As filed with the Securities and Exchange Commission on July 20, 1998
Registration No. 333-52493
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
Amendment No. 2 to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-----------------------
CASE RECEIVABLES II INC.
(Exact name of registrant as specified in its charter)
Delaware 6153 76-0439709
(State of Incorporation) (Primary Standard Industrial (I.R.S. Employer
Classification Code Number) Identification No.)
233 Lake Avenue
Racine, Wisconsin 53403
(414) 636-6564
(Address, including zip code, and telephone number,
including area code, of registrant's principal
executive offices)
Richard S. Brennan
General Counsel and Secretary
Case Corporation
700 State Street
Racine, Wisconsin 53404
(414) 636-6011
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
Robert F. Hugi David Mercado
Mayer, Brown & Platt Cravath, Swaine & Moore
190 South LaSalle Street 825 Eighth Avenue
Chicago, Illinois 60603-3441 New York, New York 10019-7475
(312) 782-0600 (212) 474-1000
Approximate date of commencement of proposed sale to the public:
From time to time after this Registration Statement becomes effective as
determined by market conditions.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, check
the following box.[ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box. |x|
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. [ ]_______
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]________
If delivery of the prospectus is expected to be made pursuant to
Rule 434, check the following box. [ ]
<PAGE>
CALCULATION OF REGISTRATION FEE
===============================================================================
Proposed Proposed
Maximum Maximum
Title of Each Offering Aggregate Amount of
Class of Securities Amount to be Price Per Offering Registration
to be Registered Registered(1) Unit (2) Price(2) Fee(3)
- -------------------------------------------------------------------------------
Asset Backed Notes.. $3,435,296,654 100% $3,435,296,654 $1,013,412.52
- -------------------------------------------------------------------------------
Asset Backed
Certificates........ $50,000,000 100% $50,000,000 $14,750
- -------------------------------------------------------------------------------
Total Asset Backed
Securities.......... $3,485,296,654 100% $3,485,296,654 $1,028,162.52
===============================================================================
(1) $514,703,346 aggregate principal amount of Asset Backed Securities
registered by the Registrant under Registration Statement No.
33-99298 referred to below and not previously sold are
consolidated in this Registration Statement pursuant to Rule 429, and
such Asset Backed Securities are allocated to Asset Backed Notes.
All registration fees in connection with such unsold amount of
Asset Backed Securities have previously been paid under
Registration Statement No. 33-99298. The total amount registered
under this Registration Statement as so consolidated as of the
date of this filing is $4,000,000,000 consisting of $3,950,000,000
of Asset Backed Notes and $50,000,000 of Asset Backed Certificates.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) Pursuant to Rule 457(o) under the Securities Act of 1933, the
registration fee has been calculated on the basis of the proposed
maximum offering price for the Total Asset Backed Securities.
_______________________
Pursuant to Rule 429 under the Securities Act of 1933, the Prospectus
filed as part of this Registration Statement relates to the securities
registered hereby, including the remaining unsold $514,703,346 principal amount
of debt securities previously registered by the Registrant under its
Registration Statement on Form S-3 (File No. 33-99298).
The Registrant hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that
this Registration Statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of 1933, or until this Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
<PAGE>
THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT IS NOT COMPLETE AND
MAY BE CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE
REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION IS EFFECTIVE. THIS PROSPECTUS SUPPLEMENT IS NOT AN
OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER
TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS
NOT PERMITTED.
Consider carefully the risk factors beginning on page S-7 in this prospectus
supplement and on page 4 in the prospectus.
The notes represent obligations of the trust only [and do not][. The
certificates represent interests in the trust only. Neither the notes nor
the certificates] represent obligations of or interests in Case Receivables
II Inc., Case Credit Corporation or any of their affiliates.
This prospectus supplement may be used to offer and sell the notes [and
the certificates] only if accompanied by the prospectus.
Prospectus Supplement to Prospectus dated _______, 1998
Case Equipment Receivables Trust 199_-_
CASE RECEIVABLES II INC.
Seller
CASE CREDIT CORPORATION
Servicer
The trust will issue the following [classes of notes] [securities]--
- -------------------------------------------------------------------------------
Class A Notes [Class B
-------------------------------------- Notes]
A-1 Notes A-2 Notes A-3 Notes [Certificates]
- --------------------------------------------------------------------------------
Principal Amount
- --------------------------------------------------------------------------------
Interest Rate
- --------------------------------------------------------------------------------
Payment Dates Monthly Monthly Monthly Monthly
- --------------------------------------------------------------------------------
First Payment Date
- --------------------------------------------------------------------------------
Final Scheduled
Payment Date
- --------------------------------------------------------------------------------
Price to Public (1)
- --------------------------------------------------------------------------------
Underwriting
Discount (2)
- --------------------------------------------------------------------------------
Proceeds to Seller (3)
- --------------------------------------------------------------------------------
1 Plus accrued interest, if any, from __________. Total price to public
(excluding such interest) = $_________.
2 Total underwriting discount = $_________.
3 Total proceeds to issuer = $_______.
<PAGE>
Credit Enhancement
o [The trust is also issuing $_______ ___% Asset Backed Certificates,
which][The certificates] are subordinated to the notes.
Subordination of the certificates provides credit enhancement for
the notes.
o A spread account, with an initial balance of $___________ (__% of
the Contract Value of the initial receivables), will serve as
additional credit enhancement for the [notes] [securities]. Each
time that the trust purchases additional receivables, an amount
equal to __% of their aggregate Contract Value will be transferred
from the pre-funding account to the spread account.
[o The Class B Notes are subordinated to the Class A Notes.
Subordination of the Class B Notes provides additional credit
enhancement for the Class A Notes.]
[This prospectus supplement and the accompanying prospectus relate only to the
offering of the notes. The certificates are not offered under these documents.]
Neither the SEC nor any state securities commission has approved these
securities or determined that this prospectus supplement or the prospectus
is accurate or complete. Any representation to the contrary is a criminal
offense.
Underwriters of the Class A Notes
Underwriters of the [Class B Notes] [Certificates]
[DATE]
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
We tell you about the [notes] [securities] in two separate documents
that progressively provide more detail: (a) the accompanying prospectus,
which provides general information, some of which may not apply to a
particular series of securities, including your series; and (b) this
prospectus supplement, which describes the specific terms of your series of
securities.
If the terms of your series of [notes] [securities] vary between this
prospectus supplement and the prospectus, you should rely on the
information in this prospectus supplement.
We include cross-references in this prospectus supplement and in the
accompanying prospectus to captions in these materials where you can find
further related discussions. The following Table of Contents and the Table
of Contents included in the accompanying prospectus provide the pages on
which these captions are located.
You can find a listing of the pages where capitalized terms used in
this prospectus supplement are defined under the caption "Index of Terms
for Prospectus Supplement" beginning on page S-33 in this prospectus
supplement and under the caption "Index of Terms for Prospectus" beginning
on page 45 in the accompanying prospectus.
-----------------
<PAGE>
TABLE OF CONTENTS
Page
SUMMARY OF TERMS...........................................................S-1
OFFERED SECURITIES........................... .........................S-1
Subordination ..................... ..........................S-1
Closing Date ................................................S-1
Indenture Trustee ................................................S-1
Trustee ................................................S-1
Payment Dates ................................................S-1
Interest Payments ................................................S-1
Principal Payments ................................................S-2
Final Scheduled Maturity Dates.....................................S-2
Optional Redemption; Clean-Up Call.................................S-2
Mandatory Redemption...............................................S-2
TRUST PROPERTY.........................................................S-2
The Initial Receivables............................................S-3
Pre-Funding ................................................S-3
Negative Carry Account.............................................S-3
CREDIT ENHANCEMENT.....................................................S-4
Spread Account ................................................S-4
[The Certificates ................................................S-5
[Subordination ................................................S-5
COLLECTION ACCOUNT; PRIORITY OF
DISTRIBUTIONS......................................................S-5
Tax Status ................................................S-5
ERISA CONSIDERATIONS...................................................S-6
LEGAL INVESTMENT.......................................................S-6
RATING OF THE [NOTES]
[SECURITIES]...........................................................S-6
RISK FACTORS...............................................................S-7
Limited Ability to
Resell [Notes] [Securities]........................................S-7
Possible Prepayments as
a Result of Pre-Funding............................................S-7
Trust's Dependence Upon
Case Credit and Case for
Subsequent Receivables.............................................S-7
Possible Effects of Economic
and Other Factors..................................................S-7
Changes in Pool
Characteristics as a
Result of Pre-Funding..............................................S-8
Seasonality of Cash Flow...............................................S-8
Effects of Subordination on
[Class B Noteholders]
[Certificateholders]...............................................S-8
[Possible Effects of
Noteholder Remedies
on Certificateholders;
Limits on Remedies of
Certificateholders ................................................S-8
<PAGE>
CASE CORPORATION AND CASE CREDIT
CORPORATION............................................................S-9
THE TRUST ................................................................S-10
General...............................................................S-10
Capitalization of the Trust ..........................................S-10
The Trustee ..........................................................S-10
THE RECEIVABLES POOL .....................................................S-10
Delinquencies, Repossessions, and Net
Losses ...............................................................S-14
WEIGHTED AVERAGE LIFE OF THE [NOTES]
[SECURITIES] .........................................................S-16
DESCRIPTION OF THE NOTES..................................................S-21
General...............................................................S-21
Payments of Interest..................................................S-21
Payments of Principal.................................................S-21
Mandatory Redemption..................................................S-21
Optional Redemption...................................................S-21
Registration of Notes.................................................S-22
The Indenture Trustee.................................................S-22
DESCRIPTION OF THE CERTIFICATES...........................................S-22
[General..............................................................S-22
Distributions of Interest Income......................................S-22
Distributions of Principal Payments...................................S-23
Mandatory Repurchase..................................................S-23
Optional Purchase.....................................................S-23
DESCRIPTION OF THE TRANSFER AND
SERVICING AGREEMENTS..................................................S-23
Sale and Assignment of Initial Receivables and
Subsequent Receivables............................................S-23
Accounts..............................................................S-24
Servicing Compensation and Payment of
Expenses..........................................................S-24
Distributions.........................................................S-25
Negative Carry Account................................................S-27
Spread Account........................................................S-28
LEGAL INVESTMENT..........................................................S-29
ERISA CONSIDERATIONS......................................................S-29
The Notes.............................................................S-29
UNDERWRITING..............................................................S-30
[Class A] Notes.......................................................S-30
LEGAL OPINIONS............................................................S-32
INDEX OF TERMS............................................................S-33
<PAGE>
SUMMARY OF TERMS
o This summary highlights selected information from this document and
does not contain all of the information that you need to consider in
making your investment decision. To understand all of the terms of an
offering of the [notes] [securities], read carefully this entire
document and the accompanying prospectus.
o This summary provides an overview of certain calculations, cash flows
and other information to aid your understanding and is qualified by
the full description of these calculations, cash flows and other
information in this prospectus supplement and the accompanying
prospectus.
OFFERED SECURITIES
Case Equipment Receivables Trust ____-_ will issue the following
securities, which are being offered pursuant to this prospectus supplement
and the accompanying prospectus:
o Class A-1 ____% Asset Backed Notes (the "A-1
Notes") in the aggregate principal amount of
$-----------;
o Class A-2 ____% Asset Backed Notes (the "A-2
Notes") in the aggregate principal amount of
$-----------;
o Class A-3 ____% Asset Backed Notes (the "A-3 Notes"; together with the
A-1 Notes and A-2 Notes, the "Class A Notes") in the aggregate
principal amount of $___________; and
o [Class B ____% Asset Backed Notes (the "Class B Notes"; together with
the Class A Notes, the "Notes") in the aggregate principal amount of
$__________.][____% Asset Backed Certificates (the "Certificates" and,
together with the Class A Notes, the "Securities") in the aggregate
principal amount of
$----------.]
Each class of [Notes] [Securities] is being offered as book-entry
securities clearing through DTC (in the United States) or Cedel or
Euroclear (in Europe) in minimum denominations of $1,000 and in greater
whole-dollar denominations. See "Certain Information Regarding the
Securities--Book-Entry Registration" in the Prospectus.
<PAGE>
Subordination
The [Class B Notes] [Certificates] will be subordinated to the Class A
Notes as follows:
o no interest will be paid on the [Class B Notes] [Certificates] on any
payment date until all interest owed on the Class A Notes through that
payment date has been paid in full; and
o no principal will be paid on the [Class B Notes] [Certificates] [on
any payment date] until all principal owed on the Class A Notes
[through that payment date] has been paid in full.
Closing Date
- ---------------.
Indenture Trustee
[Harris Trust and Savings Bank].
Trustee
- ---------------.
Payment Dates
The [15]th day of each calendar month (or, if not a business day, the next
Business Day), beginning with _________, 199_.
Interest Payments
The interest rate for each class of [Notes] [Securities] is as specified on
the cover page of this prospectus supplement. Interest on each Class of
[Notes] [Securities] will be calculated on the basis of a 360-day year of
twelve 30-day months and will be payable on each payment date to holders of
record as of the fourteenth day of the calendar month in which such payment
date occurs or, if Definitive [Notes] [Securities] are issued, the close of
business on the last day of the prior calendar month (the "Record Date").
S-1
<PAGE>
Principal Payments
Principal of the [Notes] [Securities] will be payable on each payment date
in an amount generally equal to the Principal Distribution Amount for such
payment date (to the extent of funds available therefor as described
herein) as follows:
o 100% to the holders of the various classes of Class A Notes
sequentially, so that no principal will be paid on any class of Class
A Notes until each class of Class A Notes with a lower numerical
designation has been paid in full (e.g., no principal will be paid on
the Class A-2 Notes until the Class A-1 Notes have been paid in full);
and
o once all of the Class A Notes have been paid in full, 100% to the
holders of the [Class B Notes] [Certificates] until paid in full.
However, after an Event of Default and acceleration of the Notes (and, if
any Notes remain outstanding, on and after the Final Scheduled Maturity
Date, as defined below), principal payments will be made first to the
holders of the Class A Notes ratably according to the amounts due and
payable on the Class A Notes for principal until paid in full and then to
the [Class B Noteholders] [Certificateholders] until the outstanding
principal amount of the [Class B Notes] [Certificates] has been paid in
full.
The Principal Distribution Amount for a payment date will be based upon the
decrease in the sum of the Contract Value of the receivables (including the
decrease resulting from losses in respect of principal of the receivables)
and the amount on deposit in the Pre-Funding Account during the related
Collection Period. As more fully described in "Description of the Transfer
and Servicing Agreements--Distributions," the Contract Value of the
receivables is generally equivalent to their principal balance, and a
Collection Period is a period generally the length of a calendar month that
ends about nine days prior to a payment date.
<PAGE>
Final Scheduled Maturity Dates
The outstanding principal amount, if any, of each Class of [Notes]
[Securities] will be payable in full on the date specified for each below:
o A-1 Notes: ____________ (the "Final Scheduled A-1
Maturity Date");
o A-2 Notes: ____________ (the "Final Scheduled A-2
Maturity Date");
o A-3 Notes: ____________ (the "Final Scheduled A-3
Maturity Date"); and
o [Class B Notes][Certificates]: ____________ (the
"Final Scheduled Maturity Date").
Optional Redemption; Clean-Up Call
Any [Notes] [Securities] that remain outstanding on any payment date on
which the Servicer exercises its Clean-Up Call will be prepaid in whole at
the applicable redemption price on that payment date. The Servicer cannot
exercise its Clean-Up Call until the Pool Balance declines to 10% or less
of the Initial Pool Balance. The redemption price for any Class of [Notes]
[Securities] in connection with any such optional redemption will equal the
unpaid principal balance of that Class of [Notes] [Securities], plus
accrued and unpaid interest thereon.
As more fully described in "Description of the Transfer and Servicing
Agreements--Distributions," the "Pool Balance" at any time equals the
aggregate Contract Value of the receivables at that time, and the "Initial
Pool Balance" equals the sum of the Contract Values of all receivables as
measured for each receivable for purposes of the sale of that receivable to
the trust.
Mandatory Redemption
As described under "The Trust Property--Pre-Funding" below in this Summary
of Terms, the trust will have a pre-funding period. On the payment date on
or immediately following the last day of the pre-funding period, any funds
remaining in the trust's pre-funding account (after any purchase of
receivables on such date) will be applied to redeem the [Notes]
[Securities] then outstanding in whole or in part in the same sequence [and
proportions] that would apply if such remaining funds were a part of the
Principal Distribution Amount.
TRUST PROPERTY
The trust will possess only the following property:
o receivables and related collections, as further
described below;
S-2
<PAGE>
o bank accounts established for the trust, including the Pre-Funding
Account and Negative Carry Account described below, the Spread Account
described under "Credit Enhancement" below in this summary of terms
and accounts established to hold collections pending distribution to
holders of the [Notes] [Securities];
o security interests in the Financed Equipment or
Leased Equipment;
o any property obtained in a default situation under
those security interests;
o rights to proceeds from certain insurance policies
covering Financed Equipment or Leased Equipment
or Obligors; and
o the interest of the Seller in any proceeds from recourse to Dealers on
receivables (but excluding any amounts contained in Dealers' reserve
accounts).
The Initial Receivables
On the closing date, the trust will acquire Retail Installment Contracts
(the "Initial Receivables") with an aggregate Contract Value of
approximately $_____________ [and [Full Payout] Leases with an aggregate
Contract Value of approximately $_____________, in each case] as of
_______, 199_ (the "Initial Cutoff Date"). Each Initial Receivable is a
Precomputed Receivable, including some Precomputed Simple Rebate
Receivables. As of the Initial Cutoff Date:
o the weighted average annual percentage rate (the
"APR") of the Initial Receivables was approximately
-----%,
o the weighted average remaining maturity (i.e., the period from but
excluding the Initial Cutoff Date to and including each Initial
Receivable's maturity date) of the Initial Receivables was
approximately _____ months and
o the weighted average original maturity of the Initial Receivables was
approximately _____ months.
No Initial Receivable has a scheduled maturity later than
the date that is six months prior to the Final Scheduled
Maturity Date. [No [Low Payment Leases or] Dealer
Loans will be included in the trust.]
<PAGE>
Pre-Funding
In addition to the Initial Receivables, the trust will (subject to
availability and certain conditions) purchase additional Retail Installment
Contracts [and [Full Payout] Leases] (the "Subsequent Receivables") from
the Seller during a period (the "Funding Period") beginning on the closing
date and ending not later than the close of business on the _____________
payment date. The Subsequent Receivables together with the Initial
Receivables are referred to herein as the "Receivables." See "Description
of the Transfer and Servicing Agreement--Sale and Assignment of Initial
Receivables and Subsequent Receivables."
The trust will pay the purchase price for Subsequent Receivables with funds
on deposit in a Pre-Funding Account established as a Trust Account, with an
initial deposit of $__________ (the "Initial Pre-Funded Amount"). The
Seller expects to sell Subsequent Receivables to the trust with an
aggregate Contract Value approximately equal to the Initial Pre-Funded
Amount. Prior to being used to purchase Subsequent Receivables or paid to
the Securityholders, funds on deposit in the Pre-Funding Account (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.
The Funding Period will end earlier than the date specified above when the
Pre-Funded Amount is reduced to less than $100,000, or if there is an Event
of Default under the Indenture or a Servicer Default under the Sale and
Servicing Agreement or the Seller or the Servicer becomes subject to
certain insolvency events. Any Pre-Funded Amount remaining at the end of
the Funding Period will be payable to the Noteholders [and/or the
Certificateholders] as described in "Offered Securities--Mandatory
Redemption" above.
Subsequent Receivables may be originated at a later date than the Initial
Receivables, 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--Changes in Pool Characteristics as a Result of Pre-Funding" and
"The Receivables Pool." No Subsequent Receivable will have
S-3
<PAGE>
a scheduled maturity later than the date that is six months prior to the
Final Scheduled Maturity Date.
Negative Carry Account
In order to provide a source of funds to cover anticipated negative carry
resulting from the difference between the weighted average interest rate on
the [Notes] [Securities] and investment earnings on the Pre-Funded Amount,
the Servicer will establish a Trust Account to be known as the "Negative
Carry Account." On or prior to the closing date, the Seller will deposit
$____________ into the Negative Carry Account. On each payment date, the
Servicer will instruct the Trustee to transfer from the Negative Carry
Account to the Trust's Collection Account an amount equal to the Negative
Carry Amount for that payment date. For this purpose:
o "Negative Carry Amount" means, for any payment
date, the difference (if positive) between (i) the
product of (a) the sum of the Class A Noteholders'
Interest Distributable Amount and the Class B
Noteholders' Interest Distributable Amount for that
payment date multiplied by (b) the Pre-Funded
Percentage for the prior Collection Period minus (ii)
the investment earnings on the Pre-Funded Amount
since the prior payment date.
o "Pre-Funded Percentage" for each Collection Period is the percentage
equivalent of a fraction the numerator of which is the Pre-Funded
Amount and the denominator of which is the sum of the Pool Balance and
the Pre-Funded Amount, after taking into account all transfers of
Subsequent Receivables during such Collection Period.
Amounts on deposit in the Negative Carry Account in excess of the required
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 on that date) will be released to the
Seller.
<PAGE>
CREDIT ENHANCEMENT
Spread Account
As credit enhancement for the [Notes] [Securities], the Servicer will
establish and maintain in the name of the Indenture Trustee a Trust Account
to be known as the "Spread Account." The Spread Account will be funded as
follows:
o On the closing date, the seller will deposit $__________ (__% of the
Pool Balance as of the Initial Cutoff Date) into the Spread Account.
o On the date of each sale of Subsequent Receivables to the trust, the
Indenture Trustee will transfer cash or Eligible Investments having a
value approximately equal to ____% of the aggregate Contract Value of
those Subsequent Receivables from the Pre-Funding
Account to the Spread Account.
o On each payment date, the Servicer will instruct the
Indenture Trustee to deposit into the Spread Account
any amounts remaining after deposit in the
appropriate Trust Accounts of amounts to be
distributed to holders of the Notes, and the payment
of the Administration Fee and any third party
Servicing Fee. However, this deposit will be made
only to the extent necessary so that the balance on
deposit in the Spread Account will not be less than
the Specified Spread Account Balance.
The "Specified Spread Account Balance" with respect to any payment date
will equal ____% of the Initial Pool Balance, except that the Specified
Spread Account Balance will never exceed the aggregate outstanding
principal amount of the Notes (the "Note Balance"). The Specified Spread
Account Balance may be reduced or the definition thereof otherwise modified
without the consent of the Noteholders if the Rating Agencies confirm in
writing that such reduction or modification will not result in a reduction
or withdrawal of the rating of the Notes. See "Description of the Transfer
and Servicing Agreements--Spread Account."
