest on the Notes of such series. See "Description of the Transfer and
Servicing Agreements--Distributions" and "--Credit and Cash Flow Enhancement."
In the case of a series of Notes that includes two or more classes of Notes,
the sequential order and priority of payment in respect of principal and
interest, and any schedule or formula or other provisions applicable to the
determination thereof, of each such class will be set forth in the related
Prospectus Supplement. Payments in respect of principal and interest of any
class of Notes will be made on a pro rata basis among all the Noteholders of
such class.
If the Servicer exercises its option to Purchase the Receivables of a Trust
in the manner and on the respective terms and conditions described under
"Description of the Transfer and Servicing Agreements--Termination," the
outstanding Notes will be redeemed as set forth in the related Prospectus
Supplement. In addition, if the related Prospectus Supplement provides that
the property of a Trust will be included a Pre-Funding Account, the
outstanding Notes may be subject to partial redemption on or immediately
following the end of the Funding Period in an amount and manner specified in
the related Prospectus Supplement. In the event of such partial redemption,
the Noteholders may be entitled to receive a redemption premium from the
Trust, in the amount and to the extent provided in the related Prospectus
Supplement.
THE INDENTURE
Modification of Indenture. With respect to each Trust, with the consent of
the holders of a majority of the outstanding Notes of the related series, the
Trust and the Indenture Trustee may execute a supplemental indenture to add
provisions to, change in any manner or eliminate any provisions of, the
related Indenture, or modify (except as provided below) in any manner the
rights of the related Noteholders.
Unless otherwise specified in the related Prospectus Supplement with respect
to a series of Notes, without the consent of the holder of each such
outstanding Note affected thereby, however, no supplemental indenture will:
(i) change the due date of any installment of principal of or interest on any
such Note or reduce the principal amount thereof, the interest rate specified
thereon or the redemption price with respect thereto or change any place of
payment where or the coin or currency in which any such Note or any interest
thereon is payable; (ii) impair the right to institute suit for the
enforcement of certain provisions of the related Indenture regarding payment;
(iii) reduce the percentage of the aggregate amount of the outstanding Notes
of such series, the consent of the holders of which is required for any such
supplemental indenture or the consent of the holders of which is required for
any waiver of compliance with certain provisions of the related Indenture or
of certain defaults thereunder and their consequences as provided for in such
Indenture; (iv) modify or alter the provisions of the related Indenture
regarding the voting of Notes held by the applicable Trust, any other obligor
on such Notes, the Seller or an affiliate of any of them; (v) reduce the
percentage of the aggregate outstanding amount of such Notes, the consent of
the holders of which is required to direct the related Indenture Trustee to
sell or liquidate the Receivables if the proceeds of such sale would be
insufficient to pay the principal amount and accrued but unpaid interest on
the outstanding Notes of such series; (vi) decrease the percentage of the
aggregate principal amount of such Notes required to amend the sections of the
related Indenture that specify the applicable percentage of aggregate
principal amount of the Notes of such series necessary to amend such Indenture
or certain other related agreements; or (vii) permit the creation of any lien
ranking prior to or on a parity with the lien of the related Indenture with
respect to any of the collateral for such Notes or, except as otherwise
permitted or contemplated in such Indenture, terminate the lien of such
Indenture on any such collateral or deprive the holder of any such Note of the
security afforded by the lien of such Indenture.
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Unless otherwise provided in the applicable Prospectus Supplement, a Trust
and the applicable Indenture Trustee may also enter into supplemental
indentures, without obtaining the consent of the Noteholders of the related
series, for the purpose of, among other things, adding any provisions to or
changing in any manner or eliminating any of the provisions of the related
Indenture or of modifying in any manner the rights of such Noteholders;
provided that such action will not materially and adversely affect the
interest of any such Noteholder.
In addition, unless otherwise provided in the applicable Prospectus
Supplement, a Trust and the applicable Indenture Trustee may enter into
supplemental indentures, without obtaining the consent of the Noteholders of
the related series, to substitute credit enhancement for any class of Notes
provided the Rating Agencies confirm in writing that such substitution will
not result in the reduction or withdrawal of the rating for such class of
Notes or any other class of Securities of the related series.
Events of Default; Rights upon Event of Default. With respect to the Notes
of a given series, unless otherwise specified in the related Prospectus
Supplement, "Events of Default" under the related Indenture will consist of:
(i) a default for five days or more in the payment of any interest on any such
Note; (ii) a default in the payment of the principal of or any installment of
the principal of any such Note when the same becomes due and payable; (iii) a
default in the observance or performance of any covenant or agreement of the
applicable Trust made in the related Indenture and the continuation of any
such default for a period of 30 days after notice thereof is given to such
Trust by the applicable Indenture Trustee or to such Trust and such Indenture
Trustee by the holders of at least 25% in principal amount of such Notes then
outstanding; (iv) any representation or warranty made by such Trust in the
related Indenture or in any certificate delivered pursuant thereto or in
connection therewith having been incorrect in a material respect as of the
time made, and such breach not having been cured within 30 days after notice
thereof is given to such Trust by the applicable Indenture Trustee or to such
Trust and such Indenture Trustee by the holders of at least 25% in principal
amount of such Notes then outstanding; or (v) certain events of bankruptcy,
insolvency, receivership or liquidation of the applicable Trust. However, the
amount of principal required to be paid to Noteholders of such series under
the related Indenture will generally be limited to amounts available to be
deposited in the applicable Note Distribution Account. Therefore, unless
otherwise specified in the related Prospectus Supplement, the failure to pay
principal on a class of Notes generally will not result in the occurrence of
an Event of Default until the final scheduled Payment Date for such class of
Notes.
If an Event of Default should occur and be continuing with respect to the
Notes of any series, the related Indenture Trustee or holders of a majority in
principal amount of such Notes then outstanding may declare the principal of
such Notes to be immediately due and payable. Unless otherwise specified in
the related Prospectus Supplement, such declaration may, under certain
circumstances, be rescinded by the holders of a majority in principal amount
of such Notes then outstanding.
If the Notes of any series have been declared due and payable following an
Event of Default with respect thereto, the related Indenture Trustee may
institute proceedings to collect amounts due or foreclose on Trust property,
exercise remedies as a secured party, sell the related Receivables or elect to
have the applicable Trust maintain possession of such Receivables and continue
to apply collections on such Receivables as if there had been no declaration
of acceleration. Unless otherwise specified in the related Prospectus
Supplement, however, such Indenture Trustee is prohibited from selling the
related Receivables following an Event of Default, other than a default in the
payment of any principal of or a default for five days or more in the payment
of any interest on any Note of such series, unless (i) the holders of all such
outstanding Notes consent to such sale, (ii) the proceeds of such sale are
sufficient to pay in full the principal of and the accrued interest on such
outstanding Notes at the date of such sale or (iii) such Indenture Trustee
determines that the proceeds of Receivables would not be sufficient on an
ongoing basis to make all payments on such Notes as such payments would have
become due if such obligations had not been declared due and payable, and such
Indenture Trustee obtains the consent of the holders of 66 2/3% of the
aggregate outstanding amount of such Notes.
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Subject to the provisions of the applicable Indenture relating to the duties
of the related Indenture Trustee, if an Event of Default occurs and is
continuing with respect to a series of Notes, such Indenture Trustee will be
under no obligation to exercise any of the rights or powers under such
Indenture at the request or direction of any of the holders of such Notes, if
such Indenture Trustee reasonably believes it will not be adequately
indemnified against the costs, expenses and liabilities that might be incurred
by it in complying with such request. Subject to the provisions for
indemnification and certain limitations contained in the related Indenture,
the holders of a majority in principal amount of the outstanding Notes of a
given series will have the right to direct the time, method and place of
conducting any proceeding or any remedy available to the applicable Indenture
Trustee, and the holders of a majority in principal amount of such Notes then
outstanding may, in certain cases, waive any default with respect thereto,
except a default in the payment of principal or interest or a default in
respect of a covenant or provision of such Indenture that cannot be modified
without the waiver or consent of all the holders of such outstanding Notes.
Unless otherwise specified in the related Prospectus Supplement, no holder
of a Note of any series will have the right to institute any proceeding with
respect to the related Indenture, unless (i) such holder previously has given
to the applicable Indenture Trustee written notice of a continuing Event of
Default, (ii) the holders of not less than 25% in principal amount of the
outstanding Notes of such series have made written request to such Indenture
Trustee to institute such proceeding in its own name as Indenture Trustee,
(iii) such holder or holders have offered such Indenture Trustee reasonable
indemnity, (iv) such Indenture Trustee has for 60 days failed to institute
such proceeding and (v) no direction inconsistent with such written request
has been given to such Indenture Trustee during such 60-day period by the
holders of a majority in principal amount of such outstanding Notes.
In addition, each Indenture Trustee and the related Noteholders, by
accepting the related Notes, will covenant that they will not at any time
institute against the applicable Trust any bankruptcy, reorganization or other
proceeding under any Federal or state bankruptcy or similar law.
With respect to any Trust, neither the related Trustee nor the related
Indenture Trustee in its individual capacity, nor any holder of a Certificate
representing an ownership interest in such Trust nor any of their respective
owners, beneficiaries, agents, officers, directors, employees, affiliates,
successors or assigns will, in the absence of an express agreement to the
contrary, be personally liable for the payment of the principal of or interest
on the related Notes or for the agreements of such Trust contained in the
applicable Indenture.
Certain Covenants. Each Indenture will provide that the related Trust may
not consolidate with or merge into any other entity, unless (i) the entity
formed by or surviving such consolidation or merger is organized under the
laws of the United States or any state, (ii) such entity expressly assumes
such Trust's obligation to make due and punctual payments upon the Notes of
the related series and the performance or observance of every agreement and
covenant of such Trust under the Indenture, (iii) no Event of Default shall
have occurred and be continuing immediately after such merger or
consolidation, (iv) such Trust has been advised that the rating of the Notes
or the Certificates of such series then in effect would not be reduced or
withdrawn by the Rating Agencies as a result of such merger or consolidation
and (v) such Trust has received an opinion of counsel to the effect that such
consolidation or merger would have no material adverse tax consequence to the
Trust or to any related Noteholder or Certificateholder.
Each Trust will not, among other things, (i) except as expressly permitted
by the applicable Indenture, the applicable Transfer and Servicing Agreements
or certain related documents with respect to such Trust (collectively, the
"Related Documents"), sell, transfer, exchange or otherwise dispose of any of
the assets of such Trust, (ii) claim any credit on or make any deduction from
the principal and interest payable in respect of the Notes of the related
series (other than amounts withheld under the Code or applicable state law) or
assert any claim against any present or former holder of such Notes because of
the payment of taxes levied or assessed upon such Trust, (iii) except as
contemplated by the Related Documents, dissolve or liquidate in whole or in
part, (iv) permit the validity or effectiveness of the related Indenture to be
impaired or permit any person to be released from any covenants or obligations
with respect to such Notes under such Indenture except as may be
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expressly permitted thereby or (v) permit any lien, charge, excise, claim,
security interest, mortgage or other encumbrance to be created on or extend to
or otherwise arise upon or burden the assets of such Trust or any part
thereof, or any interest therein or the proceeds thereof.
No Trust may engage in any activity other than as specified under the
section of the related Prospectus Supplement entitled "The Trust." No Trust
will incur, assume or guarantee any indebtedness other than indebtedness
incurred pursuant to the related Notes and the related Indenture or otherwise
in accordance with the Related Documents.
Annual Compliance Statement. Each Trust will be required to file annually
with the related Indenture Trustee a written statement as to the fulfillment
of its obligations under the Indenture.
Indenture Trustee's Annual Report. The Indenture Trustee for each Trust will
be required to mail each year to all related Noteholders a brief report
relating to its eligibility and qualification to continue as Indenture Trustee
under the related Indenture, any amounts advanced by it under the Indenture,
the amount, interest rate and maturity date of certain indebtedness owing by
such Trust to the applicable Indenture Trustee in its individual capacity, the
property and funds physically held by such Indenture Trustee as such and any
action taken by it that materially affects the related Notes and that has not
been previously reported.
Satisfaction and Discharge of Indenture. An Indenture will be discharged
with respect to the collateral securing the related Notes upon the delivery to
the related Indenture Trustee for cancellation of all such Notes or, with
certain limitations, upon deposit with such Indenture Trustee of funds
sufficient for the payment in full of all such Notes.
THE INDENTURE TRUSTEE
The Indenture Trustee for a series of Notes will be specified in the related
Prospectus Supplement. The Indenture Trustee for any series may resign at any
time, in which event the Trust will be obligated to appoint a successor
trustee for such series. The Trust may also remove any such Indenture Trustee
if such Indenture Trustee ceases to be eligible to continue as such under the
related Indenture or if such Indenture Trustee becomes insolvent. In such
circumstances, the Trust will be obligated to appoint a successor indenture
trustee for the applicable series of Notes. Any resignation or removal of the
Indenture Trustee and appointment of a successor indenture trustee for any
series of Notes does not become effective until acceptance of the appointment
by the successor indenture trustee for such series.
DESCRIPTION OF THE CERTIFICATES
GENERAL
With respect to each Trust, one or more classes of Certificates of a given
series will be issued pursuant to the terms of a Trust Agreement, a form of
which has been filed as an exhibit to the Registration Statement of which this
Prospectus forms a part. The following summary does not purport to be complete
and is subject to, and is qualified in its entirety by reference to, all the
provisions of the Certificates and the Trust Agreement.
Unless otherwise specified in the related Prospectus Supplement and except
for the Certificates of a given series purchased by the Seller or any of its
affiliates, each class of Certificates will initially be represented by one or
more Certificates registered in the name of the Depository, except as set
forth below. Unless otherwise specified in the related Prospectus Supplement
and except for the Certificates of a given series purchased by the Seller, the
Certificates will be available for purchase in minimum denominations of $1,000
and integral multiples thereof in book-entry form only. The Seller has been
informed by DTC that DTC's Nominee will be Cede, unless another nominee is
specified in the related Prospectus Supplement. Accordingly, such nominee is
expected to be the holder of record of the Certificates of any series that are
not purchased by the Seller or any of its affiliates. Unless and until
Definitive Certificates are issued under the limited circumstances described
herein or in the
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related Prospectus Supplement, no Certificateholder (other than the Seller)
will be entitled to receive a physical certificate representing a Certificate.
All references herein and in the related Prospectus Supplement to actions by
Certificateholders refer to actions taken by DTC upon instructions from the
Participants and all references herein and in the related Prospectus
Supplement to distributions, notices, reports and statements to
Certificateholders refer to distributions, notices, reports and statements to
DTC or its nominee, as the registered holder of the Certificates, as the case
may be, for distribution to Certificateholders in accordance with DTC's
procedures with respect thereto. See "Certain Information Regarding the
Securities--Book Entry Registration" and "--Definitive Securities."
DISTRIBUTIONS OF PRINCIPAL AND INTEREST
The timing and priority of distributions, seniority, allocations of losses,
Pass-Through Rate and amount of or method of determining distributions with
respect to principal and interest of each class of Certificates of a given
series will be described in the related Prospectus Supplement. Distributions
of interest on such Certificates will be made on the Payment Dates specified
in the related Prospectus Supplement and will be made prior to distributions
with respect to principal of such Certificates. To the extent provided in the
related Prospectus Supplement, a series may include one or more classes of
Strip Certificates entitled to (i) distributions in respect of principal with
disproportionate, nominal or no interest distributions or (ii) interest
distributions with disproportionate, nominal or no distributions in respect of
principal. Each class of Certificates may have a different Pass-Through Rate,
which may be a fixed, variable or adjustable Pass-Through Rate (and that may
be zero for certain classes of Strip Certificates), or any combination of the
foregoing. The related Prospectus Supplement will specify the Pass-Through
Rate for each class of Certificates of a given series or the method for
determining such Pass-Through Rate. See also "Certain Information Regarding
the Securities--Fixed Rate Securities" and "--Floating Rate Securities."
Unless otherwise provided in the related Prospectus Supplement, distributions
in respect of the Certificates of a given series may be subordinate to
payments in respect of the Notes of such series as more fully described in the
related Prospectus Supplement. Distributions in respect of interest on and
principal of any class of Certificates will be made on a pro rata basis among
all the Certificateholders of such class.
