<PAGE> 1
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED SEPTEMBER 11, 1997
$754,810,000
CASE EQUIPMENT LOAN TRUST 1997-B
$90,000,000 CLASS A-1 5.612% ASSET BACKED NOTES
$204,500,000 CLASS A-2 5.914% ASSET BACKED NOTES
$237,000,000 CLASS A-3 6.240% ASSET BACKED NOTES
$188,591,000 CLASS A-4 6.410% ASSET BACKED NOTES
$34,719,000 CLASS C 6.410% ASSET BACKED NOTES
CASE RECEIVABLES II INC., SELLER
CASE CREDIT CORPORATION, SERVICER
------------------
The Case Equipment Loan Trust 1997-B (the "Trust") will be formed pursuant to a
Trust Agreement, to be dated as of September 1, 1997, between Case Receivables
II Inc. (the "Seller") and The Bank of New York, as Trustee, and will issue the
Class A-1 5.612% Asset Backed Notes (the "A-1 Notes"), the Class A-2 5.914%
Asset Backed Notes (the "A-2 Notes"), the Class A-3 6.240% Asset Backed Notes
(the "A-3 Notes") and the Class A-4 6.410% Asset Backed Notes (the "A-4 Notes")
and, with the A-1 Notes, the A-2 Notes and the A-3 Notes, the "Class A Notes")
and the 6.410% Class C Asset Backed Notes (the "Class C Notes," and, with the
Class A Notes, the "Offered Notes") offered hereby. The Offered Notes will be
issued pursuant to an Indenture, to be dated as of September 1, 1997 (the
"Indenture"), between the Trust and Harris Trust and Savings Bank, as Indenture
Trustee. The Trust will also issue $97,960,250.83 of Class B Floating Rate Asset
Backed Notes (the "Class B Notes," and, with the Offered Notes, the "Notes"),
and $15,190,000 of 6.410% Asset Backed Certificates (the "Certificates"), but
the Class B Notes and the Certificates are not offered hereby.
(continued on following page)
PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "RISK FACTORS"
HEREIN ON PAGE S-17 AND ON PAGE 9 OF THE ACCOMPANYING PROSPECTUS.
THE OFFERED 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 OFFERED 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>
A-1 Notes............................................ 100.000000% 0.095% 99.905000%
A-2 Notes............................................ 100.000000% 0.140% 99.860000%
A-3 Notes............................................ 99.986136% 0.230% 99.756136%
A-4 Notes............................................ 99.989714% 0.250% 99.739714%
Class C Notes........................................ 99.985037% 0.350% 99.635037%
Total................................................ $754,752,548.85 $1,509,894.00 $753,242,654.85
</TABLE>
- ---------------
(1) Plus accrued interest, if any, from September 22, 1997.
(2) Before deducting expenses, estimated to be $600,000.
------------------
The Offered 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 Offered 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 September 22, 1997.
UNDERWRITERS OF THE CLASS A NOTES
CREDIT SUISSE FIRST BOSTON
FIRST CHICAGO CAPITAL MARKETS, INC.
MERRILL LYNCH & CO.
J.P. MORGAN & CO.
NATIONSBANC CAPITAL MARKETS, INC.
SALOMON BROTHERS INC
UNDERWRITERS OF THE CLASS C NOTES
CREDIT SUISSE FIRST BOSTON J.P. MORGAN & CO.
PROSPECTUS SUPPLEMENT DATED SEPTEMBER 11, 1997
<PAGE> 2
(continued from preceding page)
The assets of the Trust will include a pool of fixed rate (the "Fixed Rate
Receivables") and floating rate (the "Floating Rate Receivables") retail
installment sale contracts (collectively, the "Receivables"), secured by
security interests in the agricultural and construction equipment financed
thereby and certain monies due or received thereunder on or after September 1,
1997, and monies on deposit in the Pre-Funding Account. Additional Fixed Rate
Receivables (the "Subsequent Receivables") may be purchased by the Trust from
the Seller from time to time on or before the February 1998 Payment Date with
funds on deposit in the Pre-Funding Account. The Offered Notes (together with
the Class B Notes) will be secured by the assets of the Trust pursuant to the
Indenture.
Interest on the Offered Notes will accrue at the respective per annum fixed
interest rate specified above for each class of Offered Notes (with the Class B
Notes, each a "Class"). Interest on the Class B Notes will accrue during each
Interest Period at a floating rate to be agreed upon between the Trust and the
Class B Noteholders; provided, that such rate may not exceed the Net Funds Cap
(the effective rate on the Class B Notes from time to time being the "Floating
Rate"). 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 on October 15, 1997, and, in the case of
the A-1 Notes, on the A-1 Note Final Scheduled Maturity Date. "Interest Period"
means the period from and including the Closing Date, or from and including the
most recent Payment Date on which interest has been paid, to but excluding the
following Payment Date.
Principal of the Class A 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 and no principal will be paid on the
A-4 Notes until the A-3 Notes have been paid in full. Principal on the Class C
Notes will be payable concurrently with principal on the Class A Notes, but will
be subordinated in priority to payments due on the Class A Notes and the Class B
Notes, in each case to the extent described herein.
Principal of the Class B Notes will be payable on each Payment Date 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 maturity date for the A-1 Notes will be October 13,
1998 (the "A-1 Note Final Scheduled Maturity Date"), the final scheduled Payment
Date for the A-2 Notes will be the September 2000 Payment Date (the "A-2 Note
Final Scheduled Maturity Date") and the final scheduled Payment Date for the A-3
Notes, the A-4 Notes and the Class C Notes (as well as the Class B Notes) will
be the September 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
outstanding Offered Notes (as well as the Class B Notes) will be subject to
redemption on any Payment Date after 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 Pool Balance. Any funds remaining in
the Pre-Funding Account at the end of the Funding Period will be applied towards
the mandatory redemption of the Offered Notes (in the same proportions and
sequence that would apply if such remaining funds were a part of the Fixed Rate
Principal Distribution Amount).
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT THE
OFFERING OF THE OFFERED 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 OFFERED 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
S-2
<PAGE> 3
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 OFFERED NOTES,
INCLUDING OVER-ALLOTMENT, STABILIZING TRANSACTIONS, SYNDICATE SHORT COVERING
TRANSACTIONS AND PENALTY BIDS. 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.
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 as the registered holder of the
Offered 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 the 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> 4
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-B (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 September
1, 1997 (the "Trust Agreement"), between the
Seller and the Trustee, acting thereunder not in
its individual capacity but solely as Trustee.
SELLER..................... Case Receivables II Inc. (the "Seller"), a Delaware
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.................... The Bank of New York, as trustee under the Trust
Agreement (the "Trustee").
THE OFFERED NOTES:
A. The Class A Notes...... Class A-1 5.612% Asset Backed Notes (the "A-1
Notes") in the aggregate principal amount of
$90,000,000.
Class A-2 5.914% Asset Backed Notes (the "A-2
Notes") in the aggregate principal amount of
$204,500,000.
Class A-3 6.240% Asset Backed Notes (the "A-3
Notes") in the aggregate principal amount of
$237,000,000.
Class A-4 6.410% Asset Backed Notes (the "A-4
Notes") and, with the A-1 Notes, the A-2 Notes
and the A-3 Notes, the "Class A Notes") in the
aggregate principal amount of $188,591,000.
B. The Class C Notes...... Class C 6.410% Asset Backed Notes (the "Class C
Notes," and, with the Class A Notes, the "Offered
Notes") in the aggregate principal amount of
$34,719,000.
The Offered Notes and the Class B Notes will be
issued pursuant to an Indenture, to be dated as
of September 1, 1997 (the "Indenture"), between
the Issuer and the Indenture Trustee and will be
secured by the assets of the Trust pursuant to
the Indenture. Only the Offered Notes (and not
the Class B Notes) constitute "Notes" for
purposes of the descriptions of the "Notes" in
(and as defined in) the Prospectus. The aggregate
outstanding principal amount of the Notes
(including the Class B 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 pursuant to the Trust
Agreement. The activities of the Trust will be
limited by the terms of the Trust Agreement to
purchasing, owning and managing the Receivables
and other activities related thereto. The Trust
property will include: (a) the Receivables and
all monies
S-4
<PAGE> 5
(including accrued interest) paid thereunder on
or after the applicable Cutoff Date, (b) the
Certificate Distribution Account, the Collection
Account, the Negative Carry Account, the Note
Distribution Account, the Pre-Funding Account and
the Spread Account, (c) security interests in the
Financed Equipment, (d) the rights to proceeds
from certain insurance policies covering the
Financed Equipment or the Obligors, (e) the
interest of the Seller in any proceeds from
recourse to Dealers on Receivables (but excluding
any amounts contained in Dealers' reserve
accounts), and (f) any property acquired by the
Trust that secured a Receivable.
The Offered Notes will be available for purchase in
denominations of $1,000 and integral multiples of
$1 thereof.
In addition to the Offered Notes, the Trust will
also issue Class B Asset Backed Notes in the
aggregate principal amount of $97,960,250.83 (the
"Class B Notes" and, with the Offered Notes, the
"Notes"), and 6.410% Asset Backed Certificates
(the "Certificates") in the aggregate principal
amount of $15,190,000. The Seller will initially
purchase the entire principal amount of the
Certificates. The Certificates represent
fractional undivided interests in the Trust and
will be issued pursuant to the Trust Agreement.
The Class B Notes and 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, including
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 September 22, 1997 (the "Closing Date"), the
Seller will purchase Contracts (the "Purchased
Contracts"): (a) with a fixed rate of interest
(the "Fixed Rate Receivables") that have an
aggregate Contract Value (calculated for the
Standard 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
balance shown on the Servicer's records) of
approximately $109,108,204 and (b) with a
floating rate of interest (the "Floating Rate
Receivables") that have an aggregate Contract
Value of approximately $97,960,251, in each case
as of August 31, 1997 (the "Initial Cutoff
Date"), from Case Credit pursuant to a Purchase
Agreement, to be dated as of September 1, 1997
(the "Purchase Agreement"), between Case Credit
and the Seller. As of the Initial Cutoff Date,
the Seller owned Fixed Rate Receivables purchased
from Case Credit pursuant to the Liquidity
Receivables Purchase Agreement (the "Owned
Contracts," and, together with the Purchased
Contracts, the "Initial Receivables") having an
aggregate Contract Value (calculated for the
Standard 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
balance on the Servicer's records) of
approximately $248,599,560 which will be sold to
the Trust.
The Seller will sell the Initial Receivables to the
Trust pursuant to a Sale and Servicing Agreement,
to be dated as of September 1, 1997 (the
S-5
<PAGE> 6
"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 aggregate Contract Value of
approximately $411,884,035, such amount being
equal to the amount on deposit in the Pre-Funding
Account on the Closing Date (the "Initial
Pre-Funded Amount"). It is expected that
Subsequent Receivables will be conveyed to the
Trust monthly on dates specified by the Seller
(each date on which Subsequent Receivables are
conveyed being referred to as a "Subsequent
Transfer Date") occurring during the Funding
Period, with such transfer being given effect as
of the close of business on the last day of the
preceding calendar month (each, a "Subsequent
Cutoff Date"). The Subsequent Receivables
together with the Initial Receivables are
referred to herein as the "Receivables." 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 to be made
therefrom in connection with the transfer of
Subsequent Receivables to the Issuer on or before
the Payment Date after such Determination Date)
is less than $100,000, (b) the occurrence of an
Event of Default 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
February 1998 Payment Date. See "Description of
the Transfer and Servicing Agreement -- Sale and
Assignment of Initial Receivables and Subsequent
Receivables."
The Receivables arose or will arise from financing
provided in connection with retail sales by
dealers (the "Dealers") of new or used
agricultural and construction equipment and were
or will be purchased by Case Credit pursuant to
agreements with the Dealers or were or will be
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 Receivables have
been selected, and the Subsequent Receivables
will be selected, from the portfolio of Contracts
owned by the Seller based upon the criteria
specified in the Sale and Servicing Agreement.
See "The Receivables Pool" below and "The
Receivables Pools" in the Prospectus. Each
Initial Receivable that is a Fixed Rate
Receivable is a Precomputed Receivable, including
some Precomputed Simple Rebate Receivables. Each
Initial Receivable that is a Floating Rate
Receivable is a Simple Interest Receivable. As of
the Initial Cutoff Date, with respect to the
Initial Receivables that are Fixed Rate
Receivables: (a) the weighted average annual
percentage rate (the "APR") was approximately
8.637%, (b) the weighted average remaining
maturity (i.e., the period from but excluding the
Initial Cutoff Date to and including each such
Receivable's maturity date) was approximately
46.32 months and
S-6
<PAGE> 7
(c) the weighted average original maturity was
approximately 48.85 months. As of the Initial
Cutoff Date, with respect to the Initial
Receivables that are Floating Rate Receivables:
(a) the weighted average APR was approximately
7.750%, (b) the weighted average remaining
maturity was approximately 39.08 months and (c)
the weighted average original maturity was
approximately 51.73 months. No Initial Receivable
has, and no Subsequent Receivable will have, a
scheduled maturity date 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
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 pool of
Receivables included in the Trust may vary from
those of the Initial Receivables. See "Risk
Factors -- The Receivables and the Pre-Funding
Account" and "The Receivables Pool."
The "Pool Balance" at any time represents the sum
of the aggregate Contract Values of the
Receivables 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, with respect to any day
(including the Initial Cutoff Date): (a) with
respect to the Fixed Rate Receivables, the
present value of the scheduled and unpaid
payments on the Fixed Rate Receivables discounted
monthly at an annual rate equal to: (i) in the
case of the Initial Receivables that are Fixed
Rate Receivables, the Initial Cutoff Date APR,
and (ii) in the case of any Subsequent Fixed Rate
Receivables, the applicable Subsequent Cutoff
Date APR, and (b) with respect to the Floating
Rate Receivables, the current balance of the
Floating Rate Receivables shown on the Servicer's
records. In effect, the Contract Value of the
Receivables is generally equivalent to the
aggregate balance of such Receivables.
"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.
TERMS OF THE OFFERED NOTES:
A. Interest Payments...... The A-1 Notes will bear interest at the rate of
5.612% per annum (the "A-1 Note Rate"); the A-2
Notes will bear interest at the rate of 5.914%
per annum (the "A-2 Note Rate"); the A-3 Notes
will bear interest at the rate of 6.240% per
annum (the "A-3 Note Rate"); the A-4 Notes will
bear interest at the rate of 6.410% per annum
(the "A-4 Note Rate"); and the Class C Notes will
bear interest at the rate of 6.410% per annum
(the "Class C Note Rate"). Interest on the A-1
Notes and the A-2 Notes will be calculated on the
basis of the actual number of days in the
applicable Interest Period and a 360-day year.
Interest on the A-3 Notes, the A-4 Notes and the
Class C Notes will
S-7
<PAGE> 8
be calculated on the basis of a 360-day year of
twelve 30-day months. The Class B Notes will bear
interest at the Floating Rate during each
Interest Period. Interest on the outstanding
principal amount of the Notes will accrue during
each Interest Period. Interest on the 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"), and, in the case of the A-1 Notes, on the
A-1 Note Final Scheduled Maturity Date,
commencing on October 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"), the holders of record of the A-3
Notes (the "A-3 Noteholders"), the holders of
record of the A-4 Notes (the "A-4 Noteholders,"
and, with the A-1 Noteholders, the A-2
Noteholders, the A-3 Noteholders and the A-4
Noteholders, the "Class A Noteholders"), the
holders of record of the Class C Notes (the
"Class C Noteholders," and, with the Class A
Noteholders, the "Offered Noteholders") and the
holders of record of the Class B Notes (the
"Class B Noteholders," and, with the Offered
Noteholders, the "Noteholders") as of the
fourteenth day of the calendar month in which
such Payment Date will occur or, if Definitive
Notes have been 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 C Notes will not be paid on
any Payment Date until interest payments on the
Class A Notes have been paid in full.