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 [and the Certificates] 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.]
S-4
<PAGE>
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 Certificates
On the closing date, the trust will issue Certificates in an aggregate
principal amount of $________. The Seller will initially purchase the
entire principal amount of the Certificates. The Certificates will bear
interest at the rate of ____% 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. The
subordination of the Certificates will provide credit enhancement for the
Notes. See "Description of the Certificates" in this Prospectus
Supplement.] [Delete if Certificates are offered hereby.]
[Subordination
The subordination of the Class B Notes to the Class A Notes as described
herein will provide additional credit enhancement for the Class A Notes.]
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 the receivables will be deposited and held pending distribution to
Noteholders and Certificateholders. On each payment date, funds on deposit
in the Collection Account relating to the prior Collection Period will be
applied to the following (in the priority indicated):
(i) accrued and unpaid Administration Fees through
the end of the related Collection Period;
(ii) accrued and unpaid interest on the Class A
Notes;
[(iii) accrued and unpaid interest on the Class B
Notes;]
<PAGE>
(iv) the Principal Distribution Amount to pay
principal:
o first, 100% to the holders of the various
Classes of Class A Notes, sequentially, so
that no principal will be paid on any Class of
Class A Notes until each Class of Class A
Notes with a lower numerical designation
has been paid in full (e.g., no principal will
be paid on the Class A-2 Notes until the
Class A-1 Notes have been paid in full);
o second, once all of the Class A Notes have been paid in full,
100% to the holders of the Class B Notes until paid in full;
(v) to the Spread Account, to the extent necessary so that the balance
on deposit therein will not be less than the Specified Spread
Account Balance;
(vi) accrued and unpaid interest on the Certificates;
(vii) the Certificateholders' Principal Distributable
Amount;
(viii) accrued and unpaid Servicing Fees through the end of the related
Collection Period, except that neither Case Credit nor any of its
affiliates is the Servicer, the amounts described in this clause
will be paid prior to any other application of funds on deposit in
the Collection Account; and
(ix) the remaining balance, if any, to the Seller.
After an Event of Default and acceleration of the Notes (and, if any Notes
remain outstanding, on and after the Final Scheduled Maturity Date),
principal payments will be made first to Class A Noteholders ratably
according to the amounts due on the Class A Notes for principal and then to
the Class B Noteholders until the outstanding principal amount of the Class
B Notes has been paid in full. See "Description of the Transfer and
Servicing Agreements--Distributions."
Tax Status
Mayer, Brown & Platt, special Federal tax counsel to the Seller ("Federal
Tax Counsel"), is of the opinion that for Federal income tax purposes the
Notes will be characterized as debt and the Trust will not be characterized
as an association (or publicly traded
S-5
<PAGE>
partnership) taxable as a corporation. Foley & Lardner, special Wisconsin
tax counsel to the Seller ("Wisconsin Tax Counsel"), is of the opinion that
the same characterizations should apply for Wisconsin income tax purposes
as for Federal income tax purposes. Each Noteholder, by the acceptance of a
Note, will agree to treat the Notes as indebtedness. See "Certain Federal
Income Tax Consequences" and "Certain State Tax Consequences" in the
Prospectus for additional information concerning the application of Federal
and Wisconsin tax laws to the Trust and the Notes.
ERISA CONSIDERATIONS
Subject to the considerations discussed under "ERISA Considerations," the
Notes are eligible for purchase by employee benefit plans. [The
Certificates may not be acquired by any employee benefit plan subject to
ERISA or by any individual retirement account. See "ERISA Considerations."]
[Include only if the Certificates are offered hereby.]
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.
RATING OF THE [NOTES] [SECURITIES]
It is a condition to the issuance of the [Notes] [Securities] that the A-1
Notes be rated in the highest short-term rating category, that the A-2
Notes and the A-3 Notes be rated in the highest long-term rating category
and that the [Class B Notes] [Certificates] be rated at least in the "A"
category or its equivalent, in each case by at least two nationally
recognized statistical rating agencies (the "Rating Agencies"). There can
be no assurance that such ratings will not be lowered or withdrawn by a
rating agency if circumstances so warrant. See "Risk Factors--Ratings of
the Notes."
S-6
<PAGE>
RISK FACTORS
You should consider the following risk factors in deciding whether to
purchase the [Notes] [Securities].
Limited Ability to
Resell [Notes] [Securities]
The underwriters
may assist in resales of the [Notes]
[Securities], but they are not required
to do so. A secondary market for the
[Notes] [Securities] may not develop.
If a secondary market does develop, it
might not continue or it might not be
sufficiently liquid to allow you to
resell any of your [Notes]
[Securities].
Possible Prepayments as
a Result of Pre-Funding If the principal
amount of eligible receivables
purchased or directly originated by
Case Credit during the Funding Period
is less than the Initial Pre-Funded
Amount, the Seller will not have
sufficient receivables to sell to the
trust during the Funding Period. This
would result in a prepayment of
principal to the [Noteholders]
[Securityholders] as described below.
To the extent that the aggregate
Contract Value of Subsequent
Receivables sold during the Funding
Period is less than the Initial
Pre-Funded Amount, an amount equal to
the excess will remain on deposit in
the Pre-Funding Account at the end of
the Funding Period. Any such remaining
Pre-Funded Amount will be applied to
prepay the [Notes] [Securities] in the
same sequence [and proportions] that
would apply if such remaining funds
were a part of the Principal
Distribution Amount. Any such
prepayment will shorten the weighted
average life of the affected [Notes]
[Securities] to an extent that cannot
be predicted with assurance, since the
amount of such prepayment cannot be
predicted with assurance.
Trust's Dependence Upon
Case Credit and Case for
Subsequent Receivables The Seller will not be able to convey
Subsequent Receivables to the trust unless
Case Credit generates those receivables.
Case Credit's ability to generate
receivables in turn depends primarily
upon sales of agricultural,
construction and other equipment
manufactured or distributed by Case.
If, during the Funding Period, Case
were to temporarily or permanently
stop manufacturing or distributing
agricultural, construction and other
equipment, the rate of sales of
agricultural, construction and other
equipment manufactured or distributed
by Case would decrease. This would
adversely affect the Seller's ability
to sell Subsequent Receivables to the
trust. Case's use of manufacturer's
rebate and other incentive programs
may also affect retail sales, and
neither the Seller nor the trust has
any control over Case's future use of
such incentives.
<PAGE>
Possible Effects of Economic
and Other Factors The ability of Dealers to sell
agricultural, construction, and other
equipment and generate Subsequent Receiv-
ables through those sales 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. Case
Credit 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, construction or other
equipment.
S-7
<PAGE>
Changes in Pool
Characteristics as a
Result of Pre-Funding
There will be no required
characteristics of the Subsequent
Receivables, except that each
Subsequent Receivable must satisfy the
eligibility criteria specified in the
Sale and Servicing Agreement at the
time of its addition. Subsequent
Receivables may be originated at a
later date using credit criteria
different from those that were applied
to the Initial Receivables and may be
of a different credit quality and
seasoning. In addition, following the
transfer of Subsequent Receivables to
the trust, the characteristics of the
entire Receivables Pool, including the
composition of the receivables, the
distribution by APR, equipment type,
payment frequency, average maturity,
current Contract Value and geographic
distribution, may vary from those of
the Initial Receivables. See "The
Receivables Pool." Since the weighted
average life of the [Notes]
[Securities] will be influenced by the
rate at which the principal balances
of the receivables are paid, some of
these variations will affect the
weighted average life of the [Notes]
[Securities]. See "Weighted Average
Life of the Securities" in the
Prospectus. The requirements that no
receivables have a remaining term in
excess of 72 months and that on each
Subsequent Transfer Date the weighted
average original term of the
receivables in the trust will not be
greater than 55 months are intended to
minimize the effect of the addition of
Subsequent Receivables on the weighted
average life of the [Notes]
[Securities].
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 ___% of the aggregate
Contract Value of the receivables as
of the Initial Cutoff Date) are
agricultural equipment retail
installment sale contracts and tend to
have payment dates that correspond to
periods in which farmers have stronger
cash flows.] As a result, the amounts
of cash distributed to [Noteholders]
[Securityholders] 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."
<PAGE>
Effects of Subordination on
[Class B Noteholders]
[Certificateholders]
If you buy [Class B Notes]
[Certificates], your interest payments
will be subordinated in priority of
payment to interest due on the [Class
A] Notes, and your principal payments
will be subordinated in priority of
payment to principal due on the [Class
A] Notes as follows. You will not
receive any interest payments on your
[Class B Notes] [Certificates] with
respect to a Collection Period until
the full amount of interest on the
[Class A] Notes relating to such
Collection Period has been deposited
in the Note Distribution Account. You
will not receive any principal
payments on your [Class B Notes]
[Certificates] until the [Class A]
Notes have been paid (or provided for)
in full. [Distributions of interest
and principal on the Certificates will
be subordinated in priority of payment
to interest and principal due on the
Notes.]
S-8
<PAGE>
[Possible Effects of
Noteholder Remedies
on Certificateholders;
Limits on Remedies of
Certificateholders If a Servicer Default occurs, the
Indenture Trustee or Noteholders
evidencing 25% or more of the
outstanding principal amount of the
Notes may remove the Servicer without
the consent of the Trustee or any of
the Certificateholders, as described
under "Description of the Transfer and
Servicing Agreements--Rights upon
Servicer Default." So long as any Notes
remain outstanding, neither the Trustee
nor the Certificateholders will have
the ability to remove the Servicer if a
Servicer Default occurs. In addition,
the Noteholders have the ability, with
certain specified exceptions, to waive
defaults by the Servicer, including
defaults that could materially
adversely affect the
Certificateholders. See "Description of
the Transfer and Servicing
Agreements--Waiver of Past Defaults."
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 year ended December 31,
____, 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 $___
million (compared to $____ million for the year ended December 31, ____),
and net income of $____ million (compared to $____ million for the year
ended December 31, ____) on net sales of $____ billion (compared to $____
billion for the year ended December 31, ____). At December 31, ____, Case's
consolidated equity was $____ billion.
Case Credit had consolidated net income of $___ million for the year
ended December 31, ___, compared with net income of $____ million for the
year ended December 31, ____. [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 ____ were $___ million and for the year ended
December 31, ____ were $___ million, compared to $___ million for the first
six months of ____ and $___ million for the year ended December 31, ____.
At June 30, ____, total gross receivables serviced by Case Credit were $___
billion, up __% from June 30, ____.
<PAGE>
Through Case Credit's ongoing process of evaluating and performing
systems and software upgrades and enhancements, Case Credit has actively
been addressing computer issues relating to the year 2000 since 1995.
During 1997, Case Credit performed a thorough analysis of the impact of
modifying computer software that is not yet year 2000 compliant. Case
Credit believes, based upon its review, that future external and internal
costs to be incurred for the modification of internal-use software to
address year 2000 issues will not have a material effect on Case Credit's
financial position, cash flows or results of operations. Case Credit has
also undertaken a program to ensure that its suppliers are addressing year
2000 issues and, subject to Case Credit's ongoing review of suppliers' year
2000 compliance, is not aware at this time of any such issues that would
have a material adverse effect on Case Credit's financial position, cash
flows or results of operations. As a result, subject to Case Credit's
ongoing compliance efforts, the costs and uncertainties relating to timely
resolution of year 2000 issues applicable to Case Credit's business and
operations are not reasonably expected by the Company to have a material
adverse effect on Case Credit's financial position, cash flows or results
of operations. The preceding three sentences are forward-looking statements
and the actual costs could differ materially from the costs currently
anticipated by Case Credit.
For additional information regarding the Seller, Case Credit or Case,
see "The Seller, Case Credit Corporation and Case Corporation" in the
Prospectus.
S-9
<PAGE>
THE TRUST
General
The trust is a business 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's principal offices are in Wilmington, Delaware, in care of
________________, as Trustee, at the address listed below under "--The
Trustee."
Capitalization of the Trust
The following table illustrates the capitalization of the trust as of
the Cutoff Date, as if the issuance and sale of the Notes and the
Certificates had taken place on such date:
Class A-1 _____% Asset Backed Notes................. $___________
Class A-2 _____% Asset Backed Notes................. ___________
Class A-3 _____% Asset Backed Notes................. ___________
Class B _____% Asset Backed Notes................... ___________
_____% Asset Backed Certificates....................
Total.......................................... $
===========
The Trustee
_________________________ is the Trustee under the Trust Agreement.
__________________________ is a Delaware banking corporation and its
principal offices are located at ______________________, Wilmington,
Delaware _____. 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 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,
including the criteria set forth in the Prospectus under "The Receivables
Pools" and the additional criteria that:
(i) each Receivable is either a Retail Installment Contract or
a Full Payout Lease;
(ii) each Receivable has an APR that is equal to or greater
than __%, and the Subsequent Cutoff Date APR with respect to the
Subsequent Receivables sold to the trust on any Subsequent Transfer
Date is equal to or greater than __%;
S-10
<PAGE>
(iii) each Receivable 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;
(iv) each Receivable 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 _% of the aggregate Contract Value of all the Receivables;
(v) after giving effect to each sale of Subsequent
Receivables, the weighted average original term of the Receivables in
the trust will not be greater than __ months; and
(vi) after giving effect to each sale of Subsequent
Receivables, not more than __% of the principal balances of the
Receivables in the trust will represent Contracts for the financing of
construction equipment and not more than [5%] of the principal
balances of the Receivables in the trust will represent Contracts for
the financing of all terrain vehicles, snowmobiles or marine vessels
collectively.
The Receivables as they are constituted on any Cutoff Date will not
deviate from the foregoing characteristics.
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.
The Initial Receivables will represent approximately __% of the sum of
initial Note Balance and the initial Certificate Balance. Except for the
criteria described in the preceding paragraphs, there will be no required
characteristics of the Subsequent Receivables. Therefore, following the
transfer of Subsequent Receivables to the trust, the aggregate
characteristics of the entire Receivables Pool, including the composition
of the Receivables, the distribution by APR, equipment type, payment
frequency, current Contract Value and geographic distribution described in
the following tables, may vary from those of the Initial Receivables.
Following the end of the Funding Period, the Seller will file a report on
Form 8-K containing information comparable to that contained in the tables
set forth below regarding the aggregate characteristics of the entire
Receivables Pool, after the addition of the Subsequent Receivables.
The composition, distribution by APR, receivable type, equipment type,
payment frequency, current Contract Value and geographic distribution, in
each case of the Initial Receivables as of the Initial Cutoff Date, are as
set forth in the following tables. For purposes of the data in the
following tables, "Contract Value" (a) for each Standard Precomputed
Receivable has been calculated as the sum of the present value of the
scheduled and unpaid payments on such Standard Precomputed Receivable as of
the Initial Cutoff Date discounted monthly at an annual rate equal to the
APR of such Standard Precomputed Receivable and (b) for each Precomputed
Simple Rebate Receivable has been deemed to equal the current balance of
that Receivable on the Servicer's records as of the Initial Cutoff Date.
The Receivables may include Contracts originated through special
interest rate financing programs. The underwriting standards for such
Receivables are the same as those for other Receivables.
Composition of the Receivables Pool
as of the Initial Cutoff Date
Weighted Weighted
Average Aggregate Weighted Average Average
APR of Contract Number of Average Original Contract
Receivables Value Receivables Remaining Term Term Value
- ----------- -------- ------------ --------------- ----------- --------
____ ____ _______ __.__ months __.__ months ____.__
S-11
<PAGE>
Distribution by Receivable Type of the Receivables Pool
as of the Initial Cutoff Date
Percent of Aggregate
Number of Aggregate Contract
Receivable Type Receivables Contract Value Value
- --------------- ----------- --------------- --------
Distribution by APR of the Receivables Pool as of the Initial Cutoff Date
Percent of
Aggregate
Number of Aggregate Contract
APR Range Receivables Contract Value Value
- --------- ----------- -------------- --------
_____% to ____%................... $ _.___%
_____% to ____%................... _.__
_____% to ____%................... _.__
_____% to ____%................... _.__
_____% to ____%................... _.__
_____% to ____%................... _.__
_____% to ____%................... _.__
_____% to ____% .................. _.__
____ % to _____%.................. _.__
_____% to _____%.................. _.__
_____% to _____%.................. _.__
_____% to _____%.................. ___ _____ _.__
Total........................ $ . %
=== ===== =====
Distribution by Equipment Type of the Receivables Pool
as of the Initial Cutoff Date
Percent of
Aggregate
Number of Aggregate Contract
Type Receivables Contract Value Value
- ---- ----------- -------------- --------
Agricultural
New.................... $ __.___%
Used................... __.___
Construction
New.................... __.___
Used................... __.___
____ _______ ______
Other
New.................... __.___
Used................... _____
Total............. $ . %
===== ======= ======
S-12
<PAGE>
Distribution by Payment Frequency of the Receivables Pool
as of the Initial Cutoff Date
Percent of
Aggregate
Number of Aggregate Contract
Frequency Receivables Contract Value Value
- --------- ----------- --------------- ----------
Annual(1).................. $ __.___%
Semiannual................. __.__
Quarterly.................. __.__
Monthly.................... _____ _____ __.__
Total................... $ . %
===== ===== ======
- ---------------------
(1) Approximately __.__%, __.__%, __.__%, __.__%, and __.__%, of the
annual Receivables have scheduled payments within the Collection
Periods relating to the payment dates in ________, ________,
________, _________ and __________, respectively.
Distribution by Current Contract Value of the Receivables Pool
as of the Initial Cutoff Date
Percent of
Aggregate
Value Number of Aggregate Contract
Range Receivables Contract Value Value
--------- ---------- -------------- --------
$ 0.00 to $ 4,999.99......................... $ _.__%
5,000.00 to 9,999.99......................... _.__
10,000.00 to 14,999.99......................... _.__
15,000.00 to 19,999.99......................... _.__
20,000.00 to 24,999.99......................... _.__
25,000.00 to 29,999.99......................... _.__
30,000.00 to 34,999.99......................... _.__
35,000.00 to 39,999.99......................... _.__
40,000.00 to 44,999.99......................... _.__
45,000.00 to 49,999.99......................... _.__
50,000.00 to 54,999.99......................... _.__
55,000.00 to 59,999.99......................... _.__
60,000.00 to 64,999.99......................... _.__
65,000.00 to 69,999.99......................... _.__
70,000.00 to 74,999.99......................... _.__
75,000.00 to 99,999.99......................... _.__
100,000.00 to 199,999.99......................... _.__
200,000.00 to 299,999.99......................... _.__
300,000.00 and over................................ ___ ____ _.__
Total.......................................... $ . %
=== ==== ====
S-13
<PAGE>
<TABLE>
<CAPTION>
Geographic Distribution of the Receivables Pool
as of the Initial Cutoff Date
Percent of Percent of
Aggregate Aggregate
Contract Contract
State(1) Value State(1) Value
- -------- ----------- -------- ----------
<S> <C> <C> <C>
Alabama..................................... _.__% Nebraska................................... _.__%
Alaska...................................... _.__ Nevada..................................... _.__
Arizona..................................... _.__ New Hampshire.............................. _.__
Arkansas.................................... _.__ New Jersey................................. _.__
California.................................. _.__ New Mexico................................. _.__
Colorado.................................... _.__ New York................................... _.__
Connecticut................................. _.__ North Carolina............................. _.__
Delaware.................................... _.__ North Dakota............................... _.__
Florida..................................... _.__ Ohio....................................... _.__
Georgia..................................... _.__ Oklahoma................................... _.__
Hawaii...................................... _.__ Oregon..................................... _.__
Idaho....................................... _.__ Pennsylvania............................... _.__
Illinois.................................... _.__ Rhode Island............................... _.__
Indiana..................................... _.__ South Carolina............................. _.__
Iowa........................................ _.__ South Dakota............................... _.__
Kansas...................................... _.__ Tennessee.................................. _.__
Kentucky.................................... _.__ Texas...................................... _.__
Louisiana................................... _.__ Utah....................................... _.__
Maine....................................... _.__ Vermont.................................... _.__
Maryland.................................... _.__ Virginia................................... _.__
Massachusetts............................... _.__ Washington................................. _.__
Michigan.................................... _.__ West Virginia.............................. _.__
Minnesota................................... _.__ Wisconsin.................................. _.__
Mississippi................................. _.__ Wyoming.................................... _.__
Missouri.................................... _.__ Total................................. . %
Montana..................................... _.__ =====
</TABLE>
(1) Based on billing addresses of 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, construction, and other equipment receivables that it
services, including receivables previously sold to trusts under prior
asset-backed securitizations. Since 1993, delinquencies, repossessions and
net losses on construction contracts have been generally stable, at levels
that reflect a strong economy. 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. There can be no assurance that the delinquency, repossession and
net loss experience on the Receivables of the trust will be comparable to
that set forth below.
S-14
<PAGE>
<TABLE>
<CAPTION>
Delinquency Experience(1)
At December 31,
--------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993
--------------------------------------------------------------------------------------------------
(Dollars in Millions)
Number Number Number Number Number
of of of of of
Contracts Amount Contracts Amount Contracts Amount Contracts Amount Contracts Amount
------- ------ --------- ------ --------- ------ --------- ------ --------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Portfolio........ 145,101 $3,623.3 135,211 $3,262.4 135,722 $3,093.1 128,891 $2,641.0 128,562 $2,434.0
Period of
Delinquency
31-60 days... 2,649 74.2 2,031 45.9 1,927 33.5 1,457 18.4 2,033 27.2
60 Days or
More...... 2,502 65.3 1,778 36.3 1,509 18.5 855 9.4 2,145 22.5
----- ----- ------ ------ ------- -------- ------ -------- ------ -------
Total
Delinquencies... 5,151 $ 139.5 3,809 $82.2 3,436 $52.0 2,312 $27.8 4,178 $49.7
Total Delinquencies
as a Percent of
the Portfolio... 3.6% 3.9% 2.8% 2.5% 2.5% 1.7% 1.8% 1.0% 3.2% 2.0%
</TABLE>
Delinquency Experience(1)
At December 31,
--------------------------------------------
1998 1997
--------------------------------------------
(Dollars in Millions)
Number Number
of of
Contracts Amount Contracts Amount
--------- ------ --------- ------
Portfolio........ 144,605 $3,664.2 135,384 $3,283.4
Period of
Delinquency
31-60 days... 2,147 62.3 2,041 50.3
60 Days or
More...... 2,010 62.0 2,380 61.1
----- ---- ----- ----
Total
Delinquencies... 4,157 $124.3 4,421 $111.4
Total Delinquencies
as a Percent of
the Portfolio... 2.9% 3.4% 3.3% 3.4%
- --------------------
(1) Except as indicated, all amounts and percentages are based on the
gross amount scheduled to be paid on each retail installment sale
contract, including unearned finance and other charges. The
information in the table includes an immaterial amount of retail
installment sale contracts on equipment other than agricultural and
construction equipment and includes the receivables that remained
with Tenneco Credit Corporation and previously sold contracts that
Case Credit continues to service. Case Credit treats a receivable as
delinquent when it is one day past due.