In the case of a series of Certificates that includes two or more classes of
Certificates, the timing, sequential order, priority of payment or amount of
distributions in respect of interest and principal, and any schedule or
formula or other provisions applicable to the determination thereof, of each
such class shall be as set forth in the related Prospectus Supplement.
If the Servicer exercises its option to purchase the Receivables of a Trust,
in the manner and on the respective terms and conditions described under
"Description of the Transfer and Servicing Agreements--Termination,"
Certificateholders will receive as prepayment an amount in respect of the
Certificates as specified in the related Prospectus Supplement. In addition,
if the related Prospectus Supplement provides that the property of a Trust
will include a Pre-Funding Account, Certificateholders may receive a partial
prepayment of principal on or immediately following the end of the Funding
Period in an amount and manner specified in the related Prospectus Supplement.
In the event of such partial prepayment, the Certificateholders may be
entitled to receive a prepayment premium from the Trust, in the amount and to
the extent provided in the related Prospectus Supplement.
CERTAIN INFORMATION REGARDING THE SECURITIES
FIXED RATE SECURITIES
Each class of Securities (other than certain classes of Strip Notes or Strip
Certificates) may bear interest at a fixed rate per annum ("Fixed Rate
Securities") or at a variable or adjustable rate per annum ("Floating Rate
Securities"), as more fully described below and in the applicable Prospectus
Supplement. Each class of Fixed Rate Securities will bear interest at the
applicable per annum Interest Rate or Pass-Through Rate, as the case may be,
specified in the applicable Prospectus Supplement. Unless otherwise set forth
in the applicable
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Prospectus Supplement, interest on each class of Fixed Rate Securities will be
computed on the basis of a 360-day year of twelve 30-day months. See
"Description of the Notes--Principal and Interest on the Notes" and
"Description of the Certificates--Distributions of Principal and Interest."
FLOATING RATE SECURITIES
Each class of Floating Rate Securities will bear interest for each
applicable Interest Reset Period (as such term is defined in the related
Prospectus Supplement with respect to a class of Floating Rate Securities,
"Interest Reset Period") at a rate per annum determined by reference to an
interest rate basis (the "Base Rate"), plus or minus the Spread, if any, or
multiplied by the Spread Multiplier, if any, in each case as specified in the
related Prospectus Supplement. The "Spread" is the number of basis points (one
basis point equals one one-hundredth of a percentage point) that may be
specified in the applicable Prospectus Supplement as being applicable to such
class, and the "Spread Multiplier" is the percentage that may be specified in
the applicable Prospectus Supplement as being applicable to such class.
The applicable Prospectus Supplement will designate a Base Rate for a given
Floating Rate Security based on the London interbank offered rate ("LIBOR"),
commercial paper rates, Federal funds rates, U.S. Government treasury
securities rates, negotiable certificates of deposit rates or another rate as
set forth in such Prospectus Supplement.
As specified in the applicable Prospectus Supplement, Floating Rate
Securities of a given class may also have either or both of the following (in
each case expressed as a rate per annum): (i) a maximum limitation, or
ceiling, on the rate at which interest may accrue during any interest period
and (ii) a minimum limitation, or floor, on the rate at which interest may
accrue during any interest period. In addition to any maximum interest rate
that may be applicable to any class of Floating Rate Securities, the interest
rate applicable to any class of Floating Rate Securities will in no event be
higher than the maximum rate permitted by applicable law, as the same may be
modified by United States law of general application.
Each Trust with respect to which a class of Floating Rate Securities will be
issued will appoint, and enter into agreements with, a calculation agent
(each, a "Calculation Agent") to calculate interest rates on each such class
of Floating Rate Securities issued with respect thereto. The applicable
Prospectus Supplement will set forth the identity of the Calculation Agent for
each such class of Floating Rate Securities of a given series, which may be
either the Trustee or Indenture Trustee with respect to such series. All
determinations of interest by the Calculation Agent shall, in the absence of
manifest error, be conclusive for all purposes and binding on the holders of
Floating Rate Securities of a given class. Unless otherwise specified in the
applicable Prospectus Supplement, all percentages resulting from any
calculation of the rate of interest on a Floating Rate Security will be
rounded, if necessary, to the nearest 1/100,000 of 1% (.0000001), with five
one-millionths of a percentage point rounded upward.
INDEXED SECURITIES
To the extent so specified in any Prospectus Supplement, any class of
Securities of a given series may consist of Securities ("Indexed Securities")
in which the principal amount payable at the final scheduled Payment Date for
such class (the "Indexed Principal Amount") is determined by reference to a
measure (the "Index") that will be related to (i) the difference in the rate
of exchange between United States dollars and a currency or composite currency
(the "Indexed Currency") specified in the applicable Prospectus Supplement
(such Indexed Securities, "Currency Indexed Securities"); (ii) the difference
in the price of a specified commodity (the "Indexed Commodity") on specified
dates (such Indexed Securities, "Commodity Indexed Securities"); (iii) the
difference in the level of a specified stock index (the "Stock Index"), which
may be based on U.S. or foreign stocks on specified dates (such Indexed
Securities, "Stock Indexed Securities"); or (iv) such other objective price or
economic measures as are described in the applicable Prospectus Supplement.
The manner of determining the Indexed Principal Amount of an Indexed Security
and historical and other information concerning the Indexed Currency, the
Indexed Commodity, the Stock Index or other price or economic measures
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used in such determination will be set forth in the applicable Prospectus
Supplement, together with information concerning tax consequences to the
holders of such Indexed Securities.
If the determination of the Indexed Principal Amount of an Indexed Security
is based on an Index calculated or announced by a third party and such third
party either suspends the calculation or announcement of such Index or changes
the basis upon which such Index is calculated (other than changes consistent
with policies in effect at the time such Indexed Security was issued and
permitted changes described in the applicable Prospectus Supplement), then
such Index shall be calculated for purposes of such Indexed Security by an
independent calculation agent named in the applicable Prospectus Supplement on
the same basis, and subject to the same conditions and controls, as applied to
the original third party. If for any reason such Index cannot be calculated on
the same basis and subject to the same conditions and controls as applied to
the original third party, then the Indexed Principal Amount of such Indexed
Security shall be calculated in the manner set forth in the applicable
Prospectus Supplement. Any determination of such independent calculation agent
shall, in the absence of manifest error, be binding on all parties.
Unless otherwise specified in the applicable Prospectus Supplement, interest
on an Indexed Security will be payable based on the amount designated in the
applicable Prospectus Supplement as the "Face Amount" of such Indexed
Security. The applicable Prospectus Supplement will describe whether the
principal amount of the related Indexed Security, if any, that would be
payable upon redemption or repayment prior to the applicable final scheduled
Payment Date will be the Face Amount of such Indexed Security, the Indexed
Principal Amount of such Indexed Security at the time of redemption or
repayment or another amount described in such Prospectus Supplement.
BOOK-ENTRY REGISTRATION
If so specified in the related Prospectus Supplement, investors may hold
their Securities through DTC (in the United States) or Cedel or 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 Securities. Cedel and Euroclear will hold omnibus
positions on behalf of the Cedel Participants and the Euroclear Participants,
respectively, through customers' securities accounts in Cedel's and
Euroclear's names on the books of their respective depositaries (collectively,
the "Depositaries") which in turn will hold such positions in customers'
securities accounts in the Depositaries' names on the books of DTC. See
"Certain Information Regarding the Securities--Book-Entry Registration" and
"--Definitive Securities" in the Prospectus.
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 pursuant to the provisions of Section 17A of the Exchange Act. DTC
holds securities for its Participants ("DTC Participants") and 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, thereby eliminating the need
for physical movement of securities certificates. DTC Participants include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations. 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 ("Indirect Participants"). The
rules applicable to DTC and DTC Participants are on file with the Securities
and Exchange Commission.
Transfers between DTC Participants will occur in accordance with DTC rules.
Transfers between Cedel Participants and Euroclear Participants will occur in
the ordinary way in accordance with their applicable rules and operating
procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC, on the one hand, and directly or indirectly through Cedel
participants or Euroclear Participants, on the other, will be effected in DTC
in accordance with DTC rules on behalf of the relevant European international
clearing system by its Depositary; however, such cross-market transactions
will require delivery of instructions to the relevant European
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international clearing system by the counterparty in such system in accordance
with its rules and procedures and within its established deadlines (European
time). The relevant European international clearing system will, if the
transaction meets its settlement requirements, deliver instructions to its
Depositary to take action to effect final settlement on its behalf by
delivering or receiving securities in DTC, and making or receiving payment in
accordance with normal procedures for same-day funds settlement applicable to
DTC. Cedel Participants and Euroclear Participants may not deliver
instructions directly to the Depositaries.
Because of time-zone differences, credits of securities in Cedel 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 Cedel Participant or Euroclear Participant on such business day. Cash
received in Cedel or Euroclear as a result of sales of securities by or
through a Cedel Participant or a Euroclear Participant to a DTC Participant
will be received with value on the DTC settlement date but will be available
in the relevant Cedel or Euroclear cash account only as of the business day
following settlement in DTC.
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.
The ownership interest of each actual Securityholder is in turn to be recorded
on the DTC Participants' and Indirect Participants' records. Securityholders
will not receive written confirmation from DTC of their purchase, but
Securityholders are expected to receive written confirmations providing
details of the transaction, as well as periodic statements of their holdings,
from the DTC Participant or Indirect Participant through which the
Securityholder entered into the transaction. Transfers of ownership interests
in the Securities are to be accomplished by entries made on the books of DTC
Participants acting on behalf of Securityholders. Securityholders will not
receive certificates representing their ownership interest in Securities,
except in the event that use of the book-entry system for the 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
Securityholders of the Securities; DTC's records reflect only the identity of
the DTC Participants to whose accounts such Securities are credited, which may
or may not be the Securityholders. The DTC Participants will 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 Securities. Under
its usual procedures, DTC mails an omnibus proxy to the issuer as soon as
possible after the record date, which assigns Cede's consenting or voting
rights to those DTC Participants to whose accounts the Securities are credited
on the record date (identified in a listing attached thereto).
Principal and interest payments on the Securities will be made to DTC. DTC's
practice is to credit 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 Trustee or the Seller, 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 Trustee, disbursement of such
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.
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DTC may discontinue providing its services as securities depository with
respect to the Securities at any time by giving reasonable notice to the
Seller or the Trustee. Under such circumstances, in the event that a successor
securities depository is not obtained, Definitive Securities are required to
be printed and delivered. The Seller 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
Securityholders. See "--Definitive Securities."
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Seller believes to be reliable, but
the Seller takes no responsibility for the accuracy thereof.
Cedel Bank, societe anonyme ("Cedel") is incorporated under the laws of
Luxembourg as a professional depository. Cedel holds securities for its
participating organizations ("Cedel Participants") and facilitates the
clearance and settlement of securities transactions between Cedel Participants
through electronic book-entry changes in accounts of Cedel Participants,
thereby eliminating the need for physical movement of certificates.
Transactions may be settled in Cedel in any of 32 currencies, including United
States dollars. Cedel provides to its Cedel Participants, among other things,
services for safekeeping, administration, clearance and settlement of
internationally traded securities and securities lending and borrowing. Cedel
interfaces with domestic markets in several countries. As a professional
depository, Cedel is subject to regulation by the Luxembourg Monetary
Institute. Cedel Participants are recognized financial institutions around the
world, including underwriters, securities brokers and dealers, banks, trust
companies, clearing corporations and certain other organizations and may
include the underwriters of any Series of Securities. Indirect access to Cedel
is also available to others, such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a Cedel
Participant, either directly or indirectly.
The Euroclear System was created in 1968 to hold securities for participants
of the Euroclear System ("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 32 currencies,
including United States dollars. The Euroclear System includes various other
services, including securities lending and borrowing and interfaces with
domestic markets in 25 countries generally similar to the arrangements for
cross-market transfers with DTC described above. The Euroclear System is
operated by Morgan Guaranty Trust Company of New York, Brussels, Belgium
office (the "Euroclear Operator" or "Euroclear"), under contract with
Euroclear Clearance System, Societe Cooperative, a Belgian cooperative
corporation (the "Cooperative"). All operations are conducted by the Euroclear
Operator, and all Euroclear securities clearance accounts and Euroclear cash
accounts are accounts with the Euroclear Operator, not the Cooperative. The
Cooperative Board establishes policy for the Euroclear System. Euroclear
Participants include banks (including central banks), securities brokers and
dealers and other professional financial intermediaries and may include the
underwriters of any series of Securities. Indirect access to the Euroclear
System is also available to other firms that 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 (collectively, the "Terms
and Conditions"). The 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 the Terms and
Conditions only on behalf of Euroclear Participants and has no record of or
relationship with persons holding through Euroclear Participants.
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Distributions with respect to Securities held through Cedel or Euroclear
will be credited to the cash accounts of Cedel Participants or Euroclear
Participants in accordance with the relevant system's rules and procedures, to
the extent received by its Depositary. Such distributions will be subject to
tax reporting in accordance with relevant United States tax laws and
regulations. See "U.S. Federal Income Tax Consequences." Cedel or the
Euroclear Operator, as the case may be, will take any other action permitted
to be taken by a Securityholder under a related Agreement on behalf of a Cedel
Participant 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, Cedel and Euroclear have agreed to the foregoing procedures in
order to facilitate transfers of Securities among participants of DTC, Cedel
and Euroclear, they are under no obligation to perform or continue to perform
such procedures and such procedures may be discontinued at any time.
DEFINITIVE SECURITIES
Unless otherwise specified in the related Prospectus Supplement, the Notes
and the Certificates of a given series will be issued in fully registered,
certificated form ("Definitive Notes" and "Definitive Certificates,"
respectively, and collectively referred to herein as "Definitive Securities")
to Noteholders or Certificateholders or their respective nominees, rather than
to DTC or its nominee, only if (i) the Administrator advises the related
Indenture Trustee or the related Trustee, as applicable (the "Applicable
Trustee"), in writing that DTC is no longer willing or able to discharge
properly its responsibilities as depository with respect to such Securities
and the Administrator is unable to locate a qualified successor, (ii) the
Administrator, at its option, elects to terminate the book-entry system
through DTC or (iii) after the occurrence of an Event of Default or a Servicer
Default with respect to such Securities, Securityholders representing at least
a majority of the outstanding principal amount of the Notes or the
Certificates, as the case may be, of such series advise the Applicable Trustee
through DTC in writing that the continuation of a book-entry system through
DTC (or a successor thereto) with respect to such Notes or Certificates is no
longer in the best interest of the Securityholders of such Securities.
Upon the occurrence of any event described in the immediately preceding
paragraph, the Applicable Trustee will be required to notify all applicable
Securityholders of a given series through Participants of the availability of
Definitive Securities. Upon surrender by DTC of the definitive certificates
representing the corresponding Securities and receipt of instructions for re-
registration, the Applicable Trustee will reissue such Securities as
Definitive Securities to such Securityholders.
Distributions of principal of, and interest on, such Definitive Securities
will thereafter be made by the Applicable Trustee in accordance with the
procedures set forth in the related Indenture or the related Trust Agreement,
as applicable, directly to holders of Definitive Securities in whose names the
Definitive Securities were registered at the close of business on the
applicable Record Date specified for such Securities in the related Prospectus
Supplement. Such distributions will be made by check mailed to the address of
such holder as it appears on the register maintained by the Applicable
Trustee. The final payment on any such Definitive Security, however, will be
made only upon presentation and surrender of such Definitive Security at the
office or agency specified in the notice of final distribution to the
applicable Securityholders.
Definitive Securities will be transferable and exchangeable at the offices
of the Applicable Trustee or of a registrar named in a notice delivered to
holders of Definitive Securities. No service charge will be imposed for any
registration of transfer or exchange, but the Applicable Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge
imposed in connection therewith.
LIST OF SECURITYHOLDERS
Unless otherwise specified in the related Prospectus Supplement with respect
to the Notes of any series, three or more holders of the Notes of such series
or one or more holders of such Notes evidencing at least 25% of the aggregate
outstanding principal balance of such Notes may, by written request to the
related Indenture Trustee, obtain access to the list of all Noteholders
maintained by such Indenture Trustee for the purpose of
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communicating with other Noteholders with respect to their rights under the
related Indenture or under such Notes. Such Indenture Trustee may elect not to
afford the requesting Noteholders access to the list of Noteholders if it
agrees to mail the desired communication or proxy, on behalf of and at the
expense of the requesting Noteholders, to all Noteholders of such series.