Interest payments on the Offered Notes will be
funded from: (a) the Fixed Rate Distribution
Amount remaining after the payment of the Fixed
Rate Percentage of the Servicing Fee (if neither
Case Credit nor an affiliate of Case Credit is
the Servicer), the Fixed Rate Percentage of the
Administration Fee, any portion of the Floating
Rate Percentage of such fees not covered by the
Floating Rate Distribution Amount and, in the
case of the Class C Notes, interest on the Class
A Notes, (b) any Floating Rate Distribution
Amount remaining (the "Floating Rate Excess
Distribution Amount") after the payment of the
Floating Rate Percentage of the Servicing Fee (if
neither Case Credit nor an affiliate of Case
Credit is the Servicer), the Floating Rate
Percentage of the Administration Fee, any portion
of the Fixed Rate Percentage of such fees not
covered by the Fixed Rate Distribution Amount and
interest and principal on the Class B Notes and
(c) 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 Class A
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.
Interest payments on the Class B Notes will be
funded from: (a) the Floating Rate Distribution
Amount remaining after the payment of the
Floating Rate Percentage of the Servicing Fee (if
neither Case Credit nor an affiliate of Case
Credit is the Servicer), the Floating Rate
Percentage of the Administration Fee and any
portion of the Fixed Rate Percentage of such fees
not covered by the Fixed Rate Distribution
Amount, (b) any Fixed Rate Distribution Amount
remaining (the "Fixed Rate Excess Distribution
Amount") after the
S-8
<PAGE> 9
payment of the Fixed Rate Percentage of the
Servicing Fee (if neither Case Credit nor an
affiliate of Case Credit is the Servicer), the
Fixed Rate Percentage of the Administration Fee,
any portion of the Floating Rate Percentage of
such fees not covered by the Floating Rate
Distribution Amount, payments of interest on the
Offered Notes and payments of principal on the
Class A Notes and (c) amounts on deposit in the
Spread Account.
Interest on the Certificates will only be paid from
the Collection Account on any Payment Date
generally to the extent of funds available
following payment of the Servicing Fee (if
neither Case Credit nor an affiliate of Case
Credit is the Servicer), the Administration Fee
and distributions in respect of the Notes.
B. Principal Payments..... Principal of the Offered Notes will be payable on
each Payment Date and, in the case of the A-1
Notes, on the A-1 Note Final Scheduled Maturity
Date in an amount generally equal to the Fixed
Rate Principal Distribution Amount for such
Payment Date to the extent of funds available
therefor; provided, that no principal payments
will be made with respect to the Class C Notes on
any Payment Date until all amounts payable with
respect to the Class A Notes and the Class B
Notes (other than any Class B Net Funds Carryover
Amount or Additional Class B Amounts) on that
Payment Date have been paid in full. See
"Description of the Transfer and Servicing
Agreements -- Distributions." Principal on the
Class B Notes will be payable on each Payment
Date in an amount generally equal to the Floating
Rate Principal Distribution Amount for such
Payment Date to the extent of funds available
therefor.
On each Payment Date before the Payment Date on
which the A-1 Notes have been paid in full,
principal of the A-1 Notes will be payable in an
amount equal to the Class A Noteholders'
Principal Distributable 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 the Class A Noteholders' Principal
Distributable Amount (less any portion thereof
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 the Class A
Noteholders' Principal Distributable Amount (less
any portion thereof applied on such Payment Date
to reduce the outstanding principal amount of the
A-1 Notes and the A-2 Notes to zero). On each
Payment Date on and after the Payment Date on
which the A-3 Notes have been paid in full,
principal of the A-4 Notes will be payable, until
the A-4 Notes have been paid in full, in an
amount equal to the Class A Noteholders'
Principal Distributable Amount (less any portion
thereof applied on such Payment Date to reduce
the outstanding principal amount of the A-1
Notes, the A-2 Notes and the A-3 Notes to zero).
The principal of the Class C Notes generally will
be payable on each Payment Date, until the Class
C Notes have been paid in full, in an amount
equal to the Class C Noteholders' Principal
Distributable Amount.
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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 October 13,
1998 (the "A-1 Note Final Scheduled Maturity
Date"), the outstanding principal amount, if any,
of the A-2 Notes will be payable in full on the
September 2000 Payment Date (the "A-2 Note Final
Scheduled Maturity Date") and the outstanding
principal amount, if any, of the A-3 Notes, the
A-4 Notes and the Class C Notes (as well as the
Class B Notes) will be payable in full on the
September 2004 Payment Date (the "Final Scheduled
Maturity Date"), in each case from funds
available therefor. After an Event of Default and
acceleration of the Offered Notes (and, if any
Offered Notes remain outstanding, on and after
the Final Scheduled Maturity Date), any amounts
distributable as principal payments on any Class
A Notes will be made to the Class A Noteholders
ratably according to the amounts due and payable
on the Class A Notes for principal.
Principal payments on the Offered Notes will
generally be derived from: (a) the Fixed Rate
Distribution Amount remaining after the payment
of the Fixed Rate Percentage of the Servicing Fee
(if neither Case Credit nor any of its affiliates
is the Servicer), the Fixed Rate Percentage of
the Administration Fee, any portion of the
Floating Rate Percentage of such fees not covered
by the Floating Rate Distribution Amount, the
Class A Noteholders' Interest Distributable
Amount and the Class C Noteholders' Interest
Distributable Amount, (b) the Floating Rate
Excess Distribution Amount, if any, and (c)
amounts on deposit in the Spread Account;
provided, that no principal payments will be made
with respect to the Class C Notes on any Payment
Date until the amounts payable with respect to
the Class B Notes on that Payment Date (other
than any Class B Net Funds Cap Carryover Amount
or Additional Class B Amounts) have been paid in
full. See "Description of the Transfer and
Servicing Agreements -- Distributions" and
"-- Spread Account."
Principal payments on the Class B Notes will
generally be derived from: (a) the Floating Rate
Distribution Amount remaining after the payment
of the Floating Rate Percentage of the Servicing
Fee (if neither Case Credit nor any of its
affiliates is the Servicer), the Floating Rate
Percentage of the Administration Fee, any portion
of the Fixed Rate Percentage of such fees not
covered by the Fixed Rate Distribution Amount and
the Class B Noteholders' Interest Distributable
Amount, (b) the Fixed Rate Excess Distribution
Amount, if any, and (c) amounts on deposit in the
Spread Account. See "Description of the Transfer
and Servicing Agreements -- Distributions."
C. Optional Redemption.... The outstanding Offered Notes will be prepaid in
whole, but not in part, at a redemption price
equal to the unpaid principal balance thereof
plus accrued and unpaid interest thereon, on the
Payment Date 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
Initial Pool Balance.
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The "Initial Pool Balance" will equal the sum of:
(a) the Pool Balance as of the Initial Cutoff
Date plus (b) 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
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 Offered Notes
then outstanding (in the same proportions and
sequence that would apply if such remaining funds
were a part of the Fixed Rate Principal
Distribution Amount) (each, a "Mandatory
Redemption").
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 approximately
$411,884,035, and, during the Funding Period,
will be reduced by the amount thereof used to
purchase Subsequent Receivables in accordance
with the Sale and Servicing Agreement 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 February 1998 Payment Date.
Any Pre-Funded Amount remaining at the end of the
Funding Period will be payable as described above
in "Description of the Offered Notes -- Mandatory
Redemption." Prior to being used to purchase
Subsequent Receivables or paid to the Offered
Noteholders, the Pre-Funded Amount will be
invested 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 Offered
Notes at their initial levels, the Servicer will
establish and maintain in the name of the
Indenture Trustee an account (the "Negative Carry
Account") as a Trust Account for the benefit of
the Offered Noteholders. The Negative Carry
Account will be created with an initial deposit
by the Seller of approximately $5,776,520 (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 (to be included in the Fixed Rate
Distribution Amount) 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: (a) the product
of: (i) the sum of the Class A Noteholders'
Interest Distributable Amount and the Class C
Noteholders' Interest Distributable Amount
multiplied by (ii) the Pre-Funded Percentage
minus (b) the Investment Earnings on the
Pre-Funded Amount. The "Pre-Funded Percentage"
for each Collection Period is the percentage
derived from a fraction the numerator of which is
the Pre-Funded Amount and the denominator of
which is the sum of the Pool Balance (calculated
with respect to the Fixed Rate Receivables only)
and the Pre-Funded Amount, after
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<PAGE> 12
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
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 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 approximately $9,121,524, which
amount equals 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 and will be
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 into the Note Distribution Account of
amounts to be distributed to Noteholders and the
payment of the Administration Fee and, if Case
Credit or an affiliate of Case Credit is the
Servicer, the Servicing Fee (but before the
payment of any amounts to the holders of the
Certificates (the "Certificateholders")).
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
Specified Spread Account Balance for such Payment
Date will be released to the Seller. The
"Specified 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 Offered 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 Offered Notes.
See "Description of the Transfer and Servicing
Agreements -- Spread Account."
THE CLASS B NOTES.......... On the Closing Date, the Trust will issue Class B
Notes in an aggregate principal amount of
$97,960,250.83. The Class B Notes will bear
interest at the Floating Rate. Distributions of
interest and principal on the Class B Notes will
be payable from the Floating Rate Distribution
Amount and, in the event of any shortfall, from
any Fixed Rate Excess
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<PAGE> 13
Distribution Amount and amounts on deposit in the
Spread Account to the extent described herein. It
is expected that the Class B Notes will be issued
to one or more institutional investors in private
placements exempt from the registration
requirements of the Securities Act. See
"Description of the Class B Notes."
THE CERTIFICATES........... On the Closing Date, the Trust will issue
Certificates in an aggregate principal amount of
$15,190,000. The Seller will initially purchase
the entire principal amount of the Certificates.
The Certificates will bear interest at the rate
of 6.410% 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 the Noteholders and the
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 Indenture Trustee
to withdraw funds on deposit in the Collection
Account and to apply such funds on each Payment
Date to the following (in the priority
indicated):
(a) from the Fixed Rate Distribution Amount:
(i) if neither Case Credit nor an affiliate of
Case Credit is the Servicer, the Fixed Rate
Percentage of the Servicing Fee for the prior
Collection Period and any such overdue
Servicing Fees to the Servicer,
(ii) the Fixed Rate Percentage of the
Administration Fee for the prior Collection
Period and any such overdue Administration Fees
to the Administrator,
(iii) the amount, if any, by which: (A) the sum
of: (1) if neither Case Credit nor an affiliate
of Case Credit is the Servicer, the Floating
Rate Percentage of the Servicing Fee for the
prior Collection Period and any such overdue
Servicing Fees plus (2) the Floating Rate
Percentage of the Administration Fee for the
prior Collection Period and any such overdue
Administration Fees exceeds (B) the Floating
Rate Distribution Amount, to pay such amounts
in the order indicated,
(iv) the Class A Noteholders' Interest
Distributable Amount into the Note Distribution
Account,
(v) the Class C Noteholders' Interest
Distributable Amount into the Note Distribution
Account,
(vi) the A-1 Noteholders' Principal
Distributable Amount into the Note Distribution
Account,
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<PAGE> 14
(vii) the A-2 Noteholders' Principal
Distributable Amount into the Note Distribution
Account,
(viii) the A-3 Noteholders' Principal
Distributable Amount into the Note Distribution
Account,
(ix) the A-4 Noteholders' Principal
Distributable Amount into the Note Distribution
Account,
(x) the Fixed Rate Excess Distribution Amount,
if any, to the extent necessary to pay the
Class B Noteholders' Interest Distributable
Amount and the Class B Noteholders' Principal
Distributable Amount, in such order, into the
Note Distribution Account, and
(xi) the balance distributed under clause (c)
below;
(b) from the Floating Rate Distribution Amount:
(i) if neither Case Credit nor an affiliate of
Case Credit is the Servicer, the Floating Rate
Percentage of the Servicing Fee for the prior
Collection Period and any such overdue
Servicing Fees to the Servicer,
(ii) the Floating Rate Percentage of the
Administration Fee for the prior Collection
Period and any such overdue Administration Fees
to the Administrator,
(iii) the amount, if any, by which: (A) the sum
of: (1) if neither Case Credit nor an affiliate
of Case Credit is the Servicer, the Fixed Rate
Percentage of the Servicing Fee for the prior
Collection Period and any such overdue
Servicing Fees plus (2) the Fixed Rate
Percentage of the Administration Fee for the
prior Collection Period and any such overdue
Administration Fees exceeds (B) the Fixed Rate
Distribution Amount, to pay such amounts in the
order indicated,
(iv) the Class B Noteholders' Interest
Distributable Amount into the Note Distribution
Account,
(v) the Class B Noteholders' Principal
Distributable Amount into the Note Distribution
Account,
(vi) the Floating Rate Excess Distribution
Amount, if any, to the extent necessary to pay
the Class A Noteholders' Interest Distributable
Amount, the Class C Noteholders' Interest
Distributable Amount and the Class A
Noteholders' Principal Distributable Amount, in
such order, into the Note Distribution Account,
and
(vii) the balance distributed under clause (c)
below; and
(c) from the balances from clauses (a)(xi) and
(b)(vii):
(i) the Class C Noteholders' Principal
Distributable Amount into the Note Distribution
Account,
(ii) to the Spread Account to the extent
necessary so that the balance on deposit
therein will equal the Specified Spread Account
Balance,
(iii) the Class B Net Funds Cap Carryover
Amount and any other amount not named above
payable by the Trust to the Class B
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<PAGE> 15
Noteholders (the "Additional Class B Amounts")
into the Note Distribution Account,
(iv) the Certificateholders' Interest
Distributable Amount into the Certificate
Distribution Account,
(v) the Certificateholders' Principal
Distributable Amount into the Certificate
Distribution Account,
(vi) if Case Credit or an affiliate of Case
Credit is the Servicer, the Servicing Fee for
the prior Collection Period and any overdue
Servicing Fees to the Servicer, and
(vii) the remaining balance, if any, to the
Spread Account.
After an Event of Default and acceleration of the
Offered Notes (and, if any Offered Notes remain
outstanding, on and after the Final Scheduled
Maturity Date), any amounts distributable as
principal payments on any Class A Notes will be
made to the Class A Noteholders ratably according
to the amounts due and payable on the Class A
Notes for principal. See "Description of the
Transfer and Servicing
Agreements -- Distributions."
TAX STATUS................. In the opinion of Mayer, Brown & Platt ("Federal
Tax Counsel"), for Federal income tax purposes
the Offered 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
characterizations should apply for Wisconsin
income tax purposes as for Federal income tax
purposes. Each Offered Noteholder, by the
acceptance of an Offered Note, will agree to
treat the Offered Notes as indebtedness. See
"Certain Federal Income Tax Consequences" and
"Certain State Tax Consequences" in the
Prospectus for additional information concerning
the application of Federal and Wisconsin tax laws
to the Trust and the Offered Notes.
ERISA CONSIDERATIONS....... Subject to the considerations discussed under
"ERISA Considerations," the Offered Notes are
eligible for purchase by employee benefit plans.
REGISTRATION OF OFFERED
NOTES...................... The Offered Notes initially will be represented by
securities registered in the name of Cede, as the
nominee of DTC. No Offered Noteholder will be
entitled to receive a Definitive Note, except
under the limited circumstances described herein.
Offered Noteholders may elect to hold their
Offered 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
Securities -- 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.
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<PAGE> 16
RATING OF THE NOTES........ It is a condition to the issuance of the Offered
Notes that the A-1 Notes be rated in the highest
short-term rating category, that the A-2 Notes,
the A-3 Notes and the A-4 Notes be rated in the
highest long-term rating category and that the
Class C Notes be rated at least in the "A"
category or its equivalent, in each case by at
least two nationally recognized statistical
rating agencies (each, a "Rating Agency"). 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 Offered Notes."