<PAGE>
<TABLE>
<CAPTION>
Credit Loss/Repossession Experience(1)
Year Ended December 31, Three Months Ended March 31,
-------------------------------------------------- ----------------------------
1997 1996 1995 1994 1993 1998 1997
-------- -------- -------- -------- --------- -------- ---------
(Dollars in Millions)
<S> <C> <C> <C> <C> <C> <C> <C>
Average Gross Portfolio Outstanding
During the Period................ $3,442.9 $3,155.5 $2,857.7 $2,511.2 $2,487.1 $3,643.8 $3,272.9
Repossessions as a Percent of Average
Gross Portfolio Outstanding (5)... 1.20% 1.07% 1.14% 1.33% 1.83% 1.68% .79%
Net Losses as a Percent of
Liquidations(2)(3)(4)............. 0.34% 0.15% 0.22% 0.36% 0.61% 0.50% 0.10%
Net Losses as a Percent of Average
Gross Portfolio Outstanding(2)(3)(5) 0.20% 0.08% 0.11% 0.19% 0.31% 0.30% 0.06%
</TABLE>
(1) Except as indicated, all amounts and percentages are based on the
gross amount scheduled to be paid on each retail installment sale
contract, including unearned finance and other charges. The
information in the table includes an immaterial amount of retail
installment sale contracts on equipment other than agricultural and
construction equipment and includes the receivables that remained with
Tenneco Credit Corporation and previously sold contracts that Case
Credit continues to service.
(2) A portion of the contracts provide for recourse to Dealers. See "The
Receivables Pools--The Retail Equipment Financing Business--Dealer
Agreements" in the Prospectus. Approximately 25%, 25%, 22%, 22%,
22%, 20% and 23% of the aggregate amounts scheduled to be paid on the
contracts acquired during the years ended December 31, 1997, 1996, 1995,
1994 and 1993 and the three months ended March 31, 1998
and March 31, 1997, respectively, 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
S-15
<PAGE>
prior periods, excluding any losses resulting from repossession
expenses and excluding any recoveries from Dealers' reserve accounts.
(4) Liquidations represent a reduction in the outstanding balances of the
contracts as a result of cash payments and charge- offs.
(5) Percentages have been annualized for the three months ended March 31,
1998 and 1997, and are not necessarily indicative of the experience
for the year.
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.
As used above, losses are defined as those receivables that are over
120 days past due that Case Credit has determined to charge-off. It is the
policy of Case Credit to treat each receivable that is over 120 days past
due as nonperforming and to review each such receivable on a case-by-case
basis to determine the amount and need for charge-off. For purposes of the
trust, however, losses are recognized when a receivable is liquidated by
the Servicer through the sale of or other disposition of the Financed
Equipment, if any, or when the Servicer, has, after using all reasonable
efforts to realize upon the Financed Equipment, if any, determined to
charge-off the receivable without realizing upon the Financed Equipment.
WEIGHTED AVERAGE LIFE OF THE [NOTES] [SECURITIES]
Information regarding certain maturity and prepayment considerations
with respect to the [Notes] [Securities] is set forth under "Weighted
Average Life of the Securities" in the Prospectus. As the rate of payment
of principal of the [Notes] [Securities] depends primarily on the rate of
payment (including prepayments) of the principal balance of the
Receivables, final payment of each Class of Notes could occur significantly
earlier than the applicable final scheduled maturity date. [Noteholders]
[Security Holders] will bear the risk of being able to reinvest principal
payments of the [Notes] [Securities] at yields at least equal to the yield
on their respective [Notes] [Securities].
Prepayments on retail installment sale contracts can be measured
relative to a prepayment standard or model. The model used in this
Prospectus Supplement is based on a constant prepayment rate ("CPR"). CPR
is determined by the percentage of principal outstanding at the beginning
of a period that prepays during that period, stated as an annualized rate.
The CPR prepayment model, like any prepayment model, does not purport to be
either an historical description of prepayment experience or a prediction
of the anticipated rate of prepayment.
The tables on pages S-__ and S-__, have been prepared on the basis of
certain assumptions, including that: (a) the Receivables prepay in full at
the specified monthly CPR, with no repurchases, (b) each scheduled payment
on the Receivables is made on the last day of each Collection Period, (c)
distributions are made on each payment date in respect of the Notes in
accordance with the description set forth under "Description of the
Transfer and Servicing Agreements--Distributions," (d) the balance in the
Spread Account on any day is equal to the Specified Spread Account Balance,
(e) the closing date occurs on [___________] and (f) the Servicer exercises
its option to purchase the Receivables on the payment date after the Pool
Balance declines to __% of the Initial Pool Balance. The table indicates
the projected weighted average life of each Class of Notes and sets forth
the percent of the initial principal balance of each class of Notes that is
projected to be outstanding after each of the payment dates shown at
various CPR percentages.
The table also assumes that the Receivables have been aggregated into
four hypothetical pools with all of the Receivables within each such pool
having the following characteristics:
S-16
<PAGE>
Aggregate Weighted
Pool Contract Value Average APR
---- -------------- -----------
1 ................................ $___________ _____%
2 ................................ ___________ _____
3 ................................ ___________ _____
4 ................................ _____
$
=====
Hypothetical pool 1 has the same Contract Value and cashflow
characteristics as the Initial Receivables. Hypothetical pools 2, 3 and 4
have Contract Values equal in the aggregate to the Initial Pre-Funded
Amount. The cash flow characteristics of hypothetical pools 2, 3 and 4 are
proportionately identical to hypothetical pool 1.
The information included in the following tables represents
forward-looking statements and involves risks and uncertainties that could
cause actual results to differ materially from those in the forward-looking
statements. The actual characteristics and performance of the Receivables
will differ from the assumptions used in constructing the tables on pages
S-__ and S-__. The assumptions used are hypothetical and have been provided
only to give a general sense of how the principal cash flows might behave
under varying prepayment scenarios. For example, it is highly unlikely that
the Receivables will prepay at a constant CPR until maturity or that all of
the Receivables will prepay at the same CPR. Similarly, the aggregate
Contract Value of Subsequent Receivables may be less than the Pre-Funded
Amount. Moreover, the diverse terms of Receivables within each of the three
hypothetical pools could produce slower or faster principal distributions
than indicated in the table at the various CPR specified. Any difference
between such assumptions and the actual characteristics and performance of
the Receivables, or actual prepayment experience, will affect the
percentages of initial balances outstanding over time and the weighted
average lives of the [Notes] [Securities].
S-17
<PAGE>
Percent of Initial Principal Amount of the Notes at Various CPR Percentages
A-1 Notes A-2 Notes
---------------------------- ------------------------------
Payment Date 0% 13% 15% 17% 19% 0% 13% 15% 17% 19%
- ------------ ---- --- --- --- --- --- --- --- --- ---
Closing Date... 100 100 100 100 100 100 100 100 100 100
February 1998...
March 1998......
April 1998......
May 1998........
June 1998.......
July 1998.......
August 1998.....
September 1998..
October 1998....
November 1998...
December 1998...
January 1999....
February 1999...
March 1999......
April 1999......
May 1999........
June 1999.......
July 1999.......
August 1999.....
September 1999..
October 1999....
November 1999...
December 1999...
January 2000....
February 2000...
March 2000......
April 2000......
May 2000........
June 2000.......
July 2000.......
August 2000.....
September 2000..
October 2000....
November 2000...
December 2000...
January 2001....
February 2001...
March 2001......
April 2001......
May 2001........
June 2001.......
July 2001.......
August 2001.....
September 2001..
October 2001....
[OTHER MONTHS??]
Weighted Average Life (years)(1)
(1) The weighted average life of an A-1 Note or A-2 Note is determined by:
(a) multiplying the amount of each principal payment on the applicable
Note by the number of years from the date of issuance of such Note to
the related payment date, (b) adding the results, and (c) dividing the
sum by the related initial principal amount of such Note.
S-18
<PAGE>
This table has been prepared based on the assumptions described on
page S-__ (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.
Percent of Initial Principal Amount of the Notes at Various CPR Percentages
A-3 Notes Class B Notes
-------------------------- ---------------------
Payment Date 0% 13% 15% 17% 19% 0% 13% 15% 17% 19%
- ------------ ---- --- --- --- --- --- --- --- --- ---
Closing Date.......... 100 100 100 100 100 100 100 100 100 100
February 1998.........
March 1998............
April 1998............
May 1998..............
June 1998.............
July 1998.............
August 1998...........
September 1998........
October 1998..........
November 1998.........
December 1998.........
January 1999..........
February 1999.........
March 1999............
April 1999............
May 1999..............
June 1999.............
July 1999.............
August 1999...........
September 1999........
October 1999..........
November 1999.........
December 1999.........
January 2000..........
February 2000.........
March 2000............
April 2000............
May 2000..............
June 2000.............
July 2000.............
August 2000...........
September 2000........
October 2000..........
November 2000.........
December 2000.........
January 2001..........
February 2001.........
March 2001............
April 2001............
May 2001..............
June 2001.............
July 2001.............
August 2001...........
September 2001........
October 2001..........
[OTHER MONTHS??]
Weighted Average Life (years)(1)
S-19
<PAGE>
(1) The weighted average life of an A-3 Note or Class B Note is determined
by: (a) multiplying the amount of each principal payment on the
applicable security by the number of years from the date of issuance
of the security to the related payment date, (b) adding the results,
and (c) dividing the sum by the related initial principal amount of
the security.
This table has been prepared based on the assumptions described on
page S-__ (including the assumptions regarding the characteristics and
performance of the Receivables, which will differ from the actual
characteristics and performance thereof) and should be read in conjunction
therewith.
S-20
<PAGE>
DESCRIPTION OF THE NOTES
General
The following summarizes the material terms of the Notes and the
Indenture pursuant to which they will be issued. The summary does not
purport to be complete and is qualified in its entirety by reference to the
provisions of the Notes and the Indenture. The following summary
supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the notes of any given
series and the related indenture set forth in the prospectus.
Payments of Interest
The Interest Rate with respect to each Class of Notes is:
Interest Rate
(per annum)
Class A-1 Notes _____%
Class A-2 Notes _____%
Class A-3 Notes _____%
Class B Notes _____%
The Notes will constitute Fixed Rate Securities, as such term is
defined under "Certain Information Regarding the Securities--Fixed Rate
Securities" in the Prospectus. Interest on the principal balance of the
Notes will accrue at the applicable Interest Rate and will be payable
monthly on each payment date, commencing _______________.
If the amount of interest on the Class A Notes payable on any payment
date exceeds the amounts available on such date, 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. See "Description of the Transfer and
Servicing Agreements--Distributions" and "--Spread Account."
Interest on the Class B Notes will not be paid on any payment date
until interest on the Class A Notes has been paid in full.
Payments of Principal
Principal payments will be made to the Noteholders on each payment
date in an amount generally equal to the Principal Distribution Amount as
follows: 100% to the holders of the various Classes of Class A Notes,
sequentially, so that no principal will be paid on any Class of Class A
Notes until each Class of Class A Notes with a lower numerical designation
has been paid in full (e.g., no principal will be paid on the Class A-2
Notes until the Class A-1 Notes have been paid in full); and once all of
the Class A Notes have been paid in full, 100% to the holders of the Class
B Notes until paid in full. The outstanding principal amount, if any, of
the A-1 Notes, A-2 Notes, A-3 Notes and [Class B Notes] will be payable in
full on the Final Scheduled A-1 Maturity Date, Final Scheduled A-2 Maturity
Date and Final Scheduled A-3 Maturity Date, respectively, in each case from
funds available therefor.
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 Notes then
outstanding in the same sequence [and proportions] that would apply if such
remaining funds were a part of the Principal Distribution Amount.
S-21
<PAGE>
Optional Redemption
Any Notes that remain outstanding on any payment date on which the
Servicer exercises its Clean-Up Call will be prepaid in whole at the
applicable redemption price on that payment date. The Clean-Up Call cannot
be exercised until the Pool Balance declines to 10% or less of the Initial
Pool Balance. The redemption price for any Class of Notes in connection
with any such optional redemption will equal the unpaid principal balance
of that Class of Notes, plus accrued and unpaid interest thereon.
Registration of Notes
The Notes initially will be cleared through DTC. Investors may hold
their Notes through DTC (in the United States) or Cedel or Euroclear (in
Europe) if they are participants of such systems, or indirectly through
organizations that are participants in such systems. See "Certain
Information Regarding the Securities--Book-Entry Registration" and
"--Definitive Securities" in the Prospectus.
The Indenture Trustee
[_________________________] is the Indenture Trustee under the
Indenture. [____________________] is an [________ banking corporation], and
its corporate trust offices are located at [_________________]. In the
ordinary course of its business, the Indenture Trustee and its affiliates
have engaged and may in the future engage in commercial banking or
financial advisory transactions with Case Credit and its affiliates.
[Pursuant to the Trust Indenture Act of 1939, as amended, the
Indenture Trustee may be deemed to have a conflict of interest and be
required to resign as trustee for either the Class A Notes or the Class B
Notes if a default occurs under the Indenture. The Indenture will provide
for a successor trustee to be appointed for one or both Classes of Notes in
these circumstances, so that there will be separate trustees for the Class
A Notes and the Class B Notes. In these circumstances, the Class A
Noteholders and Class B Noteholders will continue to vote as a single
group. So long as any amounts remain unpaid with respect to the Class A
Notes, only the trustee for the Class A Noteholders will have the right to
exercise remedies under the Indenture (but the Class B Noteholders will be
entitled to their share of any proceeds of enforcement, subject to the
subordination of the Class B Notes to the Class A Notes as described
herein). Upon repayment of the Class A Notes in full, all rights to
exercise remedies under the Indenture will transfer to the trustee for the
Class B Notes. Any resignation of the original Indenture Trustee as
described above with respect to any class of Notes will become effective
only upon the appointment of a successor trustee for such class of Notes
and such successor's acceptance of such appointment.]
DESCRIPTION OF THE CERTIFICATES
[The Certificates will be issued pursuant to the Trust Agreement. The
Seller will initially purchase the entire principal amount of the
Certificates. The Certificates will bear interest at the rate of ____% 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.] [Delete if Certificates are offered hereby.]
[General
The Certificates will be issued pursuant to the terms of the Trust
Agreement, a form of which has been filed as an exhibit to the Registration
Statement. The following summarizes the material terms of the Certificates
and the Trust Agreement. However, the summary does not purport to be
complete and is qualified in its entirety by reference to the provisions of
the Certificates and the Trust Agreement. The following summary
supplements, and to the extent inconsistent therewith replaces, the
description of the general terms and provisions of the certificates of any
given series and the related trust agreement set forth in the Prospectus,
to which description reference is hereby made.
S-22
<PAGE>
Distributions of Interest Income
The Certificates will bear interest at the rate of ____% per annum,
except that during the Funding Period no interest will accrue on the
Pre-Funded Percentage of the Certificate Balance.
On each payment date, Certificateholders will be entitled to
distributions in an amount equal to the amount of interest that would
accrue at the Pass-Through Rate on the Certificate Balance as of the last
day of the preceding Collection Period. The Certificates will constitute
Fixed Rate Securities, as such term is defined in the Prospectus under
"Certain Information Regarding the Securities--Fixed Rate Securities."
Interest distributable on a payment date will accrue from and including the
closing date or from the most recent payment date on which interest
distributions have been made to but excluding such payment date and will be
calculated on the basis of a 360-day year consisting of twelve 30-day
months. Interest distributions due for any payment date but not distributed
on such payment date will be due on the next payment date increased by an
amount equal to interest on such amount at a rate per annum equal to the
Pass-Through Rate (to the extent lawful). During the Funding Period, no
interest will accrue on the Pre-Funded Percentage of the Certificate
Balance. Interest on the Certificates will not be paid on any payment date
until interest and principal (as described herein) on the Notes have been
paid in full. See "Description of the Transfer and Servicing
Agreements--Distributions" and "--Spread Account."
Distributions of Principal Payments
Principal on the Certificates will be payable on each payment date
after principal on all of the Notes has been paid in full in an amount
generally equal to the Principal Distribution Amount for such payment date
(to the extent of funds available therefor as described herein) until paid
in full.
Mandatory Repurchase
The Certificates will be prepaid, pro rata, in whole or in part, in
the unlikely event that on the payment date on or immediately following the
last day of the Funding Period, any funds remain in the Pre-Funding Account
(after giving effect to the purchase of all Subsequent Receivables,
including any such purchase on such date and after giving effect to the
mandatory redemption of the Notes on such date).
Optional Purchase
On any payment date on which the Servicer exercises its option to
purchase the Receivables, which can occur after the Pool Balance declines
to 10% or less of the Initial Pool Balance, the Certificateholders will
receive an amount in respect of the Certificates equal to the Certificate
Balance together with accrued interest at the Pass-Through Rate and the
Certificates will be retired.] [Include only if Certificates are offered
hereby.]
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 entered into in connection with the trust (collectively,
the "Transfer and Servicing Agreements"), forms of which have been filed as
exhibits to the Registration Statement. Unless the context otherwise
requires, each reference in this prospectus supplement to the "Sale and
Servicing Agreement" and the "Purchase Agreement" refer to the Sale and
Servicing Agreement and Purchase Agreement (each as defined in the
accompanying prospectus), respectively, entered into in connection with the
trust. 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.
S-23
<PAGE>
Sale and Assignment of Initial Receivables and Subsequent Receivables
Certain information with respect to the conveyance prior to the
closing date of certain 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 $__________, such amount being equal to 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, a "Subsequent
Transfer Date") occurring during the Funding Period. The Seller will
designate as a cutoff date (each, a "Subsequent Cutoff Date") the date as
of which particular Subsequent Receivables are conveyed to the trust. 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 ____% of the aggregate
Contract Value of the Subsequent Receivables will be withdrawn from the
Pre-Funding Account and deposited in the Spread Account, and (iii) an
amount equal to the excess of the aggregate Contract Value of such
Subsequent Receivables over the amount described in clause (ii) will be
withdrawn from the Pre-Funding Account and paid to the Seller.
Any conveyance of Subsequent Receivables is subject to the
satisfaction, on or before the related Subsequent Transfer Date, of the
following conditions precedent, among others: (i) each such Subsequent
Receivable must satisfy the eligibility criteria specified in the Sale and
Servicing Agreement (see "The Receivables Pool"); (ii) the Seller shall not
have selected such Subsequent Receivables in a manner that it believes is
adverse to the interests of the Noteholders or the Certificateholders;
(iii) as of the related Subsequent Cutoff Date, the Receivables, including
any Subsequent Receivables conveyed by the Seller as of such Subsequent
Cutoff Date, must satisfy the criteria described under "The Receivables
Pool" herein and "The Receivables Pools" in the Prospectus; (iv) the
applicable Spread Account Initial Deposit for such Subsequent Transfer Date
shall have been made; (v) the Seller shall have executed and delivered to
the trust (with a copy to the Indenture Trustee) a written assignment
conveying such Subsequent Receivables to the trust (including a schedule
identifying such Subsequent Receivables); (vi) the Seller shall have
delivered certain opinions of counsel to the Trustee, the Indenture Trustee
and the Rating Agencies with respect to the transfer of all such Subsequent
Receivables conveyed during such Collection Period; (vii) the trust and the
Indenture Trustee shall have received written confirmation from a firm of
certified independent public accountants that, as of the end of the
preceding Collection Period, the Receivables in the trust at that time,
including the Subsequent Receivables conveyed by the Seller during each
Collection Period, satisfied the parameters described under "The
Receivables Pool" herein and under "The Receivables Pools" in the
Prospectus; and (viii) the Rating Agencies 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."
Accounts
In addition to the Accounts referred to in the Prospectus under
"Description of the Transfer and Servicing Agreements--Accounts," the
Servicer will establish and maintain the Pre-Funding Account, the Negative
Carry Account and the Spread Account, each in the name of the Indenture
Trustee and on behalf of the Noteholders and the Certificateholders.
S-24
<PAGE>
Servicing Compensation and Payment of Expenses
The Servicing Fee Rate with respect to the Servicing Fee to be paid to
the Servicer will be 1.00% per annum of the Pool Balance as of the first
day of each Collection Period. The Servicing Fee (together with any portion
of the Servicing Fee that remains unpaid from prior payment dates) will be
paid solely to the extent of the Total Distribution Amount and will be paid
after the distribution of any portion of the Total Distribution Amount to
the Noteholders and the Certificateholders. However, if the Servicer is not
Case Credit or an affiliate of Case Credit, the Servicing Fee will be paid
prior to the distribution of any portion of the Total Distribution Amount
to the Noteholders or the Certificateholders. See "Description of the
Transfer and Servicing Agreements--Servicing Compensation and Payment of
Expenses" in the Prospectus.
Distributions
Deposits to Collection Account. By the third business day prior to a
payment date (the "Determination Date"), the Servicer will provide the
Indenture Trustee with certain information with respect to the preceding
Collection Period, including the amount of aggregate collections on the
Receivables, the aggregate Purchase Amount of Receivables to be repurchased
by the Seller or to be purchased by the Servicer and the Negative Carry
Amount to be withdrawn from the Negative Carry Account. "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)
to but excluding the sixth day of the calendar month in which the payment
date occurs.
On or before the business day preceding each payment date, the
Servicer will cause the Total Distribution Amount to be deposited into the
Collection Account. The "Total Distribution Amount" for a payment date will
be the aggregate collections on the Receivables (including collections
received after the end of the preceding calendar month on any Subsequent
Receivables added to the trust after the end of that preceding calendar
month and on or prior to that payment date) with respect to the related
Collection Period (including any Liquidation Proceeds, the Purchase Amount
of any Receivables repurchased by the Seller or purchased by the Servicer
and Investment Earnings for such payment date) plus the Negative Carry
Amount for such Collection Period. "Liquidated Receivables" means defaulted
Receivables in respect of which the Financed Equipment or Leased 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 or Leased 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 or Leased Equipment) during any
Collection Period after the Collection Period in which such Receivable
became a Liquidated Receivable; or (iii) amounts released from the
Pre-Funding Account.