Unless otherwise specified in the related Prospectus Supplement with respect
to the Certificates of any series, three or more holders of the Certificates
of such series or one or more holders of such Certificates evidencing at least
25% of the Certificate Balance of such Certificates may, by written request to
the related Trustee, obtain access to the list of all Certificateholders
maintained by such Trustee for the purpose of communicating with other
Certificateholders with respect to their rights under the related Trust
Agreement or under such Certificates.
REPORTS TO SECURITYHOLDERS
With respect to each series of Securities, on or prior to each Payment Date,
the Servicer will prepare and provide to the related Indenture Trustee a
statement to be delivered to the related Noteholders on such Payment Date and
to the related Trustee a statement to be delivered to the related
Certificateholders. With respect to each series of Securities, each such
statement to be delivered to Noteholders will include (to the extent
applicable) the following information (and any other information so specified
in the related Prospectus Supplement) as to the Notes of such series with
respect to such Payment Date or the period since the previous Payment Date, as
applicable, and each such statement to be delivered to Certificateholders will
include (to the extent applicable) the following information (and any other
information so specified in the related Prospectus Supplement) as to the
Certificates of such series with respect to such Payment Date or the period
since the previous Payment Date, as applicable:
(i) the amount of the distribution allocable to principal of each class
of Securities of such series;
(ii) the amount of the distribution allocable to interest on or with
respect to each class of Securities of such series;
(iii) the Pool Balance as of the close of business on the last day of the
preceding Collection Period;
(iv) the aggregate outstanding principal balance and the Note Pool Factor
for each class of such Notes, and the Certificate Balance and the
Certificate Pool Factor for each class of such Certificates, each after
giving effect to all payments reported under clause (i) above on such date;
(v) the amount of the Servicing Fee paid to the Servicer with respect to
the related Collection Period;
(vi) the Interest Rate or Pass-Through Rate for the next period for any
class of Notes or Certificates of such series with variable or adjustable
rates;
(vii) the amount of the Administration Fee paid to the Administrator in
respect of the related Collection Period;
(viii) the amount of the aggregate Realized Losses, if any, for such
Collection Period;
(ix) the aggregate Purchase Amounts for Receivables, if any, that were
repurchased or purchased in such Collection Period;
(x) the balance of the Spread Account (if any) on such Payment Date,
after giving effect to changes therein on such Payment Date;
(xi) for each such date during the Funding Period (if any), the remaining
Pre-Funded Amount; and
(xii) for the first such date that is on or immediately following the end
of the Funding Period (if any), the amount of any remaining Pre-Funded
Amount that has not been used to fund the purchase of Subsequent
Receivables and is being passed through as payments of principal on the
Securities of such series.
Each amount set forth pursuant to subclauses (i), (ii), (v) and (vii) with
respect to the Notes or the Certificates of any series will be expressed as a
dollar amount per $1,000 of the initial principal balance of such Notes or the
initial Certificate Balance of such Certificates, as applicable.
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Within the prescribed period of time for tax reporting purposes after the
end of each calendar year during the term of each Trust, the Applicable
Trustee will mail to each person who at any time during such calendar year has
been a Securityholder with respect to such Trust and received any payment
thereon, a statement containing certain information for the purposes of such
Securityholder's preparation of Federal income tax returns. See "Certain
Federal Income Tax Consequences."
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain terms of (i) each Sale and Servicing
Agreement pursuant to which a Trust will purchase Receivables from the Seller
and the Servicer will agree to service such Receivables; (ii) each Purchase
Agreement pursuant to which the Seller will purchase Receivables from Case
Credit; (iii) each Trust Agreement pursuant to which a Trust will be created
and Certificates will be issued; (iv) each Administration Agreement pursuant
to which Case Credit will undertake certain administrative duties with respect
to a Trust (collectively, the "Transfer and Servicing Agreements"); and (v)
the Liquidity Receivables Purchase Agreement pursuant to which the Seller
purchases Receivables from Case Credit and other agreements related to CRC's
asset-backed commercial paper program. Forms of the Transfer and Servicing
Agreements and the Liquidity Receivables Purchase Agreement have been filed as
exhibits to the Registration Statement of which this Prospectus forms a part.
This summary does not purport to be complete and is subject to, and qualified
in its entirety by reference to, the provisions of the definitive agreements.
SALE AND ASSIGNMENT OF RECEIVABLES
On the Closing Date specified with respect to any given Trust in the related
Prospectus Supplement (the "Closing Date"), if Case Credit is selling
Receivables to the Seller in addition to those previously sold to the Seller
pursuant to the Liquidity Receivables Purchase Agreement, Case Credit will
sell and assign to the Seller, without recourse, its entire interest in the
related Receivables, including security interests in the related Financed
Equipment, pursuant to a Purchase Agreement (as amended and supplemented from
time to time, a "Purchase Agreement," which term will also include, as the
context requires, the Liquidity Receivables Purchase Agreement). The Seller
will transfer and assign to the related Trustee, without recourse, its entire
interest in such Receivables and security interests, together with its entire
interest in designated Receivables previously sold to the Seller pursuant to
the Liquidity Receivables Purchase Agreement, pursuant to a Sale and Servicing
Agreement. Each such Receivable will be identified in a schedule delivered
pursuant to such Sale and Servicing Agreement (a "Schedule of Receivables").
The related Trustee will, concurrently with such transfer and assignment,
execute and deliver the related Notes and Certificates. Unless otherwise
provided in the related Prospectus Supplement, the net proceeds received from
the sale of the Certificates and the Notes of a given series will be applied
to the purchase of the related Initial Receivables from the Seller, and, to
the extent specified in the related Prospectus Supplement, to the deposit of
the Pre-Funded Amount into the Pre-Funding Account. The related Prospectus
Supplement for a given Trust will specify whether, and the terms, conditions
and manner under which, Subsequent Receivables will be sold by the Seller to
the applicable Trust from time to time during the Funding Period on each date
specified as a transfer date in the related Prospectus Supplement (each, a
"Subsequent Transfer Date").
In each Purchase Agreement, Case Credit will represent and warrant to the
Seller, among other things, that (i) the information provided with respect to
the related Receivables is correct in all material respects; (ii) the Obligor
on each related Receivable is required to maintain physical damage insurance
covering the Financed Equipment in accordance with Case Credit's normal
requirements; (iii) as of the applicable Closing Date or the applicable
Subsequent Transfer Date, if any, the related Receivables are free and clear
of all security interests, liens, charges and encumbrances and no offset,
defenses or counterclaims have been asserted or threatened; (iv) as of the
Closing Date or the applicable Subsequent Transfer Date, if any, each of such
Receivables is or will be secured by a first priority perfected security
interest in the Financed Equipment in favor of Case Credit; (v) each related
Receivable, at the time it was originated, complied and, as of the Closing
Date or the applicable Subsequent Transfer Date, if any, complies in all
material respects with applicable Federal and state laws,
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including, without limitation, consumer credit, truth in lending, equal credit
opportunity and disclosure laws; and (vi) any other representations and
warranties that may be set forth in the related Prospectus Supplement.
Unless otherwise provided in the related Prospectus Supplement, if the
Seller breaches any of its representations or warranties made in the Sale and
Servicing Agreement, and such breach has not been cured by the last day of the
second (or, if the Seller elects, the first) Collection Period following the
discovery by or notice to the Trustee of such breach, the Seller will
repurchase from such Trust any Receivable materially and adversely affected by
such breach as of such last day at a price equal to the Contract Value (as
defined in the related Prospectus Supplement) (the "Purchase Amount"). The
obligation of the Seller to repurchase any Receivables with respect to which
any such representation or warranty has been breached is subject to Case
Credit's repurchase of such Receivables. The repurchase obligation constitutes
the sole remedy available to the Noteholders, the Indenture Trustee, the
Certificateholders or the Trustee in respect of such Trust for any such
uncured breach.
Pursuant to each Sale and Servicing Agreement, to assure uniform quality in
servicing the Receivables and to reduce administrative costs, the Seller and
each Trust will designate the Servicer as custodian to maintain possession, as
such Trust's agent, of the Receivables and any other documents relating to the
Receivables. The Servicer's accounting records will reflect the sale and
assignment of the related Receivables to the applicable Trust, and Uniform
Commercial Code ("UCC") financing statements reflecting such sale and
assignment will be filed.
COMMERCIAL PAPER PROGRAM
In connection with an asset-backed commercial paper program established in
August 1994, Case Credit and CRC entered into a Receivables Purchase Agreement
dated as of August 1, 1994 (the "Liquidity Receivables Purchase Agreement").
Case Credit intends generally to sell to CRC on the 15th day of each month all
Receivables meeting certain eligibility requirements that Case Credit
purchased from Dealers or originated directly in the preceding calendar month.
Under the Liquidity Receivables Purchase Agreement, if Case Credit elects to
sell any Receivables to CRC in a month, Case Credit is obligated to sell to
CRC all Receivables originated by Case Credit in the preceding month meeting
the applicable eligibility requirements, unless the aggregate Contract Value
(as defined in the Liquidity Receivables Purchase Agreement) of such
Receivables would exceed the purchase limit under the Liquidity Receivables
Purchase Agreement, in which event Case Credit must use procedures to select
the Receivables to be sold that are not adverse to the interests of CRC.
On each monthly settlement date under the Liquidity Receivables Purchase
Agreement, Case Credit will sell and assign to CRC, without recourse, its
entire interest in designated Receivables, including security interests in the
related Financed Equipment, and CRC will grant to Case Equipment Loan Trust
1994-B a security interest in its entire interest in such Receivables and
certain other collateral pursuant to the Loan and Security Agreement described
below. Each such Receivable will be identified in a schedule appearing as an
exhibit to the Liquidity Receivables Purchase Agreement.
In the Liquidity Receivables Purchase Agreement, Case Credit will represent
and warrant to CRC on each monthly purchase date as to designated Receivables
being purchased by CRC on such purchase date, among other things, that: (i)
each designated Receivable meets the applicable eligibility requirements; (ii)
the information provided with respect to the designated Receivables is correct
in all material respects; (iii) the Obligor on each designated Receivable is
required to maintain physical damage insurance covering the Financed Equipment
in accordance with Case Credit's normal requirements; (iv) as of the
applicable purchase date, the designated Receivables are free and clear of all
security interests, liens, charges and encumbrances and no offsets, defenses
or counterclaims have been asserted or threatened; (v) as of the purchase
date, each of such Receivables is or will be secured by a first priority
perfected security interest in the Financed Equipment in favor of Case Credit;
and (vi) each designated Receivable, at the time it was originated, complied
and, as of the purchase date, complies in all material respects with
applicable Federal and state laws, including, without limitation, consumer
credit, truth in lending, equal credit opportunity and disclosure laws.
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If Case Credit breaches any of its representations or warranties in the
Liquidity Receivables Purchase Agreement, Case Credit will repurchase from CRC
any Receivable materially and adversely affected by such breach at a price
equal to the Contract Value of such Receivable on the settlement date
immediately succeeding the month in which such repurchase obligation arises.
The repurchase obligation constitutes the sole remedy available to CRC for any
such breach.
CRC and Case Equipment Loan Trust 1994-B have entered into a Loan and
Security Agreement dated as of August 1, 1994 (the "Loan and Security
Agreement"), pursuant to which Case Equipment Loan Trust 1994-B has agreed to
make or increase the principal amount of a loan (the "CRC Loan") to CRC on a
monthly basis and CRC has agreed to grant to Case Equipment Loan Trust 1994-B
a security interest in CRC's entire interest in all Receivables purchased by
CRC pursuant to the Liquidity Receivables Purchase Agreement and not
previously released from the lien created by the Loan and Security Agreement
and certain other collateral (the "CRC Collateral"). Case Equipment Loan Trust
1994-B will have funds available to lend to CRC pursuant to the Loan and
Security Agreement to the extent that it is able to issue commercial paper
notes or to borrow under a Liquidity Agreement among Case Equipment Loan Trust
1994-B, certain Lenders and Chemical Bank, as Administrative Agent.
The CRC Collateral shall consist primarily of (i) all of the Receivables
acquired by CRC from Case Credit pursuant to the Liquidity Receivables
Purchase Agreement from time to time that have been pledged to Case Equipment
Loan Trust 1994-B pursuant to the Loan and Security Agreement and not
previously released from the lien created by the Loan and Security Agreement
and certain other related property, (ii) the security interests in the
Financed Equipment granted by Obligors pursuant to such Receivables, (iii)
funds on deposit in the certain accounts, (iv) all right, title and interest
of CRC in and to the Liquidity Receivables Purchase Agreement and the
Servicing Agreement dated as of August 1, 1994, between Case Credit, as
Servicer, and CRC, (v) all right, title and interest of CRC in and to certain
interest rate caps required to be maintained by CRC under the Loan and
Security Agreement and (vi) the proceeds of the foregoing.
Under the Loan and Security Agreement, CRC has the right to have Receivables
released from the lien of the Loan and Security Agreement for the purpose of
transferring such Receivables (or interests in such Receivables) if, among
other requirements, prior to any such transfer, CRC has received written
confirmation from the applicable rating agencies that such transfer and the
related transaction will not result in the withdrawal or downgrade of the
current ratings on the outstanding trust certificates and commercial paper
notes issued by Case Equipment Loan Trust 1994-B and after giving effect to
such transfer and the related transactions, the outstanding principal amount
of the CRC Loan will not exceed the Net Pool Balance (as defined in the Loan
and Security Agreement).
In connection with any release of Receivables from the lien of the Loan and
Security Agreement, CRC will be required to deposit into the related
collection account an amount equal to the aggregate Contract Value of such
Receivables plus accrued interest thereon at the applicable APRs to the date
of such release.
ACCOUNTS
With respect to each Trust, the Servicer will establish and maintain with
the related Indenture Trustee one or more accounts, in the name of the
Indenture Trustee on behalf of the related Noteholders and Certificateholders,
into which all payments made on or with respect to the related Receivables
will be deposited (the "Collection Account"). The Servicer will establish and
maintain with such Indenture Trustee an account, in the name of such Indenture
Trustee on behalf of such Noteholders, into which amounts released from the
Collection Account and Spread Account or other credit enhancement for payment
to such Noteholders will be deposited and from which all distributions to such
Noteholders will be made (the "Note Distribution Account"). The Servicer will
establish and maintain with the related Trustee an account, in the name of
such Trustee on behalf of such Certificateholders, into which amounts released
from the Collection Account and Spread Account or other credit enhancement for
distribution to such Certificateholders will be deposited and from which all
distributions to such Certificateholders will be made (the "Certificate
Distribution Account"). If so specified in
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the Prospectus Supplement, the Servicer may also establish and maintain a Pre-
Funding Account, in the name of the Indenture Trustee on behalf of the
Noteholders and the Certificateholders, which will be used to purchase
Subsequent Receivables from the Seller from time to time during the Funding
Period.
Any other accounts to be established with respect to a Trust will be
described in the related Prospectus Supplement.
For any series of Securities, funds in the Collection Account, the Note
Distribution Account, any Pre-Funding Account, the Spread Account and other
accounts identified as such in the related Prospectus Supplement
(collectively, the "Trust Accounts") will be invested as provided in the
related Sale and Servicing Agreement in Eligible Investments. "Eligible
Investments" are limited to investments acceptable to the Rating Agencies as
being consistent with the rating of such Securities and include: (a) direct
obligations of, and obligations fully guaranteed as to timely payment by, the
United States of America; (b) demand deposits, time deposits or certificates
of deposit of any depository institution or trust company incorporated under
the laws of the United States of America or any state thereof (or any domestic
branch of a foreign bank) and subject to supervision and examination by
Federal or State banking or depository institution authorities; provided,
however, that at the time of the investment or contractual commitment to
invest therein, the commercial paper or other short-term senior unsecured debt
obligations (other than such obligations the rating of which is based on the
credit of a Person other than such depository institution or trust company)
thereof will have a credit rating from each of the Rating Agencies in the
highest investment category granted thereby; (c) commercial paper having, at
the time of the investment or contractual commitment to invest therein, a
rating from each of the Rating Agencies in the highest investment category
granted thereby; (d) to the extent described below, investments in money
market funds having a rating from each of the Rating Agencies in the highest
investment category granted thereby (including funds for which the Indenture
Trustee or the Trustee or any of their respective Affiliates is investment
manager or advisor); (e) bankers' acceptances issued by any depository
institution or trust company referred to in clause (b) above; (f) repurchase
obligations with respect to any security that is a direct obligation of, or
fully guaranteed as to timely payment by, the United States of America or any
agency or instrumentality thereof the obligations of which are backed by the
full faith and credit of the United States of America, in either case entered
into with a depository institution or trust company (acting as principal)
described in clause (b); and (g) any other investment permitted by each of the
Rating Agencies as set forth in writing delivered to the Indenture Trustee;
provided that in the case of clauses (d) and (g) such investments will be made
only so long as making such investments will not require the Trust to register
as an investment company, in accordance with the Investment Company Act of
1940, as amended. During any Funding Period, no investments in money market
funds will be made with funds in any account other than the Collection
Account.