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<PAGE> 17
RISK FACTORS
Limited Liquidity. There is currently no secondary market for the Offered
Notes. Each Underwriter currently intends to make a market in the Offered 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 Offered 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 $455,668,015 of Initial
Receivables (calculated for Fixed Rate Receivables that are Standard Precomputed
Receivables by using a discount rate equal to the APR of each such Standard
Precomputed Receivable, for Fixed Rate Receivables that are Precomputed Simple
Rebate Receivables using the current balance shown on the Servicer's records and
for the Floating Rate Receivables using their Contract Value; or $456,076,215
calculated for all of the Initial Receivables that are Fixed Rate Receivables by
using a discount rate equal to the Initial Cutoff Date APR and for the Floating
Rate Receivables using their Contract Value) and the approximately $411,884,035
Initial Pre-Funded Amount to be deposited in the Pre-Funding Account. If the
principal amount of eligible Fixed Rate 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 Fixed Rate Receivables to sell to the Trust on the Subsequent
Transfer Dates, thereby resulting in a prepayment of principal to the Offered
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: (a) each such Subsequent Receivable must satisfy the
eligibility criteria specified in the Sale and Servicing Agreement; (b) the
Seller shall not have selected such Subsequent Receivables in a manner that it
believes is adverse to the interests of the Noteholders; (c) 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; (d) the applicable Spread
Account Initial Deposit for such Subsequent Transfer Date shall have been made;
(e) 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); (f) 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; (g) 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 (h)
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 to
redeem the Offered Notes (in the same proportions and sequence that would apply
if such remaining funds were a part of the Fixed Rate Principal Distribution
Amount).
Any such prepayment will shorten the weighted average life of the affected
Offered Notes to an extent that cannot be predicted with assurance, since the
amount of such prepayment cannot be predicted with assurance. Holders of Offered
Notes purchased at a premium 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
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<PAGE> 18
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, the relative size of the Floating Rate Receivables to the entire Pool
Balance, 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
Offered 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 Offered 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 Offered 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 56.18% with respect to the
Fixed Rate Receivables and 95.79% with respect to the Floating Rate Receivables
included in the Initial Receivables) 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 Offered 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 C Notes generally
will be subordinated in priority of payment to interest due on the Class A Notes
and, with respect to the Floating Rate Distribution Amount, principal and
interest due on the Class B Notes, and distributions of principal on the Class C
Notes will be subordinated in priority of payment to principal and interest due
on the Class A Notes and the Class B Notes, in each case to the extent described
herein. Consequently, the Class C 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 (and principal and interest on the Class B Notes,
to the extent covered by the Floating Rate Distribution Amount) relating to such
Collection Period has been deposited in the Note Distribution Account. No
distributions of principal with respect to the Class C Notes will be made until
funds sufficient to pay in full the amounts due on the Class A Notes and the
Class B Notes (other than any Class B Net Funds Cap Carryover Amount or
Additional Class B Amounts) 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 Offered 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 Offered Notes.
Ratings of the Offered Notes. It is a condition to the issuance of the
Offered Notes that the A-1 Notes be rated in the highest short-term investment
rating category, that the A-2 Notes, the A-3 Notes and the A-4
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<PAGE> 19
Notes be rated in the highest long-term investment rating category and that the
Class C 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 Offered Notes, inasmuch as such rating does not
comment as to market price or suitability for a particular investor. The ratings
of the Offered Notes address the likelihood of the timely payment of interest on
and the ultimate payment of principal of the Offered Notes pursuant to their
terms. There can be no assurance that a rating will remain for any given period
of time or that a rating will not be lowered or withdrawn entirely by a Rating
Agency if in its judgment circumstances 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 upon the generation of
additional receivables by Case Credit. The ability of Case Credit to generate
receivables in turn depends upon 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 the Servicer, delays in processing payments on the
Receivables and information in respect thereof could occur and result in delays
in payments to the Offered Noteholders.
CASE CORPORATION AND CASE CREDIT CORPORATION
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 six months ended June 30, 1997
and 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 $314 million and $579 million, respectively (compared to $313
million for the six months ended June 30, 1996 and $509 million for the year
ended December 31, 1995), and net income of $202 million and $316 million,
respectively (compared to $163 million for the six months ended June 30, 1996
and $337 million for the year ended December 31, 1995) on net sales of $2.7
billion and $5.2 billion, respectively (compared to $2.5 billion for the six
months ended June 30, 1996 and $4.9 billion for the year ended December 31,
1995). At June 30, 1997, Case's consolidated equity was $2.2 billion.
Case Credit had consolidated net income of $39 million for the six months
ended June 30, 1997 and $85 million for the year ended December 31, 1996,
compared with net income of $45 million for the six months ended June 30, 1996
and $94 million for the year ended December 31, 1995. The $6 million decrease in
net income reported during the six months ended June 30, 1997 reflect lower net
operating margins and a shift in Case Credit's asset-management strategy to
retain a larger percentage of assets on balance sheet (as opposed to selling
those assets through asset-backed securitizations). The $9 million decrease in
net income for the year ended December 31, 1996 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 first six months of 1997
S-19
<PAGE> 20
were $126 million and for the year ended December 31, 1996 were $244 million,
compared to $125 million for the first six months of 1996 and $217 million for
the year ended December 31, 1995. At June 30, 1997, total gross receivables
serviced by Case Credit were $4.8 billion, up 23% from June 30, 1996.
For additional information regarding the Seller, Case Credit or Case, see
"The Seller, Case Credit Corporation and Case Corporation" in the Prospectus.
THE TRUST
GENERAL
Case Equipment Loan Trust 1997-B 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 $15,190,000
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 Offered Noteholders by the Negative Carry
Account, the Spread Account and the subordination of the Certificates is
insufficient, the Offered 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 Offered Noteholders with respect to the Offered
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 New York, New York, in care of The
Bank of New York, as Trustee, at the address listed below under "-- The
Trustee."
S-20
<PAGE> 21
CAPITALIZATION OF THE TRUST
The following table illustrates the capitalization of the Trust as of the
Initial 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 5.612% Asset Backed Notes......................... $ 90,000,000.00
Class A-2 5.914% Asset Backed Notes......................... 204,500,000.00
Class A-3 6.240% Asset Backed Notes......................... 237,000,000.00
Class A-4 6.410% Asset Backed Notes......................... 188,591,000.00
Class B Floating Rate Asset Backed Notes.................... 97,960,250.83
Class C 6.410% Asset Backed Notes........................... 34,719,000.00
6.410% Asset Backed Certificates............................ 15,190,000.00
---------------
Total............................................. $867,960,250.83
===============
</TABLE>
THE TRUSTEE
The Bank of New York is the Trustee under the Trust Agreement. The Bank of
New York is a New York banking corporation and its principal offices are located
at 101 Barclay Street, Floor 12E, New York, New York 10286. 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. The Bank of New York (Delaware) will act as
co-trustee for the purpose of complying with certain Delaware legal
requirements.
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 Pool Balance. 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 45% of the Pool Balance of the Receivables in
the Trust will represent Contracts for the financing of construction equipment.
The Initial Receivables will represent approximately 53% of the sum of the
initial Note Balance and the initial Certificate Balance. The Initial
Receivables that are Fixed Rate Receivables will represent approximately 47% of
the sum of the initial principal amounts of the Offered Notes and the
Certificates. 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
S-21
<PAGE> 22
the Trust, the aggregate characteristics of the entire Receivables Pool
(including the composition of the Receivables Pool, the distribution by APR,
equipment type, payment frequency, average maturity, 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 Floating Rate Receivables are Simple Interest Receivables that bear a
rate of interest equal to, for any month: (a) the "prime rate" published in the
Wall Street Journal on the fifteenth day of the preceding calendar month (or the
next business day if the fifteenth day of such calendar month is not a business
day), which rate resets on the first day of each calendar month, plus (b) a
margin (which may be a negative number) agreed to with the Obligor of the
Floating Rate Receivable, subject to applicable legal maximum rates and, for
most of the Floating Rate Receivables, a contractual cap that generally equals
3.50% over the original interest rate applicable to such Receivable. As the
payment obligations of the Obligors on the Floating Rate Receivables provide for
level payments, the portion of such payments allocated to principal with respect
to a Floating Rate Receivable will vary depending upon the rate of interest
currently applicable to such Floating Rate Receivable. Any outstanding principal
due on the day of the final maturity of such Receivable is required to be paid
in full on such day of maturity.
The composition of the initial Receivables Pool, the distribution by APR,
the maximum cap of the Floating Rate Receivables, the margins on the Floating
Rate Receivables, equipment type, payment frequency, average maturity, current
Contract Value and geographic distribution, in each case 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 Fixed Rate Receivable
that is a 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 Fixed
Rate Receivable that is a Precomputed Simple Rebate Receivable and for each
Floating Rate Receivable has been deemed to equal the current balance shown of
that Receivable on the Servicer's records as of the Initial Cutoff Date. Totals
in the following tables may not precisely equal the sum of the numbers being
added due to rounding.
FIXED RATE RECEIVABLES
COMPOSITION OF THE FIXED RATE RECEIVABLES
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>
8.637% $357,707,763.96 12,783 46.32 months 48.85 months $27,983.08
</TABLE>
S-22
<PAGE> 23
DISTRIBUTION BY APR OF THE FIXED RATE RECEIVABLES 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%......................................... 591 $ 9,184,651.26 2.57%
4.00% to 4.99%......................................... 100 8,477,733.63 2.37
5.00% to 5.99%......................................... 529 14,849,178.27 4.15
6.00% to 6.99%......................................... 700 13,242,127.95 3.70
7.00% to 7.99%......................................... 2,819 81,606,689.89 22.81
8.00% to 8.99%......................................... 2,082 93,194,262.76 26.05
9.00% to 9.99%......................................... 1,969 71,563,500.87 20.01
10.00% to 10.99%......................................... 3,067 45,059,082.00 12.60
11.00% to 11.99%......................................... 508 10,488,580.88 2.93
12.00% to 12.99%......................................... 212 5,602,064.61 1.57
13.00% to 13.99%......................................... 129 2,623,397.18 0.73
14.00% to 14.99%......................................... 71 1,641,790.84 0.46
15.00% to 15.99%......................................... 5 71,433.76 0.02
16.00% to 16.99%......................................... 1 103,270.06 0.03
------ --------------- ------
Total.......................................... 12,783 $357,707,763.96 100.00%
====== =============== ======
</TABLE>
DISTRIBUTION BY EQUIPMENT TYPE OF THE FIXED RATE RECEIVABLES
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.................................................... 4,153 $100,152,449.36 28.00%
Used................................................... 4,520 100,801,914.90 28.18
Construction
New.................................................... 2,641 111,195,192.08 31.09
Used................................................... 1,469 45,558,207.62 12.74
------ --------------- ------
Total.......................................... 12,783 $357,707,763.96 100.00%
====== =============== ======
</TABLE>
S-23
<PAGE> 24
DISTRIBUTION BY PAYMENT FREQUENCY OF THE FIXED RATE RECEIVABLES
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)................................................ 6,235 $158,709,105.39 44.37%
Semiannual............................................... 566 17,321,777.72 4.84
Quarterly................................................ 104 2,414,037.76 0.67
Monthly.................................................. 5,878 179,262,843.09 50.11
------ --------------- ------
Total.......................................... 12,783 $357,707,763.96 100.00%
====== =============== ======
</TABLE>
- -------------------------
(1) Approximately 6.35%, 2.49%, 2.80%, 6.68%, 13.09%, 17.48%, 16.82%, 12.96%,
5.00%, 2.54%, 3.25% and 10.54%, of the annual Fixed Rate Receivables have
scheduled payments within the Collection Periods relating to the Payment
Dates in January, February, March, April, May, June, July, August,
September, October, November and December, respectively.
DISTRIBUTION BY CURRENT CONTRACT VALUE OF THE FIXED RATE RECEIVABLES
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 $ 4,999.99.............................. 1,594 $ 5,387,556.11 1.51%
5,000.00 to 9,999.99.............................. 2,484 18,149,229.33 5.07
10,000.00 to 14,999.99.............................. 1,905 23,394,233.34 6.54
15,000.00 to 19,999.99.............................. 1,385 23,884,305.80 6.68
20,000.00 to 24,999.99.............................. 903 20,077,903.74 5.61
25,000.00 to 29,999.99.............................. 629 17,228,545.23 4.82
30,000.00 to 34,999.99.............................. 527 17,123,204.08 4.79
35,000.00 to 39,999.99.............................. 558 20,871,391.13 5.83
40,000.00 to 44,999.99.............................. 413 17,477,198.66 4.89
45,000.00 to 49,999.99.............................. 365 17,306,990.12 4.84
50,000.00 to 54,999.99.............................. 340 17,836,558.46 4.99
55,000.00 to 59,999.99.............................. 272 15,637,351.80 4.37
60,000.00 to 64,999.99.............................. 187 11,692.006.48 3.27
65,000.00 to 69,999.99.............................. 168 11,319,420.41 3.16
70,000.00 to 74,999.99.............................. 137 9,907,653.56 2.77
75,000.00 to 99,999.99.............................. 441 37,809,760.35 10.57
100,000.00 to 199,999.99.............................. 409 52,571,293.74 14.70
200,000.00 to 299,999.99.............................. 38 9,373,045.73 2.62
300,000.00 and over.................................... 28 10,660,115.89 2.98
------ --------------- ------
Total......................................... 12,783 $357,707,763.96 100.00%
====== =============== ======
</TABLE>
S-24
<PAGE> 25
GEOGRAPHIC DISTRIBUTION OF THE FIXED RATE RECEIVABLES
AS OF THE INITIAL CUTOFF DATE
<TABLE>
<CAPTION>
PERCENT OF
AGGREGATE
CONTRACT
STATE(1) VALUE
- -------- ----------
<S> <C>
Alabama............................. 3.80%
Alaska.............................. 0.31
Arizona............................. 2.62
Arkansas............................ 3.94
California.......................... 3.18
Colorado............................ 2.12
Connecticut......................... 0.57
Delaware............................ 0.44
Florida............................. 2.14
Georgia............................. 2.50
Hawaii.............................. 0.05
Idaho............................... 1.93
Illinois............................ 4.50
Indiana............................. 2.42
Iowa................................ 4.26
Kansas.............................. 3.02
Kentucky............................ 1.48
Louisiana........................... 1.76
Maine............................... 0.56
Maryland............................ 0.98
Massachusetts....................... 0.27
Michigan............................ 2.60
Minnesota........................... 3.89
Mississippi......................... 3.27
Missouri............................ 2.98
Montana............................. 1.76
<CAPTION>
PERCENT OF
AGGREGATE
CONTRACT
STATE(1) VALUE
- -------- ----------
<S> <C>
Nebraska............................ 2.89%
Nevada.............................. 0.51
New Hampshire....................... 0.33
New Jersey.......................... 0.82
New Mexico.......................... 0.44
New York............................ 2.20
North Carolina...................... 2.37
North Dakota........................ 1.96
Ohio................................ 2.37
Oklahoma............................ 2.07
Oregon.............................. 1.66
Pennsylvania........................ 2.22
Rhode Island........................ 0.03
South Carolina...................... 0.87
South Dakota........................ 3.23
Tennessee........................... 2.54
Texas............................... 7.92
Utah................................ 0.90
Vermont............................. 0.23
Virginia............................ 1.18
Washington.......................... 2.32
Washington, D.C. ................... 0.01
West Virginia....................... 0.32
Wisconsin........................... 2.87
Wyoming............................. 0.44
------
Total.......................... 100.00%
======
</TABLE>
- -------------------------
(1) Based upon billing addresses of the obligors.