Deposits to the Distribution Accounts. On each payment date, the
Servicer will instruct the Indenture Trustee to make the deposits and
distributions set forth below, to the extent of the Total Distribution
Amount in the following order of priority:
(i) to the Administrator, the Administration Fee and all unpaid
Administration Fees from prior Collection Periods;
(ii) to the Note Distribution Account, the Class A Noteholders' Interest
Distributable Amount;
(iii) to the Note Distribution Account, the Class B Noteholders'
Interest Distributable Amount;
(iv) to the Note Distribution Account, the Class Principal
Distributable Amount for each class of Notes;
(v) to the Spread Account, to the extent necessary so that the
balance on deposit therein will not be less than the Specified Spread
Account Balance;
(vi) to the Certificate Distribution Account, the Certificateholders'
Interest Distributable Amount;
S-25
<PAGE>
(vii) to the Certificate Distribution Account, the Certificateholders'
Principal Distributable Amount;
(viii) to the Servicer, the Servicing Fee and all unpaid
Servicing Fees from prior Collection Periods; provided that if Case
Credit or an affiliate of Case Credit is not the Servicer, the amounts
described in this clause (vii) will be paid prior to any other
application of funds on deposit in the Collection Account; and
(ix) the remaining Total Distribution Amount, if any, to the Seller.
After an Event of Default and acceleration of the Notes (and, if any
Notes remain outstanding, on and after the Final Scheduled Maturity Date),
principal payments will be made first to the Class A Noteholders ratably
according to the amounts due and payable on the Class A Notes for principal
until paid in full and then to the Class B Noteholders until the
outstanding principal amount of the Class B Notes has been paid in full.
["Certificateholders' 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 Certificates from and including the preceding payment date (or, in
the case of the initial payment date, from and including the closing
date) to but excluding the current payment date (based on a 360-day
year of twelve 30-day months) plus (ii) the Certificateholders'
Interest Carryover Shortfall for the current payment date.
"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 on the
Certificates 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 a rate per annum equal
to the Pass-Through Rate from such preceding payment date to but
excluding the current payment date.
"Certificateholders' Distributable Amount" means, with respect to
any payment date, the sum of the Certificateholders' Interest
Distributable Amount plus the Certificateholders' Principal
Distributable Amount.
"Certificateholders' Principal Distributable Amount" means, on
any payment date, the remainder, if any, of the Principal
Distributable Amount for that payment date after subtracting the Class
Principal Distributable Amount for each Class of Notes; provided that
(a) in no event shall the Certificateholders' Principal Distributable
Amount exceed the outstanding principal amount of Certificates, and
(b) on the Final Scheduled Maturity Date, the Certificateholders'
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 and the
Certificate Distribution Account on such payment date and allocable to
principal) to reduce the outstanding principal amount of Certificates
to zero.]
"Class A Noteholders' Distributable Amount" means, with respect
to any payment date, the sum of the Class A Noteholders' Interest
Distributable Amount plus the Class Principal Distributable Amount for
each Class of Class A Notes.
"Class A Noteholders' Interest Carryover Shortfall" means, with
respect to any payment date (the "current payment date"), the excess
of the Class A Noteholders' Interest Distributable Amount for the
preceding payment date over the amount in respect of interest on the
Class A Notes that was actually deposited in the Note Distribution
Account on such preceding payment date, plus interest on such excess,
to the extent permitted by law, at a rate per annum equal to the
Interest Rate on the applicable Class of Class A Notes from such
preceding payment date to but excluding the current payment date.
"Class A Noteholders' Interest Distributable Amount" means, with
respect to any payment date (the "current payment date"), an amount
equal to the sum of (i) the aggregate amount of interest accrued on
the Class A Notes at their respective Interest Rates from and
including the preceding payment date (or, in the case of the initial
payment date, from and including the closing date) to but excluding
the current payment date (based on a 360-day year of twelve 30-day
months) plus (ii) the Class A Noteholders' Interest Carryover
Shortfall for the current payment date.
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<PAGE>
"Class B Noteholders' Distributable Amount" means, with respect
to any payment date, the sum of the Class B Noteholders' Interest
Distributable Amount plus the Class Principal Distributable Amount for
the Class B Notes.
"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 their
Interest 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 their Interest Rate from and including the
preceding payment date (or, if later, the issuance date for the Class
B Notes) to but excluding the current payment date plus (ii) the Class
B Noteholders' Interest Carryover Shortfall for the current payment date.
"Class Principal Distributable Amount" means, with respect to any
Class of Notes on a payment date, the remainder, if any, of the
Principal Distributable Amount for that payment date after subtracting
the Class Principal Distributable Amount for each Class of Notes
having priority of payment over such Class of Notes; provided that (a)
in no event shall the Class Principal Distributable Amount for any
Class exceed the outstanding principal amount of that Class, (b) on
the Final Scheduled A-1 Maturity Date, the Class Principal
Distributable Amount for the A-1 Notes 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 A-1 Notes to zero and (c) on the
applicable final scheduled maturity date, the Class Principal
Distributable Amount for each other Class of Notes 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 such Class of Notes to zero. For
purposes of the foregoing, the various Classes of Notes shall have the
following priority (beginning with the highest priority and descending
to the lowest): the A-1 Notes, the A-2 Notes, the A-3 Notes and the
Class B Notes.
"Contract Value" of the Receivables is generally equivalent to
their principal balance and is defined, as of any calculation date
(including the Initial Cutoff Date) as the present value of the
scheduled and unpaid payments on the Receivables discounted monthly at
an annual rate equal to (a) in the case of the Initial Receivables,
_____%, which is the weighted average APR of the Initial Receivables
as of the Initial Cutoff Date (the "Initial Cutoff Date APR") and (b)
in the case of the Subsequent Receivables, the weighted average APR of
the Subsequent Receivables sold as of the applicable Subsequent Cutoff
Date (the "Subsequent Cutoff Date APR").
"Noteholders' Distributable Amount" means, with respect to any
payment date, the sum of the Class A Noteholders' Distributable Amount
and the Class B Noteholders' Distributable Amount.
"Pool Balance" at any time equals 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.
"Principal Carryover Shortfall" means, with respect to each
payment date, the excess of the 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 Notes on
such preceding payment date.
"Principal Distributable Amount" means, with respect to each
payment date, the sum of (a) the Principal Distribution Amount plus
(b) the Principal Carryover Shortfall.
"Principal Distribution Amount" means, with respect to any
payment date, the amount (not less than zero) equal to (i) the sum of
the Contract Value of all Receivables and the Pre-Funded Amount as of
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<PAGE>
the beginning of the immediately preceding Collection Period less
(ii) the sum of the Contract Value of all Receivables and the
Pre-Funded Amount as of the beginning of the current Collection Period.
On each payment date, all amounts on deposit in the Note Distribution
Account will be distributed to the Noteholders.
Negative Carry Account
The Servicer will establish and maintain in the name of the Indenture
Trustee the Negative Carry Account as a Trust Account for the benefit of
the Noteholders. The Negative Carry Account will be created with an initial
deposit by the Seller of $_________ (the "Negative Carry Account Initial
Deposit"), which is equal to the Maximum Negative Carry Amount as of the
closing date. The "Maximum Negative Carry Amount" is equal to the product
of (i) the difference between (a) the weighted average of the interest rate
on each Class of the Notes minus (b) ___%, multiplied by (ii) the Note
Percentage of the amount on deposit in the Pre-Funding Account multiplied
by (iii) the fraction of a year represented by the number of days until the
expected end of the Funding Period (calculated on the basis of a 360-day
year of twelve 30-day months). At any time, the "Note Percentage" means the
percentage equivalent of a fraction the numerator of which is the Note
Balance and the denominator of which is the sum of the Note Balance and
Certificate Balance. On each payment date, the Servicer will instruct the
Indenture Trustee to withdraw from the Negative Carry Account and deposit
into the Collection Account an amount equal to the Negative Carry Amount
for such Collection Period. For each Collection Period, the "Negative Carry
Amount" will be calculated by the Servicer as the difference (if positive)
between (1) the product of (A) the sum of the Class A Noteholders' Interest
Distributable Amount and the Class B Noteholders' Interest Distributable
Amount multiplied by (B) the Pre-Funded Percentage, as of the immediately
prior payment date, or in the case of the first payment date, the closing
date, minus (2) the investment earnings on the Pre-Funded Amount. The
"Pre-Funded Percentage" for each Collection Period is the percentage
derived from the fraction the numerator of which is the Pre-Funded Amount
and the denominator of which is the sum of the Pool Balance and the
Pre-Funded Amount, after taking into account all transfers of Subsequent
Receivables during such Collection Period. The amount required to be on
deposit in the Negative Carry Account (the "Required Negative Carry Account
Balance") as of the beginning of each Collection Period will be equal to
the lesser of (x) the Negative Carry Account Initial Deposit minus all
previous withdrawals from the Negative Carry Account and (y) the Maximum
Negative Carry Amount as of such day. If the amount on deposit in the
Negative Carry Account on any payment date (after giving effect to the
withdrawal of the Negative Carry Amount for such payment date) is greater
than the Required Negative Carry Account Balance, the excess will be
released to the Seller. All amounts remaining on deposit in the Negative
Carry Account on the payment date on or immediately following the last day
of the Funding Period (after giving effect to all withdrawals therefrom on
such payment date) will be released to the Seller.
Spread Account
The rights of the Certificateholders to receive distributions with
respect to the Receivables will be subordinated to the rights of the
Noteholders in the event of defaults and delinquencies on the Receivables
as provided in the Sale and Servicing Agreement. The rights of the Class B
Noteholders to receive distributions with respect to the Receivables will
be subordinated to the rights of the Class A Noteholders to the extent
described herein. The protection afforded to 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 $________, which is equal to the Pool Balance as
of the Initial Cutoff Date multiplied by ____%. On each Subsequent Transfer
Date, cash or Eligible Investments having a value approximately equal to
____% of the aggregate Contract Value of the Subsequent Receivables
conveyed to the trust on such Subsequent Transfer Date will be withdrawn
from the Pre-Funding Account from amounts otherwise distributable to the
Seller in connection with the sale of Subsequent Receivables and deposited
in the Spread Account. The amount initially deposited in the Spread Account
by the Seller together with the aggregate amount transferred from the
Pre-Funding Account to the Spread Account on each Subsequent Transfer Date
is referred to as the "Spread Account Initial Deposit." The Spread Account
Initial Deposit will be augmented on each payment date by the deposit in
the Spread Account of amounts remaining after the deposit in the Note
Distribution Account and the Certificate Distribution Account of amounts to
be distributed to Noteholders and Certificateholders and the payment of the
Administration Fee and the Servicing Fee. Subject to certain limitations,
amounts on deposit in the Spread Account will be released to the Seller to
the extent that the amount on deposit in the Spread Account exceeds the
Specified Spread Account Balance. The Seller may at any time, without
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<PAGE>
consent of the Noteholders, sell, transfer, convey or assign in any manner
its rights to and interests in distributions from the Spread Account,
including interest earnings thereon, provided that certain conditions are
satisfied, including that the Rating Agencies confirm in writing that such
action will not result in a reduction or withdrawal of the rating of the Notes.
"Specified Spread Account Balance" means, with respect to any
payment date, the lesser of (a)____% of the Initial Pool Balance and
(b) the Note Balance. The Specified Spread Account Balance may be
reduced or the definition thereof otherwise modified without the
consent of the Noteholders if the Rating Agencies confirm in writing
that such reduction or modification will not result in a reduction or
withdrawal of the rating of the Notes.
"Initial Pool Balance" means the sum of (i) the Pool Balance as
of the Initial Cutoff Date plus (ii) the aggregate Contract Value of
all Subsequent Receivables sold to the trust as of their respective
Subsequent Cutoff Dates.
If the amount on deposit in the Spread Account on any payment date
(after giving effect to all deposits or withdrawals therefrom on such
payment date) is greater than the Specified Spread Account Balance for such
payment date, the Servicer will instruct the Indenture Trustee to
distribute the amount of the excess to the Seller; provided, however, that
if, after giving effect to all payments made on the Notes on such payment
date, the sum of the Pool Balance plus the Pre-Funded Amount as of the
first day of the Collection Period in which such payment date occurs is
less than the sum of the Note Balance and the Certificate Balance, such
excess amount will not be distributed to the Seller and will be retained in
the Spread Account. Upon the final scheduled payment date or after payment
of all interest and principal of the Notes, the Servicer will instruct the
Indenture Trustee to distribute the Spread Account balance to the Seller.
Upon any distribution to the Seller of amounts from the Spread Account made
in accordance with the Sale and Servicing Agreement, the Noteholders will
not have any rights in, or claims to, such amounts.
Subject to the limitations described in the preceding paragraph,
amounts held from time to time in the Spread Account will continue to be
held for the benefit of Noteholders. Funds will be withdrawn from the
Spread Account to the extent that the Total Distribution Amount (after the
payment of the Administration Fee (and the Servicing Fee if Case Credit or
an affiliate of Case Credit is not the Servicer)) with respect to any
Collection Period is less than the Noteholders' Distributable Amount and
will be deposited in the Note Distribution Account and used to cover
shortfalls in the Noteholders' Distributable Amount in the same order of
priority applicable to distributions from the Collection Account. Funds on
deposit in the Spread Account will not be used to cover shortfalls in any
distributions to the Certificateholders.
The Spread Account and the subordination of the Certificates and the
Class B Notes to the Class A Notes are intended to enhance the likelihood
of receipt by Class A Noteholders of the full amount of principal and
interest due them and to decrease the likelihood that the Class A
Noteholders will experience losses. In addition, the Spread Account and the
subordination of the Certificates to the Class B Notes are intended to
enhance the likelihood of receipt by Class B Noteholders of the full amount
of principal and interest due them and to decrease the likelihood that the
Class B Noteholders will experience losses. However, in certain
circumstances, the Spread Account could be depleted. If the amount required
to be withdrawn from the Spread Account to cover shortfalls in collections
on the Receivables exceeds the amount of cash in the Spread Account,
Noteholders could incur losses or a temporary shortfall in the amounts
distributed to the Noteholders could result, which could, in turn, increase
the average life of the Notes.
LEGAL INVESTMENT
The A-1 Notes will be eligible for purchase by money market funds
under paragraph (a)(9) of Rule 2a-7 under the Investment Company Act of
1940, as amended.
ERISA CONSIDERATIONS
The Notes
The Seller has been advised that, although there is little guidance on
the subject, the Notes will not be treated as "equity interests" in the
trust under the Plan Asset Regulation. As a result, the Notes may be
S-29
<PAGE>
purchased by an employee benefit plan or an individual retirement account
(a "Plan") subject to the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), or Section 4975 of the Internal Revenue Code of 1986,
as amended.
However, without regard to whether the Notes are treated as equity
interests for purposes of the Plan Asset Regulation, the acquisition or
holding of Notes by or on behalf of a Plan could be considered to give rise
to a "prohibited transaction" if the trust, the Servicer or the Trustee is
or becomes a "party in interest" or a "disqualified person" with respect to
such Plan. Certain exemptions from the prohibited transaction rules could
be applicable to the purchase and holding of Notes by a Plan depending on
the type and circumstances of the plan fiduciary making the decision to
acquire such Notes. Included among these exemptions are: Prohibited
Transaction Class Exemption ("PTCE") 75-1, regarding transactions between
registered broker-dealers and plans; PTCE 90-1, regarding investments by
insurance company pooled separate accounts; PTCE 91-38, regarding
investments by bank collective investment funds; PTCE 84-14, regarding
transactions effected by "qualified professional asset managers"; PTCE
95-60, regarding transactions by insurance company general accounts; and
PTCE 96-23, regarding certain transactions determined by in-house asset
managers. By its acquisition of a Note, each purchaser shall be deemed to
represent and warrant that its purchase and holding of the Note will not
give rise to a nonexempt prohibited transaction under ERISA or the Internal
Revenue Code of 1986, as amended.
For additional information regarding treatment of the Notes under
ERISA, see "ERISA Considerations" in the Prospectus.
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
Principal
[Class A] Note Underwriters Amount
=========
A-2 Notes
Principal
[Class A] Note Underwriters Amount
========
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<PAGE>
A-3 Notes
Principal
[Class A] Note Underwriters Amount
----------
=========
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____% per A-1 Note, _____% per A-2 Note
and _____% per A-3 Note. The [Class A] Note Underwriters may allow and such
dealers may reallow a concession not in excess of ____% per A-1 Note,
_____% per A-2 Note and _____% per A-3 Note to certain other dealers. After
the initial public offering of the [Class A] Notes, the public offering
prices and such concessions may be changed.
In the ordinary course of their respective businesses, the [Class A]
Note Underwriters and their respective affiliates have engaged and may in
the future engage in investment banking or commercial banking transactions
with Case Credit and its affiliates.
_________________, on behalf of the [Class A] Note Underwriters, may
engage in stabilizing transactions and syndicate covering transactions in
accordance with Rule 104 under the Exchange Act. Stabilizing transactions
permit bids to purchase the underlying security so long as the stabilizing
bids do not exceed a specified maximum. Syndicate covering transactions
involve purchases of the [Class A] Notes in the open market after the
distribution has been completed in order to cover syndicate short
positions. Such stabilizing transactions and syndicate covering
transactions may cause the price of the [Class A] Notes to be higher than
it would otherwise be in the absence of such transactions. These
transactions, if commenced, may be discontinued at any time.
[Class B Notes] [Certificates]
Subject to the terms and conditions set forth in an underwriting
agreement (the "[Class B Note] [Certificate] Underwriting Agreement"), the
Seller has agreed to cause the trust to sell to each of the Underwriters
named below (the "[Class B] [Certificate] Note Underwriters"; and together
with the [Class A] Note Underwriters, the "Underwriters"), and each of the
[Class B] [Certificate] Note Underwriters has severally agreed to purchase,
the principal amount of [Class B Notes] [Certificates] set forth opposite
its name below:
Principal
[Class B Note] [Certificate] Underwriters Amount
$
==========
The Seller has been advised by the [Class B Note] [Certificate]
Underwriters that they propose initially to offer the [Class B Notes]
[Certificates] to the public at the prices set forth herein, and to certain
dealers at such prices less the initial concession not in excess of____%
per [Class B Note] [Certificate]. The [Class B Note] [Certificate]
Underwriters may allow and such dealers may reallow a concession not in
excess of ____% per [Class B Note] [Certificate] to certain other dealers.
After the initial public offering of the [Class B Notes] [Certificate], the
public offering prices and such concessions may be changed.
S-31
<PAGE>
In the ordinary course of their respective businesses, the [Class B
Note] [Certificate] 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.
___________________, on behalf of the [Class B Note] [Certificates]
Underwriters, may engage in stabilizing transactions and syndicate covering
transactions in accordance with Rule 104 under the Exchange Act.
Stabilizing transactions permit bids to purchase the underlying security so
long as the stabilizing bids do not exceed a specified maximum. Syndicate
covering transactions involve purchases of the [Class B Notes]
[Certificates] in the open market after the distribution has been completed
in order to cover syndicate short positions. Such stabilizing transactions
and syndicate covering transactions may cause the price of the [Class B
Notes] [Certificates] to be higher than it would otherwise be in the
absence of such transactions. These transactions, if commenced, may be
discontinued at any time.
We will receive proceeds of approximately $______ from the sale of the
Class A Notes (representing ___% of the principal amount of each Class A
Certificate) after paying the underwriting discount of $______
(representing ___% of the principal amount of each Class A Note). [We will
receive proceeds of approximately $______ from the sale of the Class B
Notes (representing ___% of the principal amount of each Class B
Certificate) after paying the underwriting discount of $______
(representing ___% of the principal amount of each Class B Note).]
Additional offering expenses are estimated to be $______.
LEGAL OPINIONS
Certain legal matters relating to the Notes will be passed upon for
the trust, the Seller and the Servicer by Mayer, Brown & Platt. Certain
legal matters relating to the Notes will be passed upon for the
Underwriters by Cravath, Swaine & Moore. Certain Federal income tax and
other matters will be passed upon for the trust by Mayer, Brown & Platt.
Certain Wisconsin state tax matters will be passed upon for the trust by
Foley & Lardner. Cravath, Swaine & Moore and Foley & Lardner have also
provided legal services to Case, Case Credit and the Seller.
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<PAGE>
INDEX OF TERMS
A-1 Notes..................................................................S-1
A-2 Notes..................................................................S-1
A-3 Notes..................................................................S-1
APR........................................................................S-3
Certificateholders' Distributable Amount..................................S-26
Certificateholders' Interest Carryover Shortfall..........................S-26
Certificateholders' Interest Distributable Amount.........................S-26
Certificateholders' Principal Distributable Amount........................S-26
Certificates...............................................................S-1
Class A Noteholders' Distributable Amount.................................S-26
Class A Noteholders' Interest Distributable Amount........................S-26
Class A Notes..............................................................S-1
Class B Noteholders' Distributable Amount.................................S-26
Class B Noteholders' Interest Carryover Shortfall.........................S-26
Class B Noteholders' Interest Distributable Amount........................S-26
Class B Notes..............................................................S-1
Class Principal Distributable Amount......................................S-27
Collection Account.........................................................S-5
Collection Period.........................................................S-25
Contract Value......................................................S-11, S-27
CPR.......................................................................S-16
current Payment Date......................................................S-26
Cutoff Date...............................................................S-10
Determination Date........................................................S-25
ERISA.....................................................................S-29
Final Scheduled A-1 Maturity Date..........................................S-2
Final Scheduled A-2 Maturity Date..........................................S-2
Final Scheduled A-3 Maturity Date..........................................S-2
Final Scheduled Maturity Date..............................................S-2
Funding Period.............................................................S-3
Initial Cutoff Date........................................................S-3
Initial Cutoff Date APR...................................................S-27
Initial Pool Balance.................................................S-2, S-28
Initial Pre-Funded Amount..................................................S-3
Initial Receivables...................................................S-2, S-3
Liquidated Receivables....................................................S-25
Liquidation Proceeds......................................................S-25
Maximum Negative Carry Amount.............................................S-27
Negative Carry Account.....................................................S-3
Negative Carry Account Initial Deposit....................................S-27
Negative Carry Amount................................................S-4, S-28
Note Balance...............................................................S-4
Note Percentage...........................................................S-28
Noteholders' Distributable Amount.........................................S-27
Notes......................................................................S-1
Plan......................................................................S-29
Pool Balance.........................................................S-2, S-27
Pre-Funded Amount..........................................................S-3
Pre-Funded Percentage................................................S-4, S-28
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<PAGE>
Principal Carryover Shortfall.............................................S-27
Principal Distributable Amount............................................S-27
Principal Distribution Amount.............................................S-27
PTCE......................................................................S-29
Purchase Agreement........................................................S-23
Rating Agencies............................................................S-6
Receivables................................................................S-3
Receivables Pool..........................................................S-10
Record Date................................................................S-1
Required Negative Carry Account Balance...................................S-28
Sale and Servicing Agreement..............................................S-23
Specified Spread Account Balance.....................................S-4, S-28
Spread Account.............................................................S-4
Spread Account Initial Deposit............................................S-28
Subsequent Cutoff Date....................................................S-24
Subsequent Cutoff Date APR................................................S-27
Subsequent Receivables.....................................................S-3
Subsequent Transfer Date..................................................S-24
Total Distribution Amount.................................................S-25
Transfer and Servicing Agreements.........................................S-23
Underwriters..............................................................S-31
Wisconsin Tax Counsel......................................................S-5
[Class A] Note Underwriters...............................................S-30
[Class A] Note Underwriting Agreement.....................................S-30
[Class B Note] [Certificate] Underwriting Agreement.......................S-31
[Class B] [Certificate] Note Underwriters.................................S-31
S-34
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. WE MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS
EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE
SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
Consider carefully the risk factors beginning on page 4 in this prospectus.