Subject to certain conditions, Eligible Investments may include securities
issued by the Seller or its affiliates or trusts originated by the Seller or
its affiliates. Except as described below or in the related Prospectus
Supplement, Eligible Investments are limited to obligations or securities that
mature on or before the business day preceding the date of the next
distribution. However, to the extent permitted by the Rating Agencies, funds
in any Spread Account of a Trust may be invested in securities that will not
mature prior to the date of the next distribution with respect to Notes issued
by such Trust and will not be sold to meet any shortfalls. Thus, the amount of
cash in any Spread Account at any time may be less than the balance of the
Spread Account. If the amount required to be withdrawn from any Spread Account
to cover shortfalls in collections on the related Receivables (as provided in
the related Prospectus Supplement) exceeds the amount of cash in the Spread
Account, a temporary shortfall in the amounts distributed to the related
Noteholders or Certificateholders could result, which could, in turn, increase
the average life of the Notes or the Certificates of such series. Except as
otherwise specified in the related Prospectus Supplement, investment earnings
on funds deposited in the Trust Accounts, net of losses and investment
expenses (collectively, "Investment Earnings"), shall be deposited in the
applicable Collection Account on each Payment Date and shall be treated as
collections of interest on the related Receivables.
The Trust Accounts will be maintained as Eligible Deposit Accounts.
"Eligible Deposit Account" means either (a) a segregated account with an
Eligible Institution or any other segregated account the deposit of funds in
which has been approved by the Rating Agencies or (b) a segregated trust
account with the corporate trust
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department of a depository institution organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
(or any domestic branch of a foreign bank), having corporate trust powers and
acting as trustee for funds deposited in such account, so long as any of the
securities of such depository institution have a credit rating from each
Rating Agency in one of its generic rating categories that signifies
investment grade. "Eligible Institution" means, with respect to a Trust, (a)
the corporate trust department of the related Indenture Trustee or the related
Trustee, as applicable, or (b) a depository institution organized under the
laws of the United States of America or any one of the states thereof or the
District of Columbia (or any domestic branch of a foreign bank) (i) that has
either (A) a long-term unsecured debt rating or certificate of deposit rating
acceptable to the Rating Agencies or (B) a short-term unsecured debt rating or
certificate of deposit rating acceptable to the Rating Agencies and (ii) whose
deposits are insured by the FDIC.
SERVICING PROCEDURES
The Servicer will make reasonable efforts to collect all payments due with
respect to the Receivables held by any Trust in a manner consistent with the
related Sale and Servicing Agreement, and will utilize such collection
procedures as it follows with respect to comparable agricultural and
construction equipment retail installment sale contracts it services for
itself or others. Consistent with its normal procedures, the Servicer may, in
its discretion, arrange with the Obligor on a Receivable to extend or modify
the payment schedule, but no such arrangement will extend the final payment
date of any Receivable beyond the Final Scheduled Maturity Date unless the
Servicer purchases the Receivable as described below. Some of such
arrangements (including, without limitation, any extension of the payment
schedule beyond the Final Scheduled Maturity Date) may result in the Servicer
purchasing the Receivable for the Purchase Amount. In the event of a
foreclosure with respect to a Receivable, the Servicer may sell the Financed
Equipment securing the respective Receivable at public or private sale, or
take any other action permitted by applicable law. See "Certain Legal Aspects
of the Receivables."
COLLECTIONS
With respect to each Trust, the Servicer will deposit all payments on the
related Receivables (from whatever source) and all proceeds of such
Receivables collected during each collection period specified in the related
Prospectus Supplement (each, a "Collection Period") into the related
Collection Account within two business days after receipt thereof. However, at
any time that and for so long as (i) Case Credit is the Servicer, (ii) there
exists no Servicer Default and (iii) each other condition to making deposits
less frequently than daily as may be specified by the Rating Agencies or set
forth in the related Prospectus Supplement is satisfied, the Servicer will not
be required to deposit such amounts into the Collection Account until on or
before the business day preceding the applicable Payment Date. Pending deposit
into the Collection Account, collections may be invested by the Servicer at
its own risk and for its own benefit and will not be segregated from its own
funds. If the Servicer were unable to remit such funds, Securityholders might
incur a loss. To the extent set forth in the related Prospectus Supplement,
the Servicer may, in order to satisfy the requirements described above, obtain
a letter of credit or other security for the benefit of the related Trust to
secure timely remittances of collections on the related Receivables and
payment of the aggregate Purchase Amount with respect to Receivables purchased
by the Servicer.
SERVICING COMPENSATION AND PAYMENT OF EXPENSES
Unless otherwise specified in the Prospectus Supplement with respect to any
Trust, the Servicer will be entitled to receive the Servicing Fee for each
Collection Period in an amount equal to specified percentage per annum (as set
forth in the related Prospectus Supplement, the "Servicing Fee Rate") of the
Pool Balance as of the first day of each month during the related Collection
Period (the "Servicing Fee"). The Servicing Fee (together with any portion of
the Servicing Fee that remains unpaid from prior Payment Dates) will be paid
solely to the extent of the Total Distribution Amount (as defined in the
related Prospectus Supplement) and, unless otherwise disclosed in the related
Prospectus Supplement, will be paid prior to the distribution of any portion
of the Total Distribution Amount to the Noteholders or the Certificateholders.
Under certain circumstances as
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described in a related Prospectus Supplement, the Servicing Fee will not be
paid until after the distribution to the Noteholders and the
Certificateholders of their respective portions of the Total Distribution
Amount.
The Servicing Fee will compensate the Servicer for performing the functions
of a third party servicer of agricultural and construction equipment
receivables as an agent for their beneficial owner, including collecting and
posting all payments, responding to inquiries of Obligors on the Receivables,
investigating delinquencies, sending payment coupons to Obligors, reporting
tax information to Obligors, paying costs of collections and disposition of
defaults and policing the collateral. The Servicing Fee also will compensate
the Servicer for administering the Receivables of each Trust, accounting for
collections and furnishing monthly and annual statements to the related
Trustee and Indenture Trustee with respect to distributions and generating
Federal income tax information for such Trust and for the related Noteholders
and Certificateholders. The Servicing Fee also will reimburse the Servicer for
certain taxes, accounting fees, outside auditor fees, data processing costs
and other costs incurred in connection with administering the Receivables of
each Trust.
DISTRIBUTIONS
With respect to each series of Securities, beginning on the Payment Date
specified in the related Prospectus Supplement, distributions of principal and
interest (or, where applicable, of principal or interest only) on each class
of such Securities entitled thereto will be made by the applicable Trustee to
the Noteholders and the Certificateholders of such series. The timing,
calculation, allocation, order, source, priorities of and requirements for all
payments to each class of Noteholders and all distributions to each class of
Certificateholders of such series will be set forth in the related Prospectus
Supplement.
With respect to each Trust, on each Payment Date, collections on the related
Receivables will be transferred from the Collection Account to the Note
Distribution Account and the Certificate Distribution Account for distribution
to Noteholders and Certificateholders to the extent provided in the related
Prospectus Supplement. Credit enhancement, such as a Spread Account, will be
available to cover any shortfalls in the amount available for distribution on
such date to the extent specified in the related Prospectus Supplement. As
more fully described in the related Prospectus Supplement, and unless
otherwise specified therein, distributions in respect of principal of a class
of Securities of a given series will be subordinate to distributions in
respect of interest on such class, and distributions in respect of the
Certificates of such series may be subordinate to payments in respect of the
Notes of such series.
CREDIT AND CASH FLOW ENHANCEMENT
The amounts and types of credit enhancement arrangements and the provider
thereof, if applicable, with respect to each class of Securities of a given
series, if any, will be set forth in the related Prospectus Supplement. If and
to the extent provided in the related Prospectus Supplement, credit
enhancement may be in the form of subordination of one or more classes of
Securities, Spread Accounts, over-collateralization, letters of credit, credit
or liquidity facilities, surety bonds, guaranteed investment contracts, swaps
or other interest rate protection agreements, repurchase obligations, other
agreements with respect to third party payments or other support, cash
deposits or such other arrangements as may be described in the related
Prospectus Supplement or any combination of two or more of the foregoing. If
specified in the applicable Prospectus Supplement, credit enhancement for a
class of Securities may cover one or more other classes of Securities of the
same series, and credit enhancement for a series of Securities may cover one
or more other series of Securities.
The presence of a Spread Account and other forms of credit enhancement for
the benefit of any class or series of Securities is intended to enhance the
likelihood of receipt by the Securityholders of such class or series of the
full amount of principal and interest due thereon and to decrease the
likelihood that such Securityholders will experience losses. Unless otherwise
specified in the related Prospectus Supplement, the credit enhancement for a
class or series of Securities will not provide protection against all risks of
loss and will not guarantee repayment of the entire principal balance and
interest thereon. If losses occur that exceed the amount covered by any credit
enhancement or which are not covered by any credit enhancement,
Securityholders of any class or
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series will bear their allocable share of deficiencies, as described in the
related Prospectus Supplement. In addition, if a form of credit enhancement
covers more than one series of Securities, Securityholders of any such series
will be subject to the risk that such credit enhancement will be exhausted by
the claims of Securityholders of other series.
Unless otherwise provided in the related Prospectus Supplement, the Seller
may replace the credit enhancement for any class of Securities with another
form of credit enhancement without the consent of Securityholders provided the
Rating Agencies confirm in writing that substitution will not result in the
reduction or withdrawal of the rating of such class of Securities or any other
class of Securities of the related series.
Spread Account. If so provided in the related Prospectus Supplement,
pursuant to the related Sale and Servicing Agreement, the Seller will
establish for a series or class of Securities an account, as specified in the
related Prospectus Supplement (the "Spread Account"), which will be maintained
in the name of the applicable Indenture Trustee. Unless otherwise provided in
the related Prospectus Supplement, the Spread Account will be funded by an
initial deposit by the Seller on the Closing Date in the amount set forth in
the related Prospectus Supplement. As further described in the related
Prospectus Supplement, the amount on deposit in the Spread Account will be
increased on each Payment Date thereafter up to the Specified Spread Account
Balance (as defined in the related Prospectus Supplement) by the deposit
therein of the amount of collections on the related Receivables remaining on
each such Payment Date after the payment of all other required payments and
distributions on such date. The related Prospectus Supplement will describe
the circumstances and manner under which distributions may be made out of the
Spread Account, either to holders of the Securities covered thereby, to the
Seller or to any transferee or assignee of the Seller.
The Seller may at any time, without consent of the Securityholders, sell,
transfer, convey or assign in any manner its rights to and interests in
distributions from the Spread Account, including interest earnings thereon;
provided that (i) the Rating Agencies confirm in writing that such action will
not result in a reduction or withdrawal of the rating of any class of
Securities, (ii) the Seller provides to the Trustee and the Indenture Trustee
a written opinion from independent counsel to the effect that such action will
not cause the Trust to be treated as an association (or publicly traded
partnership) taxable as a corporation for Federal income tax purposes and
(iii) such transferee or assignee agrees in writing to take positions for tax
purposes consistent with the tax positions agreed to be taken by the Seller.
NET DEPOSITS
As an administrative convenience, unless the Servicer is required to remit
collections daily (see "--Collections" above), the Servicer will be permitted
to make the deposit of collections and Purchase Amounts for any Trust for or
with respect to the related Collection Period net of distributions to be made
to the Servicer for such Trust with respect to such Collection Period. The
Servicer, however, will account to the Indenture Trustee, the Trustee, the
Noteholders and the Certificateholders with respect to each Trust as if all
deposits, distributions and transfers were made individually.
STATEMENTS TO TRUSTEES AND TRUST
Prior to each Payment Date with respect to each series of Securities, the
Servicer will provide to the applicable Indenture Trustee and the applicable
Trustee as of the close of business on the last day of the preceding
Collection Period a statement setting forth substantially the same information
as is required to be provided in the periodic reports provided to
Securityholders of such series described under "Certain Information Regarding
the Securities--Reports to Securityholders."
EVIDENCE AS TO COMPLIANCE
Each Sale and Servicing Agreement will provide that a firm of independent
public accountants will furnish to the related Trustee and Indenture Trustee
annually a statement as to compliance by the Servicer during the preceding
twelve months (or in the case of the first such certificate, from the
applicable Closing Date) with certain standards relating to the servicing of
the applicable Receivables, the Servicer's accounting records and computer
files with respect thereto and certain other matters.
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Each Sale and Servicing Agreement will also provide for delivery to the
related Trust and Indenture Trustee, substantially simultaneously with the
delivery of such accountants' statement referred to above, of a certificate
signed by an officer of the Servicer stating that the Servicer has fulfilled
its obligations under the Sale and Servicing Agreement throughout the
preceding twelve months (or, in the case of the first such certificate, from
the Closing Date) or, if there has been a default in the fulfillment of any
such obligation, describing each such default. The Servicer will agree to give
each Indenture Trustee and each Trustee notice of certain Servicer Defaults
under the related Sale and Servicing Agreement.
Copies of such statements and certificates may be obtained by
Securityholders by written request addressed to the Applicable Trustee.
CERTAIN MATTERS REGARDING THE SERVICER
Each Sale and Servicing Agreement will provide that Case Credit may not
resign from its obligations and duties as Servicer thereunder, except upon
determination that Case Credit's performance of such duties is no longer
permissible under applicable law. No such resignation will become effective
until the related Indenture Trustee or a successor servicer has assumed Case
Credit's servicing obligations and duties under such Sale and Servicing
Agreement.
Each Sale and Servicing Agreement will further provide that neither the
Servicer nor any of its directors, officers, employees and agents will be
under any liability to the related Trust or the related Noteholders or
Certificateholders for taking any action or for refraining from taking any
action pursuant to such Sale and Servicing Agreement or for errors in
judgment; except that neither the Servicer nor any such person will be
protected against any liability that would otherwise be imposed by reason of
willful misfeasance, bad faith or negligence in the performance of the
Servicer's duties thereunder or by reason of reckless disregard of its
obligations and duties thereunder. In addition, each Sale and Servicing
Agreement will provide that the Servicer is under no obligation to appear in,
prosecute or defend any legal action that is not incidental to the Servicer's
servicing responsibilities under such Sale and Servicing Agreement and that,
in its opinion, may cause it to incur any expense or liability.
Under the circumstances specified in each Sale and Servicing Agreement, any
entity into which the Servicer may be merged or consolidated, or any entity
resulting from any merger or consolidation to which the Servicer is a party,
or any entity succeeding to the business of the Servicer or, with respect to
its obligations as Servicer, any corporation 50% or more of the voting stock
of which is owned, directly or indirectly, by Case or Case Credit, which
corporation or other entity in each of the foregoing cases assumes the
obligations of the Servicer, will be the successor of the Servicer under such
Sale and Servicing Agreement.
SERVICER DEFAULT
Except as otherwise provided in the related Prospectus Supplement, "Servicer
Default" under each Sale and Servicing Agreement will consist of (i) any
failure by the Servicer to deliver to the related Indenture Trustee for
deposit in any of the Trust Accounts or the Certificate Distribution Account
any required payment or to direct such Indenture Trustee to make any required
distributions therefrom, which failure continues unremedied for three business
days after written notice from such Indenture Trustee or the related Trustee
is received by the Servicer or after discovery of such failure by the
Servicer; (ii) any failure by the Servicer or the Seller, as the case may be,
duly to observe or perform in any material respect any other covenant or
agreement in such Sale and Servicing Agreement, which failure materially and
adversely affects the rights of the Noteholders, the Certificateholders of the
related series or any other person (a "Specified Party") identified in the
related Prospectus Supplement and that continues unremedied for 60 days after
the giving of written notice of such failure (A) to the Servicer or the
Seller, as the case may be, by such Indenture Trustee or such Trustee or (B)
to the Servicer or the Seller, as the case may be, and to such Indenture
Trustee and such Trustee by holders of Notes or Certificates of such series,
as applicable, evidencing not less than 25% in principal amount of such
outstanding Notes or of such Certificate Balance or by another Specified
Party; and (iii) certain events of
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insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings with respect to the Servicer or the Seller and certain
actions by the Servicer or the Seller indicating its insolvency,
reorganization pursuant to bankruptcy proceedings or inability to pay its
obligations (each, an "Insolvency Event").