FLOATING RATE RECEIVABLES
COMPOSITION OF THE FLOATING RATE RECEIVABLES
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
- ----------- -------------- ----------- -------------- ------------- --------
<C> <C> <C> <C> <C> <C>
7.750% $97,960,250.83 4,549 39.08 months 51.73 months $21,534.46
</TABLE>
S-25
<PAGE> 26
DISTRIBUTION BY APR OF THE FLOATING RATE RECEIVABLES 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>
6.00% to 6.99%......................................... 1,931 $39,505,777.25 40.33%
7.00% to 7.99%......................................... 502 18,180,164.35 18.56
8.00% to 8.99%......................................... 1,004 24,432,382.86 24.94
9.00% to 9.99%......................................... 921 12,760,254.21 13.03
10.00% to 10.99%......................................... 157 2,901,112.31 2.96
11.00% to 11.99%......................................... 28 134,515.81 0.14
12.00% to 12.99%......................................... 6 46,044.04 0.05
----- -------------- ------
Total.......................................... 4,549 $97,960,250.83 100.00%
===== ============== ======
</TABLE>
DISTRIBUTION OF MAXIMUM CAP ON FLOATING RATE RECEIVABLES
AS OF THE INITIAL CUTOFF DATE
<TABLE>
<CAPTION>
PERCENT OF
AGGREGATE
NUMBER OF AGGREGATE CONTRACT
MAXIMUM CAP RECEIVABLES CONTRACT VALUE VALUE
----------- ----------- -------------- ----------
<S> <C> <C> <C>
10.00% to 10.49%......................................... 2,008 $40,478,158.54 41.32
10.50% to 10.99%......................................... 4 101,390.63 0.10
11.00% to 11.49%......................................... 332 15,695,080.56 16.02
11.50% to 11.99%......................................... 259 5,156,736.70 5.26
12.00% to 12.49%......................................... 1,056 22,782,025.16 23.26
12.50% to 12.99%......................................... 316 5,494,527.95 5.61
13.00% to 13.49%......................................... 334 4,522,182.21 4.62
13.50% to 13.99%......................................... 9 138,439.54 0.14
14.00% to 14.49%......................................... 6 90,837.90 0.09
14.50% to 14.99%......................................... 0 0.00 0.00
15.00% to 15.49%......................................... 0 0.00 0.00
15.50% to 15.99%......................................... 1 5,704.00 0.01
16.00% to 16.49%......................................... 2 27,950.44 0.03
No Cap................................................... 222 3,467,217.20 3.54
----- -------------- ------
Total.......................................... 4,549 $97,960,250.83 100.00%
===== ============== ======
</TABLE>
DISTRIBUTION OF MARGINS ON FLOATING RATE RECEIVABLES
AS OF THE INITIAL CUTOFF DATE
<TABLE>
<CAPTION>
PERCENT OF
AGGREGATE
NUMBER OF AGGREGATE CONTRACT
MARGIN RECEIVABLES CONTRACT VALUE VALUE
------ ----------- -------------- ----------
<S> <C> <C> <C>
- -2.99% to -2.00%.......................................... 131 $ 2,464,863.44 2.52%
- -1.99% to -1.00%.......................................... 2,020 41,491,959.70 42.36
- -0.99% to -0.01%.......................................... 301 14,330,652.01 14.63
0.00% to 0.99%.......................................... 1,092 26,015,850.56 26.56
1.00% to 1.99%.......................................... 859 11,456,943.92 11.70
2.00% to 2.99%.......................................... 131 2,103,094.58 2.15
3.00% to 3.99%.......................................... 13 68,936.18 0.07
4.00% to 4.99%.......................................... 2 27,950.44 0.03
----- -------------- ------
Total........................................... 4,549 $97,960,250.83 100.00%
===== ============== ======
</TABLE>
S-26
<PAGE> 27
DISTRIBUTION BY EQUIPMENT TYPE OF THE FLOATING RATE RECEIVABLES
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..................................................... 1,660 $38,879,645.08 39.69%
Used.................................................... 2,727 54,955,834.16 56.10
Construction
New..................................................... 89 2,553,447.13 2.61
Used.................................................... 73 1,571,324.46 1.60
----- -------------- ------
Total........................................... 4,549 $97,960,250.83 100.00%
===== ============== ======
</TABLE>
DISTRIBUTION BY PAYMENT FREQUENCY OF THE FLOATING RATE RECEIVABLES
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)................................................. 3,390 $76,697,369.26 78.29%
Semiannual................................................ 440 9,077,691.69 9.27
Quarterly................................................. 52 857,472.09 0.88
Monthly................................................... 667 11,327,717.79 11.56
----- -------------- ------
Total........................................... 4,549 $97,960,250.83 100.00%
===== ============== ======
</TABLE>
- -------------------------
(1) Approximately 12.57%, 7.03%, 9.14%, 9.02%, 6.00%, 5.04%, 5.60%, 4.68%,
7.48%, 8.40%, 9.77% and 15.29%, of the annual Floating Rate Receivables have
scheduled payments within the Collection Periods relating to the Payment
Dates in January, February, March, April, May, June, July, August,
September, October, November and December, respectively.
S-27
<PAGE> 28
DISTRIBUTION BY CURRENT CONTRACT VALUE OF THE FLOATING RATE RECEIVABLES
AS OF THE INITIAL CUTOFF DATE
<TABLE>
<CAPTION>
PERCENT OF
AGGREGATE AGGREGATE
NUMBER OF CONTRACT CONTRACT
CONTRACT VALUE RANGE RECEIVABLES VALUE VALUE
-------------------- ----------- -------------- ----------
<S> <C> <C> <C>
$ 0.00 to $ 4,999.99................................ 827 $ 2,680,507.87 2.74%
5,000.00 to 9,999.99................................ 1,066 7,811,488.60 7.97
10,000.00 to 14,999.99................................ 656 8,005,429.87 8.17
15,000.00 to 19,999.99................................ 389 6,737,052.16 6.88
20,000.00 to 24,999.99................................ 277 6,206,514.85 6.34
25,000.00 to 29,999.99................................ 217 5,991,670.10 6.12
30,000.00 to 34,999.99................................ 214 6,928,724.50 7.07
35,000.00 to 39,999.99................................ 155 5,801,951.84 5.92
40,000.00 to 44,999.99................................ 160 6,801,885.45 6.94
45,000.00 to 49,999.99................................ 119 5,631,189.96 5.75
50,000.00 to 54,999.99................................ 91 4,759,854.64 4.86
55,000.00 to 59,999.99................................ 71 4,067,164.33 4.15
60,000.00 to 64,999.99................................ 49 3,077,231.06 3.14
65,000.00 to 69,999.99................................ 47 3,155,878.34 3.22
70,000.00 to 74,999.99................................ 29 2,094,434.77 2.14
75,000.00 to 99,999.99................................ 125 10,575,472.82 10.80
100,000.00 to 199,999.99................................ 53 6,544,075.36 6.68
200,000.00 to 299,999.99................................ 3 752,962.87 0.77
300,000.00 and over...................................... 1 336,761.44 0.34
----- -------------- ------
Total........................................... 4,549 $97,960,250.83 100.00%
===== ============== ======
</TABLE>
S-28
<PAGE> 29
GEOGRAPHIC DISTRIBUTION OF THE FLOATING RATE RECEIVABLES
AS OF THE INITIAL CUTOFF DATE
<TABLE>
<CAPTION>
PERCENT OF
AGGREGATE
CONTRACT
STATE(1) VALUE
- -------- ----------
<S> <C>
Alabama............................ 0.79%
Alaska............................. 0.00
Arizona............................ 0.33
Arkansas........................... 6.46
California......................... 1.12
Colorado........................... 0.33
Connecticut........................ 0.04
Delaware........................... 0.59
Florida............................ 0.10
Georgia............................ 3.46
Hawaii............................. 0.00
Idaho.............................. 1.53
Illinois........................... 5.63
Indiana............................ 1.88
Iowa............................... 9.43
Kansas............................. 8.02
Kentucky........................... 1.00
Louisiana.......................... 0.32
Maine.............................. 0.07
Maryland........................... 0.49
Massachusetts...................... 0.03
Michigan........................... 1.59
Minnesota.......................... 10.95
Mississippi........................ 0.75
Missouri........................... 2.46
Montana............................ 1.24
<CAPTION>
PERCENT OF
AGGREGATE
CONTRACT
STATE(1) VALUE
- -------- ----------
<S> <C>
Nebraska........................... 5.52%
Nevada............................. 0.07
New Hampshire...................... 0.04
New Jersey......................... 0.11
New Mexico......................... 0.12
New York........................... 1.24
North Carolina..................... 0.84
North Dakota....................... 5.09
Ohio............................... 1.65
Oklahoma........................... 1.69
Oregon............................. 1.16
Pennsylvania....................... 1.12
Rhode Island....................... 0.00
South Carolina..................... 0.46
South Dakota....................... 6.06
Tennessee.......................... 0.70
Texas.............................. 7.31
Utah............................... 1.26
Vermont............................ 0.05
Virginia........................... 0.15
Washington......................... 2.08
Washington, D.C. .................. 0.00
West Virginia...................... 0.06
Wisconsin.......................... 3.83
Wyoming............................ 0.78
------
Total.................... 100.00%
======
</TABLE>
- -------------------------
(1) Based upon billing addresses of the obligors.
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 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
S-29
<PAGE> 30
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
-------------------- -------------------- -------------------- --------------------
NUMBER OF NUMBER OF NUMBER OF NUMBER OF
CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT
--------- -------- --------- -------- --------- -------- --------- --------
(DOLLARS IN MILLIONS)
<S> <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
Period of Delinquency
31-60 days.......... 2,031 45.9 1,927 33.5 1,457 18.4 2,033 27.2
60 Days or More..... 1,778 36.3 1,509 18.5 855 9.4 2,145 22.5
------- -------- ------- -------- ------- -------- ------- --------
Total
Delinquencies.... 3,809 $ 82.2 3,426 $ 52.0 2,312 $ 27.8 4,178 $ 49.7
Total Delinquencies
as a Percent of the
Portfolio........... 2.8% 2.5% 2.5% 1.7% 1.8% 1.0% 3.2% 2.0%
<CAPTION>
AT DECEMBER 31, AT JUNE 30,
-------------------- -------------------------------------------
1992 1997 1996
-------------------- -------------------- --------------------
NUMBER OF NUMBER OF NUMBER OF
CONTRACTS AMOUNT CONTRACTS AMOUNT CONTRACTS AMOUNT
--------- -------- --------- -------- --------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
Portfolio............ 138,711 $2,549.8 139,759 $3,416.7 132,739 $3,160.5
Period of Delinquency
31-60 days.......... 4,877 71.7 2,205 50.9 1,768 31.4
60 Days or More..... 6,177 78.3 2,442 57.4 1,838 28.6
------- -------- ------- -------- ------- --------
Total
Delinquencies.... 11,054 $ 150.0 4,647 $ 108.3 3,606 $ 60.0
Total Delinquencies
as a Percent of the
Portfolio........... 8.0% 5.9% 3.3% 3.2% 2.7% 1.9%
</TABLE>
- -------------------------
(1) Except as indicated, all amounts and percentages are based upon 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.
CREDIT LOSS/REPOSSESSION EXPERIENCE(1)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
---------------------------------------------------- -------------------
1996 1995 1994 1993 1992 1997 1996
-------- -------- -------- -------- -------- -------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <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 $3,320.8 $3,108.1
Repossessions as a Percent of Average
Gross Portfolio Outstanding.......... 1.07% 1.14% 1.33% 1.83% 2.68% 1.06% 1.25%
Net Losses as a Percent of
Liquidations(2)(3)(4)................ 0.15% 0.22% 0.36% 0.61% 1.23% 0.28% 0.15%
Net Losses as a Percent of Average
Gross Portfolio Outstanding(2)(3).... 0.08% 0.11% 0.19% 0.31% 0.67% 0.15% 0.08%
</TABLE>
- -------------------------
(1) Except as indicated, all amounts and percentages are based upon 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 23%, 28%, 25%, 22%, 22%, 22%
and 27% of the aggregate amounts scheduled to be paid on the contracts
acquired during the six months ended June 30, 1997 and 1996 and 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.
S-30
<PAGE> 31
(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 OFFERED NOTES
Information regarding certain maturity and prepayment considerations with
respect to the Offered Notes is set forth under "Weighted Average Life of the
Securities" in the Prospectus. As the rate of payment of principal of the
Offered Notes depends primarily upon 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, the A-2 Note Final Scheduled Maturity Date or the Final Scheduled
Maturity Date, as applicable. Offered Noteholders will bear the risk of being
able to reinvest principal payments of the Offered Notes at yields at least
equal to the yield on their respective Offered Notes.
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 upon 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-33 through S-35 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 Offered 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
September 22, 1997, (f) the interest rates applicable to the Floating Rate
Receivables remain the same as at the Initial Cutoff Date and (g) 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 tables indicate
the projected weighted average life of each Class of Offered Notes and set forth
the percent of the initial principal balance of each Class of Offered Notes that
is projected to be outstanding after each of the Payment Dates shown at various
CPR percentages.
The tables also assume that the Receivables have been aggregated into
hypothetical pools with all of the Receivables within each such pool having the
following characteristics:
<TABLE>
<CAPTION>
AGGREGATE WEIGHTED
POOL CONTRACT VALUE AVERAGE APR
- ---- -------------- -----------
<S> <C> <C>
1........................................................ $358,115,965 8.637%
2........................................................ 150,000,000 8.637
3........................................................ 140,000,000 8.637
4........................................................ 121,884,035 8.637
5........................................................ 97,960,251 7.632
------------
$867,960,251
============
</TABLE>
Hypothetical pool 1 has the same Pool Balance and cashflow characteristics
as the Initial Receivables that are Fixed Rate Receivables. Hypothetical pools
2, 3 and 4 have Contract Values equal in the aggregate to
S-31
<PAGE> 32
the Initial Pre-Funded Amount, which means in effect that the following table
assumes that the aggregate Contract Values of Subsequent Receivables as of their
respective Subsequent Cutoff Dates is no greater than the Pre-Funded Amount.
Hypothetical pool 5 has the same Pool Balance and cash flow characteristics as
the Floating Rate Receivables. The cash flow characteristics of hypothetical
pools 2, 3 and 4 are proportionately identical to hypothetical pool 1. The
weighted average APR for pool 5 has been calculated using the internal rate of
return of the remaining payments on the Floating Rate Receivables.
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 following tables. 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 hypothetical pools could produce slower or faster principal
distributions than indicated in the table at the various CPRs specified. As the
payment obligations of the Obligors on the Floating Rate Receivables provide for
level payments, the portion of such payments allocated to principal with respect
to a Floating Rate Receivable will vary depending upon the rate of interest
currently applicable to such Floating Rate Receivable. 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
Offered Notes.
S-32
<PAGE> 33
PERCENT OF INITIAL PRINCIPAL AMOUNT OF THE OFFERED NOTES REMAINING 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
October 1997....................................... 94 90 89 89 88 100 100 100 100 100
November 1997...................................... 87 78 76 74 72 100 100 100 100 100
December 1997...................................... 78 62 59 56 53 100 100 100 100 100
January 1998....................................... 63 39 35 31 26 100 100 100 100 100
February 1998...................................... 50 18 12 7 1 100 100 100 100 100
March 1998......................................... 38 0 0 0 0 100 99 96 93 90
April 1998......................................... 26 0 0 0 0 100 91 88 84 80
May 1998........................................... 13 0 0 0 0 100 83 79 75 71
June 1998.......................................... 0 0 0 0 0 98 73 68 64 60
July 1998.......................................... 0 0 0 0 0 91 61 56 52 47
August 1998........................................ 0 0 0 0 0 80 48 43 38 33
September 1998..................................... 0 0 0 0 0 70 36 30 25 20
October 1998....................................... 0 0 0 0 0 61 25 20 14 9
November 1998...................................... 0 0 0 0 0 55 17 11 5 0
December 1998...................................... 0 0 0 0 0 49 9 3 0 0
January 1999....................................... 0 0 0 0 0 42 1 0 0 0
February 1999...................................... 0 0 0 0 0 36 0 0 0 0
March 1999......................................... 0 0 0 0 0 31 0 0 0 0
April 1999......................................... 0 0 0 0 0 26 0 0 0 0
May 1999........................................... 0 0 0 0 0 20 0 0 0 0
June 1999.......................................... 0 0 0 0 0 13 0 0 0 0
July 1999.......................................... 0 0 0 0 0 3 0 0 0 0
August 1999........................................ 0 0 0 0 0 0 0 0 0 0
September 1999..................................... 0 0 0 0 0 0 0 0 0 0
October 1999....................................... 0 0 0 0 0 0 0 0 0 0
November 1999...................................... 0 0 0 0 0 0 0 0 0 0
December 1999...................................... 0 0 0 0 0 0 0 0 0 0
January 2000....................................... 0 0 0 0 0 0 0 0 0 0
February 2000...................................... 0 0 0 0 0 0 0 0 0 0
March 2000......................................... 0 0 0 0 0 0 0 0 0 0
April 2000......................................... 0 0 0 0 0 0 0 0 0 0
May 2000........................................... 0 0 0 0 0 0 0 0 0 0
June 2000.......................................... 0 0 0 0 0 0 0 0 0 0
July 2000.......................................... 0 0 0 0 0 0 0 0 0 0
August 2000........................................ 0 0 0 0 0 0 0 0 0 0
September 2000..................................... 0 0 0 0 0 0 0 0 0 0
October 2000....................................... 0 0 0 0 0 0 0 0 0 0
November 2000...................................... 0 0 0 0 0 0 0 0 0 0
December 2000...................................... 0 0 0 0 0 0 0 0 0 0
January 2001....................................... 0 0 0 0 0 0 0 0 0 0
February 2001...................................... 0 0 0 0 0 0 0 0 0 0
March 2001......................................... 0 0 0 0 0 0 0 0 0 0
April 2001......................................... 0 0 0 0 0 0 0 0 0 0
May 2001........................................... 0 0 0 0 0 0 0 0 0 0
June 2001.......................................... 0 0 0 0 0 0 0 0 0 0
July 2001.......................................... 0 0 0 0 0 0 0 0 0 0
August 2001........................................ 0 0 0 0 0 0 0 0 0 0
September 2001..................................... 0 0 0 0 0 0 0 0 0 0
Weighted Average Life (years)(1)................... 0.4 0.3 0.3 0.3 0.3 1.3 0.9 0.9 0.9 0.8
</TABLE>
- -------------------------
(1) The weighted average life of an Offered Note is determined by: (a)
multiplying the amount of each principal payment on the applicable Offered
Note by the number of years from the date of issuance of such Offered Note
to the related Payment Date, (b) adding the results and (c) dividing the sum
by the related initial principal amount of such Offered Note.