The Asset Backed Notes of a given series represent obligations of the
related trust only. The Asset Backed Certificates of such series represent
beneficial interests in the related trust only. Neither the Asset Backed
Notes nor the Asset Backed Certificates 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.
This prospectus may be used to offer and sell any series of securities only
if accompanied by the prospectus supplement for that series.
PROSPECTUS
Case Equipment Receivables Trusts
Asset Backed Notes
Asset Backed Certificates
CASE RECEIVABLES II INC.
Seller
CASE CREDIT CORPORATION
Servicer
The Trusts--
o A new trust will be formed to issue each series of Securities. The
assets of each trust will be limited to those described below.
o The primary assets of each trust will be a pool of receivables
("Receivables" or "Contracts") of one or more of the following types
(as specified in the related prospectus supplement):
o retail installment sale contracts or loans (the "Retail Installment
Contracts") secured by new or used agricultural and construction or
other equipment;
o leases ("Leases") of similar equipment;
o term loans ("Dealer Loans") to equipment dealers secured by rental
equipment, rolling stock or computer systems; and
o unsecured term loans ("Unsecured Dealer Loans") to equipment dealers.
o Each trust may also own monies on deposit in a trust account, which
will be used to purchase additional Receivables from time to time
during the period specified in the related prospectus supplement.
o In addition, each trust will hold security or ownership interests in
the equipment financed or leased under the trust's Receivables (except
for equipment financed under the Unsecured Dealer Loans), any proceeds
from claims on certain related insurance policies, amounts on deposit
in the trust accounts identified in the related prospectus supplement
and any credit enhancements specified in the related prospectus
supplement.
The Securities--
o will represent indebtedness of the related trust (in the case of Asset
Backed Notes) or beneficial interests in the related trust (in the case
of Asset Backed Certificates);
o will be paid only from the assets of the related trust;
o if offered by this prospectus, will be rated in one of the four highest
long-term rating categories or the highest short-term rating category
by at least one nationally recognized rating agency;
o may benefit from one or more forms of credit enhancement; and
o will be issued as part of a designated series, which will include one
or more classes of Asset Backed Notes and one or more classes of Asset
Backed Certificates (collectively called "Securities").
Neither the SEC nor any state securities commission has approved these
Securities or determined that this prospectus is accurate or complete. Any
representation to the contrary is a criminal offense.
_______ ___, 1998
1
<PAGE>
IMPORTANT NOTICE ABOUT INFORMATION PRESENTED IN THIS
PROSPECTUS AND THE ACCOMPANYING PROSPECTUS SUPPLEMENT
We tell you about the Securities in two separate documents that
progressively provide more detail: (a) this prospectus, which provides
general information, some of which may not apply to a particular series of
Securities, including your series; and (b) the accompanying prospectus
supplement, which will describe the specific terms of your series of
Securities, including:
o the timing of interest and principal payments;
o the priority of interest and principal payments;
o financial and other information about the Receivables;
o information about credit enhancement for each class;
o the ratings of each class; and
o the method for selling the Securities.
If the terms of a particular series of Securities vary between this
prospectus and the prospectus supplement, you should rely on the
information in the prospectus supplement.
You should rely only on the information provided in this prospectus and
the accompanying prospectus supplement, including the information
incorporated by reference. We have not authorized anyone to provide you
with different information. We are not offering the Securities in any state
where the offer is not permitted.
We include cross-references in this prospectus and in the accompanying
prospectus supplement to captions in these materials where you can find
further related discussions. The following Table of Contents and the Table
of Contents included in the accompanying prospectus supplement provide the
pages on which these captions are located.
You can find a listing of the pages where capitalized terms used in
this prospectus are defined under the caption "Index of Terms" beginning on
page 45 in this prospectus.
----------------
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TABLE OF CONTENTS
RISK FACTORS.................................................................8
Maturity and Prepayment Considerations.......................................8
Possible Effects of a Case Credit
or Seller Bankruptcy.....................................................8
Possible Payment Delays or Losses Resulting From
a Dealer Bankruptcy......................................................9
Possible Third Party Liabilities of Trusts...................................9
Possible Payment Delays or Losses Resulting From
Receivable Defaults.....................................................9
THE TRUSTS .................................................................10
The Trustee.............................................................11
THE RECEIVABLES POOLS ......................................................11
General.................................................................11
The Retail Equipment Financing Business.................................13
Delinquencies, Repossessions and Net Losses ............................14
WEIGHTED AVERAGE LIFE OF THE SECURITIES ....................................14
POOL FACTORS AND TRADING INFORMATION .......................................15
USE OF PROCEEDS ............................................................15
THE SELLER, CASE CREDIT CORPORATION AND CASE CORPORATION ...................15
Case Receivables II Inc. ...............................................15
Case Credit Corporation.................................................16
Case Corporation........................................................16
DESCRIPTION OF THE NOTES....................................................17
General.................................................................17
Principal and Interest on the Notes.....................................17
The Indenture...........................................................18
The Indenture Trustee...................................................20
DESCRIPTION OF THE CERTIFICATES.............................................20
General.................................................................20
Distributions of Principal and Interest.................................20
CERTAIN INFORMATION REGARDING THE SECURITIES ...............................21
Denominations...........................................................21
Fixed Rate Securities ..................................................21
Floating Rate Securities................................................21
Indexed Securities......................................................22
Book-Entry Registration.................................................22
Definitive Securities...................................................25
List of Securityholders.................................................25
Reports to Securityholders..............................................25
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS .......................26
Sale and Assignment of Receivables......................................26
Commercial Paper Program................................................27
Accounts ...............................................................28
Servicing Procedures ...................................................30
Collections.............................................................30
Servicing Compensation and Payment of Expenses..........................30
Credit and Cash Flow Enhancement........................................31
Net Deposits ...........................................................31
Statements to Trustees and Trust........................................31
Evidence as to Compliance...............................................32
Certain Matters Regarding the Servicer..................................32
Servicer Default........................................................32
Rights Upon Servicer Default ...........................................33
Waiver of Past Defaults.................................................33
Amendment ..............................................................33
Payment of Notes........................................................34
Termination.............................................................34
Administration Agreement................................................34
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES....................................34
Bankruptcy Considerations Relating to Case Credit.......................34
Bankruptcy Considerations Relating to Dealers...........................35
Perfection and Priority With Respect to Receivables.....................35
Security Interests in Financed Equipment................................35
Security Interests in Leased Equipment. ................................36
Bankruptcy Considerations Relating to a Lessee..........................37
Repossession ...........................................................37
Notice of Sale; Redemption Rights ......................................38
Certain UCC Considerations .............................................38
Vicarious Tort Liability................................................38
Deficiency Judgments and Excess Proceeds; Other Limitations ............38
Consumer Protection Laws................................................39
U.S. FEDERAL INCOME TAX CONSEQUENCES .......................................39
Tax Characterization of the Trust.......................................39
Tax Consequences to Holders of the Notes................................40
Tax Consequences to Holders of the Certificates.........................41
WISCONSIN STATE TAX CONSEQUENCES............................................45
ERISA CONSIDERATIONS........................................................45
PLAN OF DISTRIBUTION........................................................46
LEGAL OPINIONS..............................................................46
WHERE YOU CAN FIND MORE INFORMATION.........................................46
INDEX OF TERMS .............................................................48
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RISK FACTORS
You should consider the following risk factors in deciding whether to
purchase the Securities.
Maturity and Prepayment
Considerations
The receivables included in each trust may be
prepaid, in full or in part, voluntarily or
as a result of defaults, casualties to the
related equipment, death of an obligor or
other reasons. Also, the servicer of the
receivables or Case Receivables II Inc.
(the "Seller") may be required to
repurchase one or more receivables from a
trust in certain circumstances, and the
servicer will have the right to purchase
all remaining receivables from a trust
pursuant to a clean-up call. See
"Description of the Transfer and Servicing
Agreements--Sale and Assignment of
Receivables." Each such prepayment,
repurchase or purchase will shorten the
average life of the related Securities.
Prepayment rates may be influenced by a
variety of factors and cannot be predicted
with any assurance (although prepayments of
agricultural equipment retail installment
sale contracts, which will make up a
substantial portion of the receivables in
many trusts, have historically tended to
increase during periods in which farmers
have strong cash flows).
On the other hand, the payment schedule under a
receivable may be extended or revised under certain
circumstances, which may lengthen the average
remaining term of the receivables and the average
life of the related Securities. See "The Receivables
Pools--The Retail Equipment Financing Business --
Extension/ Revision Procedures."
You will bear any reinvestment risks resulting from a
faster or slower rate of prepayment, repurchase or
extension of receivables held by your trust. If you
purchase a Security at a discount, you should
consider the risk that a slower than anticipated rate
of principal payments on your Security could result
in an actual yield that is less than the anticipated
yield. Conversely, if you purchase a Security at a
premium, you should consider the risk that a faster
than anticipated rate of principal payments on your
Security could result in an actual yield that is less
than the anticipated yield.
Possible Effects of a
Case Credit or
Seller Bankruptcy
Case Credit Corporation ("Case Credit")
will sell receivables to the Seller, and
the Seller will in turn sell receivables
to each trust. However, a court could
conclude that Case Credit or the Seller
effectively still owns the receivables
supporting any series of Securities,
either because the sales referred to
above were not "true sales" or because
the court concludes that the Seller or
the trust should be treated as the same
person as Case Credit or the Seller for
bankruptcy purposes. If this were to
occur, then you could experience delays
or reductions in payments as a result of:
o the "automatic stay" which prevents secured creditors
from exercising remedies against a debtor in
bankruptcy without permission from the court and
provisions of the U.S. Bankruptcy Code that permit
substitution of collateral in certain circumstances;
4
<PAGE>
o certain tax or government liens on Case Credit's or
the Seller's property (that arose prior to the
transfer of a receivable to the trust) having a right
to be paid from collections before the collections
are used to make payments on the Securities;
o rejection by Case Credit or its bankruptcy trustee of
any Lease that was deemed to be a "true lease," which
would result in the termination of scheduled payments
under that Lease; and
o the fact that the trust might not have a perfected
interest in (a) certain equipment subject to
certificate of title statutes and (b) any cash
collections on the receivables held by Case Credit at
the time that a bankruptcy proceeding begins.
Possible Payment Delays
or Losses Resulting From
a Dealer Bankruptcy
A substantial portion of the receivables
was originated by dealers or brokers
("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, Case Dealers
have 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 assert that the sales of
receivables to Case Credit are loans to the Dealer
secured by the receivables. Such an assertion could
result in payment delays or (if successful) losses on
the affected receivables. In such circumstances, a
Dealer or its bankruptcy trustee might also be able to
reject any Leases originated by the Dealer that were
deemed to be "true leases," resulting in the
termination of scheduled payments under those Leases.
Possible Third Party
Liabilities of Trusts
The sales of receivables from Case Credit to the
Seller and from the Seller to each trust are intended,
among other things, to reduce the possibility that
cash flows from the Receivables will be subject to
claims other than the rights of investors in the
related Securities and of the parties to the
applicable trust documents (primarily Case Credit, the
Seller and the related trustee and indenture trustee).
However, to the extent that Case Credit or a Dealer
violates certain Federal or state consumer protection
laws applicable to the receivables, a trust could be
liable to the obligor, as an assignee of any of the
affected receivables. Under the related Transfer and
Servicing Agreements, the Seller must repurchase any
such receivable from the trust. See "Certain Legal
Aspects of the Receivables--Consumer Protection Laws."
However, if the Seller fails for any reason to perform
its repurchase obligation, you could experience delays
or reductions in payments on your Securities as a
result of any such liabilities imposed upon your trust.
Similarly, as to any trust that holds any equipment
subject to Leases, state laws differ as to whether
anyone suffering any injury to person or property
involving leased agricultural, construction or other
equipment may bring an action upon which relief may be
granted against the owner of the equipment by virtue
of that ownership. To the extent applicable law
permits such an action and such an action is
successful, the related trust and its assets may be
subject to liability to such an injured party. You
could experience delays or reductions in payments on
your Securities if liability of this type were imposed
on your trust, and the coverage provided by any
available insurance is insufficient to cover such a
loss. See "Certain Legal Aspects of the
Receivables--Vicarious Tort Liability."
<PAGE>
Possible Payment Delays or
Losses Resulting From
Receivable Defaults
You will rely primarily upon collections on the
receivables in your trust for payments on your
Securities. Your Securities may have the benefit of a
Spread Account, subordination of one or more other
classes of Securities and/or one or more other forms
of credit enhancement specified in the related
prospectus supplement. This credit enhancement will
cover losses and delinquencies on the receivables up
to some level. However, if the level of receivables
losses and delinquencies exceeds the available credit
enhancement, you may experience delays in payments due
to you or may not ultimately receive all interest and
principal due to you.
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<PAGE>
THE TRUSTS
Each series of Securities will be issued by a separate trust (a
"Trust"), which will be formed pursuant to an agreement (each, a "Trust
Agreement") between the Seller and a trustee identified in the related
prospectus supplement. Each series of Securities will include one or more
classes of asset backed notes (the "Notes") and one or more classes of
asset backed certificates (the "Certificates"). However, the Certificates
included in each series may or may not be offered under this prospectus and
the related prospectus supplement. Each Note and each Certificate will
represent the right to receive payments of principal and interest as
described in the related prospectus supplement. In this prospectus, holders
of Notes are called "Noteholders," holders of Certificates are called
"Certificateholders," and Noteholders and Certificateholders are
collectively called "Securityholders".
Payments on the Certificates issued by a Trust will be subordinated in
priority to payments on the related Notes. The details of the subordination
will be specified in the related prospectus supplement. In addition, if a
series includes two or more classes of Notes or two or more classes of
Certificates, each class may differ as to timing and priority of
distributions, seniority, allocations of losses, interest rates or amount
of distributions in respect of principal or interest.
The principal offices of each Trust and the related Trustee will be
specified in the applicable prospectus supplement.
Trust Property
The assets of each Trust will be limited to those described below.
The primary assets of each Trust will be a pool of Receivables and the
obligations of the retail purchasers, borrowers, lessees and Dealers (the
"Obligors") 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"). If Leases are included in a Trust,
the Trust property will also include any termination value payment due at
the end of the lease term by any Obligor (including any Dealer). No Trust
will include in its property any rights to receive proceeds from the sale
or other disposition of leased equipment at the end of the lease term other
than termination value payments. However, any proceeds received through the
exercise of remedies in a default situation will be included to the same
extent as in the case with Retail Installment Contracts.
Each Trust will purchase Receivables ("Initial Receivables") from
the Seller on the closing date specified with respect to such Trust in the
related prospectus supplement (the "Closing Date"). In addition, to the
extent provided in the related prospectus supplement, the Trust will
purchase additional Receivables (the "Subsequent Receivables") from the
Seller as frequently as daily during a pre-funding period (the "Funding
Period") lasting not more than six months. In a transaction that includes a
Funding Period, a portion of the proceeds from the sale of the related
Securities (the "Pre-Funded Amount") will be held in a trust account (the
"Pre-Funding Account") and used to pay the purchase price for Subsequent
Receivables and related purposes. The Initial Receivables either were sold
previously by Case Credit to the Seller on a monthly basis 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."
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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 equipment financed by
Retail Installment Contracts or securing Dealer Loans ("Financed
Equipment") and "finance leases" ("Finance Lease Equipment") held by the
Trust and security or ownership interests in equipment subject to "true
leases" (together with Finance Lease Equipment, "Leased Equipment") held by
the Trust; (iii) the rights to proceeds from claims on certain physical
damage and term life insurance policies covering the Financed Equipment,
the Leased Equipment or the Obligors, as the case may be; (iv) the interest
of the Seller in any proceeds from recourse to Dealers with 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.
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 and
Leased Equipment which 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 or
the Leased Equipment in all states, may affect the Servicer's ability to
repossess and sell the equipment securing or otherwise subject to 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--Credit and Cash Flow Enhancement" and "Certain
Legal Aspects of the Receivables."
The Trustee
The trustee for each Trust (each, a "Trustee") 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 must 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
must 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.
7
<PAGE>
THE RECEIVABLES POOLS
General
The Receivables in each Trust evidence the financing or lease of
new and used agricultural, construction and other equipment or secured or
unsecured term loans to Dealers. They will be selected from the Seller's
portfolio using several criteria, including that, unless otherwise provided
in the related prospectus supplement, each Receivable:
(i) either (A) is secured by, or evidences the lease of,
new or used agricultural, construction or other equipment or (B)
is a term loan to a Dealer;
(ii) was originated in the United States;
(iii) provides for payments that fully amortize the
amount financed over its original term to maturity (which payments
may, in the case of any Low Payment Lease, include a termination
value akin to a final "balloon" payment payable by either the
Obligor or the Dealer that originated the Lease);
(iv) is a Precomputed Receivable or a Simple Interest
Receivable;
(v) is not a non-performing Receivable and does not
have a payment that is more than 90 days overdue as of the end
of the month prior to the day it is sold to the Trust or other
material default outstanding;
(vi) does not have an Obligor that is shown in the
Servicer's records as being the subject of a bankruptcy
proceeding; and
(vii) 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 which were purchased by Case Credit from Tenneco Credit
Corporation out of the $1.2 billion pool of retail receivables retained by
Tenneco Credit Corporation in connection with the acquisition by Case
Corporation and its subsidiaries of the farm and construction equipment
business of subsidiaries of Tenneco Inc. on June 23, 1994 (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 amount financed 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 (or other appropriate fraction) of the
annual percentage rate ("APR") of the loan multiplied by the unpaid amount
financed, 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." Leases that
are Precomputed Receivables may require a termination value payment (to be
made by the Obligor or the originating Dealer), which would generally be in
a different amount from the fixed periodic rental payments. The "Rule of 78's"
is a method of calculating the unearned portion of the precomputed finance
charge on Receivables repayable in substantially equal successive installments
of approximately equal intervals over 12 months. The unearned portion of the
precomputed finance charge to be refunded is equal to that portion of the
finance charge which the sum of the number of months the obligations are
outstanding after the date of prepayment (counting 1 month as 1, 2 months as
3 (1 + 2), etc., up to 78) bears to 78.
8
<PAGE>
"Simple Interest Receivables" provide for the amortization of the
amount financed under each receivable over a series of fixed level periodic
payments. However, unlike the periodic payment under an Actuarial
Receivable, each periodic payment consists of an installment of interest
which is calculated on the basis of the outstanding principal balance of
the receivable multiplied by the stated APR and further multiplied by the
period elapsed (as a fraction of a calendar year) since the preceding
payment of interest was made. As payments are received under a Simple
Interest Receivable, they are applied first to interest accrued to the date
of payment, and the balance is applied to reduce the unpaid principal
balance. Accordingly, if an obligor pays a fixed periodic 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 periodic
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 periodic installment until the final scheduled payment date,
at which time the amount of the final installment is increased or decreased
as necessary to repay the then outstanding principal balance.
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 Receivable
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. These amortization features and related rebates for
Rule of 78's Receivables and Actuarial Receivables should not result in
shortfalls of principal payments on related Securities because the portion
of the interest payments on these Receivables that give rise to rebate
requirements are essentially treated as principal paydowns for purposes of
the Securities. 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."
The Receivables transferred to any Trust may include fixed rate
receivables and floating rate receivables. In addition, Receivables may
provide for different interest rates (or different formulae to calculate
the floating interest rate) during an introductory period or otherwise
during the life of the Receivable. Each prospectus supplement will include
information about any such features that apply to the Receivables in the
related Trust.
<PAGE>
Each Lease transferred to any Trust will provide that the payments
due under that Lease are absolute and unconditional, notwithstanding any
damages to, or loss of, the Leased Equipment or any other event. The Leases
transferred to a Trust may include Leases referred to by Case Credit as
Full Payout Leases, Low Payment Leases or both. "Full Payout Leases" are
Leases with a termination value payment of $1 or less. "Low Payment Leases"
are Leases with a termination value payment of more than $1. The
termination value payment is a fixed dollar amount determined at the time a
Lease is entered into and specified in the Lease. Under both Full Payout
Leases and Low Payment Leases, the lessee has the right (but not the
obligation) to purchase the leased equipment at the end of the lease term
for an amount equal to the termination value payment. If a lessee does not
elect to purchase the leased equipment at the end of the lease term, then
the Dealer that originated the Lease is required to pay the termination
value payment and entitled to obtain the equipment from the lessee. In no
case, will a Trust (or Case Credit, as Servicer) obtain possession of any
leased equipment or be entitled to the proceeds from the sale of such
equipment (other than termination value payments) unless the equipment is
repossessed in a default situation. Consequently, no Securities offered by
this prospectus will rely for their payment on the residual value of leased
equipment.