RIGHTS UPON SERVICER DEFAULT
Unless otherwise provided in the related Prospectus Supplement, as long as a
Servicer Default under a Sale and Servicing Agreement remains unremedied, the
related Indenture Trustee or holders of Notes of the related series evidencing
not less than 25% in principal amount of such Notes then outstanding may
terminate all the rights and obligations of the Servicer under such Sale and
Servicing Agreement, whereupon such Indenture Trustee or a successor servicer
appointed by such Indenture Trustee will succeed to all the responsibilities,
duties and liabilities of the Servicer under such Sale and Servicing Agreement
and will be entitled to similar compensation arrangements. If, however, a
bankruptcy trustee or similar official has been appointed for the Servicer,
and no Servicer Default other than such appointment has occurred, such trustee
or official may have the power to prevent such Indenture Trustee or such
Noteholders from effecting a transfer of servicing. In the event that such
Indenture Trustee is unwilling or unable to so act, it may appoint, or
petition a court of competent jurisdiction for the appointment of, a successor
with a net worth of at least $100,000,000 and whose regular business includes
the servicing of equipment receivables. Such Indenture Trustee may make such
arrangements for compensation to be paid, which in no event may be greater
than the servicing compensation to the Servicer under such Sale and Servicing
Agreement. Neither the Trustee nor the Certificateholders have the right to
remove the Servicer if a Servicer Default occurs.
WAIVER OF PAST DEFAULTS
With respect to each Trust, unless otherwise provided in the related
Prospectus Supplement, the holders of Notes evidencing at least a majority in
principal amount of the then outstanding Notes of the related series (or the
holders of the Certificates of such series evidencing at least a majority of
the outstanding Certificate Balance, in the case of any Servicer Default that
does not adversely affect the related Indenture Trustee or such Noteholders)
may, on behalf of all such Noteholders and Certificateholders, waive any
default by the Servicer in the performance of its obligations under the
related Sale and Servicing Agreement and its consequences, except a default in
making any required deposits to or payments from any of the Trust Accounts in
accordance with such Sale and Servicing Agreement. Therefore, the Noteholders
have the ability, as limited above, to waive defaults by the Servicer which
could materially adversely affect the Certificateholders. No such waiver will
impair such Noteholders' or Certificateholders' rights with respect to
subsequent defaults.
AMENDMENT
Unless otherwise provided in the related Prospectus Supplement, each of the
Transfer and Servicing Agreements may be amended by the parties thereto,
without the consent of the related Noteholders or Certificateholders, for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of such Transfer and Servicing Agreements or of
modifying in any manner the rights of such Noteholders or Certificateholders;
provided that such action will not, in the opinion of counsel satisfactory to
the related Indenture Trustee and the related Trustee, materially and
adversely affect the interest of any such Noteholder or Certificateholder. In
addition, unless otherwise provided in the related Prospectus Supplement, the
Transfer and Servicing Agreements may be amended by the parties thereto,
without the consent of the related Noteholders or Certificateholders, to
substitute or add credit enhancement for any class of Securities provided the
Rating Agencies confirm in writing that such substitution or addition will not
result in a reduction or withdrawal of the rating of such class of Securities
or any other class of Securities of the related series. Unless otherwise
specified in the related Prospectus Supplement, the Transfer and Servicing
Agreements may also be amended by the Seller, the Servicer and the related
Trustee with the consent of the Indenture Trustee, the holders of Notes
evidencing at least a majority in principal amount of then outstanding Notes
of the related series and the holders of Certificates of such series
evidencing at least a majority of the Certificate Balance, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of such Transfer and
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Servicing Agreements or of modifying in any manner the rights of such
Noteholders or Certificateholders; provided, however, that no such amendment
may (i) increase or reduce in any manner the amount of, or accelerate or delay
the timing of, collections of payments on the related Receivables or
distributions that are required to be made for the benefit of such Noteholders
or Certificateholders or (ii) reduce the aforesaid percentage of the Notes or
Certificates of such series that are required to consent to any such
amendment, without the consent of the holders of all the outstanding Notes or
Certificates, as the case may be, of such series.
PAYMENT OF NOTES
Upon the payment in full of all outstanding Notes of a given series and the
satisfaction and discharge of the related Indenture, the related Trustee will
succeed to all the rights of the Indenture Trustee, and the Certificateholders
of such series will succeed to all the rights of the Noteholders of such
series, under the related Sale and Servicing Agreement, except as otherwise
provided therein.
TERMINATION
With respect to each Trust, the obligations of the Servicer, the Seller, the
related Trustee and the related Indenture Trustee pursuant to the Transfer and
Servicing Agreements will terminate upon (i) the maturity or other liquidation
of the last related Receivables and the disposition of any amounts received
upon liquidation of any such remaining Receivables and (ii) the payment to
Noteholders and Certificateholders of the related series of all amounts
required to be paid to them pursuant to the Transfer and Servicing Agreements.
Unless otherwise provided in the related Prospectus Supplement, in order to
avoid excessive administrative expense, the Servicer will be permitted at its
option to purchase from each Trust, as of the beginning of any applicable
Collection Period if, on the Payment Date in such Collection Period, the then
outstanding Pool Balance with respect to the Receivables held by such Trust is
10% or less of the Initial Pool Balance (as defined in the related Prospectus
Supplement, the "Initial Pool Balance"), all remaining related Receivables at
a price equal to the aggregate of the Contract Value of the Receivables as of
the end of such Collection Period plus accrued interest at the Cutoff Date
APR.
As more fully described in the related Prospectus Supplement, any
outstanding Notes of the related series will be redeemed concurrently with
either of the events specified above and the subsequent distribution to the
related Certificateholders of all amounts required to be distributed to them
pursuant to the applicable Trust Agreement will effect early retirement of the
Certificates of such series.
ADMINISTRATION AGREEMENT
Case Credit, in its capacity as administrator (the "Administrator"), will
enter into an agreement (as amended and supplemented from time to time, an
"Administration Agreement") with each Trust and the related Indenture Trustee
pursuant to which the Administrator will agree, to the extent provided in such
Administration Agreement, to perform on behalf of the Trust certain
administrative obligations required by the related Indenture. Unless otherwise
specified in the related Prospectus Supplement with respect to any Trust, as
compensation for the performance of the Administrator's obligations under the
applicable Administration Agreement and as reimbursement for its expenses
related thereto, the Administrator will be entitled to a quarterly
administration fee in an amount equal to $500, or such other amount as may be
set forth in the related Prospectus Supplement (the "Administration Fee").
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CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
SECURITY INTEREST IN EQUIPMENT
In states in which retail installment sale contracts such as the Receivables
evidence the credit sale of agricultural and construction equipment by dealers
to obligors, the contracts also constitute personal property security
agreements and include grants of security interests in the equipment under the
applicable UCC. Perfection of security interests in the equipment is generally
governed by the UCC. However, under the laws of certain states and under
certain circumstances, perfection of security interests in agricultural or
construction equipment may be governed by certificate of title registration
laws of the state in which such equipment is located.
Case Credit generally sells on a monthly basis to the Seller, pursuant to
the Liquidity Receivables Purchase Agreement, all retail installment sales
contracts that Case Credit acquires from dealers or retail outlets owned by
Case or its affiliates and may sell additional such contracts originated or
acquired by it (but not sold to the Seller pursuant to the Liquidity
Receivables Purchase Agreement) to the Seller pursuant to a Purchase Agreement
in connection with the issuance of a series of Securities. All of such
contracts acquired by Case Credit name Case Credit as obligee or assignee and
as the secured party. Case Credit also confirms that all necessary action has
been taken under the laws of the state in which the financed equipment is
located to perfect Case Credit's security interest in the financed equipment.
Because Case Credit continues to service the contracts, the obligors on the
contracts are not notified of the sale from Case Credit to the Seller and will
not be notified of the sale from the Seller to the Trust. No action will be
taken (by amendment of the financing statements or, if applicable, the
certificates of title for the financed equipment or otherwise) to record the
transfer of the security interest from the Seller to the Trust. In connection
with the Liquidity Receivables Purchase Agreement, or any applicable Purchase
Agreement, Case Credit has also sold and assigned or will sell and assign its
interests in the Financed Equipment securing the related Receivables to the
Seller. Case Credit has filed and will file financing statements in Wisconsin
reflecting the sale of its interests in the Receivables to the Seller. See
"Description of the Transfer and Servicing Agreements--Commercial Paper
Program."
With respect to each Trust, pursuant to the related Sale and Servicing
Agreement, the Seller will assign its interests in such Financed Equipment to
such Trust. However, because of the administrative burden and expense, none of
the Seller, the Servicer nor the related Trustee will amend or assign any
financing statement or, if applicable, the certificate of title to identify
such Trust as the new secured party on such financing statement or, if
applicable, the certificate of title relating to the Financed Equipment. Also,
the Servicer will continue to hold the Receivables and any certificates of
title relating to the equipment in its possession as custodian for the Seller
and such Trust pursuant to the related Sale and Servicing Agreement. See
"Description of the Transfer and Servicing Agreements--Sale and Assignment of
Receivables."
There are certain limited circumstances under the UCC and applicable Federal
law in which prior or subsequent transferees of Receivables held by a Trust
could have an interest in such Receivables with priority over such Trust's
interest. A purchaser of the Receivables who gives new value and takes
possession of the instruments that evidence the Receivables (i.e., the chattel
paper) in the ordinary course of such purchaser's business may, under certain
circumstances, have priority over the interest of the related Trust in the
Receivables. In addition, while Case Credit is the Servicer, cash collections
on the Receivables will, under certain circumstances, be commingled with the
funds of Case Credit and, in the event of the bankruptcy of Case Credit, the
related Trust may not have a perfected interest in such collections.
In most states, an assignment such as that under each Sale and Servicing
Agreement is an effective conveyance of a security interest without amendment
or assignment of any financing statement relating to the equipment or, if
applicable, notation on the related certificate of title, and the assignee
succeeds thereby to the assignor's rights as secured party. However, by not
identifying such Trust as the secured party on the financing statement or
certificate of title, the security interest of such Trust in the vehicle could
be defeated through fraud or negligence. In the absence of error, fraud or
forgery by the equipment owner or the Servicer or administrative
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error by state or local agencies, the proper initial filing of the financing
statement relating to the equipment or, if applicable, the notation of the
Dealer's lien on the certificates of title will be sufficient to protect such
Trust against the rights of subsequent purchasers of Financed Equipment or
subsequent lenders who take a security interest in Financed Equipment. If
there is any Financed Equipment as to which the original secured party failed
to obtain and assign to Case Credit a perfected security interest, the
security interest of Case Credit would be subordinate to, among others,
subsequent purchasers of the Financed Equipment and holders of perfected
security interests. Such a failure, however, would constitute a breach of the
warranties of Case Credit under the Liquidity Receivables Purchase Agreement
or the applicable Purchase Agreement and would create an obligation of Case
Credit to repurchase the related Receivable from the Seller unless the breach
is cured. See "Description of the Transfer and Servicing Agreements--Sale and
Assignment of Receivables" and "--Commercial Paper Program."
Under the laws of most states, the perfected security interest in movable
property would continue for four months after such property is moved to a
state other than the state in which a financing statement was filed initially
to perfect the security interest in such property, or, if applicable, in which
such property is initially registered. With respect to any equipment that is
subject to certification of title under the laws of the state in which it is
located, a majority of states generally require a surrender of a certificate
of title to re-register the equipment. Accordingly, a secured party must
surrender possession if it holds the certificate of title to the equipment,
or, in the case of equipment registered in a state providing for the notation
of a lien on the certificate of title but not possession by the secured party,
the secured party would receive notice of surrender if the security interest
is noted on the certificate of title. Thus, the secured party would have the
opportunity to re-perfect its security interest in the equipment in the state
of relocation. In states that do not require a certificate of title for
registration of equipment, re-registration could defeat perfection.
Under each Sale and Servicing Agreement, the Servicer is and will be
obligated to take appropriate steps, at the Servicer's expense, to maintain
perfection of security interests in the Financed Equipment and is obligated to
purchase the related Receivable if it fails to do so.
Under the laws of most states, liens for repairs performed on the equipment
and liens for unpaid taxes take priority over even a perfected security
interest in such goods. Under each Sale and Servicing Agreement, the Seller
will represent to the related Trust that, as of the date the related
Receivable is sold to such Trust, each security interest in the Financed
Equipment is or will be prior to all other present liens on and security
interests in such Financed Equipment. However, liens for repairs or taxes
could arise at any time during the term of a Receivable. No notice will be
given to the Trustee, the Indenture Trustee, the Noteholders or the
Certificateholders in respect of a given Trust if such a lien arises.
REPOSSESSION
In the event of default by equipment purchasers, the holder of the retail
installment sale contract has all the remedies of a secured party under the
UCC, except where specifically limited by other state laws. Among the UCC
remedies, the secured party has the right to perform self-help repossession
unless such act would constitute a breach of the peace. Self-help is the
method employed by the Servicer in most cases and is accomplished simply by
retaking possession of the financed equipment. In the event of default by the
obligor, some jurisdictions require that the obligor be notified of the
default and be given a time period within which the obligor may cure the
default prior to repossession. Generally, the right of reinstatement may be
exercised on a limited number of occasions in any one-year period. In cases
where the obligor objects or raises a defense to repossession, or if otherwise
required by applicable state law, a court order must be obtained from the
appropriate state court, and the equipment must then be repossessed in
accordance with that order.
NOTICE OF SALE; REDEMPTION RIGHTS
The UCC and other state laws require the secured party to provide the
obligor with reasonable notice of the date, time and place of any public sale
and/or the date after which any private sale of the collateral may be held.
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The obligor has the right to redeem the collateral prior to actual sale by
paying the secured party the unpaid principal balance of the obligation plus
reasonable expenses for repossessing, holding and preparing the collateral for
disposition and arranging for its sale, plus, in some jurisdictions,
reasonable attorneys' fees, or, in some states, by payment of delinquent
installments or the unpaid balance.
DEFICIENCY JUDGMENTS AND EXCESS PROCEEDS; OTHER LIMITATIONS
The proceeds of resale of the equipment generally will be applied first to
the expenses of resale and repossession and then to the satisfaction of the
indebtedness. While some states impose prohibitions or limitations on
deficiency judgments if the net proceeds from resale do not cover the full
amount of the indebtedness, a deficiency judgment against the debtor can be
sought for the shortfall in those states that do not prohibit or limit such
judgments. However, because a defaulting obligor may have very little capital
or sources of income available following repossession, in many cases it may
not be useful to seek a deficiency judgment. If one is obtained, it may be
uncollectible or settled at a significant discount.
Occasionally, after resale of the equipment and payment of all expenses and
all indebtedness, there is a surplus of funds. In that case, the UCC requires
the creditor to remit the surplus to any holder of a lien with respect to the
equipment or, if no such lienholder exists, to the former owner of the
equipment.
Courts have applied general equitable principles to secured parties pursuing
repossession and litigation involving deficiency balances. These equitable
principles may have the effect of relieving an obligor from some or all of the
legal consequences of a default.
In several cases, obligors have asserted that the self-help remedies of
secured parties under the UCC and related laws violate the due process
protections provided under the 14th Amendment to the Constitution of the
United States. Courts have generally upheld the notice provisions of the UCC
and related laws as reasonable or have found that the repossession and resale
by the creditor do not involve sufficient state action to afford
constitutional protection to borrowers.
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including Federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a secured
party to realize upon collateral or to enforce a deficiency judgment. For
example, in a Chapter 11, 12 or 13 proceeding under the Federal bankruptcy
law, a court may prevent a creditor from repossessing equipment, and, as part
of the rehabilitation plan, reduce the amount of the secured indebtedness to
the market value of the equipment at the time of bankruptcy (as determined by
the court), leaving the creditor as a general unsecured creditor for the
remainder of the indebtedness. A bankruptcy court may also reduce the monthly
payments due under a contract or change the rate of interest and time of
repayment of the indebtedness.