THIS TABLE HAS BEEN PREPARED BASED UPON THE ASSUMPTIONS DESCRIBED ON PAGES
S-31 AND S-32 (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-33
<PAGE> 34
PERCENT OF INITIAL PRINCIPAL AMOUNT OF THE OFFERED NOTES REMAINING AT VARIOUS
CPR PERCENTAGES
<TABLE>
<CAPTION>
A-3 NOTES A-4 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
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 98 93 100 100 100 100 100
January 1999....................................... 100 100 96 91 85 100 100 100 100 100
February 1999...................................... 100 95 89 84 78 100 100 100 100 100
March 1999......................................... 100 89 83 77 72 100 100 100 100 100
April 1999......................................... 100 83 77 72 66 100 100 100 100 100
May 1999........................................... 100 77 71 66 60 100 100 100 100 100
June 1999.......................................... 100 70 64 59 53 100 100 100 100 100
July 1999.......................................... 100 62 56 50 45 100 100 100 100 100
August 1999........................................ 93 53 47 41 36 100 100 100 100 100
September 1999..................................... 83 44 38 33 27 100 100 100 100 100
October 1999....................................... 76 37 31 26 20 100 100 100 100 100
November 1999...................................... 70 31 25 20 15 100 100 100 100 100
December 1999...................................... 65 26 20 15 10 100 100 100 100 100
January 2000....................................... 59 20 15 10 5 100 100 100 100 100
February 2000...................................... 54 15 10 5 0 100 100 100 100 100
March 2000......................................... 49 11 5 0 0 100 100 100 100 94
April 2000......................................... 44 6 1 0 0 100 100 100 95 89
May 2000........................................... 39 2 0 0 0 100 100 96 89 83
June 2000.......................................... 33 0 0 0 0 100 95 89 83 77
July 2000.......................................... 24 0 0 0 0 100 87 81 75 70
August 2000........................................ 15 0 0 0 0 100 78 72 67 62
September 2000..................................... 6 0 0 0 0 100 69 64 59 55
October 2000....................................... 0 0 0 0 0 99 63 58 53 49
November 2000...................................... 0 0 0 0 0 92 57 53 49 44
December 2000...................................... 0 0 0 0 0 87 53 49 45 41
January 2001....................................... 0 0 0 0 0 81 49 45 41 37
February 2001...................................... 0 0 0 0 0 75 45 41 37 33
March 2001......................................... 0 0 0 0 0 71 41 37 34 0
April 2001......................................... 0 0 0 0 0 66 37 34 0 0
May 2001........................................... 0 0 0 0 0 61 34 0 0 0
June 2001.......................................... 0 0 0 0 0 55 0 0 0 0
July 2001.......................................... 0 0 0 0 0 48 0 0 0 0
August 2001........................................ 0 0 0 0 0 41 0 0 0 0
September 2001..................................... 0 0 0 0 0 0 0 0 0 0
Weighted Average Life(years)(1).................... 2.5 2.0 1.9 1.9 1.8 3.7 3.3 3.2 3.2 3.1
</TABLE>
- -------------------------
(1) The weighted average life of an Offered Note is determined by: (a)
multiplying the amount of each principal payment on the applicable Offered
Note by the number of years from the date of issuance of the Offered Note to
the related Payment Date, (b) adding the results and (c) dividing the sum by
the related initial principal amount of the Offered Note.
THIS TABLE HAS BEEN PREPARED BASED UPON THE ASSUMPTIONS DESCRIBED ON PAGES
S-31 AND S-32 (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-34
<PAGE> 35
PERCENT OF INITIAL PRINCIPAL AMOUNT OF THE OFFERED NOTES REMAINING AT VARIOUS
CPR PERCENTAGES
<TABLE>
<CAPTION>
CLASS C NOTES
---------------------------
PAYMENT DATE 0% 13% 15% 17% 19%
- ------------ --- --- --- --- ---
<S> <C> <C> <C> <C> <C>
Closing Date................................................ 100 100 100 100 100
October 1997................................................ 100 99 99 98 98
November 1997............................................... 100 97 97 96 96
December 1997............................................... 100 95 94 94 94
January 1998................................................ 100 92 91 91 90
February 1998............................................... 100 89 88 88 87
March 1998.................................................. 100 87 86 85 84
April 1998.................................................. 100 84 83 82 81
May 1998.................................................... 100 82 81 80 78
June 1998................................................... 100 79 78 77 75
July 1998................................................... 84 76 75 73 72
August 1998................................................. 81 72 71 70 68
September 1998.............................................. 79 69 68 66 65
October 1998................................................ 76 66 65 63 62
November 1998............................................... 74 64 62 61 59
December 1998............................................... 73 62 60 59 57
January 1999................................................ 71 59 58 56 54
February 1999............................................... 69 57 55 54 52
March 1999.................................................. 67 55 53 52 50
April 1999.................................................. 66 53 51 50 48
May 1999.................................................... 64 51 49 48 46
June 1999................................................... 62 49 47 45 44
July 1999................................................... 59 47 45 43 41
August 1999................................................. 56 44 42 40 38
September 1999.............................................. 54 41 39 37 36
October 1999................................................ 51 39 37 35 34
November 1999............................................... 49 37 35 33 32
December 1999............................................... 48 35 34 32 30
January 2000................................................ 46 33 32 30 28
February 2000............................................... 44 32 30 28 27
March 2000.................................................. 42 30 28 27 25
April 2000.................................................. 40 29 27 25 24
May 2000.................................................... 39 27 25 24 23
June 2000................................................... 37 25 24 22 21
July 2000................................................... 34 23 22 20 19
August 2000................................................. 31 21 20 19 17
September 2000.............................................. 29 19 18 17 15
October 2000................................................ 26 17 16 15 14
November 2000............................................... 25 16 15 14 13
December 2000............................................... 23 15 14 13 12
January 2001................................................ 22 14 13 12 11
February 2001............................................... 20 13 12 11 10
March 2001.................................................. 19 12 11 10 0
April 2001.................................................. 18 11 10 0 0
May 2001.................................................... 17 10 0 0 0
June 2001................................................... 15 0 0 0 0
July 2001................................................... 13 0 0 0 0
August 2001................................................. 12 0 0 0 0
September 2001.............................................. 0 0 0 0 0
Weighted Average Life (years)(1)............................ 2.3 1.8 1.8 1.7 1.7
</TABLE>
- -------------------------
(1) The weighted average life of an Offered Note is determined by: (a)
multiplying the amount of each principal payment on the applicable Offered
Note by the number of years from the date of issuance of the Offered Note to
the related Payment Date, (b) adding the results and (c) dividing the sum by
the related initial principal amount of the Offered Note.
THIS TABLE HAS BEEN PREPARED BASED UPON THE ASSUMPTIONS DESCRIBED ON PAGES
S-31 AND S-32 (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-35
<PAGE> 36
DESCRIPTION OF THE OFFERED NOTES
GENERAL
The Offered 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 Offered 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 Offered 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 Offered 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 Offered
Notes will accrue at the applicable interest rate and will be payable monthly on
each Payment Date, commencing on October 15, 1997 (and, in the case of the A-1
Notes, on the A-1 Note Final Scheduled Maturity Date).
Interest payments on the Offered Notes will be derived from: (a) the Fixed
Rate Distribution Amount remaining after the payment of the Fixed Rate
Percentage of the Servicing Fee (if neither Case Credit nor any of its
affiliates is the Servicer), the Fixed Rate Percentage of the Administration
Fee, any portion of the Floating Rate Percentage of such fees not covered by the
Floating Rate Distribution Amount and, in the case of the Class C Notes,
interest on the Class A Notes, (b) any Floating Rate Excess Distribution Amount
and (c) 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 Class A 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. Interest payments
on the Class B Notes will be funded from: (i) the Floating Rate Distribution
Amount remaining after the payment of the Floating Rate Percentage of the
Servicing Fee (if neither Case Credit nor an affiliate of Case Credit is the
Servicer), the Floating Rate Percentage of the Administration Fee and any
portion of the Fixed Rate Percentage of such fees not covered by the Fixed Rate
Distribution Amount, (ii) any Fixed Rate Excess Distribution Amount and (c)
amounts on deposit in the Spread Account. See "Description of the Transfer and
Servicing Agreements -- Distributions" and "-- Spread Account."
Notwithstanding the Events of Default described in the Prospectus under the
caption "Description of the Notes -- The Indenture -- Events of Default; Rights
Upon Event of Default," until the principal amount of the Class A Notes and the
Class B Notes has been paid in full, the failure to pay interest due on the
Class C Notes will not be an Event of Default.
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, distributions in respect of the Notes and certain deposits
to the Spread Account from the Collection Account.
PAYMENTS OF PRINCIPAL
Principal payments will be made to the Offered Noteholders on each Payment
Date and, in the case of the A-1 Notes, on the A-1 Note Final Scheduled Maturity
Date as follows. Principal payments will be made to the A-1 Noteholders in an
amount generally equal to the Class A Noteholders' Principal Distributable
Amount until the A-1 Notes have been repaid in full. After the A-1 Notes have
been repaid in full, principal payments will be made to the A-2 Noteholders on
each Payment Date in an amount generally equal to the Class A Noteholders'
Principal Distributable Amount (less any portion thereof applied on such Payment
Date to reduce the outstanding principal amount of the A-1 Notes to zero) until
the A-2 Notes have been repaid in full. On each Payment Date on and after the
Payment Date on which the A-2 Notes have been repaid in full, principal payments
will be made to the A-3 Noteholders in an amount equal to the Class A
Noteholders'
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Principal Distributable Amount (less any portion thereof applied on such Payment
Date to reduce the outstanding principal amount of the A-1 Notes and the A-2
Notes to zero) until the A-3 Notes have been repaid in full. On each Payment
Date on and after the Payment Date on which the A-3 Notes have been repaid in
full, principal payments will be made to the A-4 Noteholders in an amount equal
to the Class A Noteholders' Principal Distributable Amount (less any portion
thereof applied on such Payment Date to reduce the outstanding principal amount
of the A-1 Notes, the A-2 Notes and the A-3 Notes to zero) until the A-4 Notes
have been repaid in full. Principal payments will be made to the Class C
Noteholders on each Payment Date in an amount generally equal to the Class C
Noteholders' Principal Distributable Amount until the Class C Notes have been
repaid in full. No principal distributions will be made with respect to the
Certificates until the Notes have been repaid in full.
Principal payments on the Offered Notes will generally be derived from: (a)
the Fixed Rate Distribution Amount remaining after the payment of the Fixed Rate
Percentage of the Servicing Fee (if neither Case Credit nor any of its
affiliates is the Servicer), the Fixed Rate Percentage of the Administration
Fee, any portion of the Floating Rate Percentage of such fees not covered by the
Floating Rate Distribution Amount, the Class A Noteholders' Interest
Distributable Amount and the Class C Noteholders' Interest Distributable Amount,
(b) the Floating Rate Excess Distribution Amount, if any, and (c) amounts on
deposit in the Spread Account, provided, that no principal payments will be made
with respect to the Class C Notes on any Payment Date until the amounts payable
with respect to the Class A Notes and the Class B Notes (other than any Class B
Net Funds Cap Carryover Amount and any Additional Class B Amounts) on that
Payment Date have been paid in full. See "Description of the Transfer and
Servicing Agreements -- Distributions" and "-- Spread Account."
Principal payments on the Class B Notes will be derived from: (a) the
Floating Rate Distribution Amount remaining after the payment of the Floating
Rate Percentage of the Servicing Fee (if neither Case Credit nor any of its
affiliates is the Servicer), the Floating Rate Percentage of the Administration
Fee, any portion of the Fixed Rate Percentage of such fees not covered by the
Fixed Rate Distribution Amount and the Class B Noteholders' Interest
Distributable Amount, (b) the Fixed Rate Excess Distribution Amount, if any, and
(c) amounts on deposit in the Spread Account. See "Description of the Transfer
and Servicing Agreements -- Distributions".
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 Offered Notes then outstanding in whole or
in part (in the same proportions and sequence that would apply if such remaining
funds were a part of the Fixed Rate Principal Distribution Amount) (each, a
"Mandatory Redemption").
OPTIONAL REDEMPTION
The outstanding Offered Notes will be prepaid in whole, but not in part, at
a redemption price equal to the unpaid principal balance thereof plus accrued
and unpaid interest thereon, on the Payment Date 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
Initial Pool Balance, as described in the Prospectus under "Description of the
Transfer and Servicing Agreements -- Termination."
REGISTRATION OF OFFERED NOTES
The Offered Notes initially will be represented by securities registered in
the name of Cede, as the nominee of DTC. Unless and until Definitive Securities
are issued, all references herein to actions by Offered 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 Offered Noteholders shall refer to distributions, notices, reports
and statements to DTC or Cede, as the registered holder of the Offered Notes,
for distribution to beneficial owners in accordance with DTC procedures. Offered
Noteholders
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may hold their Offered 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, the Class B Notes or the Class C Notes
if a default occurs under the Indenture. The Indenture will provide for a
successor trustee to be appointed for one or more Classes of Notes in these
circumstances, so that there will be separate trustees for the Class A Notes,
the Class B Notes and/or the Class C Notes. 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 and the Class C Noteholders will be entitled to their share of any
proceeds of enforcement on an equivalent basis to what would apply if there had
been no Event of Default). 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, and, so long as any amounts remain unpaid with respect to the
Class B Notes, only the trustee for the Class B Noteholders will have the right
to exercise remedies under the Indenture (but the Class C Noteholders will be
entitled to their share of any proceeds of enforcement, subject to the
subordination of the Class C Notes to the Class B Notes as described herein).
Upon repayment of the Class B Notes in full, all rights to exercise remedies
under the Indenture will transfer to the trustee for the Class C 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 CLASS B NOTES
The Class B Notes will be issued pursuant to the Indenture and sold
pursuant to a note purchase agreement (the "Note Purchase Agreement") among the
Issuer, the initial purchaser of the Class B Notes and such other parties as may
be identified therein. The following summarizes the terms of the Class B Notes
and the Note Purchase Agreement that are material to the Offered Noteholders.
The Class B Notes are not offered hereby and do not constitute "Notes" for
purposes of the description of the "Notes" in (and as defined in) the Prospectus
to which this Prospectus Supplement is attached, except that: (a) defaults in
the payment of principal or (after the Class A Notes have been paid in full)
interest on the Class B Notes will constitute "Events of Default" as described
in "Description of the Notes -- The Indenture -- Events of Default; Rights Upon
Event of Default" in the Prospectus, as if the Class B Notes were "Notes" for
purposes of the Prospectus, and (b) the Class B Noteholders will be entitled to
vote with respect to the exercise of remedies with respect to an Event of
Default after the Class A Notes have been paid in full.
On the Closing Date, the Trust will issue Class B Notes in the aggregate
principal amount of $97,960,250.83.