Information with respect to each pool of Receivables will be set
forth in the related prospectus supplement, including, to the extent
appropriate, the types and composition of the Receivables, the distribution
by APR (or spread over a designated index rate), 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 in agricultural
and construction equipment manufactured or otherwise distributed by Case
("Case Dealers"). Case Credit also purchases Contracts from certain other
dealers and through brokers in agricultural, equipment and other equipment.
In addition, Case Credit finances Contracts originated through one retail
outlet directly owned by Case which are immediately thereafter assigned to
Case Credit and makes (or may in the future make) loans directly to
purchasers. In connection with the retail equipment financing business,
Case Credit makes term loans to Dealers secured by rental equipment,
rolling stock and computer systems and unsecured loans to Dealers. As of
December 31, 1997, there were approximately 1,000 independently owned Case
Dealer outlets 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 may include wheel
loaders, skid steer loaders, crawler dozers and loaders, excavators, rough
terrain forklifts, trenchers, irrigation equipment and loader/backhoes. The
other equipment financed by Case Credit may include horse trailers,
all-terrain vehicles, snowmobiles, forestry equipment, power generators and
marine vessels; however, Receivables relating to all-terrain vehicles,
snowmobiles and marine vessels will collectively make up less than 10% of
the assets of each Trust.
9
<PAGE>
Origination Process. Each prospective customer is required to complete
a credit application which lists the applicant's liabilities, income,
credit history and other demographic and personal information. Credit
application information obtained by a Dealer or Case Credit, as the case
may be, is sent to one of four regional finance offices maintained by Case
Credit. The information 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 some cases, Case Credit
obtains a credit bureau report on the applicant from an independent credit
bureau or checks credit references provided by the applicant, typically
banks or finance companies or suppliers that have furnished credit to the
applicant. In certain cases, audited or certified financial statements of
the applicant are obtained. As part of the credit review process (other
than in connection with Dealer Loans and Unsecured Dealer Loans), certain
data regarding the applicant and additional information is analyzed using
Case Credit's credit scoring model. The model was developed by Fair, Isaac
and Company, Inc., based on Case Credit's experience using variables that
historically have been predictive of future loan performance. The credit
score is not determinative; the final credit decision is a subjective
determination based on all of the information gathered. Case Credit also
maintains five-year loan histories on all past and present Case Credit
customers which are reviewed.
Creditworthiness is evaluated based on criteria established by Case
Credit's management. The same credit criteria are applied regardless of
which of Case Credit's regional finance offices reviews the application,
regardless of whether the applicant is purchasing or leasing equipment and
regardless of whether the related Contract will be purchased by Case Credit
from a Dealer, assigned by Case to Case Credit as a result of a sale or
lease by a Case-owned retail outlet or take the form of a direct loan by
Case Credit to a purchaser of Financed Equipment. Credit criteria similar
to that used to evaluate applicants for Retail Installment Contracts and
Leases are applied to applicants for Dealer Loans and Unsecured Dealer
Loans.
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 an agreement (a
"Dealer Agreement") that Case Credit enters into with each Dealer (except
that Case Credit also makes (or may in the future make) loans directly to
purchasers and Dealers). Dealer Agreements consist of Retail Financing
Agreements, Assignment Agreements and Warranty Agreements. Retail Financing
Agreements, which are entered into by Case Dealers and some non-Case
Dealers, are master agreements: a single Retail Financing Agreement governs
all assignments of Contracts from a Dealer to Case Credit. Warranty
Agreements or Assignment Agreements are used with non-Case Dealers that
have not signed Retail Financing Agreements and are entered into on a
Contract-by-Contract basis. Some of the Contracts purchased by Case Credit
from Dealers provide for recourse to the originating Dealer for defaults by
the obligor under the Contract. A portion of such Contracts purchased from
Case Dealers 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 in some cases a Dealer's recourse obligation is
contingent upon Case Credit obtaining the related equipment from the
Obligor and presenting it to the Dealer. 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.
<PAGE>
Contract Terms. Case Credit offers Receivables with a variety of
repayment or rental 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 Retail
Installment Contract or a Lease varies based on the obligor's credit
history, the type of equipment financed and whether the equipment is new or
used, the payment schedule and the length of the Contract. The amount
financed is calculated as a percentage of the value of the related
equipment, which may not exceed 105% unless a senior credit manager with
appropriate delegated authority specifically approves an exception to this
limit. Such exceptions are unusual and are made only when Case Credit has
determined that the obligor will be able to cover the excess on the basis
of the obligor's overall financial condition, as opposed to from the value
of the equipment. There is no stated limit on the ratio that may be
approved by a senior credit manager. The limit would be based upon the
senior credit manager's judgement about the obligor's overall financial
condition. For new equipment, such value is based on Dealer's cost for the
related equipment plus freight charges. The value of used equipment is
based on the "as-is" value of the related equipment reported in the most
recent edition of the North American Equipment Dealers Association
guidebook or other comparable guidebook. Obligors are required to obtain
and maintain physical damage insurance and, in the case of a Lease,
liability insurance with respect to the financed or leased 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 maximum amount that Case Credit will finance under a Dealer Loan
or Unsecured Dealer Loan is generally based upon an analysis of the Dealer's
overall financial condition, rather than the value of any collateral.
Consequently, there are no requirements as to the relationship between the
amounts of these types of loans and the value of any collateral.
Any equipment securing or leased under 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. This may not, however, be the case with Dealer Loans, since they are
not generally based upon the value of any collateral.
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 which 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 which Case Credit continues to service) will be
set forth in each prospectus supplement. This information may exclude any
category of Contracts not included in the related Trust. 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.
10
<PAGE>
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 Retail Installment
Contracts and Dealer Loans are prepayable at any time without penalty to
the Obligor. Although Leases do not generally permit voluntary prepayments
by their express terms, it is Case Credit's custom to permit voluntary
prepayments, and in its capacity as Servicer for each Trust Case Credit
will be permitted to continue this practice. 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 factors and cannot be predicted with any assurance (although prepayments
of agricultural equipment retail installment sale contracts, which will
make up a substantial portion of the Receivables in many Trusts, have
historically tended to increase during periods in which farmers have strong
cash flows). Neither Case Credit nor any of its affiliates maintains
historical prepayment data with respect to its portfolio of Receivables. In
addition, under certain circumstances, the Seller must 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 must 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.
<PAGE>
POOL FACTORS AND TRADING INFORMATION
The "Note Pool Factor" for each class of Notes will be a seven-digit
decimal which the Servicer will compute with respect to such class of Notes
indicating the remaining outstanding principal balance of such class of
Notes, as of each 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 which the Servicer will
compute with respect to such class of Certificates indicating the remaining
balance (the "Certificate Balance") of such class of Certificates, as of
each payment date (after giving effect to distributions to be made on such
payment date), as a fraction of the initial Certificate Balance of such
class of Certificates. Each Note Pool Factor and each Certificate Pool
Factor will initially be 1.0000000 and thereafter will decline to reflect
reductions in the outstanding principal balance of the applicable class of
Notes, or the reduction of the Certificate Balance of the applicable class
of Certificates, as the case may be. A Noteholder's portion of the
aggregate outstanding principal balance of the related class of Notes is
the product of (i) the original denomination of such Noteholder's Note and
(ii) the applicable Note Pool Factor. A Certificateholder's portion of the
aggregate outstanding Certificate Balance for the related class of
Certificates is the product of (a) the original denomination of such
Certificateholder's Certificate and (b) the applicable Certificate Pool
Factor.
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."
11
<PAGE>
USE OF PROCEEDS
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 deposit of the initial
Pre-Funded Amount into the Pre-Funding Account, if any, and (iii) to make
such other deposits in accounts of the related Trust as may be 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.
Case Receivables II Inc. (the "Seller"), a wholly owned subsidiary of
Case Credit will sell the Receivables to each Trust. The Seller 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 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 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 "Certain Legal Aspects of the Receivables--Bankruptcy
Considerations Relating to Case Credit."
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 that it 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.
In such circumstances, certain of the Leases considered true leases under
the United States Bankruptcy Code could be rejected by the trustee or Case
Credit, as debtor in possession, resulting in the termination of scheduled
payments under any such true leases and possible reductions in
distributions to Securityholders if amounts available under any credit
enhancement is insufficient to cover such losses. If the transfer of
Receivables to 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.
12
<PAGE>
Case Credit Corporation
Case Credit Corporation, a Delaware corporation (the "Servicer" or
"Case Credit") will service the Receivables owned by each Trust. Case
Credit is a wholly owned finance subsidiary of Case Corporation. Case
Credit and its wholly owned Canadian and Australian operating subsidiaries
provide and administer financing for the retail purchase or lease of new
and used Case agricultural, construction, and other 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, Canada and Australia; however,
the Trusts will include only Receivables of obligors located in the United
States. Case Credit's business principally involves purchasing retail
installment sale contracts from Case Dealers. In addition, Case Credit
facilitates and finances the sale of insurance products to retail
customers, provides financing for Case dealers and Case rental equipment
yards, and also provides other retail financing programs for end-use
customers in the United States and Canada. Case Credit also provides
various financing options to dealers for a variety of purposes, including
inventory, working capital, real estate acquisitions, construction and
remodeling, business acquisitions, dealer systems and service and
maintenance equipment.
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 Securities Exchange Act of
1934, as amended (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 "Where You Can Find More
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. Case's market position is
particularly significant in several product categories, including
loader/backhoes, skid steer loaders, large, high-horsepower farm tractors
and self-propelled combines. As used herein, "Case" refers to Case and its
consolidated subsidiaries.
Case also manufactures and distributes replacement parts for various
models of its farm and construction equipment, many of which are
proprietary, to support products it has sold. Case distributes these parts
to dealers and distributors through a network of parts depots throughout
the world.
To facilitate the sale of its products, Case offers wholesale
financing to its dealers and various types of retail financing to qualified
end-users in the United States, Canada and Australia. Wholesale financing
consists primarily of floorplan financing and allows dealers to maintain a
representative inventory of products. Retail financing consists of the
financing of retail installment sales contracts, leases and similar
products for the benefit of end-use customers in conjunction with the
purchase of new and used equipment from Case dealers and company-owned
retail stores and is intended to be competitive with financing available
from third parties.
Case products are distributed through an extensive network of
independent dealers and distributors in more than 150 countries worldwide.
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 "Where You Can Find More
Information."
<PAGE>
DESCRIPTION OF THE NOTES
General
Each Trust will issue one or more classes of Notes pursuant to the
terms of an indenture (each, an "Indenture") between the related Trust and
the related indenture trustee (each, an "Indenture Trustee"), a form of
which has been filed as an exhibit to the registration statement of which
this prospectus forms a part. In addition to the Notes offered hereby, each
Trust may issue one or more additional classes of notes that may be sold in
transactions exempt from registration under the Securities Act of 1933, as
amended (the "Securities Act") or retained by the Seller or its affiliates.
Any such additional classes of notes may be issued under the related
Indenture or under a separate agreement. 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.
We will specify in each prospectus supplement whether each class of
Notes offered under that prospectus supplement will be (a) cleared through
the Depository Trust Company ("DTC"), which is generally expected to be the
case, or (b) issued as definitive securities. DTC or its nominee will be
the holder of record of all Notes in any class that is cleared through DTC.
As to any such class of Notes, 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. See
"Certain Information Regarding the Securities--Book-Entry Registration" and
"--Definitive Securities."
13
<PAGE>
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. To the
extent provided in the related prospectus supplement, 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.
Each class of Notes may have a different interest rate, which may be a
fixed, variable or adjustable interest rate (and which may be zero for
certain classes of Strip Notes), or any combination of the foregoing. The
related prospectus supplement will specify the interest rate for each class
of Notes of a given series or the method for determining such Interest
Rate. See also "Certain Information Regarding the Securities--Fixed Rate
Securities" and "--Floating Rate Securities." 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.
In the case of a series of Notes which includes two or more classes of
Notes, the sequential order and priority of payment in respect of principal
and interest, 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 include 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.
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.
<PAGE>
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 which 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: (a) adding any provisions
to or changing in any manner or eliminating any of the provisions of the
related Indenture or of modifying in any manner the rights of such
Noteholders, provided that such action will not materially and adversely
affect the interest of any such Noteholder; or (b) substituting credit
enhancement for any class of Notes, provided that the applicable 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.
14
<PAGE>
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 generally will (and, if so specified in the
applicable prospectus supplement, the amount of interest required to be
paid to Noteholders of such Series under the related Indenture may) be
limited to amounts available to be deposited in the applicable Note
Distribution Account for that purpose. Therefore, unless otherwise
specified in the related prospectus supplement, the failure to pay
principal (or, when applicable, interest) 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 (or of one or more particular
classes thereof, if so specified in the applicable prospectus supplement)
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, subject to payment of any past due
amounts and cure or waiver of all other Events of Default, be rescinded by
the holders of a majority in principal amount of such Notes then
outstanding. Noteholders' voting rights may vary by class.
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.
<PAGE>
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 which
might be incurred by it in complying with such request. Subject to the
provisions for indemnification and certain limitations contained in the
related Indenture, the holders of a majority in principal amount of the
outstanding Notes of a given series (or of one or more particular classes
thereof, if so specified in the applicable prospectus supplement) 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.
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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 applicable 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.
<PAGE>
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 must 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 must 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.
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DESCRIPTION OF THE CERTIFICATES
General
Each Trust will issue one or more classes of Certificates 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 Certificates issued by each Trust may be offered hereby or may be
sold in transactions exempt from registration under the Securities Act or
retained by the Seller or its affiliates. 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.
We will specify in each prospectus supplement whether each class of
Certificates offered under that prospectus supplement will be (a) cleared
through DTC, which is generally expected to be the case, or (b) issued as
definitive securities. DTC or its nominee will be the holder of record of
all Certificates in any class that is cleared through DTC.
Distributions of Principal and Interest
The timing and priority of distributions, seniority, allocations of
losses, rate at which interest will accrue (the "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
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. Each class of Certificates may
have a different Pass-Through Rate, which may be a fixed, variable or
adjustable Pass-Through Rate (and which may be zero for certain classes of
Strip Certificates), or any combination of the foregoing. The related
prospectus supplement will specify the Pass-Through Rate for each class of
Certificates of a given series or the method for determining such
Pass-Through Rate. See also "Certain Information Regarding the
Securities--Fixed Rate Securities" and "--Floating Rate Securities." 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 which 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
Denominations
Securities will be available for purchase in the denominations
specified in the related prospectus supplement. If no denomination is
specified, then the Securities will be available for purchase in minimum
denominations of $1,000 and in greater whole-dollar denominations.
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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 equals one one-hundredth of a percentage point)
that may be specified in the applicable prospectus supplement as being
applicable to such class, and the "Spread Multiplier" is the percentage
that may be specified in the applicable prospectus supplement as being
applicable to such class.
The applicable prospectus supplement will designate a Base Rate for a
given Floating Rate Security based on the London interbank offered rate
("LIBOR"), commercial paper rates, Federal funds rates, U.S. Government
treasury securities rates, negotiable certificates of deposit rates or
another rate as set forth in such prospectus supplement.
As specified in the applicable prospectus supplement, Floating Rate
Securities of a given class may also have either or both of the following
(in each case expressed as a rate per annum): (i) a maximum limitation, or
ceiling, on the rate at which interest may accrue during any interest
period and (ii) a minimum limitation, or floor, on the rate at which
interest may accrue during any interest period. In addition to any maximum
interest rate that may be applicable to any class of Floating Rate
Securities, the interest rate applicable to any class of Floating Rate
Securities will in no event be higher than the maximum rate permitted by
applicable law, as the same may be modified by United States law of general
application.
Each Trust with respect to which a class of Floating Rate Securities
will be issued will appoint, and enter into agreements with, a calculation
agent (each, a "Calculation Agent") to calculate interest rates on each
such class of Floating Rate Securities issued with respect thereto. The
applicable prospectus supplement will set forth the identity of the
Calculation Agent for each such class of Floating Rate Securities of a
given series, which may be either the Trustee or Indenture Trustee with
respect to such series. All determinations of interest by the Calculation
Agent shall, in the absence of manifest error, be conclusive for all
purposes and binding on the holders of Floating Rate Securities of a given
class. Unless otherwise specified in the applicable prospectus supplement,
all percentages resulting from any calculation of the rate of interest on a
Floating Rate Security will be rounded, if necessary, to the nearest
1/100,000 of 1% (.0000001), with five one-millionths of a percentage point
rounded upward.
<PAGE>
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") which will be related to (i) the
difference in the rate of exchange between United States dollars and a
currency or composite currency (the "Indexed Currency") specified in the
applicable prospectus supplement (such Indexed Securities, "Currency
Indexed Securities"); (ii) the difference in the price of a specified
commodity (the "Indexed Commodity") on specified dates (such Indexed
Securities, "Commodity Indexed Securities"); (iii) the difference in the
level of a specified stock index (the "Stock Index"), which may be based on
U.S. or foreign stocks on specified dates (such Indexed Securities, "Stock
Indexed Securities"); or (iv) such other objective price or economic
measures as are described in the applicable prospectus supplement. The
manner of determining the Indexed Principal Amount of an Indexed Security
and historical and other information concerning the Indexed Currency, the
Indexed Commodity, the Stock Index or other price or economic measures used
in such determination will be set forth in the applicable prospectus
supplement, together with information concerning tax consequences to the
holders of such Indexed Securities.
If the determination of the Indexed Principal Amount of an Indexed
Security is based on an Index calculated or announced by a third party and
such third party either suspends the calculation or announcement of such
Index or changes the basis upon which such Index is calculated (other than
changes consistent with policies in effect at the time such Indexed
Security was issued and permitted changes described in the applicable
prospectus supplement), then such Index shall be calculated for purposes of
such Indexed Security by an independent calculation agent named in the
applicable prospectus supplement on the same basis, and subject to the same
conditions and controls, as applied to the original third party. If for any
reason such Index cannot be calculated on the same basis and subject to the
same conditions and controls as applied to the original third party, then
the Indexed Principal Amount of such Indexed Security shall be calculated
in the manner set forth in the applicable prospectus supplement. Any
determination of such independent calculation agent shall, in the absence
of manifest error, be binding on all parties.
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Unless otherwise specified in the applicable prospectus supplement,
interest on an Indexed Security will be payable based on the amount
designated in the applicable prospectus supplement as the "Face Amount" of
such Indexed Security. The applicable prospectus supplement will describe
whether the principal amount of the related Indexed Security, if any, that
would be payable upon redemption or repayment prior to the applicable final
scheduled payment date will be the Face Amount of such Indexed Security,
the Indexed Principal Amount of such Indexed Security at the time of
redemption or repayment or another amount described in such prospectus
supplement.
Book-Entry Registration
If so specified in the related prospectus supplement, investors may
hold their Securities through DTC (in the United States) or Cedel or
Euroclear (in Europe) if they are participants of such systems, or
indirectly through organizations that are participants in such systems.
Cede & Co., 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.
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.
<PAGE>
Because of time-zone differences, credits of securities in Cedel or
Euroclear as a result of a transaction with a DTC Participant will be made
during the subsequent securities settlement processing, dated the business
day following the DTC settlement date, and such credits or any transactions
in such securities settled during such processing will be reported to the
relevant Cedel Participant or Euroclear Participant on such business day.
Cash received in Cedel or Euroclear as a result of sales of securities by
or through a Cedel Participant or a Euroclear Participant to a DTC
Participant will be received with value on the DTC settlement date but will
be available in the relevant Cedel or Euroclear cash account only as of the
business day following settlement in DTC.
Purchases of Securities under the DTC system must be made by or
through DTC Participants, which will receive a credit for the Securities on
DTC's records. The ownership interest of each actual Securityholder is in
turn to be recorded on the DTC Participants' and Indirect Participants'
records. Securityholders will not receive written confirmation from DTC of
their purchase, but Securityholders are expected to receive written
confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the DTC Participant or Indirect
Participant through which the Securityholder entered into the transaction.
Transfers of ownership interests in the Securities are to be accomplished
by entries made on the books of DTC Participants acting on behalf of
Securityholders. Securityholders will not receive certificates representing
their ownership interest in Securities, except in the event that use of the
book-entry system for the Securities is discontinued. 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, unless and 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.
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.
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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 "Certain Information Regarding the
Securities--Definitive Securities."
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that the Seller believes to be
reliable, but the Seller takes no responsibility for the accuracy thereof.
Cedel Bank, societe anonyme ("Cedel") is incorporated under the laws
of Luxembourg as a professional depository. Cedel holds securities for its
participating organizations ("Cedel Participants") and facilitates the
clearance and settlement of securities transactions between Cedel
Participants through electronic book-entry changes in accounts of Cedel
Participants, thereby eliminating the need for physical movement of
certificates. Transactions may be settled in Cedel in any of 32 currencies,
including United States dollars. Cedel provides to its Cedel Participants,
among other things, services for safekeeping, administration, clearance and
settlement of internationally traded securities and securities lending and
borrowing. Cedel interfaces with domestic markets in several countries. As
a professional depository, Cedel is subject to regulation by the Luxembourg
Monetary Institute. Cedel Participants are recognized financial
institutions around the world, including underwriters, securities brokers
and dealers, banks, trust companies, clearing corporations and certain
other organizations and may include the underwriters of any series of
Securities. Indirect access to Cedel is also available to others, such as
banks, brokers, dealers and trust companies that clear through or maintain
a custodial relationship with a Cedel Participant, either directly or
indirectly.
<PAGE>
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 "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
The Notes or Certificates that are initially cleared through DTC will
be issued in fully registered, certificated form ("Definitive Notes" and
"Definitive Certificates," respectively, and collectively referred to
herein as "Definitive Securities") to investors 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 (or on Notes or Certificates initially issued as Definitive
Securities) will 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 net losses on Receivables, 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 the material terms of (i) the
agreements (each, a "Sale and Servicing Agreement") pursuant to which
Trusts 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 Retail Installment Contracts from Case Credit and other
agreements related to the Seller'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, if Case Credit is selling to the Seller any
Receivables 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
and security or ownership interests in the related Leased Equipment,
pursuant to a purchase agreement (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 and
ownership interests, together with its entire interest in designated Retail
Installment Contracts 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
at the closing under the related Sale and Servicing Agreement (a "Schedule
of Receivables"). In connection with the sale of Unsecured Dealer Loans to
the Trust, the Seller will deliver the related notes to the Related
Trustee. The related Trustee will, concurrently with such transfer and
assignment, execute and deliver the related Notes and Certificates. 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 and initial deposits in other trust accounts. 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").