CONSUMER PROTECTION LAWS
Numerous Federal and state consumer protection laws and related regulations
impose substantial requirements upon lenders and servicers involved in
consumer finance. Also, state laws impose finance charge ceilings and other
restrictions on consumer transactions and require contract disclosures in
addition to those required under Federal law. These requirements impose
specific statutory liabilities upon creditors who fail to comply with their
provisions. In some cases, this liability could affect an assignee's ability
to enforce consumer finance contracts. Certain of the Receivables may be
deemed to be consumer finance contracts under applicable Federal or state
laws.
Under the Liquidity Receivables Purchase Agreement, Case Credit warrants to
the Seller upon each sale of Receivables that each Receivable sold complies
with all requirements of law in all material respects and will give, under
each Purchase Agreement, a similar warranty. Accordingly, if an Obligor has a
claim against the related Trust for violation of any law and such claim
materially and adversely affects such Trust's interest in a Receivable, such
violation would constitute a breach of the warranties of the Seller under such
Sale and Servicing
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Agreement and would create an obligation of the Seller to repurchase the
Receivable unless the breach is cured. See "Description of the Transfer and
Servicing Agreements--Sale and Assignment of Receivables."
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of certain Federal income tax
consequences of the purchase, ownership and disposition of the Notes and the
Certificates. The summary does not purport to deal with Federal income tax
consequences applicable to all categories of holders, some of which may be
subject to special rules. For example, it does not discuss the tax treatment
of Noteholders or Certificateholders that are insurance companies, regulated
investment companies or dealers in securities. This discussion is directed to
prospective purchasers who purchase Notes or Certificates in the initial
distribution thereof and who hold the Notes or Certificates as "capital
assets" within the meaning of Section 1221 of the Internal Revenue Code of
1986, as amended (the "Code"). Prospective investors are urged to consult
their own tax advisors in determining the Federal, state, local, foreign and
any other tax consequences to them of the purchase, ownership and disposition
of the Notes and the Certificates.
The following summary is based upon current provisions of the Code, the
Treasury regulations promulgated thereunder, judicial authority, and ruling
authority, all of which are subject to change, which change may be
retroactive. Each Trust will be provided with an opinion of special Federal
tax counsel to such Trust specified in the related Prospectus Supplement
("Federal Tax Counsel") regarding certain Federal income tax matters discussed
below. An opinion of Federal Tax Counsel, however, is not binding on the
Internal Revenue Service (the "IRS") or the courts. Moreover, there are no
cases or IRS rulings on similar transactions involving both debt and equity
interests issued by a trust with terms similar to those of the Notes and the
Certificates. As a result, the IRS may disagree with all or a part of the
discussion below. No ruling on any of the issues discussed below will be
sought from the IRS. For purposes of the following summary, references to the
Trust, the Notes, the Certificates and related terms, parties and documents
shall be deemed to refer, unless otherwise specified herein, to each Trust and
the Notes, Certificates and related terms, parties and documents applicable to
such Trust.
TAX CHARACTERIZATION OF THE TRUST
Federal Tax Counsel will deliver its opinion that the Trust will not be an
association (or publicly traded partnership) taxable as a corporation for
Federal income tax purposes. This opinion will be based on the assumption of
compliance by all parties with the terms of the Trust Agreement and related
documents.
If the Trust were taxable as a corporation for Federal income tax purposes,
the Trust would be subject to corporate income tax on its taxable income. The
Trust's taxable income would include all its income on the Receivables,
possibly reduced by its interest expense on the Notes. Any such corporate
income tax could materially reduce cash available to make payments on the
Notes and distributions on the Certificates, and Certificateholders could be
liable for any such tax that is unpaid by the Trust.
TAX CONSEQUENCES TO HOLDERS OF THE NOTES
Treatment of the Notes as Indebtedness. The Seller will agree, and the
Noteholders will agree by their purchase of Notes, to treat the Notes as debt
for Federal, state and local income and franchise tax purposes. Federal Tax
Counsel will, except as otherwise provided in the related Prospectus
Supplement, advise the Trust that the Notes will be classified as debt for
Federal income tax purposes. The discussion below assumes this
characterization of the Notes is correct.
OID, Indexed Securities, etc. The discussion below assumes that all payments
on the Notes are denominated in U.S. dollars, and that the Notes are not
Indexed Securities or Strip Notes. Moreover, the discussion assumes that the
interest formula for the Notes meets the requirements for "qualified stated
interest"
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under Treasury regulations (the "OID Regulations") relating to original issue
discount ("OID"), and that any OID on the Notes (i.e., any excess of the
principal amount of the Notes over their issue price) is a de minimis amount
(i.e., less than 1/4% of their principal amount multiplied by the number of
full years included in their term), all within the meaning of the OID
Regulations. If these conditions are not satisfied with respect to any given
series of Notes and as a result the Notes are treated as issued with OID,
additional tax considerations with respect to such Notes will be disclosed in
the applicable Prospectus Supplement.
Interest Income on the Notes. Based on the above assumptions, except as
discussed below, the Notes will not be considered issued with OID. The stated
interest thereon will be taxable to a Noteholder as ordinary interest income
when received or accrued in accordance with such Noteholder's method of tax
accounting. Under the OID Regulations, a holder of a Note issued with a de
minimis amount of OID must include such OID in income, on a pro rata basis, as
principal payments are made on the Note. It is believed that any prepayment
premium paid as a result of a mandatory redemption will be taxable as
contingent interest when it becomes fixed and unconditionally payable. A
purchaser who buys a Note for more or less than its principal amount will
generally be subject, respectively, to the premium amortization or market
discount rules of the Code.
A holder of a Note that has a fixed maturity date of not more than one year
from the issue date of such Note (a "Short-Term Note") may be subject to
special rules. Under the OID Regulations, all stated interest will be treated
as OID. An accrual basis holder of a Short-Term Note (and certain cash basis
holders, including regulated investment companies, as set forth in Section
1281 of the Code) generally would be required to report interest income as OID
accrues on a straight-line basis over the term of each interest period. Other
cash basis holders of a Short-Term Note would, in general, be required to
report interest income as interest is paid (or, if earlier, upon the taxable
disposition of the Short-Term Note). However, a cash basis holder of a Short-
Term Note reporting interest income as it is paid may be required to defer a
portion of any interest expense otherwise deductible on indebtedness incurred
to purchase or carry the Short-Term Note until the taxable disposition of the
Short-Term Note. A cash basis taxpayer may elect under Section 1281 of the
Code to accrue interest income on all nongovernment debt obligations with a
term of one year or less, in which case the taxpayer would include OID on the
Short-Term Note in income as it accrues, but would not be subject to the
interest expense deferral rule referred to in the preceding sentence. Certain
special rules apply if a Short-Term Note is purchased for more or less than
its principal amount.
Sale or Other Disposition. If a Noteholder sells a Note, the holder will
recognize gain or loss in an amount equal to the difference between the amount
realized on the sale and the holder's adjusted tax basis in the Note. The
adjusted tax basis of a Note to a particular Noteholder will equal the
holder's cost for the Note, increased by any market discount, OID and gain
previously included by such Noteholder in income with respect to the Note and
decreased by the amount of premium (if any) previously amortized and by the
amount of principal payments previously received by such Noteholder with
respect to such Note. Any such gain or loss will be capital gain or loss,
except for gain representing accrued interest and accrued market discount not
previously included in income. Capital losses generally may be used by a
corporate taxpayer only to offset capital gains, and by an individual taxpayer
only to the extent of capital gains plus $3,000 of other income.
Foreign Holders. Interest paid (or accrued) to a Noteholder who is a
nonresident alien, foreign corporation or other non-United States person (a
"foreign person") generally will be considered "portfolio interest," and
generally will not be subject to United States Federal income tax and
withholding tax, if the interest is not effectively connected with the conduct
of a trade or business within the United States by the foreign person and the
foreign person (i) is not actually or constructively a "10 percent
shareholder" of the Trust or the Seller (including a holder of 10% of the
outstanding Certificates) or a "controlled foreign corporation" with respect
to which the Trust or the Seller is a "related person" within the meaning of
the Code and (ii) provides the Trustee or other person who is otherwise
required to withhold U.S. tax with respect to the Notes with an appropriate
statement (on Form W-8 or a similar form), signed under penalties of perjury,
certifying that the beneficial owner of the Note is a foreign person and
providing the foreign person's name and address. If the information provided
in this statement changes, the foreign person must inform the Trust within 30
days of such change. If a Note is
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held through a securities clearing organization or certain other financial
institutions, the organization or institution may provide the relevant signed
statement to the withholding agent; in that case, however, the signed
statement must be accompanied by a Form W-8 or substitute form provided by the
foreign person that owns the Note. If such interest is not portfolio interest,
then it will be subject to United States Federal income and withholding tax at
a rate of 30%, unless reduced or eliminated pursuant to an applicable tax
treaty.
Any capital gain realized on the sale, redemption, retirement or other
taxable disposition of a Note by a foreign person will be exempt from United
States Federal income and withholding tax; provided that (i) such gain is not
effectively connected with the conduct of a trade or business in the United
States by the foreign person and (ii) in the case of an individual foreign
person, the foreign person is not present in the United States for 183 days or
more in the taxable year.
Backup Withholding. Each holder of a Note (other than an exempt holder such
as a corporation, tax-exempt organization, qualified pension and profit-
sharing trust, individual retirement account or nonresident alien who provides
certification as to status as a nonresident) will be required to provide,
under penalties of perjury, a certificate containing the holder's name,
address, correct Federal taxpayer identification number and a statement that
the holder is not subject to backup withholding. Should a nonexempt Noteholder
fail to provide the required certification, the Trust will be required to
withhold 31% of the amount otherwise payable to the holder, and remit the
withheld amount to the IRS as a credit against the holder's Federal income tax
liability.
Possible Alternative Treatments of the Notes. If, contrary to the opinion of
Federal Tax Counsel, the IRS successfully asserted that one or more of the
Notes did not represent debt for Federal income tax purposes, the Notes might
be treated as equity interests in the Trust. In such a case, the Trust would
be treated as a publicly traded partnership that would not be taxable as a
corporation because it would meet certain qualifying income tests.
Nonetheless, treatment of the Notes as equity interests in such a publicly
traded partnership could have adverse tax consequences to certain holders. For
example, income to foreign holders might be subject to U.S. tax and U.S. tax
return filing and withholding requirements, and individual holders might be
subject to certain limitations on their ability to deduct their share of Trust
expenses.
TAX CONSEQUENCES TO HOLDERS OF THE CERTIFICATES
The following discussion only applies to the extent Certificates are offered
in a related Prospectus Supplement. Until that time, because the Certificates
will be held solely by the Seller or one of its affiliates, under current
Treasury regulations, the Trust will be disregarded as an entity separate from
its owner (i.e., the Seller or one of its affiliates) for federal income tax
purposes.
Treatment of the Trust as a Partnership. The Seller and the Servicer will
agree, and the Certificateholders will agree by their purchase of
Certificates, to treat the Trust as a partnership for purposes of Federal and
state income tax, franchise tax and any other tax measured in whole or in part
by income, with the assets of the partnership being the assets held by the
Trust, the partners of the partnership being the Certificateholders (including
the Seller in its capacity as recipient of distributions from the Spread
Account and any other account specified in the related Prospectus Supplement
in which the Seller has an interest), and the Notes being debt of the
partnership. However, the proper characterization of the arrangement involving
the Trust, the Certificates, the Notes, the Seller and the Servicer is not
clear because there is no authority on transactions closely comparable to that
contemplated herein.
A variety of alternative characterizations are possible. For example,
because the Certificates have certain features characteristic of debt, the
Certificates might be considered debt of the Seller or the Trust. Any such
characterization should not result in materially adverse tax consequences to
Certificateholders as compared to the consequences from treatment of the
Certificates as equity in a partnership, described below. The following
discussion assumes that the Certificates represent equity interests in a
partnership.
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Indexed Securities, etc. The following discussion assumes that all payments
on the Certificates are denominated in U.S. dollars, none of the Certificates
are Indexed Securities or Strip Certificates and a series of Securities
includes a single class of Certificates. If these conditions are not satisfied
with respect to any given series of Certificates, additional tax
considerations with respect to such Certificates will be disclosed in the
applicable Prospectus Supplement.
Partnership Taxation. As a partnership, the Trust will not be subject to
Federal income tax. Rather, each Certificateholder will be required to
separately take into account such holder's accruals of guaranteed payments
from the Trust and its allocated share of other income, gains, losses,
deductions and credits of the Trust. The Trust's income will consist primarily
of interest and finance charges earned on the Receivables (including
appropriate adjustments for market discount, OID and premium) and any gain
upon collection or disposition of Receivables. The Trust's deductions will
consist primarily of interest accruing with respect to the Notes, guaranteed
payments on the Certificates, servicing and other fees, and losses or
deductions upon collection or disposition of Receivables.
Under the Trust Agreement, interest payments on the Certificates at the
Pass-Through Rate (including interest on amounts previously due on the
Certificates but not yet distributed) will be treated as "guaranteed payments"
under Section 707(c) of the Code. Guaranteed payments are payments to partners
for the use of their capital and, in the present circumstances, are treated as
deductible to the Trust and ordinary income to the Certificateholders. The
Trust will have a calendar year tax year and will deduct the guaranteed
payments under the accrual method of accounting. Certificateholders with a
calendar year tax year are required to include the accruals of guaranteed
payments in income in their taxable year that corresponds to the year in which
the Trust deducts the payments, and Certificateholders with a different
taxable year are required to include the payments in income in their taxable
year that includes the December 31 of the Trust year in which the Trust
deducts the payments. It is possible that guaranteed payments will not be
treated as interest for all purposes of the Code.
In addition, the Trust Agreement will provide, in general, that the
Certificateholders will be allocated taxable income of the Trust for each
Collection Period equal to the sum of (i) any Trust income attributable to
discount on the Receivables that corresponds to any excess of the principal
amount of the Certificates over their initial issue price; (ii) prepayment
premium, if any, payable to the Certificateholders for such month and (iii)
any other amounts of income payable to the Certificateholders for such month.
Such allocation will be reduced by any amortization by the Trust of premium on
Receivables that corresponds to any excess of the issue price of Certificates
over their principal amount. All remaining items of income, gain, loss and
deduction of the Trust will be allocated to the Seller.
Based on the economic arrangement of the parties, this approach for accruing
guaranteed payments and allocating Trust income should be permissible under
applicable Treasury regulations, although no assurance can be given that the
IRS would not require a greater amount of income to be allocated to
Certificateholders. Moreover, even under the foregoing method of allocation,
Certificateholders may be subject to tax on income equal to the entire Pass-
Through Rate plus the other items described above even though the Trust might
not have sufficient cash to make current cash distributions of such amount.
Thus, cash basis holders will in effect be required to report income from the
Certificates on the accrual basis and Certificateholders may become liable for
taxes on Trust income even if they have not received cash from the Trust to
pay such taxes. In addition, because tax allocations and tax reporting will be
done on a uniform basis for all Certificateholders but Certificateholders may
be purchasing Certificates at different times and at different prices,
Certificateholders may be required to report on their tax returns taxable
income that is greater or less than the amount reported to them by the Trust.
Most of the guaranteed payments and taxable income allocated to a
Certificateholder that is a pension, profit-sharing or employee benefit plan
or other tax-exempt entity (including an individual retirement account) will
constitute "unrelated debt-financed income" generally taxable to such a holder
under the Code.
An individual taxpayer's share of expenses of the Trust (including fees to
the Servicer but not interest expense) would be miscellaneous itemized
deductions. Such deductions might be disallowed to the individual in
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whole or in part and might result in such holder being taxed on an amount of
income that exceeds the amount of cash actually distributed to such holder
over the life of the Trust. It is not clear whether these rules would be
applicable to a Certificateholder accruing guaranteed payments.
The Trust intends to make all tax calculations relating to income and
allocations to Certificateholders on an aggregate basis. If the IRS were to
require that such calculations be made separately for each Receivable, the
Trust might be required to incur additional expense but it is believed that
there would not be a material adverse effect on Certificateholders.