Interest on the Class B Notes will accrue during each Interest Period at a
floating rate to be agreed upon between the Trust and the Class B Noteholder;
provided, that such rate may not exceed the Net Funds Cap (the effective rate on
the Class B Notes from time to time being, the "Floating Rate").
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"Net Funds Cap" means, for any Interest Period, the percentage equivalent
of: (a) the quotient of: (i) the aggregate amount of interest payments due
during the Collection Period during which such Interest Period begins on
Floating Rate Receivables that had a positive Contract Value at the beginning of
such Collection Period minus the sum of: (A) if neither Case Credit nor an
affiliate of Case Credit is the Servicer, the Floating Rate Percentage of the
Servicing Fee and (B) the Floating Rate Percentage of the Administration Fee
divided by (ii) the outstanding principal amount of the Class B Notes at the
beginning of such Interest Period (after giving effect to payments of principal
on the day that such Interest Period begins) multiplied by (b) a fraction the
numerator of which is 360 and the denominator of which is the number of days in
such Interest Period.
Should the Floating Rate ever be determined by the Net Funds Cap for any
Interest Period, the excess of: (a) the amount of interest on the Class B Notes
that would have accrued in respect of such Interest Period had the Floating Rate
been calculated without regard to the Net Funds Cap over (b) the amount of
interest on the Class B Notes actually accrued during such Interest Period (such
excess, together with the unpaid portion of any such excess from prior Interest
Periods (and interest accrued thereon at the Floating Rate (calculated without
regard to the Net Funds Cap), is referred to as the "Class B Net Funds Cap
Carryover Amount") will accumulate and be paid as and when described herein.
Distributions of interest and principal on the Class B Notes will be
payable from the Floating Rate Distribution Amount and, in the event of any
shortfall, from any Fixed Rate Excess Distribution Amount and amounts on deposit
in the Spread Account to the extent described herein. It is expected that the
Class B Notes will be issued to one or more institutional investors in private
placements exempt from the registration requirements of the Securities Act. The
Class B Notes will be payable from the assets of the Trust solely as described
in this Prospectus Supplement. See "Description of the Transfer and Servicing
Agreements -- Distributions" below.
The Class B Notes will be secured (together with the Offered Notes) by the
Receivables, the Spread Account and the other assets of the Issuer
(collectively, the"Collateral"). So long as the Class A Notes remain
outstanding, the Offered Noteholders (or the Indenture Trustee on their behalf)
will have the sole rights, without the necessity of any consent from the Class B
Noteholders, to: (a) declare an Event of Default with respect to the Offered
Notes or accelerate the maturity of the Offered Notes and (b) direct the
Indenture Trustee as to the taking of any actions with respect to any Event of
Default and the pursuit of any remedies (other than a sale of the Collateral,
which will, in certain circumstances, require the consent of the Class B
Noteholders). No amendments may be made to the Indenture, the Trust Agreement or
the Transfer and Servicing Agreements without the consent of the Class B
Noteholders.
After the Class A Notes have been repaid in full, if any Class B Notes
remain outstanding, the Class B Noteholders (or the Indenture Trustee on their
behalf) will have the same rights with respect to events of default, Servicer
Defaults and the exercise of remedies as the Class A Noteholders (and the
Indenture Trustee on their behalf) had before the Class A Notes being repaid in
full.
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 6.410% 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.
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
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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
$411,884,035, 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 will be 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 will be 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; (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 such 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."
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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, as
applicable, 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 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 as set forth herein. 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 the Fixed Rate Distribution Amount and the
Floating Rate Distribution Amount, respectively, 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 that were
added to the Trust after the end of that preceding calendar month but on or
prior to that Payment Date) with respect to the related Collection Period
(including any Liquidation Proceeds and the Purchase Amount of any Receivables
repurchased by the Seller or purchased by the Servicer) plus 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.
The "Fixed Rate Distribution Amount" will equal the portion of the Total
Distribution Amount that includes all of the aggregate collections on the Fixed
Rate Receivables plus all of the Negative Carry Amount plus all of the
Investment Earnings on amounts on deposit in the Pre-Funding Account and the
Negative Carry Account plus the Fixed Rate Percentage of all other Investment
Earnings. The "Floating Rate Distribution Amount" will equal the Total
Distribution Amount minus the Fixed Rate Distribution Amount.
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Deposits to the Distribution Accounts. On each Payment Date (and, with
respect to the A-1 Notes, on the A-1 Note Final Scheduled Maturity 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:
(a) from the Fixed Rate Distribution Amount:
(i) to the Servicer, if neither Case Credit nor an affiliate of
Case Credit is the Servicer, the Fixed Rate Percentage of the Servicing
Fee for the prior Collection Period and any such overdue Servicing Fees;
(ii) to the Administrator, the Fixed Rate Percentage of the
Administration Fee for the prior Collection Period and any such overdue
Administration Fees;
(iii) to pay such amounts in the order and as above provided, the
amount, if any, by which: (A) the sum of: (1) if neither Case Credit nor
an affiliate of Case Credit is the Servicer, the Floating Rate
Percentage of the Servicing Fee for the prior Collection Period and any
such overdue Servicing Fees plus (2) the Floating Rate Percentage of the
Administration Fee for the prior Collection Period and any such overdue
Administration Fees exceeds (B) the Floating Rate Distribution Amount;
(iv) to the Note Distribution Account, the Class A Noteholders'
Interest Distributable Amount;
(v) to the Note Distribution Account, the Class C Noteholder's
Interest Distributable Amount;
(vi) to the Note Distribution Account, the A-1 Noteholders'
Principal Distributable Amount;
(vii) to the Note Distribution Account, the A-2 Noteholders'
Principal Distributable Amount;
(viii) to the Note Distribution Account, the A-3 Noteholders'
Principal Distributable Amount;
(ix) to the Note Distribution Account, the A-4 Noteholders'
Principal Distributable Amount;
(x) to the Note Distribution Account, the Fixed Rate Excess
Distribution Amount, if any, to the extent necessary to pay the Class B
Noteholders' Interest Distributable Amount and the Class B Noteholders'
Principal Distributable Amount, in such order; and
(xi) the balance to be distributed pursuant to clause (c) below;
(b) from the Floating Rate Distribution Amount:
(i) to the Servicer, if neither Case Credit nor an affiliate of
Case Credit is the Servicer, the Floating Rate Percentage of the
Servicing Fee for the prior Collection Period and any such overdue
Servicing Fees;
(ii) to the Administrator, the Floating Rate Percentage of the
Administration Fee for the prior Collection Period and any such overdue
Administration Fees;
(iii) to pay such amounts in the order and as above provided, the
amount, if any, by which: (A) the sum of: (1) if neither Case Credit nor
an affiliate of Case Credit is the Servicer, the Fixed Rate Percentage
of the Servicing Fee for the prior Collection Period and any such
overdue Servicing Fees plus (2) the Fixed Rate Percentage of the
Administration Fee for the prior Collection Period and any such overdue
Administration Fees exceeds (B) the Fixed Rate Distribution Amount;
(iv) to the Note Distribution Account, the Class B Noteholders'
Interest Distributable Amount;
(v) to the Note Distribution Account, the Class B Noteholders'
Principal Distributable Amount;
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(vi) to the Note Distribution Account, the Floating Rate Excess
Distribution Amount, if any, to the extent necessary to pay the Class A
Noteholders' Interest Distributable Amount, the Class C Noteholders'
Interest Distributable Amount and the Class A Noteholders' Principal
Distributable Amount, in such order; and
(vii) the balance to be distributed pursuant to clause (c) below;
and
(c) from the balances from clauses (a)(xi) and (b)(vii) above:
(i) to the Note Distribution Account, the Class C Noteholders'
Principal Distributable Amount;
(ii) to the Spread Account to the extent necessary so that the
balance on deposit therein will equal the Specified Spread Account
Balance;
(iii) to the Note Distribution Account, the Class B Net Funds Cap
Carryover Amount and Additional Class B Amounts;
(iv) to the Certificate Distribution Account, the
Certificateholders' Interest Distributable Amount;
(v) to the Certificate Distribution Account, the
Certificateholders' Principal Distributable Amount;
(vi) to the Servicer, if Case Credit or an affiliate of Case Credit
is the Servicer, the Servicing Fee for the prior Collection Period and
any overdue Servicing Fees; and
(vii) to the Spread Account, the remaining balance, if any.
After an Event of Default and acceleration of the Offered Notes (and, if
any Offered Notes remain outstanding, on and after the Final Scheduled Maturity
Date), any amounts distributable as principal payments on any Class A Notes will
be made to the Class A Noteholders ratably according to the amounts due and
payable on the Class A Notes for principal.
"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
Class A Noteholders' Monthly Principal Distributable 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 Class A Noteholders' Monthly Principal Distributable 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).
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"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;
and 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 A-2 Note
Final Scheduled Maturity Date, the A-2 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-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, the Class A
Noteholders' Monthly Principal Distributable Amount (less the portion
thereof, if any, applied to reduce the outstanding principal amount of the
A-1 Notes and 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; and 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.
"A-4 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, the Class A
Noteholders' Monthly Principal Distributable Amount (less the portion
thereof, if any, applied to reduce the outstanding principal amount of the
A-1 Notes, the A-2 Notes and the A-3 Notes to zero on such Payment Date).
"A-4 Noteholders' Principal Carryover Shortfall" means, with respect
to any Payment Date, the excess of the A-4 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-4 Notes on such preceding Payment Date.
"A-4 Noteholders' Principal Distributable Amount" means, with respect
to any Payment Date, the sum of: (a) the A-4 Noteholders' Monthly Principal
Distributable Amount for such Payment Date and (b) the A-4 Noteholders'
Principal Carryover Shortfall for such Payment Date; provided, however,
that, until an amount sufficient to reduce the outstanding amount of the
A-3 Notes to zero has been deposited in the Note Distribution Account, the
A-4 Noteholders' Principal Distributable Amount shall be zero;
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<PAGE> 45
and provided further, that the sum of clauses (a) and (b) shall not exceed
the outstanding principal amount of the A-4 Notes, and on the Final
Scheduled Maturity Date, the A-4 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-4 Notes to zero.
"Certificate Balance" equals, initially, $15,190,000 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 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 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 Notes to zero has been
deposited in the Note Distribution Account, the Certificateholders'
Principal Distributable Amount shall be zero; and provided further, that
the Certificateholders' Principal Distributable Amount will not exceed the
Certificate Balance.
"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, (iv) the A-4 Noteholders'
Principal Distributable Amount, and (v) 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 for
the A-1 Notes and the A-2 Notes (based upon the actual number of days
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<PAGE> 46
in the Interest Period and a 360-day year) and for the A-3 Notes and the
A-4 Notes (based upon a 360-day year of twelve 30-day months) plus (ii) the
Class A Noteholders' Interest Carryover Shortfall for the current Payment
Date.
"Class A Noteholders' Monthly Principal Distributable Amount" means,
with respect to any Payment Date, the Principal Distribution Amount minus
the Class B Noteholders' Monthly Principal Distributable Amount and the
Class C Noteholders' Monthly Principal Distributable Amount.
"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 Floating 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 Floating Rate 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 plus (ii) the Class
B Noteholders' Interest Carryover Shortfall for the current Payment Date.
"Class B Noteholders' Monthly Principal Distributable Amount" means,
until the Payment Date on which the outstanding principal amount of the
Class B Notes has been reduced to zero, 100% of the Floating Rate Principal
Distribution Amount.
"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 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 Payment Date and allocable to principal) to
reduce the outstanding principal amount of the Class B Notes to zero.
"Class C Noteholders' Distributable Amount" means, with respect to any
Payment Date, the sum of: (a) the Class C Noteholders' Interest
Distributable Amount and (b) the Class C Noteholders' Principal
Distributable Amount.
"Class C Noteholders' Interest Carryover Shortfall" means, with
respect to any Payment Date (the "current Payment Date"), the excess of the
Class C Noteholders' Interest Distributable Amount for the preceding
Payment Date over the amount in respect of interest on the Class C 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 C Note Rate from
such preceding Payment Date to but excluding the current Payment Date.
"Class C Noteholders' Interest Distributable Amount" means, with
respect to any Payment Date (the "current Payment Date"), an amount equal
to the sum of: (a) the aggregate amount of interest accrued on the Class C
Notes at the Class C Note Rate 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
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<PAGE> 47
current Payment Date (based upon a 360-day year of twelve 30-day months)
plus (b) the Class C Noteholders' Interest Carryover Shortfall for the
current Payment Date.
"Class C Noteholders' Monthly Principal Distributable Amount" means,
with respect to each Payment Date until the Payment Date on which the
outstanding principal amount of the Class C Notes has been reduced to zero,
an amount equal to the excess, if any of: (a) the outstanding principal
amount of the Class C Notes on the related Record Date minus any Class C
Noteholders' Principal Carryover Shortfall over (b) the Initial Class C
Percentage of the sum of the outstanding Pool Balance and the Pre-Funded
Amount as of the beginning of the current Collection Period; provided,
however, that if on the related Record Date any principal of the A-1 Notes
remains outstanding, then the Class C Noteholders' Monthly Principal
Distributable Amount for such Payment Date shall not exceed an amount equal
to the aggregate unscheduled principal payments on the Fixed Rate
Receivables received during the related Collection Period.
"Class C Noteholders' Principal Carryover Shortfall" means, with
respect to any Payment Date, the excess of the Class C 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 C Notes on such preceding Payment Date.
"Class C Noteholders' Principal Distributable Amount" means, with
respect to any Payment Date, the sum of: (a) the Class C Noteholders'
Monthly Principal Distributable Amount for such Payment Date and (b) the
Class C Noteholders' Principal Carryover Shortfall for such Payment Date;
provided, however, that the sum of clauses (a) and (b) shall not exceed the
outstanding principal amount of the Class C Notes, and on the Final
Scheduled Maturity Date, the Class C 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 Class C Notes to zero.
"Fixed Rate Percentage" means, with respect to any Payment Date, the
percentage equivalent of a fraction: (a) the numerator of which is the sum
of the Contract Value of all Fixed Rate Receivables and the Pre-Funded
Amount and (b) the denominator of which is the sum of the Contract Value of
all Receivables and the Pre-Funded Amount, all determined as of the
beginning of the immediately preceding Collection Period.
"Fixed Rate Principal Distribution Amount" means an amount (not less
than zero) equal to: (i) the sum of the Contract Value of all Fixed Rate
Receivables and the Pre-Funded Amount as of the beginning of the
immediately preceding Collection Period minus (ii) the sum of the Contract
Value of all Fixed Rate Receivables and the Pre-Funded Amount as of the
beginning of the current Collection Period.
"Floating Rate Percentage" means, with respect to any Payment Date,
100% minus the Fixed Rate Percentage.
"Floating Rate Principal Distribution Amount" means, with respect to
any Payment Date, the amount (not less than zero) equal to: (a) the sum of
the Contract Value of all Floating Rate Receivables as of the beginning of
the immediately preceding Collection Period minus (b) the sum of the
Contract Value of all Floating Rate Receivables as of the beginning of the
current Collection Period.
"Initial Class C Percentage" means the percentage equivalent of: (a)
the initial balance of the Class C Notes (i.e., $34,719,000) divided by (b)
the Pool Balance as of the Initial Cutoff Date plus the Initial Pre-Funded
Amount.
"Initial Cutoff Date APR" means 8.637%, which is the weighted average
APR of the Initial Receivables that are Fixed Rate Receivables as of the
Initial Cutoff Date.
"Noteholders' Distributable Amount" means, with respect to any Payment
Date, the sum of the Class A Noteholders' Distributable Amount, the Class B
Noteholders' Distributable Amount and the Class C Noteholders'
Distributable Amount.
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<PAGE> 48
"Principal Distribution Amount" means, with respect to any Payment
Date the sum of (a) the Fixed Rate Principal Distribution Amount plus (b)
the Floating Rate Principal Distribution Amount.