<PAGE>
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 and liability insurance, in the case of a Lease,
with respect to the Financed Equipment or Leased 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 such Receivable is or will be
secured by a first priority perfected security interest in the Financed
Equipment or Leased Equipment in favor of Case Credit (except that no such
representation or warranty need be made as to any Dealer Loan or Unsecured
Dealer Loan or as to any Lease that is a "true lease"); (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, leasing, 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.
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) month
following the discovery by or notice to the Trustee of such breach, the
Seller will repurchase from such Trust any Receivable materially and
adversely affected by such breach as of such last day at a price equal to
the Contract Value (as defined in the related prospectus supplement) (the
"Purchase Amount"). The obligation of the Seller to repurchase any
Receivables with respect to which any such representation or warranty has
been breached is subject to Case Credit's repurchase of such Receivables.
The repurchase obligation constitutes the sole remedy available to the
Noteholders, the Indenture Trustee, the Certificateholders or the Trustee
in respect of such Trust for any such uncured breach.
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<PAGE>
Pursuant to each Sale and Servicing Agreement, Case Credit, as
Servicer, will continue to service the Receivables held by the related
Trust and will receive fees for such services. 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 (other than notes
evidencing Unsecured Dealer Loans) and any other documents relating to the
Receivables. Notes evidencing Unsecured Dealer Loans will be delivered to
the related Indenture Trustee. The obligors on the Receivables are not
notified of the sale of the Receivables from Case Credit to the Seller or
from the Seller to the Trust. 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.
Pursuant to each Sale and Servicing Agreement, the Servicer will have
the right (but no obligation) to purchase all of the remaining Receivables
held by the Trust after the aggregate Contract Values (as defined in the
related prospectus supplement) of the remaining Receivables fall below 10%
of the Initial Pool Balance (as defined in the related prospectus
supplement). This right is referred to as the Servicer's "Clean-Up Call."
Commercial Paper Program
In connection with an asset-backed commercial paper program
established in August 1994, Case Credit and the Seller entered into a
Receivables Purchase Agreement dated as of August 1, 1994 (as amended, the
"Liquidity Receivables Purchase Agreement"). Case Credit intends generally
to sell to the Seller on the 15th day of each month all Retail Installment
Contracts meeting certain eligibility requirements which Case Credit
purchased from Case Dealers or from Case in the preceding calendar month.
Under the Liquidity Receivables Purchase Agreement, if Case Credit elects
to sell any Retail Installment Contracts to the Seller in a month, Case
Credit is obligated to sell to the Seller all Retail Installment Contracts
purchased by Case Credit from Case Dealers or from Case 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 Retail Installment Contracts to be sold that are
not adverse to the interests of the Seller.
On each monthly settlement date under the Liquidity Receivables
Purchase Agreement, Case Credit will sell and assign to the Seller, without
recourse, its entire interest in designated Retail Installment Contracts,
including security interests in the related Financed Equipment, and the
Seller 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.
<PAGE>
In the Liquidity Receivables Purchase Agreement, Case Credit will
represent and warrant to the Seller on each monthly purchase date as to
designated Retail Installment Contracts being purchased by the Seller on
such purchase date, among other things, that: (i) each designated Retail
Installment Contract meets the applicable eligibility requirements; (ii)
the information provided with respect to the designated Retail Installment
Contract is correct in all material respects; (iii) the Obligor on each
designated Retail Installment Contract 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 Retail Installment Contracts 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 such Retail Installment Contract 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 Retail Installment Contract,
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 the Seller any Retail Installment Contract materially and adversely
affected by such breach at a price equal to the Contract Value of such
Retail Installment Contract on the settlement date immediately succeeding
the month in which such repurchase obligation arises. The repurchase
obligation constitutes the sole remedy available to the Seller for any such
breach.
The Seller and Case Equipment Loan Trust 1994-B have entered into a
Loan and Security Agreement dated as of August 1, 1994 (as amended, the
"Loan and Security Agreement"), pursuant to which Case Equipment Loan Trust
1994- B has agreed to make or increase the principal amount of a loan (the
"Seller Loan") to the Seller on a monthly basis and The Seller has agreed
to grant to Case Equipment Loan Trust 1994-B a security interest in the
Seller's entire interest in all Retail Installment Contracts purchased by
the Seller 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 "Seller Collateral"). Case
Equipment Loan Trust 1994-B will have funds available to lend to the Seller
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 The Chase
Manhattan Bank, as Administrative Agent.
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<PAGE>
The Seller Collateral shall consist primarily of (i) all of the Retail
Installment Contracts acquired by the Seller from Case Credit pursuant to
the Liquidity Receivables Purchase Agreement from time to time which 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 Retail Installment Contracts, (iii) funds on deposit in the certain
accounts, (iv) all right, title and interest of the Seller in and to the
Liquidity Receivables Purchase Agreement and the Servicing Agreement dated
as of August 1, 1994 as amended, between Case Credit, as Servicer, and the
Seller, (v) all right, title and interest of the Seller in and to certain
interest rate caps required to be maintained by the Seller under the Loan
and Security Agreement and (vi) the proceeds of the foregoing.
Under the Loan and Security Agreement, the Seller has the right to
have Retail Installment Contracts released from the lien of the Loan and
Security Agreement for the purpose of transferring such Retail Installment
Contracts (or interests in such Retail Installment Contracts) if, among
other requirements, prior to any such transfer, the Seller 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 Seller Loan will not exceed the Net Pool Balance
(as defined in the Loan and Security Agreement).
In connection with any release of Retail Installment Contracts from
the lien of the Loan and Security Agreement, the Seller will be required to
deposit into the related collection account an amount equal to the
aggregate Contract Value of such Retail Installment Contracts plus accrued
interest thereon at the applicable APRs to the date of such release.
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<PAGE>
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 Agreement in Eligible Investments. "Eligible
Investments" are generally limited to investments acceptable to the
applicable rating agencies as being consistent with the rating of such
Securities and include: (a) direct obligations of, obligations fully
guaranteed as to timely payment by, the United States of America; (b)
demand deposits, time deposits or certificates of deposit of any depository
institution or trust company incorporated under the laws of the United
States of America or any state thereof (or any domestic branch of a foreign
bank) and subject to supervision and examination by Federal or State
banking or depository institution authorities; provided, however, that at
the time of the investment or contractual commitment to invest therein, the
commercial paper or other short-term senior unsecured debt obligations
(other than such obligations the rating of which is based on the credit of
a Person other than such depository institution or trust company) thereof
will have a credit rating from each of the applicable rating agencies in
the highest investment category granted thereby; (c) commercial paper
having, at the time of the investment or contractual commitment to invest
<PAGE>
therein, a rating from each of the applicable 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
applicable 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 applicable 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 applicable
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.
26
<PAGE>
In the unlikely event of defaults on Eligible Investments, investors
in the Securities could experience losses or payment delays. 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 applicable 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 applicable rating agency in one of its generic rating categories which
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) which has either (A) a long-term unsecured debt rating or
certificate of deposit rating acceptable to the applicable rating agencies
or (B) a short-term unsecured debt rating or certificate of deposit rating
acceptable to the applicable 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, construction and other equipment retail installment sale
contracts and leases 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 specified in the related
prospectus supplement unless the Servicer purchases the Receivable as
described below. Some of such arrangements (including 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 or the Leased Equipment related to the respective
Receivable at public or private sale, or take any other action permitted by
applicable law. See "Certain Legal Aspects of the Receivables." When
appropriate, in connection with its servicing obligations, the Servicer may
require the applicable Indenture Trustee to deliver all or a portion of one
or more notes evidencing Unsecured Dealer Loans. The Servicer will return
any such notes to the applicable Indenture Trustee when the need therefor
by the Servicer no longer exists, unless the Unsecured Dealer Loan has been
paid in full. The Servicer will hold any such notes exclusively as agent
for the related Indenture Trustee.
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 applicable 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 for the related Securities. 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.
27
<PAGE>
Servicing Compensation and Payment of Expenses
With respect to each Trust, the Servicer will be entitled to receive
the Servicing Fee for each Collection Period in an amount equal to a
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 periods) will be paid solely from the
sources, and at the priority, specified in the related prospectus
supplement.
The Servicing Fee will compensate the Servicer for performing the
functions of a third party servicer of agricultural, construction and other
equipment receivables as an agent for their beneficial owner, including
collecting and posting all payments, responding to inquiries of Obligors on
the Receivables, investigating delinquencies, sending payment coupons to
Obligors, reporting tax information to Obligors, paying costs of
collections and disposition of defaults and policing the collateral. The
Servicing Fee also will compensate the Servicer for administering the
Receivables of each Trust, accounting for collections and furnishing
monthly and annual statements to the related Trustee and Indenture Trustee
with respect to distributions and generating Federal income tax information
for such Trust and for the related Noteholders and Certificateholders. The
Servicing Fee also will reimburse the Servicer for certain taxes,
accounting fees, outside auditor fees, data processing costs and other
costs incurred in connection with administering the Receivables of each
Trust.
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. 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. 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. Any credit enhancement that constitutes a guarantee
of the applicable Securities will be separately registered under the
Securities Act unless exempt from such registration.
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. The credit
enhancement for a class or series of Securities generally 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 which
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 class or series of Securities, Securityholders of any
such class or series will be subject to the risk that such credit
enhancement will be exhausted by the claims of Securityholders of other
classes or series.
<PAGE>
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 applicable rating agencies confirm in writing
that substitution will not result in the reduction or withdrawal of the
rating of such class of Securities or any other class of Securities of the
related series.
Spread Account. If so provided in the related prospectus supplement,
pursuant to the related Sale and Servicing Agreement, the Seller will
establish for a series or class of Securities an account, as specified in
the related prospectus supplement (the "Spread Account"), which will be
maintained in the name of the applicable Indenture Trustee. Any Spread
Account may initially be funded by a deposit by the Seller on the
applicable 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 applicable 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.
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<PAGE>
Net Deposits
As an administrative convenience, unless the Servicer is required to
remit collections daily (see "Description of the Transfer and Servicing
Agreements--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.
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.
29
<PAGE>
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 of 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 of the related series, 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; 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
If a Servicer Default under a Sale and Servicing Agreement occurs and
remains unremedied, the related Indenture Trustee or holders of Notes of the
related series evidencing not less than 25% in outstanding principal amount of
such Notes (or of one or more particular classes or such Notes, if specified
in the related prospectus supplement) may terminate all the rights and
obligations of the Servicer under such Sale and Servicing Agreement, whereupon
such Indenture Trustee or a successor servicer appointed by such Indenture
Trustee will succeed to all the responsibilities, duties and liabilities of the
Servicer under such Sale and Servicing Agreement and will be entitled to
similar compensation arrangements. If, however, a bankruptcy trustee or
similar official has been appointed for the Servicer, and no Servicer Default
other than such appointment has occurred, such trustee or official may have
the power to prevent such Indenture Trustee or such Noteholders from effecting
a transfer of servicing. In the event that such Indenture Trustee is unwilling
or unable to so act, it may appoint, or petition a court of competent
jurisdiction for the appointment of, a successor with a net worth of at least
$100,000,000 and whose regular business includes the servicing of equipment
receivables. Such Indenture Trustee may make such arrangements for
compensation to be paid, which in no event may be greater than the servicing
compensation to the Servicer under such Sale and Servicing Agreement. Neither
the Trustee nor the Certificateholders have the right to remove the Servicer
if a Servicer Default occurs so long as nay Notes of the same series remain
outstanding.
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.
<PAGE>
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 applicable 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.
30
<PAGE>
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 (including as a result of the exercise by the
Servicer of its Clean-Up Call). The Servicer will provide notice of any
termination of a Trust to the applicable Trustee and the Indenture Trustee.
Within five business days of the receipt of notice from the Servicer, the
Trustee will mail notice of such termination to the Certificateholders. The
Indenture Trustee will mail notice of any such termination to the
Noteholders.
Administration Agreement
Case Credit will enter into an agreement (an "Administration
Agreement") with each Trust and the related Indenture Trustee pursuant to
which Case Credit will act as administrator (in such capacity, the
"Administrator") for such Trust. The Administrator will 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").
<PAGE>
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
Bankruptcy Considerations Relating to Case Credit.
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.
In addition, 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.
Also, under such circumstances, Case Credit's bankruptcy trustee (or Case
Credit as debtor-in-possession) will, for a period of time, have the
opportunity to reject any Lease that is deemed a "true lease," which would
result in a cancellation of the scheduled payments due thereafter under
such Lease. 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 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.
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 UCC, 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 UCC, 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.
<PAGE>
Bankruptcy Considerations Relating to Dealers.
A substantial portion of the Receivables was originated by Case
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 Case Dealers provide for recourse
to the originating Dealer for defaults by the Obligors. In addition, the
Case Dealers retain the right to repurchase at any time the Receivables
originated by them. In the event of a Case Dealer's bankruptcy, a creditor
or bankruptcy trustee of the Case Dealer or the Case Dealer as a debtor in
possession might attempt to characterize the sales of Receivables to Case
Credit as loans to the Case 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. Furthermore, in the event of a
Dealer's bankruptcy, a Dealer or its bankruptcy trustee might also be able
to reject any Leases originated by the Dealer that were deemed to be "true
leases" resulting in the termination of scheduled payments under those
Leases.
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<PAGE>
Perfection and Priority With Respect to Receivables
A purchaser of the Retail Installment Contracts or Leases who
gives new value and takes possession of the instruments which evidence the
Retail Installment Contracts or Leases (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
Retail Installment Contracts or Leases. 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. Any such sale of Retail Installment
Contracts or Leases that had been sold to a Trust would be a violation of
Case Credit's contractual obligations.
Security Interests in Financed Equipment.
In states in which retail installment sale contracts such as the
Retail Installment Contracts evidence the credit sale of agricultural,
construction and other equipment by dealers, brokers or manufacturers to
obligors, the contracts also constitute personal property security
agreements and include grants of security interests in the equipment under
the applicable UCC. In addition, a Lease that is a finance lease should
generally be treated as a personal property security agreement for purposes
of the 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,
construction or other equipment may be governed by certificate of title
registration laws of the state in which such equipment is located.
Case Credit confirms that appropriate action has been taken under the
laws of each state in which the Financed Equipment or Finance Lease
Equipment is located to perfect Case Credit's security interest in the
Financed Equipment and Finance Lease Equipment. The Seller is required to
repurchase from each Trust any Receivable (other than a Lease that is a
"true lease" or an Unsecured Dealer Loan) as to which necessary perfection
actions have not been taken prior to the time of sale to the Trust, if the
failure to take such actions will materially adversely affect the interest
of such Trust in such Receivable and such failure is not cured within a
specified grace period. Similarly, Case Credit is required to repurchase
any such Receivable if the failure occurred prior to the sale of the
Receivable from Case Credit to the Seller. In addition, under each Sale and
Servicing Agreement, Case Credit, as the Servicer, is required (at its own
expense) to take appropriate steps to maintain perfection of security
interests in the Financed Equipment and the Finance Lease Equipment and is
obligated to purchase the related Receivable if it fails to do so. However,
because Case Credit does not obtain subordination agreements from other
secured lenders when making Dealer Loans, the security interests obtained
in connection therewith may not have first priority status.
Due to the administrative burden and expense, no action will be taken
to record the transfer of security interests from Case Credit to the Seller
or from the Seller to the Trust. In most states, an assignment like the
sales under the Purchase Agreement and Sale and Servicing Agreement for
each Trust is effective to convey a security interest, without any action
to record the transfer of record. In such states, the proper initial filing
of the financing statement relating to the equipment, or, if applicable,
the notation of Case Credit'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. However, by not identifying a Trust as the
secured party on the financing statement or certificate of title, the
security interest of such Trust in Financed Equipment could be defeated
through fraud or negligence.
<PAGE>
In addition, 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. Also, error, fraud or forgery by the equipment owner or the
Servicer or administrative error by state or local agencies could impair a
Trust's security interest. Neither the Seller nor the Servicer must
repurchase a Receivable if any of the occurrences described above (other
than any action by the Servicer) 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.
Under the laws of most states, the perfected security interest in
equipment would continue for four months after the equipment 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 a certificate of title under the laws of
the state in which it is located, a majority of states generally require a
surrender of a certificate of title to re-register the equipment.
Accordingly, a secured party must surrender possession if it holds the
certificate of title to the equipment, or, in the case of equipment
registered in a state providing for the notation of a lien on the
certificate of title but not possession by the secured party, the secured
party would receive notice of surrender if the security interest is noted
on the certificate of title. Thus, the secured party would have the
opportunity to re-perfect its security interest in the equipment in the
state of relocation. In states that do not require a certificate of title
for registration of equipment, re-registration could defeat perfection.
32
<PAGE>
Security Interests in Leased Equipment.
When Leases are sold to a Trust, the security or ownership interest
held by the Seller in any related Leased Equipment will be assigned by the
Seller to such Trust. Each Lease is either a "true lease" or a lease
intended for security (often referred to as a "finance lease"). Whether the
Seller is deemed to hold a security interest or an ownership interest in
particular Leased Equipment depends in part upon whether the related Lease
is a "true lease" or not.
----------------------------------------------------------------------
"true lease" = the lessor (i.e., the originating Dealer and its
assigns) is deemed to be the beneficial owner of the leased equipment.
"finance lease" (not a true lease) = the lessee is deemed to be the
beneficial owner, and the lessor (or its assignee) is deemed to hold
a security interest in the leased equipment.
-----------------------------------------------------------------------
Under applicable state law standards, Full Payout Leases should be
deemed to be finance leases. The treatment of certain Low Payment Leases as
finance leases or true leases under applicable state law is less certain,
and the applicable prospectus supplement will specify the extent to which
any Low Payment Leases included in the property of the related Trust are
thought to be finance leases or true leases or are of uncertain
classification.
Case Credit requires Dealers that originate Leases (including both
Full Payout Leases and Low Payment Leases) to obtain a precautionary first
priority perfected security interest in the related Leased Equipment (in
case the Leases are deemed to be a finance lease). These security interests
are transferred to Case Credit when it purchases the related Leases. When
Case Credit originates a Lease directly, it also obtains a precautionary
first priority perfected security interest in the related Leased Equipment.
For Full Payout Leases and any Low Payment Leases that are deemed to be
finance leases, Case Credit and its assigns will have a very similar
position to the one described above with respect to Retail Installment
Contracts. The Seller must repurchase any Full Payout Lease (and any Low
Payment Lease that is represented to be a finance lease in the related Sale
and Servicing Agreement) that is sold to a Trust if a first priority
perfected security interest in the name of Case Credit in the Leased
Equipment securing such Lease did not exist as of the date such Lease was
purchased by such Trust, if such breach will materially adversely affect
the interest of such Trust in such Lease and such failure is not corrected
within a specified grace period.
Case Credit also obtains a perfected security interest in Leased
Equipment against originating Case Dealers in the event that the Leased
Equipment is deemed to be owned by the Dealer (which would be the case for
any Low Payment Lease that is deemed to be a true lease) and the transfer
of such Leased Equipment from the Dealer to Case Credit is not deemed to be
a true sale. However, that security interest may not in all cases have
first priority status. The related prospectus supplement will specify if
any Low Payment Leases will be included in the property of any Trust and,
if so, whether any filings will be made to perfect a first priority
security interest in the related Leased Equipment against Case Credit and
the Seller, in case the transfer of such Leased Equipment from Case Credit
to the Seller, or from the Seller to the applicable Trust, respectively, is
deemed not to be a true sale. Due to administrative burden and expense, it
is anticipated that such filings (if any) will cover only a portion of the
Leased Equipment. Competing liens arising in favor of creditors of the
originating Dealer, Case Credit or the Seller could take priority over the
interests of the applicable Trust in such Leased Equipment if such Dealer,
Case Credit or the Seller were not deemed to have made a true sale and any
security interest in such Leased Equipment granted to Case Credit, the
Seller or the Trust, respectively, was not perfected or did not have first
priority status. Also, Case Credit does not obtain a perfected security
interest in Leased Equipment against originating non-Case Dealers.
<PAGE>
Bankruptcy Considerations Relating to a Lessee
If the Obligor under any Lease included in the property of a Trust
becomes a debtor in federal bankruptcy proceedings or any similar
applicable state law proceedings, the Trust may be delayed or prevented
from enforcing certain of its rights under the Leases and obtaining
possession of the Leased Equipment from the Obligor. The precise treatment
of a Lease in bankruptcy proceedings generally will depend upon whether the
bankruptcy court finds the Lease to be a true lease or a finance lease.
If a given Lease is a "finance lease," its treatment in bankruptcy
will be similar to the treatment of a Retail Installment Contract. The
Trust will have a bankruptcy claim equal to the outstanding amount of the
deemed "loan" to the Obligor, which claim will generally have the benefit
of a perfected security interest in the related Finance Lease Equipment
(subject to the qualifications set out under "--Security Interests in the
Equipment" above. If a given Lease is a true lease, the Obligor's
bankruptcy trustee (or the Obligor as debtor-in-possession) will, for a
period of time, have the opportunity to either assume or reject the Lease.
The precise length of this period of time will be difficult to predict in
any given case, and the bankruptcy trustee (or the Obligor as
debtor-in-possession) will have possession of the Leased Equipment during
such period.
34
<PAGE>
If the Lease is assumed, the bankruptcy trustee (or the Obligor as
debtor-in-possession) must:
o cure any default (other than a default based on the Obligor's
bankruptcy or financial condition, and possibly other non-monetary
defaults); or
o provide adequate assurance of a prompt cure; and,
o if there has been a prepetition default, provide adequate assurance of
future performance under the Lease.
If the Lease is rejected:
o the scheduled payments due thereafter under such Lease will be canceled;
o the Trust will generally be able to obtain possession of the Leased
Equipment; and
o the Trust will be entitled to assert a claim for damages resulting
from the rejection of the Lease, which claim would be unsecured.
Repossession
In the event of default by equipment purchasers, the holder of the
retail installment sale contract (or a lease that is treated as a personal
property security interest) 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 or leased
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.
<PAGE>
Certain UCC Considerations
Certain states have adopted a version of Article 2A ("Article 2A") of
the UCC that purports to codify many provisions of existing common law.
Although there is little precedent regarding how Article 2A will be
interpreted, it may, among other things, limit the enforceability of any
"unconscionable" lease or "unconscionable" provision in a lease, provide a
lessee with remedies, including the right to cancel the lease, for certain
lessor breaches or defaults, and may add to or modify the terms of
"consumer leases" and leases where the lessee is a "merchant lessee."