Discount and Premium. The purchase price paid by the Trust for the
Receivables may be greater or less than the remaining principal balance of the
Receivables at the time of purchase. If so, the Receivables will have been
acquired at a premium or discount, as the case may be. (As indicated above,
the Trust will make this calculation on an aggregate basis, but might be
required to recompute it on a Receivable-by-Receivable basis.)
If the Trust acquires the Receivables at a market discount or premium, the
Trust will elect to include any such discount in income currently as it
accrues over the life of the Receivables or to offset any such premium against
interest income on the Receivables. As indicated above, a portion of such
market discount income or premium deduction may be allocated to
Certificateholders.
Section 708 Termination. Under Section 708 of the Code, the Trust will be
deemed to terminate for Federal income tax purposes if 50% or more of the
capital and profits interests in the Trust are sold or exchanged within a 12-
month period. If such a termination occurs, under current Treasury
regulations, the Trust will be considered to distribute its assets to the
partners, who would then be treated as recontributing those assets to the
Trust, as a new partnership. Proposed Treasury regulations would modify this
treatment. The Trust will not comply with certain technical requirements that
might apply when such a constructive termination occurs. As a result, the
Trust may be subject to certain tax penalties and may incur additional
expenses if it is required to comply with those requirements. Furthermore, the
Trust might not be able to comply due to lack of data.
Disposition of Certificates. Generally, capital gain or loss will be
recognized on a sale of Certificates in an amount equal to the difference
between the amount realized and the seller's tax basis in the Certificates
sold. A Certificateholder's tax basis in a Certificate will generally equal
the holder's cost increased by the holder's share of Trust income and accruals
of guaranteed payments (includible in income) and decreased by any
distributions received with respect to such Certificate. In addition, both the
tax basis in the Certificates and the amount realized on a sale of a
Certificate would include the holder's share of the Notes and other
liabilities of the Trust. A holder acquiring Certificates at different prices
may be required to maintain a single aggregate adjusted tax basis in such
Certificates, and, upon sale or other disposition of some of the Certificates,
allocate a pro rata portion of such aggregate tax basis to the Certificates
sold (rather than maintaining a separate tax basis in each Certificate for
purposes of computing gain or loss on a sale of that Certificate).
Any gain on the sale of a Certificate attributable to the holder's share of
unrecognized accrued market discount on the Receivables would generally be
treated as ordinary income to the holder and would give rise to special tax
reporting requirements. The Trust does not expect to have any other assets
that would give rise to such special reporting requirements. Thus, to avoid
those special reporting requirements, the Trust will elect to include market
discount in income as it accrues.
If a Certificateholder is required to recognize an aggregate amount of
income (not including income attributable to disallowed itemized deductions
described above) over the life of the Certificates that exceeds the aggregate
cash distributions with respect thereto, such excess will generally give rise
to a capital loss upon the retirement of the Certificates.
Allocations Between Transferors and Transferees. In general, the Trust's
taxable income and losses will be determined monthly and the tax items and
accruals of guaranteed payments for a particular calendar month will be
apportioned among the Certificateholders in proportion to the principal amount
of Certificates owned by them as of the close of the last day of such month.
As a result, a holder purchasing Certificates may be allocated
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tax items and accruals of guaranteed payments (which will affect its tax
liability and tax basis) attributable to periods before the actual
transaction.
The use of such a monthly convention may not be permitted by existing
regulations. If a monthly convention is not allowed (or only applies to
transfers of less than all of the partner's interest), taxable income or
losses and accruals of guaranteed payments of the Trust might be reallocated
among the Certificateholders. The Company is authorized to revise the Trust's
method of allocation between transferors and transferees to conform to a
method permitted by future regulations.
Section 754 Election. In the event that a Certificateholder sells its
Certificates at a profit (loss), the purchasing Certificateholder will have a
higher (lower) basis in the Certificates than the selling Certificateholder
had. The tax basis of the Trust's assets will not be adjusted to reflect that
higher (or lower) basis unless the Trust were to file an election under
Section 754 of the Code. In order to avoid the administrative complexities
that would be involved in keeping accurate accounting records, as well as
potentially onerous information reporting requirements, the Trust will not
make such election. As a result, Certificateholders might be allocated a
greater or lesser amount of Trust income than would be appropriate based on
their own purchase price for Certificates.
Administrative Matters. The Trustee is required to keep or have kept
complete and accurate books of the Trust. Such books will be maintained for
financial reporting and tax purposes on an accrual basis and the fiscal year
of the Trust will be the calendar year. The Trustee will file a partnership
information return (IRS Form 1065) with the IRS for each taxable year of the
Trust and will report each Certificateholder's accruals of guaranteed payments
and allocable share of items of Trust income and expense to holders and the
IRS on Schedule K-1. The Trust will provide the Schedule K-1 information to
nominees that fail to provide the Trust with the information statement
described below and such nominees will be required to forward such information
to the beneficial owners of the Certificates. Generally, holders must file tax
returns that are consistent with the information return filed by the Trust or
be subject to penalties unless the holder notifies the IRS of all such
inconsistencies.
Under Section 6031 of the Code, any person that holds Certificates as a
nominee at any time during a calendar year is required to furnish the Trust
with a statement containing certain information on the nominee, the beneficial
owners and the Certificates so held. Such information includes (i) the name,
address and taxpayer identification number of the nominee and (ii) as to each
beneficial owner (x) the name, address and taxpayer identification number of
such person, (y) whether such person is a United States person, a tax-exempt
entity or a foreign government, an international organization, or any wholly-
owned agency or instrumentality of either of the foregoing and (z) certain
information on Certificates that were held, bought or sold on behalf of such
person throughout the year. In addition, brokers and financial institutions
that hold Certificates through a nominee are required to furnish directly to
the Trust information as to themselves and their ownership of Certificates. A
clearing agency registered under Section 17A of the Exchange Act is not
required to furnish any such information statement to the Trust. The
information referred to above for any calendar year must be furnished to the
Trust on or before the following January 31. Nominees, brokers and financial
institutions that fail to provide the Trust with the information described
above may be subject to penalties.
The Seller will be designated as the tax matters partner in the Trust
Agreement and, as such, will be responsible for representing the
Certificateholders in any dispute with the IRS. The Code provides for
administrative examination of a partnership as if the partnership were a
separate and distinct taxpayer. Generally, the statute of limitations for
partnership items does not expire before three years after the date on which
the partnership information return is filed. Any adverse determination
following an audit of the return of the Trust by the appropriate taxing
authorities could result in an adjustment of the returns of the
Certificateholders, and, under certain circumstances, a Certificateholder may
be precluded from separately litigating a proposed adjustment to the items of
the Trust. An adjustment could also result in an audit of a
Certificateholder's returns and adjustments of items not related to the income
and losses of the Trust.
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Tax Consequences to Foreign Certificateholders. It is not clear whether the
Trust would be considered to be engaged in a trade or business in the United
States for purposes of Federal withholding taxes with respect to non-U.S.
persons because there is no clear authority dealing with that issue under
facts substantially similar to those described herein. Although it is not
expected that the Trust would be engaged in a trade or business in the United
States for such purposes, the Trust will withhold as if it were so engaged in
order to protect the Trust from possible adverse consequences of a failure to
withhold. The Trust expects to withhold on the portion of its taxable income
that is allocable to foreign Certificateholders pursuant to Section 1446 of
the Code, as if such income were effectively connected to a U.S. trade or
business, at a rate of 35% for foreign holders that are taxable as
corporations and 39.6% for all other foreign holders. Subsequent adoption of
Treasury regulations or the issuance of other administrative pronouncements
may require the Trust to change its withholding procedures. In determining a
holder's nonforeign status, the Trust may rely on IRS Form W-8, IRS Form W-9
or the holder's certification of nonforeign status signed under penalties of
perjury.
Each foreign holder might be required to file a U.S. individual or corporate
income tax return and pay U.S. income tax on the amount computed therein
(including, in the case of a corporation, the branch profits tax) on its share
of accruals of guaranteed payments and the Trust's income. Each foreign holder
must obtain a taxpayer identification number from the IRS and submit that
number to the Trust on Form W-8 in order to assure appropriate crediting of
the taxes withheld. A foreign holder generally would be entitled to file with
the IRS a claim for refund with respect to taxes withheld by the Trust, taking
the position that no taxes were due because the Trust was not engaged in a
U.S. trade or business. However, the IRS may assert that additional taxes are
due, and no assurance can be given as to the appropriate amount of tax
liability.
On April 15, 1996, proposed Treasury regulations (the "1996 Proposed
Regulations") were issued which, if adopted in final form, could affect the
United States taxation of foreign holders. The 1996 Proposed Regulations are
generally proposed to be effective for payments after December 31, 1997,
subject to certain transition rules. It cannot be predicted at this time
whether the 1996 Proposed Regulations will become effective as proposed or
what, if any, modifications may be made to them. The 1996 Proposed Regulations
would, if adopted, alter the rules under this heading and under "--Backup
Withholding" below in certain respects. Prospective investors are urged to
consult their tax advisors with respect to the effect the 1996 Proposed
Regulations may have if adopted.
Backup Withholding. Distributions made on the Certificates and proceeds from
the sale of the Certificates will be subject to a "backup" withholding tax of
31% if, in general, the Certificateholder fails to comply with certain
identification procedures, unless the holder is an exempt recipient under
applicable provisions of the Code. The 1996 Proposed Regulations would, if
adopted, alter the foregoing rules in certain respects. See "Tax Consequences
to Holders of the Notes--Backup Withholding."
CERTAIN STATE TAX CONSEQUENCES
The following discussion is a summary of the Wisconsin income and franchise
tax consequences arising from the purchase, ownership and disposition of the
Notes and the Certificates. The discussion regarding Certificates only applies
to the extent the Certificates are not held solely by the Seller or one of its
affiliates. This summary is based upon current provisions of the Wisconsin
Statutes, administrative pronouncements thereunder, and judicial authority,
all of which are subject to change. Any such changes could be retroactive. No
ruling on any of the issues discussed below will be sought from the Wisconsin
Department of Revenue.
In the opinion of Foley & Lardner, special Wisconsin tax counsel to the
Trust ("Wisconsin Tax Counsel"), if the Notes are treated as indebtedness of
the Trust for Federal income tax purposes, the Notes should be treated as
indebtedness of the Trust for Wisconsin income and franchise tax purposes.
Noteholders not otherwise subject to Wisconsin income or franchise tax
jurisdiction should not be subject to such jurisdiction as a consequence of
their purchase, ownership and disposition of the Notes. However, a Noteholder
already subject to Wisconsin income or franchise tax jurisdiction may be
required to take the income with respect to the Notes into account in
determining the Noteholder's liability for Wisconsin income or franchise tax.
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In the opinion of Wisconsin Tax Counsel, if the Trust is classified as a
partnership for Federal income tax purposes (but is not classified as a
publicly traded partnership or, if it is so classified, would not be taxable
as a corporation because it would meet certain qualifying income tests), the
Trust would not be taxable as a corporation for Wisconsin income and franchise
tax purposes. While the matter is not free from doubt, the Trust should not be
subject to Wisconsin income or franchise tax jurisdiction. If the Trust were
subject to Wisconsin income or franchise tax jurisdiction, it would be
required to file Wisconsin partnership information returns similar to the
returns it would be required to file for Federal income tax purposes.
Regardless of whether the Trust is subject to Wisconsin income or franchise
tax jurisdiction, Certificateholders not otherwise subject to Wisconsin income
or franchise tax jurisdiction should not be subject to such jurisdiction as a
consequence of their purchase, ownership and disposition of the Certificates.
If the Trust were taxable as a corporation for Federal tax purposes: (i)
while the matter is not free from doubt, the Trust should not be subject to
Wisconsin income or franchise tax jurisdiction; and (ii) Certificateholders
not otherwise subject to Wisconsin income or franchise tax jurisdiction should
not be subject to such taxation as a consequence of their purchase, ownership
and disposition of the Certificates. If the Trust were classified as an
association taxable as a corporation and the Trust were determined to be
subject to Wisconsin income or franchise tax jurisdiction: (i) the Trust would
be liable for Wisconsin income or franchise taxes with respect to its taxable
income attributable to Wisconsin and any resulting Wisconsin income or
franchise taxes paid by the Trust would reduce the amounts otherwise available
for distribution to the Certificateholders; (ii) distributions to the
Certificateholders would not be subject to withholding for Wisconsin income or
franchise taxes; and (iii) Certificateholders not otherwise subject to
Wisconsin income or franchise tax jurisdiction should not be subject to
Wisconsin income or franchise taxes as a consequence of their purchase,
ownership and disposition of the Certificates.
Because each state's income tax laws vary, it is impossible to predict the
income tax consequences to the Securityholders in all the state taxing
jurisdictions in which they are already subject to tax. Securityholders are
urged to consult their own advisors with respect to state income and franchise
taxes.
ERISA CONSIDERATIONS
Section 406 of ERISA and Section 4975 of the Code prohibit a pension,
profit-sharing or other employee benefit plan, as well as individual
retirement accounts and certain types of Keogh Plans (each a "Benefit Plan"),
from engaging in certain transactions with persons that are "parties in
interest" under ERISA or "disqualified persons" under the Code with respect to
such Benefit Plan. A violation of these "prohibited transaction" rules may
result in an excise tax or other penalties and liabilities under ERISA and the
Code for such persons.
Certain transactions involving the Trust might be deemed to constitute
prohibited transactions under ERISA and the Code with respect to a Benefit
Plan that purchased Notes or Certificates if assets of the Trust were deemed
to be assets of the Benefit Plan. Under a regulation issued by the United
States Department of Labor (the "Plan Assets Regulation"), the assets of the
Trust would be treated as plan assets of a Benefit Plan for the purposes of
ERISA and the Code only if the Benefit Plan acquired an "equity interest" in
the Trust and none of the exceptions contained in the Plan Assets Regulation
was applicable. An equity interest is defined under the Plan Assets Regulation
as an interest other than an instrument that is treated as indebtedness under
applicable local law and that has no substantial equity features. The likely
treatment in this context of Notes and Certificates of a given series will be
discussed in the related Prospectus Supplement.
Employee benefit 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.
A plan fiduciary considering the purchase of Securities of a given series
should consult its tax and/or legal advisors regarding whether the assets of
the related Trust would be considered plan assets, the possibility of
exemptive relief from the prohibited transaction rules and other issues and
their potential consequences.
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PLAN OF DISTRIBUTION
On the terms and conditions set forth in an underwriting agreement with
respect to the Notes of a given series and an underwriting agreement with
respect to the Certificates of a given series (collectively, the "Underwriting
Agreements"), the Seller will agree to cause the related Trust to sell to the
underwriters named therein and in the related Prospectus Supplement, and each
of such underwriters will severally agree to purchase, the principal amount of
each class of Notes and Certificates, as the case may be, of the related
series set forth therein and in the related Prospectus Supplement. In each of
the Underwriting Agreements with respect to any given series of Securities,
the several underwriters will agree, subject to the terms and conditions set
forth therein, to purchase all the Notes and Certificates, as the case may be,
described therein that are offered hereby and by the related Prospectus
Supplement if any of such Notes and Certificates, as the case may be, are
purchased.
Each Prospectus Supplement will either (i) set forth the price at which each
class of Notes and Certificates, as the case may be, being offered thereby
will be offered to the public and any concessions that may be offered to
certain dealers participating in the offering of such Notes and Certificates,
as the case may be, or (ii) specify that the related Notes and Certificates,
as the case may be, are to be resold by the underwriters in negotiated
transactions at varying prices to be determined at the time of such sale.
After the initial public offering of any such Notes and Certificates, as the
case may be, such public offering prices and such concessions may be changed.
Each Underwriting Agreement will provide that the Seller and Case Credit
will indemnify the underwriters against certain civil liabilities, including
liabilities under the Securities Act, or contribute to payments the several
underwriters may be required to make in respect thereof.
Each Trust may, from time to time, invest the funds in its Trust Accounts in
Eligible Investments acquired from such underwriters.
Pursuant to each of the Underwriting Agreements with respect to a given
series of Securities, the closing of the sale of any class of Securities
subject to either thereof will be conditioned on the closing of the sale of
all other such classes subject to either thereof. The place and time of
delivery for the Securities in respect of which this Prospectus is delivered
will be set forth in the related Prospectus Supplement.