"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
Offered Noteholders. The Negative Carry Account will be created with an initial
deposit by the Seller of approximately $5,776,520 (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: (i) the weighted
average of the interest rates on each Class of the Offered Notes minus 2.5%
multiplied by (ii) the Offered 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 "Offered
Note Percentage" means the percentage equivalent of a fraction the numerator of
which is the Note Balance (excluding the Class B Notes) and the denominator of
which is the sum of the Note Balance (excluding the Class B Notes) and the
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
(to be included in the Fixed Rate Distribution Amount) 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: (a) the product of: (i) the sum of the Class A
Noteholders' Interest Distributable Amount and the Class C Noteholder's Interest
Distributable Amount multiplied by (ii) the Pre-Funded Percentage as of the
immediately prior Payment Date or, in the case of the first Payment Date, the
Closing Date, minus (b) 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 (calculated with respect to
the Fixed Rate Receivables only) 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 provided in the Sale
and Servicing Agreement. The rights of the Class C Noteholders to receive
distributions with respect to the Receivables will be subordinated to the rights
of the Class A Noteholders and the Class B Noteholders to the extent described
herein. The protection afforded to 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
approximately $9,121,524, which amount equals the Pool Balance as of the Initial
Cutoff Date multiplied by 2.00%. On each
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<PAGE> 49
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 and will be 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 the consent of the Offered 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 Offered 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 Offered
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 Offered 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 Maturity
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 Offered
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 the Noteholders. Funds will be withdrawn from the Spread Account to
the extent that the Total Distribution Amount (after the payment of the
Servicing Fee (if Case Credit or an affiliate of Case Credit is not the
Servicer) and the Administration Fee) 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. If on any Payment Date, the funds available for
this purpose in the Spread Account are less than the sum of the shortfalls in
the Class A Noteholders' Distributable Amount and the Class B Noteholders'
Distributable Amount on that Payment Date, the remaining funds in the Spread
Account will be applied to such shortfalls pro rata on the basis of the
aggregate outstanding principal amount of the Class A Notes and the Class B
Notes. 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
C Notes to the Class A Notes, as described herein, are intended to enhance the
likelihood of receipt by the Class A Noteholders of the full amount of principal
and 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 C Notes are intended to enhance
the likelihood of receipt by the Class C Noteholders of the full amount of
principal and interest due them and to decrease the likelihood that the Class C
Noteholders will experience losses. However, in certain circumstances, the
Spread Account could be depleted. If the amount required to be
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<PAGE> 50
withdrawn from the Spread Account to cover shortfalls in collections on the
Receivables exceeds the amount of cash in the Spread Account, the Offered
Noteholders could incur losses or a temporary shortfall in the amounts
distributed to the Offered Noteholders could result, which could, in turn,
increase the average life of the Offered Notes.
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.
ERISA CONSIDERATIONS
The Seller has been advised that, although there is little guidance on the
subject, the Offered Notes will not be treated as "equity interests" in the
Trust under the Plan Asset Regulation. As a result, the Offered 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 Offered Notes are treated as equity
interests for purposes of the Plan Asset Regulation, the acquisition or holding
of Offered 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 Offered Notes by a Plan depending on
the type and circumstances of the plan fiduciary making the decision to acquire
such Offered 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 Offered Notes under
ERISA, see "ERISA Considerations" in the Prospectus.
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<PAGE> 51
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>
Credit Suisse First Boston Corporation...................... $15,000,000
First Chicago Capital Markets, Inc. ........................ $15,000,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated.......... $15,000,000
J.P. Morgan Securities Inc. ................................ $15,000,000
NationsBanc Capital Markets, Inc. .......................... $15,000,000
Salomon Brothers Inc ....................................... $15,000,000
-----------
$90,000,000
===========
</TABLE>
A-2 NOTES
<TABLE>
<CAPTION>
PRINCIPAL
CLASS A NOTE UNDERWRITERS AMOUNT
- ------------------------- ------------
<S> <C>
Credit Suisse First Boston Corporation...................... $ 34,085,000
First Chicago Capital Markets, Inc. ........................ $ 34,083,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated.......... $ 34,083,000
J.P. Morgan Securities Inc. ................................ $ 34,083,000
NationsBanc Capital Markets, Inc. .......................... $ 34,083,000
Salomon Brothers Inc ....................................... $ 34,083,000
------------
$204,500,000
============
</TABLE>
A-3 NOTES
<TABLE>
<CAPTION>
PRINCIPAL
CLASS A NOTE UNDERWRITERS AMOUNT
- ------------------------- ------------
<S> <C>
Credit Suisse First Boston Corporation...................... $ 39,500,000
First Chicago Capital Markets, Inc. ........................ $ 39,500,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated.......... $ 39,500,000
J.P. Morgan Securities Inc. ................................ $ 39,500,000
NationsBanc Capital Markets, Inc. .......................... $ 39,500,000
Salomon Brothers Inc ....................................... $ 39,500,000
------------
$237,000,000
============
</TABLE>
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<PAGE> 52
A-4 NOTES
<TABLE>
<CAPTION>
PRINCIPAL
CLASS A NOTE UNDERWRITERS AMOUNT
- ------------------------- ------------
<S> <C>
Credit Suisse First Boston Corporation...................... $ 31,436,000
First Chicago Capital Markets, Inc. ........................ 31,431,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated.......... 31,431,000
J.P. Morgan Securities Inc. ................................ 31,431,000
NationsBanc Capital Markets, Inc. .......................... 31,431,000
Salomon Brothers Inc ....................................... 31,431,000
------------
$188,591,000
============
</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 0.055% per A-1 Note, 0.080% per A-2 Note, 0.140% per A-3 Note
and 0.150% per A-4 Note. The Class A Note Underwriters may allow and such
dealers may reallow a concession not in excess of 0.055% per A-1 Note, 0.080%
per A-2 Note, 0.125% per A-3 Note and 0.125% per A-4 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.
The Class A Note Underwriters may engage in over-allotment, stabilizing
transactions, syndicate covering transactions and penalty bids in accordance
with Regulation M under the Exchange Act. Over-allotment involves syndicate
sales in excess of the offering size, which creates a syndicate short position.
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.
Penalty bids permit the Class A Note Underwriters to reclaim a selling
concession from a syndicate member when the Class A Notes originally sold by
such syndicate member are purchased in a syndicate covering transaction to cover
syndicate short positions. Such stabilizing transactions, syndicate covering
transactions and penalty bids may cause the prices of the Class A Notes to be
higher than they would otherwise be in the absence of such transactions. These
transactions, if commenced, may be discontinued at any time.
CLASS C NOTES
Subject to the terms and conditions set forth in an underwriting agreement
(the "Class C Note Underwriting Agreement"), the Seller has agreed to cause the
Trust to sell to each of the Underwriters named below (the "Class C Note
Underwriters"), and each of the Class C Note Underwriters has severally agreed
to purchase, the principal amount of Class C Notes set forth opposite its name
below:
<TABLE>
<CAPTION>
PRINCIPAL
CLASS C NOTE UNDERWRITERS AMOUNT
- ------------------------- -----------
<S> <C>
Credit Suisse First Boston Corporation...................... $17,360,000
J.P. Morgan Securities Inc. ................................ 17,359,000
-----------
$34,719,000
===========
</TABLE>
The Seller has been advised by the Class C Note Underwriters that they
propose initially to offer the Class C 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 0.210% per Class C Note. The Class C Note Underwriters may
allow and such dealers may reallow a concession not in excess of 0.125% per
Class C Note to certain other dealers. After the initial public offering of the
Class C Notes, the public offering prices and such concessions may be changed.
S-52
<PAGE> 53
In the ordinary course of their respective businesses, the Class C 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.
The Class C Note Underwriters may engage in over-allotment, stabilizing
transactions, syndicate covering transactions and penalty bids in accordance
with Regulation M under the Exchange Act. Over-allotment involves syndicate
sales in excess of the offering size, which creates a syndicate short position.
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 C Notes in the open market after the
distribution has been completed in order to cover syndicate short positions.
Penalty bids permit the Class C Note Underwriters to reclaim a selling
concession from a syndicate member when the Class C Notes originally sold by
such syndicate member are purchased in a syndicate covering transaction to cover
syndicate short positions. Such stabilizing transactions, syndicate covering
transactions and penalty bids may cause the prices of the Class C Notes to be
higher than they 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 Offered 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 Offered 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 August 31, 1997, 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-53
<PAGE> 54
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-2, S-10
A-1 Noteholders............................................. S-8
A-1 Noteholders' Monthly Principal Distributable Amount..... S-43
A-1 Noteholders' Principal Carryover Shortfall.............. S-43
A-1 Noteholders' Principal Distributable Amount............. S-43
A-1 Note Rate............................................... S-7
A-1 Notes................................................... S-1, S-4
A-2 Note Final Scheduled Maturity Date...................... S-2, S-10
A-2 Noteholders............................................. S-8
A-2 Noteholders' Monthly Principal Distributable Amount..... S-43
A-2 Noteholders' Principal Carryover Shortfall.............. S-44
A-2 Noteholders' Principal Distributable Amount............. S-44
A-2 Note Rate............................................... S-7
A-2 Notes................................................... S-1, S-4
A-3 Noteholders............................................. S-8
A-3 Noteholders' Monthly Principal Distributable Amount..... S-44
A-3 Noteholders' Principal Carryover Shortfall.............. S-44
A-3 Noteholders' Principal Distributable Amount............. S-44
A-3 Note Rate............................................... S-7
A-3 Notes................................................... S-1, S-4
A-4 Noteholders............................................. S-8
A-4 Noteholders' Monthly Principal Distributable Amount..... S-44
A-4 Noteholders' Principal Carryover Shortfall.............. S-44
A-4 Noteholders' Principal Distributable Amount............. S-44
A-4 Note Rate............................................... S-7
A-4 Notes................................................... S-1, S-4
Additional Class B Amounts.................................. S-15
APR......................................................... S-6
Case........................................................ S-6
Case Credit................................................. S-4
Cede........................................................ S-3
Certificate Balance......................................... S-45
Certificateholders.......................................... S-12
Certificateholders' Interest Carryover Shortfall............ S-45
Certificateholders' Interest Distributable Amount........... S-45
Certificateholders' Principal Carryover Shortfall........... S-45
Certificateholders' Principal Distributable Amount.......... S-45
Certificates................................................ S-1, S-5
Class....................................................... S-2
Class A Noteholders......................................... S-8
Class A Noteholders' Distributable Amount................... S-45
Class A Noteholders' Interest Carryover Shortfall........... S-45
Class A Noteholders' Interest Distributable Amount.......... S-45
Class A Noteholders' Monthly Principal Distributable
Amount.................................................... S-46
Class A Notes............................................... S-1, S-4
Class A Note Underwriters................................... S-51
Class A Note Underwriting Agreement......................... S-51
</TABLE>
S-54
<PAGE> 55
<TABLE>
<CAPTION>
PAGE
----------
<S> <C>
Class B Net Funds Cap Carryover Amount...................... S-39
Class B Noteholders......................................... S-8
Class B Noteholders' Distributable Amount................... S-46
Class B Noteholders' Interest Carryover Shortfall........... S-46
Class B Noteholders' Interest Distributable Amount.......... S-46
Class B Noteholders' Monthly Principal Distributable
Amount.................................................... S-46
Class B Noteholders' Principal Carryover Shortfall.......... S-46
Class B Noteholders' Principal Distributable Amount......... S-46
Class B Notes............................................... S-1, S-5
Class C Noteholders......................................... S-8
Class C Noteholders' Distributable Amount................... S-46
Class C Noteholders' Interest Carryover Shortfall........... S-46
Class C Noteholders' Interest Distributable Amount.......... S-46
Class C Noteholders' Monthly Principal Distributable
Amount.................................................... S-47
Class C Noteholders' Principal Carryover Shortfall.......... S-47
Class C Noteholders' Principal Distributable Amount......... S-47
Class C Note Rate........................................... S-7
Class C Notes............................................... S-1, S-4
Class C Note Underwriters................................... S-52
Class C Note Underwriting Agreement......................... S-52
Closing Date................................................ S-5
Collateral.................................................. S-39
Collection Account.......................................... S-13
Collection Period........................................... S-7
Commission.................................................. S-3
Contracts................................................... S-5
Contract Value.............................................. S-7
CPR......................................................... S-31
Cutoff Date................................................. S-21
Dealers..................................................... S-6
Determination Date.......................................... S-41
DTC......................................................... S-3
ERISA....................................................... S-50
Exchange Act................................................ S-3
Federal Tax Counsel......................................... S-15
Final Scheduled Maturity Date............................... S-10
Financed Equipment.......................................... S-5
Fixed Rate Distribution Amount.............................. S-41
Fixed Rate Excess Distribution Amount....................... S-8
Fixed Rate Percentage....................................... S-47
Fixed Rate Principal Distribution Amount.................... S-47
Fixed Rate Receivables...................................... S-2, S-5
Floating Rate............................................... S-2, S-38
Floating Rate Distribution Amount........................... S-41
Floating Rate Excess Distribution Amount.................... S-8
Floating Rate Percentage.................................... S-47
Floating Rate Principal Distribution Amount................. S-47
Floating Rate Receivables................................... S-2, S-5
Funding Period.............................................. S-6
Indenture................................................... S-1, S-4
Indenture Trustee........................................... S-4
</TABLE>
S-55
<PAGE> 56
<TABLE>
<CAPTION>
PAGE
----------
<S> <C>
Initial Class C Percentage.................................. S-47
Initial Cutoff Date......................................... S-5
Initial Cutoff Date APR..................................... S-47
Initial Pool Balance........................................ S-11
Initial Pre-Funded Amount................................... S-6
Initial Receivables......................................... S-5
Interest Period............................................. S-2
Issuer...................................................... S-4
Liquidated Receivables...................................... S-41
Liquidation Proceeds........................................ S-41
Mandatory Redemption........................................ S-11, S-37
Maximum Negative Carry Amount............................... S-48
Moody's..................................................... S-17
Negative Carry Account...................................... S-11
Negative Carry Account Initial Deposit...................... S-11, S-48
Negative Carry Amount....................................... S-11, S-48
Net Funds Cap............................................... S-39
Note Balance................................................ S-4
Noteholders................................................. S-8
Noteholders' Distributable Amount........................... S-47
Note Purchase Agreement..................................... S-38
Notes....................................................... S-1, S-5
Offered Noteholders......................................... S-8
Offered Note Percentage..................................... S-48
Offered Notes............................................... S-1, S-4
Owned Contracts............................................. S-5
Payment Date................................................ S-2, S-8
Plan........................................................ S-50
Pool Balance................................................ S-7
Pre-Funded Amount........................................... S-11
Pre-Funded Percentage....................................... S-11, S-48
Principal Distribution Amount............................... S-48
Prospectus.................................................. S-3
PTCE........................................................ S-50
Purchase Agreement.......................................... S-5
Purchased Contracts......................................... S-5
Rating Agency............................................... S-16
Receivables................................................. S-2, S-6
Receivables Pool............................................ S-21
Record Date................................................. S-8
Required Negative Carry Account Balance..................... S-48
Sale and Servicing Agreement................................ S-6
Seller...................................................... S-1, S-4
Servicer.................................................... S-4
Specified Spread Account Balance............................ S-12, S-49
Spread Account.............................................. S-12
Spread Account Initial Deposit.............................. S-12, S-49
Subsequent Cutoff Date...................................... S-6
Subsequent Cutoff Date APR.................................. S-48
Subsequent Receivables...................................... S-2
Subsequent Transfer Date.................................... S-6
</TABLE>
S-56
<PAGE> 57
<TABLE>
<CAPTION>
PAGE
----------
<S> <C>
Total Distribution Amount................................... S-41
Transfer and Servicing Agreements........................... S-39
Trust....................................................... S-1, S-4
Trust Agreement............................................. S-4
Trustee..................................................... S-4
Wisconsin Tax Counsel....................................... S-15
</TABLE>
S-57
<PAGE> 58
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 9 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 SEPTEMBER 11, 1997
<PAGE> 59
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> 60
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
"Issuer").
SELLER..................... Case Receivables II Inc. (the "Seller" or "CRC "),
a wholly-owned subsidiary of Case Credit
Corporation.
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
Prospectus Supplement.
TRUSTEE.................... With respect to each series of Securities, the
Trustee specified in the related Prospectus
Supplement.
THE NOTES.................. Each series of Securities will include one or more
classes of Notes, which will be issued pursuant to
an indenture between the related Trust and the
Indenture Trustee (as amended and supplemented from
time to time, an "Indenture").