LEGAL OPINIONS
Certain legal matters relating to the Securities of any series will be
passed upon for the related Trust, the Seller and the Servicer by Richard S.
Brennan, General Counsel and Secretary of Case.
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INDEX OF TERMS
Set forth below is a list of the defined terms used in this Prospectus and
the pages on which the definitions of such terms may be found herein.
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
1996 Proposed Regulations................................................. 52
Actuarial Receivables..................................................... 15
Administration Agreement.................................................. 42
Administration Fee........................................................ 42
Administrator............................................................. 42
Applicable Trustee........................................................ 31
APR....................................................................... 7
Base Rate................................................................. 27
Benefit Plan.............................................................. 53
Calculation Agent......................................................... 27
Case...................................................................... 6
Case Credit............................................................... 3
Cede...................................................................... 13
Cedel..................................................................... 30
Cedel Participants........................................................ 30
Certificate Balance....................................................... 4
Certificate Distribution Account.......................................... 35
Certificate Pool Factor................................................... 18
Certificateholders........................................................ 4
Certificates.............................................................. 1
Closing Date.............................................................. 33
Code...................................................................... 46
Collection Account........................................................ 35
Collection Period......................................................... 37
Commission................................................................ 2
Commodity Indexed Securities.............................................. 27
Contracts................................................................. 5
Cooperative............................................................... 30
CRC....................................................................... 3
CRC Collateral............................................................ 35
CRC Loan.................................................................. 35
Currency Indexed Securities............................................... 27
Cutoff Date............................................................... 13
Dealer Agreements......................................................... 13
Dealers................................................................... 6
Definitive Certificates................................................... 31
Definitive Notes.......................................................... 31
Definitive Securities..................................................... 31
Depositaries.............................................................. 28
Depository................................................................ 21
DTC....................................................................... 58
DTC Participants.......................................................... 28
DTC's Nominee............................................................. 13
Eligible Deposit Account.................................................. 36
Eligible Institution...................................................... 37
Eligible Investments...................................................... 36
</TABLE>
55
<PAGE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ERISA..................................................................... 9
Euroclear................................................................. 30
Euroclear Operator........................................................ 30
Euroclear Participants.................................................... 30
Events of Default......................................................... 23
Exchange Act.............................................................. 2
Face Amount............................................................... 28
Federal Tax Counsel....................................................... 46
Final Scheduled Maturity Date............................................. 7
Financed Equipment........................................................ 5
Fixed Rate Securities..................................................... 26
Floating Rate Securities.................................................. 26
Foreign Person............................................................ 47
Funding Period............................................................ 4
Global Securities......................................................... 58
Indenture................................................................. 3
Indenture Trustee......................................................... 1
Index..................................................................... 27
Indexed Commodity......................................................... 27
Indexed Currency.......................................................... 27
Indexed Principal Amount.................................................. 27
Indexed Securities........................................................ 27
Indirect Participants..................................................... 28
Initial Cutoff Date....................................................... 5
Initial Pool Balance...................................................... 42
Initial Receivables....................................................... 5
Insolvency Event.......................................................... 41
Insolvency Laws........................................................... 10
Interest Rate............................................................. 3
Interest Reset Period..................................................... 27
Investment Earnings....................................................... 36
IRS....................................................................... 46
Issuer.................................................................... 3
LIBOR..................................................................... 27
Liquidity Receivables Purchase Agreement.................................. 34
Loan and Security Agreement............................................... 35
Note Distribution Account................................................. 35
Note Pool Factor.......................................................... 18
Noteholders............................................................... 3
Notes..................................................................... 1
Obligors.................................................................. 13
OID....................................................................... 47
OID Regulations........................................................... 47
Participants.............................................................. 21
Pass-Through Rate......................................................... 4
Payment Date.............................................................. 22
Plan Assets Regulation.................................................... 53
Pool Balance.............................................................. 19
Pre-Funded Amount......................................................... 6
Pre-Funding Account....................................................... 1
Precomputed Receivables................................................... 15
</TABLE>
56
<PAGE>
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Precomputed Simple Rebate Receivables.................................... 16
Prospectus Supplement.................................................... 1
Purchase Agreement....................................................... 33
Purchase Amount.......................................................... 34
Rating Agencies.......................................................... 12
Receivables.............................................................. 1, 13
Registration Statement................................................... 2
Related Documents........................................................ 24
Reorganization........................................................... 20
Rule of 78's Receivables................................................. 15
Sale and Servicing Agreement............................................. 5
Schedule of Receivables.................................................. 32
Securities............................................................... 1
Securities Act........................................................... 2
Securityholders.......................................................... 4
Seller................................................................... 1, 3
Servicer................................................................. 3
Servicer Default......................................................... 40
Servicing Fee............................................................ 37
Servicing Fee Rate....................................................... 37
Short-Term Note.......................................................... 47
Simple Interest Receivables.............................................. 15
Specified Party.......................................................... 40
Spread................................................................... 27
Spread Account........................................................... 6, 39
Spread Multiplier........................................................ 27
Standard Precomputed Receivables......................................... 16
Stock Index.............................................................. 27
Stock Indexed Securities................................................. 27
Strip Certificates....................................................... 5
Strip Notes.............................................................. 4
Subsequent Receivables................................................... 1
Subsequent Transfer Date................................................. 33
Terms and Conditions..................................................... 30
Transfer and Servicing Agreements........................................ 7, 33
Trust.................................................................... 1, 3
Trust Accounts........................................................... 36
Trust Agreement.......................................................... 3
Trustee.................................................................. 4
UCC...................................................................... 34
Underwriting Agreements.................................................. 54
U.S. Person.............................................................. 60
Wisconsin Tax Counsel.................................................... 52
</TABLE>
57
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ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Securities
issued by the Case Equipment Loan Trust 1997-A (the "Global Securities") will
be available only in book-entry form. Securityholders in the Global Securities
may hold such Global Securities through any of The Depository Trust Company
("DTC"), Cedel or Euroclear. The Global Securities will be tradeable as home
market instruments in both the European and U.S. domestic markets. Initial
settlement and all secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities through
Cedel and Euroclear will be conducted in the ordinary way in accordance with
their normal rules and operating procedures and in accordance with
conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities through
DTC will be conducted according to the rules and procedures applicable to U.S.
corporate debt obligations.
Secondary cross-market trading between Cedel or Euroclear and DTC
Participants holding Securities will be effected on a delivery-against-payment
basis through the respective Depositaries of Cedel and Euroclear (in such
capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing
organizations or their participants.
INITIAL SETTLEMENT
All Global Securities will be held in book-entry form by DTC in the name of
Cede & Co. as nominee of DTC. Securityholders' interests in the Global
Securities will be represented through financial institutions acting on their
behalf as direct and indirect Participants in DTC. As a result, Cedel and
Euroclear will hold positions on behalf of their participants through their
respective Depositaries, which in turn will hold such positions in accounts as
DTC Participants.
Securityholders electing to hold their Global Securities through DTC will
follow the settlement practices applicable to U.S. corporate debt obligations.
Securityholder securities custody accounts will be credited with their
holdings against payment in same-day funds on the settlement date.
Securityholders electing to hold their Global Securities through Cedel or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global Securities will be credited to
the securities custody accounts on the settlement date against payment in
same-day funds.
SECONDARY MARKET TRADING
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired
value date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to U.S. corporate
debt obligations in same-day funds.
Trading between Cedel and/or Euroclear Participants. Secondary market
trading between Cedel Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
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<PAGE>
Trading between DTC seller and Cedel or Euroclear purchaser. When Global
Securities are to be transferred from the account of a DTC Participant to the
account of a Cedel Participant or a Euroclear Participant, the purchaser will
send instructions to Cedel or Euroclear through a Cedel Participant or
Euroclear Participant at least one business day prior to settlement. Cedel or
Euroclear will instruct the respective Depositary, as the case may be, to
receive the Global Securities against payment. Payment will include interest
accrued on the Global 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
Global Securities. After settlement has been completed, the Global Securities
will be credited to the respective clearing system and by the clearing system,
in accordance with its usual procedures, to the Cedel Participant's or
Euroclear Participant's account. The Global Securities credit will appear the
next day (European time) and the cash debit will be back-valued to, and the
interest on the Global 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 Cedel or Euroclear cash debit will be valued instead as of the
actual settlement date.
Cedel Participants and Euroclear Participants will need to make available to
the respective clearing systems the funds necessary to process same-day funds
settlement. The most direct means of doing so is to pre-position funds for
settlement, either from cash on hand or existing lines of credit, as they
would for any settlement occurring within Cedel or Euroclear. Under this
approach, they may take on credit exposure to Cedel or Euroclear until the
Global Securities are credited to their accounts one day later.
As an alternative, if Cedel or Euroclear has extended a line of credit to
them, Cedel Participants or Euroclear Participants can elect not to pre-
position funds and allow that credit line to be drawn upon the finance
settlement. Under this procedure, Cedel Participants or Euroclear Participants
purchasing Global Securities would incur overdraft charges for one day,
assuming they cleared the overdraft when the Global Securities were credited
to their accounts. However, interest on the Global Securities would accrue
from the value date. Therefore, in many cases the investment income on the
Global 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 Cedel Participant's or Euroclear Participant's particular cost
of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities
to the respective Depositary for the benefit of Cedel Participants or
Euroclear Participants. The sale proceeds will be available to the DTC seller
on the settlement date. Thus, to the DTC Participant a cross-market
transaction will settle no differently than a trade between two DTC
Participants.
Trading between Cedel or Euroclear seller and DTC purchaser. Due to time
zone differences in their favor, Cedel Participants and Euroclear Participants
may employ their customary procedures for transactions in which Global
Securities are to be transferred by the respective clearing system, through
the respective Depositary, to a DTC Participant. The seller will send
instructions to Cedel or Euroclear through a Cedel Participant or Euroclear
Participant at least one business day prior to settlement. In these cases,
Cedel or Euroclear will instruct the respective Depositary, as appropriate, to
deliver the bonds to the DTC Participant's account against payment. Payment
will include interest accrued on the Global 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 Cedel Participant or Euroclear
Participant the following day, and receipt of the cash proceeds in the Cedel
Participant's or Euroclear Participant's account would be back-valued to the
value date (which would be the preceding day, when settlement occurred in New
York). Should the Cedel Participant or Euroclear Participant have a line of
credit with its respective clearing system and elect to be in debit in
anticipation of receipt of the sale proceeds in its account, the back-
valuation will extinguish any overdraft charges incurred over that one-day
period. If settlement is not completed on the intended value date (i.e., the
trade fails), receipt of the cash proceeds in the Cedel Participant's or
Euroclear Participant's account would instead be valued as of the actual
settlement date. Finally, day traders that use Cedel or Euroclear and that
purchase Global Securities from DTC Participants for delivery to Cedel
Participants or Euroclear Participants should note that these trades would
automatically fail
59
<PAGE>
on the sale side unless affirmative action were taken. At least three
techniques should be readily available to eliminate this potential problem:
(a) borrowing through Cedel or Euroclear for one day (until the purchase
side of the day trade is reflected in their Cedel or Euroclear accounts) in
accordance with the clearing system's customary procedures;
(b) borrowing the Global Securities in the U.S. from a DTC Participant no
later than one day prior to settlement, which would give the Global
Securities sufficient time to be reflected in their Cedel or Euroclear
account in order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the trade so
that the value date for the purchase from the DTC Participant is at least
one day prior to the value date for the sale to the Cedel Participant or
Euroclear Participant.
CERTAIN U.S. FEDERAL INCOME TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of Global Securities holding securities through Cedel or
Euroclear (or through DTC if the holder has an address outside the U.S.) will
be subject to the 30% U.S. withholding tax that generally applies to payments
of interest (including original issue discount) on registered debt issued by
U.S. Persons, unless (i) each clearing system, bank or other financial
institution that holds customers' securities in the ordinary course of its
trade or business in the chain of intermediaries between such beneficial owner
and the U.S. entity required to withhold tax complies with applicable
certification requirements and (ii) such beneficial owner takes one of the
following steps to obtain an exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of Securities
that are non-U.S. Persons can obtain a complete exemption form the withholding
tax by filing a signed Form W-8 (Certificate of Foreign Status). If the
information shown on Form W-8 changes, a new Form W-8 must be filed within 30
days of such change.
Exemption for non-U.S. Persons with effectively connected income (Form
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its
conduct of a trade or business in the United States, can obtain an exemption
from the withholding tax by filing Form 4224 (Exemption from Withholding of
Tax on Income Effectively Connected with the Conduct of a Trade or Business in
the United States).
Exemption or reduced rate for non-U.S. Persons resident in treaty countries
(Form 1001). Non-U.S. Persons that are beneficial owners of Securities
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
Securityholder or his agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The beneficial owner of a
Global 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 (i) a citizen or resident of the United States,
(ii) a corporation or partnership organized in or under the laws of the United
States or any political subdivision thereof or (iii) an estate or trust the
income of which is includible in gross income for United States tax purposes,
regardless of its source. 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. Securityholders are advised to consult their own tax
advisers for specific tax advice concerning their holding and disposing of the
Global Securities.
60
<PAGE>
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMA-
TION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED
BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON. THIS PRO-
SPECTUS SUPPLEMENT AND THE PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES OF-
FERED HEREBY, NOR AN OFFER OF THE SECURITIES IN ANY STATE OR JURISDICTION IN
WHICH, OR TO ANY PERSON TO WHOM, SUCH OFFER WOULD BE UNLAWFUL. THE DELIVERY OF
THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT
INFORMATION HEREIN OR THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.
----------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Reports to Noteholders..................................................... S-3
Summary of Terms........................................................... S-4
Risk Factors............................................................... S-16
The Trust.................................................................. S-19
The Receivables Pool....................................................... S-20
Weighted Average Life of the Notes......................................... S-25
Description of the Notes................................................... S-29
Description of the Certificates............................................ S-31
Description of the Transfer and Servicing Agreements....................... S-32
Legal Investment........................................................... S-39
ERISA Considerations....................................................... S-39
Underwriting............................................................... S-40
Legal Opinions............................................................. S-41
Index of Terms............................................................. S-42
PROSPECTUS
Available Information...................................................... 2
Incorporation of Certain Documents by Reference............................ 2
Summary of Terms........................................................... 3
Risk Factors............................................................... 10
The Trusts................................................................. 13
The Receivables Pools...................................................... 15
Weighted Average Life of the Securities.................................... 18
Pool Factors and Trading Information....................................... 18
Use of Proceeds............................................................ 19
The Seller, Case Credit Corporation and Case Corporation................... 19
Description of the Notes................................................... 21
Description of the Certificates............................................ 25
Certain Information Regarding the Securities............................... 26
Description of the Transfer and Servicing Agreements....................... 33
Certain Legal Aspects of the Receivables................................... 43
Certain Federal Income Tax Consequences.................................... 46
Certain State Tax Consequences............................................. 52
ERISA Considerations....................................................... 53
Plan of Distribution....................................................... 54
Legal Opinions............................................................. 54
Index of Terms............................................................. 56
Annex I.................................................................... 58
</TABLE>
UNTIL JUNE 9, 1997 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS SUPPLEMENT), ALL
DEALERS EFFECTING TRANSACTIONS IN THE NOTES, WHETHER OR NOT PARTICIPATING IN
THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS SUPPLEMENT AND A
PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PRO-
SPECTUS SUPPLEMENT AND A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RE-
SPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
$638,625,000
CASE EQUIPMENT LOAN TRUST 1997-A
$71,500,000 CLASS A-1 5.597% ASSET BACKED NOTES
$282,000,000 CLASS A-2 6.00% ASSET BACKED NOTES
$259,125,000 CLASS A-3 6.45% ASSET BACKED NOTES
$26,000,000 CLASS B 6.70% ASSET BACKED NOTES
CASE RECEIVABLES II INC.
SELLER
CASE CREDIT CORPORATION
SERVICER
UNDERWRITERS OF THE CLASS A NOTES SALOMON BROTHERS INC
BANCAMERICASECURITIES, INC.
CHASE SECURITIES INC.
CITICORP SECURITIES, INC.
FIRST UNION CAPITALMARKETS CORP.
MERRILL LYNCH & CO.
UNDERWRITERS OF THE CLASS B NOTES SALOMON BROTHERS INC
MERRILL LYNCH & CO.
PROSPECTUS SUPPLEMENT
MARCH 11, 1997