Unless otherwise specified in the related
Prospectus 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 Definitive
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
Prospectus Supplement, each class of Notes will
have a stated principal amount and will bear
interest at a specified rate or rates (with respect
to each class of Notes, the "Interest Rate"). Each
class of Notes may have a different Interest Rate,
which may be a fixed, variable or adjustable
Interest Rate, or any combination of the foregoing.
The related Prospectus Supplement will specify the
Interest Rate for each class of Notes, or the
method for determining the Interest Rate.
With respect to a series that includes two or more
classes of Notes, each class may differ as to the
timing and priority of payments, seniority,
allocations of losses, Interest Rate or amount of
payments of principal or interest, or payments of
principal or interest in respect of any such class
or classes may or may not be made upon the
occurrence of specified events or on the basis of
collections from designated portions of the
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.
3
<PAGE> 61
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 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 issued
pursuant to a Trust Agreement.
Unless otherwise specified in the related
Prospectus Supplement, Certificates 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 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 Securities--
Definitive Securities."
Unless otherwise specified in the related
Prospectus Supplement, each class of Certificates
will have a stated Certificate Balance specified in
the related Prospectus Supplement (the "Certificate
Balance") and will accrue interest on such
Certificate Balance at a specified rate (with
respect to each class of Certificates, the
"Pass-Through Rate"). Each class of Certificates
may have a different Pass-Through Rate, which may
be a fixed, variable or adjustable Pass-Through
Rate, or any combination of the foregoing. The
related Prospectus Supplement will specify the
Pass-Through Rate for each class of Certificates or
the method for determining the Pass-Through Rate.
With respect to a series that includes two or more
classes of Certificates, each class may differ as
to timing and priority of distributions, seniority,
allocations of losses, Pass-Through Rates or amount
of distributions in respect of principal or
interest, or distributions in respect of principal
or interest in respect of any such class or classes
may or may not be made upon the occurrence of
specified events or on the basis of collections
from designated portions of the Receivables in the
related Trust. In addition, a series may include
one or more classes of Certificates ("Strip
Certificates") entitled to (i) distributions in
respect of principal with disproportionate, nominal
or no interest distributions or (ii) interest
distributions with disproportionate, nominal or no
distributions in respect of principal.
To the extent specified in the related Prospectus
Supplement, distributions in respect of the
Certificates may be subordinated in priority of
payment to payments on the Notes.
4
<PAGE> 62
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 a prepayment an amount in respect of the
Certificates as specified in the related Prospectus
Supplement. In addition, if the related Prospectus
Supplement provides that the property of a Trust
will include a Pre-Funding Account,
Certificateholders may receive a partial prepayment
of principal on or immediately following the end of
the 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.
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
construction equipment, including rights to receive
certain payments made with respect to such
Contracts, security interests in the equipment
financed 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
accounts, 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
Prospectus Supplement with respect to a Trust, the
Seller will sell Contracts (the "Initial
Receivables") 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
Servicing 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 conditions
described in the applicable Sale and Servicing
Agreement), the Subsequent Receivables from time to
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
pursuant to agreements with the Dealers or are
originated 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
Securities. The Receivables sold to a Trust will be
selected from the portfolio of Contracts owned by
the Seller based upon the criteria
5
<PAGE> 63
specified in the applicable Sale and Servicing
Agreement and described herein and in the related
Prospectus Supplement.
CREDIT AND CASH FLOW
ENHANCEMENT................ If and to the extent specified in the related
Prospectus Supplement, credit enhancement with
respect to a Trust or any class or classes of
Securities may include any one or more of the
following: subordination of one or more other
classes of Securities, 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 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 Supplement, 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
Prospectus Supplement, a Spread Account will be
created 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 related
Prospectus Supplement. To the extent specified in
the related Prospectus Supplement, funds in the
Spread Account will thereafter be supplemented 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 Receivables.
Amounts in the Spread Account will be available to
cover shortfalls in amounts due to the holders of
those classes of Securities specified in the
related Prospectus Supplement in the manner and
under the circumstances specified therein. The
related Prospectus Supplement will also specify to
whom and the manner and circumstances under which
amounts on deposit in the Spread Account (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
AGREEMENTS................. With respect to each Trust, the Seller will sell
the related Receivables to such Trust pursuant to a
Sale and Servicing Agreement. The rights and
benefits of such Trust under the Sale and Servicing
Agreement will be assigned to the Indenture Trustee
as collateral for the Notes of the related 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
respect to such Trust under an Administration
Agreement.
Unless otherwise provided in the related Prospectus
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
representation or warranty made by the Seller with
respect to the Receivable that has not been cured
following the discovery by or
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notice to the Seller of the breach. Case Credit
will, in most cases, be obligated to repurchase
from the Seller any Receivable that the Seller is
obligated to repurchase from the related Trust.
Unless otherwise provided in the related Prospectus
Supplement, the Servicer will be obligated to
purchase any Receivable if, among other things, it
extends the date for final payment by the Obligor
of such Receivable beyond the applicable Final
Scheduled Maturity Date (as defined in the related
Prospectus Supplement, the "Final Scheduled
Maturity Date"), decreases the annual percentage
rate ("APR") or a loss is incurred due to its
failure to maintain a perfected security interest
in the related Financed Equipment.
Unless otherwise specified in the related
Prospectus Supplement, the Servicer will be
entitled to receive a fee for servicing the
Receivables of each Trust equal to a specified
percentage of the aggregate principal balance of
such Receivables, as set forth in the related
Prospectus Supplement. See "Description of the
Transfer and Servicing 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 Equipment
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, 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. Unless otherwise specified in the
related Prospectus Supplement, the Seller will be
obligated to repurchase any Receivable sold to a
Trust as to which a first priority perfected
security interest in the name of Case Credit in the
Financed Equipment securing such Receivable shall
not exist as of the date such Receivable is
purchased by such Trust, if such breach shall
materially 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 interest
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 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 because of
fraud or negligence, such Trust could lose the
priority of its security interest or its security
interest in 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 a Trust's
losing the priority of its security interest or its
security interest in
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such Financed Equipment after the Closing Date.
Federal and state consumer protection laws impose
requirements upon 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 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.
TAX STATUS................. Upon the issuance of each series of Securities,
except as otherwise provided in the related
Prospectus 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 characterized 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 deliver an
opinion to the effect that the same
characterizations would apply for Wisconsin income
tax purposes as would apply for Federal income tax
purposes. Each Noteholder, by the acceptance 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 information concerning
the application of Federal and Wisconsin tax laws.
ERISA CONSIDERATIONS....... Subject to the considerations discussed under
"ERISA Considerations" herein and in the related
Prospectus Supplement, and unless otherwise
specified therein, the Notes of each series are
eligible for purchase by employee benefit plans.
Unless otherwise specified in the related
Prospectus Supplement, the Certificates of any
series 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
Prospectus Supplement.
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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 before the transfer of a Receivable to the Seller may have
priority over the
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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 related
Prospectus Supplement, a Spread Account and any other credit enhancement.
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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
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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.
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
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respect 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 (which may vary from month to month) 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
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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.
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 June 30, 1997, there were
approximately 1,005 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 upon 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
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Contracts provide for 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 upon 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 upon Dealer's cost for
the related equipment plus freight charges. The value of used equipment is based
upon 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
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(a) the original denomination of such Certificateholder's Certificate and (b)
the applicable Certificate Pool Factor.
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
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the Seller pursuant to 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.
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
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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.
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
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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.
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
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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 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.
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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 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."
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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 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
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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 upon 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 upon 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 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 upon 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
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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 upon 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 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
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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.
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.
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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.
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.
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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 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.
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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.
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."
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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, 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
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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.
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
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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 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
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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 upon 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 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-
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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 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
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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
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.
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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.
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.
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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
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
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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 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.
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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, the Trustee 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").
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
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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 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
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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.
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.
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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 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
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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 upon 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" 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 upon 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
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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 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
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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.
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.
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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 upon 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 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
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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 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 upon 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
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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.
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, although the IRS has unofficially indicated that
final regulations will have an effective date of January 1, 1999. It cannot be
predicted at this time whether the 1996 Proposed Regulations will become
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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.
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.
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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.
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.
52
<PAGE> 110
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.
53
<PAGE> 111
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................................... 50
Actuarial Receivables....................................... 14
Administration Agreement.................................... 41
Administration Fee.......................................... 41
Administrator............................................... 41
Applicable Trustee.......................................... 30
APR......................................................... 7
Base Rate................................................... 25
Benefit Plan................................................ 52
Calculation Agent........................................... 26
Case........................................................ 5
Case Credit................................................. 3
Cede........................................................ 12
Cedel....................................................... 28
Cedel Participants.......................................... 28
Certificate Balance......................................... 4
Certificate Distribution Account............................ 34
Certificateholders.......................................... 4
Certificate Pool Factor..................................... 17
Certificates................................................ 1
Closing Date................................................ 32
Code........................................................ 44
Collection Account.......................................... 34
Collection Period........................................... 36
Commission.................................................. 2
Commodity Indexed Securities................................ 26
Contracts................................................... 5
Cooperative................................................. 29
CRC......................................................... 3
CRC Collateral.............................................. 34
CRC Loan.................................................... 34
Currency Indexed Securities................................. 26
Cutoff Date................................................. 12
Dealer Agreements........................................... 12
Dealers..................................................... 5
Definitive Certificates..................................... 30
Definitive Notes............................................ 30
Definitive Securities....................................... 30
Depositaries................................................ 27
Depository.................................................. 20
DTC......................................................... 12
DTC Participants............................................ 27
DTC's Nominee............................................... 12
Eligible Deposit Account.................................... 35
</TABLE>
i
<PAGE> 112
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Eligible Institution........................................ 35
Eligible Investments........................................ 35
ERISA....................................................... 8
Euroclear................................................... 29
Euroclear Operator.......................................... 29
Euroclear Participants...................................... 29
Events of Default........................................... 22
Exchange Act................................................ 2
Face Amount................................................. 27
Federal Tax Counsel......................................... 44
Final Scheduled Maturity Date............................... 7
Financed Equipment.......................................... 5
Fixed Rate Securities....................................... 25
Floating Rate Securities.................................... 25
foreign person.............................................. 46
Funding Period.............................................. 4
Indenture................................................... 3
Indenture Trustee........................................... 1
Index....................................................... 26
Indexed Commodity........................................... 26
Indexed Currency............................................ 26
Indexed Principal Amount.................................... 26
Indexed Securities.......................................... 26
Indirect Participants....................................... 27
Initial Cutoff Date......................................... 5
Initial Pool Balance........................................ 41
Initial Receivables......................................... 5
Insolvency Event............................................ 39
Insolvency Laws............................................. 9
Interest Rate............................................... 3
Interest Reset Period....................................... 25
Investment Earnings......................................... 35
IRS......................................................... 45
Issuer...................................................... 3
LIBOR....................................................... 26
Liquidity Receivables Purchase Agreement.................... 33
Loan and Security Agreement................................. 33
Note Distribution Account................................... 34
Noteholders................................................. 3
Note Pool Factor............................................ 17
Notes....................................................... 1
Obligors.................................................... 12
OID......................................................... 45
OID Regulations............................................. 45
Participants................................................ 20
Pass-Through Rate........................................... 4
Payment Date................................................ 20
Plan Assets Regulation...................................... 52
Pool Balance................................................ 18
</TABLE>
ii
<PAGE> 113
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Pre-Funded Amount........................................... 5
Pre-Funding Account......................................... 1
Precomputed Receivables..................................... 14
Precomputed Simple Rebate Receivables....................... 15
Prospectus Supplement....................................... 1
Purchase Agreement.......................................... 32
Purchase Amount............................................. 33
Rating Agencies............................................. 11
Receivables................................................. 1, 12
Registration Statement...................................... 2
Related Documents........................................... 23
Reorganization.............................................. 19
Rule of 78's Receivables.................................... 14
Sale and Servicing Agreement................................ 5
Schedule of Receivables..................................... 32
Securities.................................................. 1
Securities Act.............................................. 2
Securityholders............................................. 4
Seller...................................................... 1, 3
Servicer.................................................... 3
Servicer Default............................................ 39
Servicing Fee............................................... 36
Servicing Fee Rate.......................................... 36
Short-Term Note............................................. 45
Simple Interest Receivables................................. 14
Specified Party............................................. 39
Spread...................................................... 25
Spread Account.............................................. 38
Spread Multiplier........................................... 26
Standard Precomputed Receivables............................ 15
Stock Index................................................. 26
Stock Indexed Securities.................................... 26
Strip Certificates.......................................... 4
Strip Notes................................................. 3
Subsequent Receivables...................................... 1
Subsequent Transfer Date.................................... 32
Terms and Conditions........................................ 29
Transfer and Servicing Agreements........................... 32
Trust....................................................... 1, 3
Trust Accounts.............................................. 34
Trust Agreement............................................. 3
Trustee..................................................... 1
UCC......................................................... 33
Underwriting Agreements..................................... 52
Wisconsin Tax Counsel....................................... 51
</TABLE>
iii
<PAGE> 114
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-B (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.
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
I-1
<PAGE> 115
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
I-2
<PAGE> 116
should note that these trades would automatically fail on the sale side unless
affirmative action were taken. At least three techniques should be readily
available to eliminate this potential problem:
(a) borrowing through Cedel or Euroclear for one day (until the
purchase side of the day trade is reflected in their Cedel or Euroclear
accounts) in accordance with the clearing system's 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.
I-3
<PAGE> 117
- ------------------------------------------------------
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
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 PROSPECTUS
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 OFFERED
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-17
Case Corporation and Case Credit
Corporation............................. S-19
The Trust................................. S-20
The Receivables Pool...................... S-21
Weighted Average Life of the Offered
Notes................................... S-31
Description of the Offered Notes.......... S-36
Description of the Class B Notes.......... S-38
Description of the Certificates........... S-39
Description of the Transfer and Servicing
Agreements.............................. S-39
Legal Investment.......................... S-50
ERISA Considerations...................... S-50
Underwriting.............................. S-51
Legal Opinions............................ S-53
Index of Terms............................ S-54
PROSPECTUS
Available Information..................... 2
Incorporation of Certain Documents by
Reference............................... 2
Summary of Terms.......................... 3
Risk Factors.............................. 9
The Trusts................................ 12
The Receivables Pools..................... 14
Weighted Average Life of the Securities... 17
Pool Factors and Trading Information...... 17
Use of Proceeds........................... 18
The Seller, Case Credit Corporation and
Case Corporation........................ 18
Description of the Notes.................. 20
Description of the Certificates........... 24
Certain Information Regarding the
Securities.............................. 25
Description of the Transfer and Servicing
Agreements.............................. 32
Certain Legal Aspects of the
Receivables............................. 41
Certain Federal Income Tax Consequences... 44
Certain State Tax Consequences............ 51
ERISA Considerations...................... 52
Plan of Distribution...................... 52
Legal Opinions............................ 53
Index of Terms............................ i
Annex I................................... I-1
</TABLE>
UNTIL DECEMBER 10, 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
PROSPECTUS SUPPLEMENT AND A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH
RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.
======================================================
$754,810,000
CASE EQUIPMENT
LOAN TRUST 1997-B
$90,000,000
CLASS A-1 5.612%
ASSET BACKED NOTES
$204,500,000
CLASS A-2 5.914%
ASSET BACKED NOTES
$237,000,000
CLASS A-3 6.240%
ASSET BACKED NOTES
$188,591,000
CLASS A-4 6.410%
ASSET BACKED NOTES
$34,719,000
CLASS C 6.410%
ASSET BACKED NOTES
CASE RECEIVABLES II INC.
SELLER
CASE CREDIT CORPORATION
SERVICER
PROSPECTUS SUPPLEMENT
UNDERWRITERS OF THE CLASS A NOTES
CREDIT SUISSE FIRST BOSTON
FIRST CHICAGO CAPITAL MARKETS, INC.
MERRILL LYNCH & CO.
J.P. MORGAN & CO.
NATIONSBANC CAPITAL MARKETS, INC.
SALOMON BROTHERS INC
UNDERWRITERS OF THE CLASS C NOTES
CREDIT SUISSE FIRST BOSTON
J.P. MORGAN & CO.
- ------------------------------------------------------