However, Case Credit will represent in each Sale and Servicing Agreement
that (i) to the best of its knowledge, each Obligor has accepted the
equipment leased to it and, after reasonable opportunity to inspect and
test, has not notified Case Credit of any defects therein. Article 2A does,
however, recognize typical commercial lease "hell or high water" rental
payment clauses and validates reasonable liquidated damages provisions in
the event of lessor or lessee defaults. Article 2A also recognizes the
concept of freedom of contract and permits the parties in a commercial
context a wide degree of latitude to vary provisions of the law.
Vicarious Tort Liability
Although each Trust will or may own the Leased Equipment related to
each Lease purchased by that Trust that is treated as a true lease, the
Leased Equipment will be operated by the related lessees and their
respective invitees. State laws differ as to whether anyone suffering
injury to person or property involving leased agricultural, construction or
other equipment may bring an action upon which relief may be granted
against the owner of the equipment by virtue of that ownership. To the
extent applicable law permits such an action and such an action is
successful, the related Trust and its assets may be subject to liability to
such an injured party. If vicarious liability were imposed on a Trust as
owner of Leased Equipment, and the coverage provided by any available
insurance is insufficient to cover such a loss, you could incur a loss on
your investment.
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Lessees are required to obtain and maintain physical damage insurance
and liability insurance. Dealers are responsible for verifying physical
damage insurance and liability insurance with respect to the Leased
Equipment at the time the Lease is originated. If a Dealer fails to verify
insurance coverage and the lessee did not obtain insurance coverage at the
time the Lease was originated, the Dealer will be required to repurchase
such Lease. If any such insurance has lapsed or has not been maintained in
full force and effect, the Dealers will not be obligated to repurchase such
Lease.
Deficiency Judgments and Excess Proceeds; Other Limitations
The proceeds of resale of the equipment generally will be applied
first to the expenses of resale and repossession and then to the
satisfaction of the indebtedness. While some states impose prohibitions or
limitations on deficiency judgments if the net proceeds from resale do not
cover the full amount of the indebtedness, a deficiency judgment against
the debtor can be sought for the shortfall in those states that do not
prohibit or limit such judgments. However, because a defaulting obligor may
have very little capital or sources of income available following
repossession, in many cases it may not be useful to seek a deficiency
judgment. If one is obtained, it may be uncollectible or settled at a
significant discount.
Occasionally, after resale of the equipment and payment of all
expenses and all indebtedness, there is a surplus of funds. In that case,
the UCC requires the creditor to remit the surplus to any holder of a lien
with respect to the equipment or, if no such lienholder exists, to the
former owner of the equipment.
Courts have applied general equitable principles to secured parties
pursuing repossession and litigation involving deficiency balances. These
equitable principles may have the effect of relieving an obligor from some
or all of the legal consequences of a default.
In several cases, obligors have asserted that the self-help remedies
of secured parties under the UCC and related laws violate the due process
protections provided under the 14th Amendment to the Constitution of the
United States. Courts have generally upheld the notice provisions of the
UCC and related laws as reasonable or have found that the repossession and
resale by the creditor do not involve sufficient state action to afford
constitutional protection to borrowers. As to Leases, some jurisdictions
require that a lessee be notified of a default and given a time period
within which to cure the default prior to repossession of leased equipment.
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.
<PAGE>
Consumer Protection Laws
Numerous Federal and state consumer protection laws and related
regulations impose substantial requirements upon lenders, lessors 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 and
lessors 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. Under the
Sale and Servicing Agreement, the Seller makes similar warranties to the
Trustee. 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; provided however, that 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. If such claim existed at the
time Case Credit sold such Receivable to the Seller, such violation would
also constitute a breach of the warranties of Case Credit under the
Liquidity Receivables Purchase Agreement or Purchase Agreement and would
create an obligation of Case Credit to repurchase the Receivable unless the
breach is cured. See "Description of the Transfer and Servicing
Agreements--Sale and Assignment of Receivables."
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U.S. FEDERAL INCOME TAX CONSEQUENCES
The following discussion, summarizing the material Federal income tax
consequences of the purchase, ownership and disposition of the Notes and
Certificates, is based upon the provisions of the Internal Revenue Code of
1986, as amended (the "Code"), proposed, temporary and final Treasury
regulations thereunder, and published rulings and court decisions in effect
as of the date hereof, all of which are subject to change, possibly
retroactively. To the extent that the following summary relates to matters
of law or legal conclusions with respect thereto, such summary represents
the opinion of Mayer, Brown & Platt, special federal tax counsel ("Federal
Tax Counsel") for each Trust, subject to the qualifications set forth
herein. Mayer, Brown & Platt have prepared or reviewed the statements in
this prospectus under the heading "U.S. Federal Income Tax Consequences,"
and are of the opinion that such statements are correct in all material
respects. This discussion does not address every aspect of the Federal
income tax laws that may be relevant to Securityholders in light of their
personal investment circumstances or their special treatment under the
Federal income tax laws (for example, banks and life insurance companies).
Each Trust will be provided with an opinion of Federal Tax Counsel
regarding certain Federal income tax matters discussed below. An opinion of
Federal Tax Counsel, however, is not binding on the Internal Revenue
Service (the "IRS") or the courts. Moreover, there are no cases or IRS
rulings on similar transactions involving both debt and equity interests
issued by a trust with terms similar to those of the Notes and the
Certificates. As a result, the IRS may disagree with all or a part of the
discussion below. No ruling on any of the issues discussed below will be
sought from the IRS. For purposes of the following summary, references to
the Trust, the Notes, the Certificates and related terms, parties and
documents shall be deemed to refer, unless otherwise specified herein, to
each Trust and the Notes, Certificates and related terms, parties and
documents applicable to such Trust.
Tax Characterization of the Trust
Federal Tax Counsel will deliver its opinion that the Trust will not
be an association (or publicly traded partnership) taxable as a corporation
for Federal income tax purposes. This opinion will be based 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.
<PAGE>
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 holder of a Short-Term Note reporting interest income as it is
paid may be required to defer
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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. In the case of an individual taxpayer, any capital
gain on the sale of a Note will be taxed at a maximum rate of 39.6% if the
Note is held for not more than 12 months, at 28% if the Note is held for
more than 12 months, but not more than 18 months, and at 20% if the Note is
held for more than 18 months.
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) satisfies the statement requirement set forth
in section 871(h) and section 881(c) of the Code and the regulations
thereunder. To satisfy this requirement, the foreign person, or a financial
institution holding the Note on behalf of such foreign person, must
provide, in accordance with specified procedures, a paying agent of the
Trust with a statement to the effect that the foreign person is not a
United States person. Currently these requirements will be met if (x) the
foreign person provides his name and address, and certifies, under
penalties of perjury, that he is not a United States person (which
certification may be made on an IRS Form W-8) or (y) a financial
institution holding the Note on behalf of the foreign person certifies,
under penalties of perjury, that such statement has been received by it and
furnishes a paying agent with a copy thereof. Under recently finalized
Treasury regulations (the "Final Regulations"), the statement requirement
may also be satisfied with other documentary evidence with respect to an
offshore account or through certain foreign intermediaries. The Final
Regulations will generally be effective for payments made after December
31, 1999.
If such interest is not "portfolio interest," then it will be subject
to a 30% withholding tax unless the foreign person provides the Trust or
its paying agent, as the case may be, with a properly executed (i) IRS Form
1001 (or successor form) claiming an exemption from withholding tax or a
reduction in withholding tax under the benefit of a tax treaty or (ii) IRS
Form 4224 (or successor form) stating that interest paid on the Note is not
subject to withholding tax because it is effectively connected with the
foreign person's conduct of a trade or business in the United States. Under
the Final Regulations, a foreign person will generally be required to
provide IRS Form W-8 in lieu of IRS Form 1001 and IRS Form 4224, although
alternative documentation may be applicable in certain situations.
<PAGE>
If a foreign person is engaged in a trade or business and interest on
the Note is effectively connected with the conduct of such trade or
business in the United States, the foreign person, although exempt from the
withholding tax discussed above, will be subject to United States federal
income tax on such interest on a net income basis in the same manner as if
it were a United States person. In addition, if such foreign person is a
foreign corporation, it may be subject to a branch profits tax equal to 30%
(or lower treaty rate) of its effectively connected earnings and profits
for the taxable year, subject to adjustments.
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. The Final Regulations make certain
modifications to the backup
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withholding and information reporting rules. Prospective investors are
urged to consult their own tax advisors regarding the Final Regulations.
Possible Alternative Treatments of the Notes. If, contrary to the
opinion of Federal Tax Counsel, the IRS successfully asserted that one or
more of the Notes did not represent debt for Federal income tax purposes,
the Notes might be treated as equity interests in the Trust. In such a
case, the Trust would be treated as a publicly traded partnership that
would not be taxable as a corporation because it would meet certain
qualifying income tests. Nonetheless, treatment of the Notes as equity
interests in such a publicly traded partnership could have adverse tax
consequences to certain holders. For example, income to foreign holders
might be subject to U.S. tax and U.S. tax return filing and withholding
requirements, and individual holders might be subject to certain
limitations on their ability to deduct their share of Trust expenses.
Tax Consequences to Holders of the Certificates
The following discussion only applies to the extent Certificates are
offered in a related prospectus supplement. Until that time, because the
Certificates will be held solely by the Seller or one of its affiliates,
under current Treasury regulations, the Trust will be disregarded as an
entity separate from its owner (i.e., the Seller or one of its affiliates)
for federal income tax purposes.
Treatment of the Trust as a Partnership. The Seller and the Servicer
will agree, and the Certificateholders will agree by their purchase of
Certificates, to treat the Trust as a partnership for purposes of Federal
and state income tax, franchise tax and any other tax measured in whole or
in part by income, with the assets of the partnership being the assets held
by the Trust, the partners of the partnership being the Certificateholders
(including the Seller in its capacity as recipient of distributions from
the Spread Account and any other account specified in the related
prospectus supplement in which the Seller has an interest), and the Notes
being debt of the partnership. However, the proper characterization of the
arrangement involving the Trust, the Certificates, the Notes, the Seller
and the Servicer is not clear because there is no authority on transactions
closely comparable to that contemplated herein.
A variety of alternative characterizations are possible. For example,
because the Certificates have certain features characteristic of debt, the
Certificates might be considered debt of the Seller or the Trust. Any such
characterization should not result in materially adverse tax consequences
to Certificateholders as compared to the consequences from treatment of the
Certificates as equity in a partnership, described below. The following
discussion assumes that the Certificates represent equity interests in a
partnership.
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.
<PAGE>
Partnership Taxation. As a partnership, the Trust will not be subject
to Federal income tax. Rather, each Certificateholder will be required to
separately take into account such holder's accruals of guaranteed payments
from the Trust and its allocated share of other income, gains, losses,
deductions and credits of the Trust. The Trust's income will consist
primarily of interest and finance charges earned on the Receivables
(including appropriate adjustments for market discount, OID and premium)
and any gain upon collection or disposition of Receivables. The Trust's
deductions will consist primarily of interest accruing with respect to the
Notes, guaranteed payments on the Certificates, servicing and other fees,
and losses or deductions upon collection or disposition of Receivables.
Under the Trust Agreement, interest payments on the Certificates at
the Pass-Through Rate (including interest on amounts previously due on the
Certificates but not yet distributed) will be treated as "guaranteed
payments" under Section 707(c) of the Code. Guaranteed payments are
payments to partners for the use of their capital and, in the present
circumstances, are treated as deductible to the Trust and ordinary income
to the Certificateholders. The Trust will have a calendar year tax year and
will deduct the guaranteed payments under the accrual method of accounting.
Certificateholders with a calendar year tax year are required to include
the accruals of guaranteed payments in income in their taxable year that
corresponds to the year in which the Trust deducts the payments, and
Certificateholders with a different taxable year are required to include
the payments in income in their taxable year that includes the December 31
of the Trust year in which the Trust deducts the payments. It is possible
that guaranteed payments will not be treated as interest for all purposes
of the Code.
In addition, the Trust Agreement will provide, in general, that the
Certificateholders will be allocated taxable income of the Trust for each
Collection Period equal to the sum of (i) any Trust income attributable to
discount on the Receivables that corresponds to any excess of the principal
amount of the Certificates over their initial issue price; (ii) prepayment
premium, if any, payable to the Certificateholders for such month and (iii)
any other amounts of income payable to the Certificateholders for such
month. Such allocation will be reduced by any amortization by the Trust of
premium on Receivables that corresponds to any excess of the issue price of
Certificates over their principal amount. All remaining items of income,
gain, loss and deduction of the Trust will be allocated to the Seller.
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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.
<PAGE>
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. Under current Treasury regulations, if such a
termination occurs, the Trust will be considered to have contributed the
assets of the Trust (the "Old Partnership") to a new partnership (the "New
Partnership") in exchange for interests in the New Partnership. Such
interest would be deemed distributed to the partners of the Old Partnership
in liquidation thereof. The Trust will not comply with certain technical
requirements that might apply when such a constructive termination occurs.
As a result, the Trust may be subject to certain tax penalties and may
incur additional expenses if it is required to comply with those
requirements. Furthermore, the Trust might not be able to comply due to
lack of data.
Disposition of Certificates. Generally, capital gain or loss will be
recognized on a sale of Certificates in an amount equal to the difference
between the amount realized and the seller's tax basis in the Certificates
sold. A Certificateholder's tax basis in a Certificate will generally equal
the holder's cost increased by the holder's share of Trust income and
accruals of guaranteed payments (includible in income) and decreased by any
distributions received with respect to such Certificate. In addition, both
the tax basis in the Certificates and the amount realized on a sale of a
Certificate would include the holder's share of the Notes and other
liabilities of the Trust. A holder acquiring Certificates at different
prices may be required to maintain a single aggregate adjusted tax basis in
such Certificates, and, upon sale or other disposition of some of the
Certificates, allocate a pro rata portion of such aggregate tax basis to
the Certificates sold (rather than maintaining a separate tax basis in each
Certificate for purposes of computing gain or loss on a sale of that
Certificate).
Any gain on the sale of a Certificate attributable to the holder's
share of unrecognized accrued market discount on the Receivables would
generally be treated as ordinary income to the holder and would give rise
to special tax reporting requirements. The Trust does not expect to have
any other assets that would give rise to such special reporting
requirements. Thus, to avoid those special reporting requirements, the
Trust will elect to include market discount in income as it accrues.
If a Certificateholder is required to recognize an aggregate amount of
income (not including income attributable to disallowed itemized deductions
described above) over the life of the Certificates that exceeds the
aggregate cash distributions with respect thereto, such excess will
generally give rise to a capital loss upon the retirement of the
Certificates.
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Allocations Between Transferors and Transferees. In general, the
Trust's taxable income and losses will be determined monthly and the tax
items 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 Seller 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 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.
<PAGE>
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.
41
<PAGE>
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.
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 Final
Regulations make certain modifications to the backup withholding and
information reporting rules. Prospective investors are urged to consult
their own tax advisors regarding the Final Regulations. See "Tax
Consequences to Holders of the Notes--Backup Withholding."
WISCONSIN STATE TAX CONSEQUENCES
The following discussion, summarizing the material Wisconsin income
and franchise tax consequences of the purchase, ownership and disposition
of the Notes and Certificates, is based upon current provisions of the
Wisconsin Statutes, administrative pronouncements thereunder, and judicial
authority, all of which are subject to change, possibly retroactively. To
the extent that the following summary relates to matters of law or legal
conclusions with respect thereto, such summary represents the opinion of
Foley & Lardner, special Wisconsin tax counsel ("Wisconsin Tax Counsel")
for each Trust, subject to the qualifications set forth herein. Foley &
Lardner have prepared or reviewed the statements in this prospectus under
the heading "Wisconsin State Tax Consequences," and are of the opinion that
such statements are correct in all material respects. No ruling on any of
the issues discussed below will be sought from the Wisconsin Department of
Revenue.
<PAGE>
In the opinion of 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.
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.
42
<PAGE>
ERISA CONSIDERATIONS
Section 406 of the Employee Retirement Income Security Act of 1974, as
amended ("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 which is
treated as indebtedness under applicable local law and which 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 which
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.
<PAGE>
Each Underwriting Agreement will provide that the Seller and Case
Credit will indemnify the underwriters against certain civil liabilities,
including liabilities under the Securities Act, or contribute to payments
the several underwriters may be required to make in respect thereof.
Each Trust may, from time to time, invest the funds in its Trust
Accounts in Eligible Investments acquired from such underwriters.
Pursuant to each of the Underwriting Agreements with respect to a
given series of Securities, the closing of the sale of any class of
Securities subject to either thereof will be conditioned on the closing of
the sale of all other such classes subject to either thereof. The place and
time of delivery for the Securities in respect of which this prospectus is
delivered will be set forth in the related prospectus supplement.
LEGAL OPINIONS
Certain legal matters relating to the Securities of any series will be
passed upon for the related Trust, the Seller and the Servicer by Mayer,
Brown & Platt, Chicago, Illinois and New York, New York. Richard S.
Brennan, General Counsel and Secretary of Case is also a partner at Mayer,
Brown & Platt.
43
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
The Seller, as originator of each Trust filed a registration statement
relating to the Securities with the Securities and Exchange Commission (the
"SEC"). This prospectus is part of the registration statement, but the
registration statement includes additional information.
The Seller will file with the SEC all required annual, monthly and
special SEC reports and other information about any Trust it originates.
You may read and copy any reports, statements or other information we
file at the SEC's public reference room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. You can request copies of these documents, upon
payment of a duplicating fee, by writing to the SEC. Please call the SEC at
(800) SEC-0330 for further information on the operation of the public
reference rooms. Our SEC filings are also available to the public on the
SEC Internet site (http://www.sec.gov.).
The SEC allows us to "incorporate by reference" information that the
Seller files with it, which means that the Seller can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus.
Information that the Seller files later with the SEC will automatically
update the information in this prospectus. In all cases, you should rely on
the later information over different information included in this
prospectus or the accompanying prospectus supplement. The Seller
incorporates by reference any future annual, monthly and special SEC
reports and proxy materials filed by or on behalf of any Trust until we
terminate offering the Securities.
The Seller's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995 (File No. 33-99298) was filed with the SEC pursuant to
the Exchange Act and is incorporated into this prospectus by reference and
made a part hereof. Since that time, the Seller has not been, and is not
currently, required to file reports pursuant to Section 13(a) or 15(d) of
the Exchange Act, except for the filing of Current Reports on Form 8-K in
connection with the trusts it originates. The Seller's Current Reports on
Form 8-K dated March 7, 1996, May 10, 1996, September 19, 1996, January 13,
1997, March 18, 1997, June 11, 1997, September 10, 1997, September 22,
1997, December 5, 1997 and February 9, 1998 are incorporated into this
prospectus by reference and made a part hereof.
As a recipient of this prospectus, you may request a copy of any
document the Seller incorporates by reference, except exhibits to the
documents (unless the exhibits are specifically incorporated by reference),
at no cost, by writing or calling: Case Receivables II Inc., 233 Lake
Avenue, Racine, Wisconsin 53403, Attention: Vice President (Telephone
414-636-6564). You may access the Servicer's Internet site at
(http://www.casecorp.com).
44
<PAGE>
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.
Page
Exchange Act................................................................12
10 percent shareholder......................................................36
accounts....................................................................30
Actuarial Receivables........................................................7
Administration Agreement....................................................30
Administration Fee..........................................................30
Administrator...............................................................30
Applicable Trustee..........................................................20
APR..........................................................................7
Article 2A..................................................................33
automatic stay...............................................................4
banking organization........................................................18
Base Rate...................................................................17
Benefit Plan................................................................41
Calculation Agent...........................................................17
Case........................................................................12
Case Credit...............................................................4,12
Case Dealers.................................................................9
Cedel.......................................................................20
Cedel Participants..........................................................20
Certificate Balance.........................................................11
Certificate Distribution Account............................................24
Certificate Pool Factor.....................................................11
Certificateholders........................................................6,19
Certificates.................................................................6
chattel paper...............................................................30
Clean-Up Call...............................................................23
clearing corporation........................................................18
Closing Date.................................................................6
Code........................................................................39
Collection Account..........................................................24
Collection Period...........................................................26
Commodity Indexed Securities................................................18
consumer leases.............................................................33
Contracts....................................................................1
Cooperative.................................................................24
Currency Indexed Securities.................................................18
Cutoff Date..................................................................6
Dealer Agreement.............................................................9
Dealer Loans.................................................................1
Dealers......................................................................5
Definitive Certificates.....................................................20
Definitive Notes............................................................20
Definitive Securities.......................................................20
Depositaries................................................................18
disqualified persons........................................................41
DTC.........................................................................13
DTC Participants............................................................18
Eligible Deposit Account....................................................25
Eligible Institution........................................................25
Eligible Investments........................................................25
ERISA.......................................................................41
Euroclear...................................................................20
Euroclear Operator..........................................................20
Euroclear Participants......................................................20
Events of Default...........................................................14
Face Amount.................................................................18
Federal Tax Counsel.........................................................35
Final Regulations...........................................................36
45
<PAGE>
Page
finance lease...............................................................32
Finance Lease Equipment......................................................6
Financed Equipment...........................................................6
Fixed Rate Securities.......................................................17
Floating Rate Securities....................................................17
foreign person..............................................................36
Full Payout Leases...........................................................8
Funding Period...............................................................6
guaranteed payments.........................................................37
Indenture...................................................................13
Indenture Trustee...........................................................13
Index.......................................................................18
Indexed Commodity...........................................................18
Indexed Currency............................................................18
Indexed Principal Amount....................................................18
Indexed Securities..........................................................18
Indirect Participants.......................................................18
Initial Receivables..........................................................6
Insolvency Event............................................................28
Insolvency Laws..........................................................12,30
Interest Reset Period.......................................................17
Investment Earnings.........................................................25
IRS.........................................................................35
Leased Equipment.............................................................6
Leases.......................................................................1
LIBOR.......................................................................17
Liquidity Receivables Purchase Agreement....................................23
loan........................................................................33
Loan and Security Agreement.................................................24
Low Payment Leases...........................................................8
merchant lessee.............................................................33
New Partnership.............................................................38
Note Distribution Account...................................................24
Note Pool Factor............................................................11
Noteholders...............................................................6,19
Notes.....................................................................1, 6
Obligors.....................................................................6
OID.........................................................................35
OID Regulations.............................................................35
Old Partnership.............................................................38
Participants................................................................17
parties in interest.........................................................41
Pass-Through Rate...........................................................16
Plan Assets Regulation......................................................41
Pool Balance................................................................11
portfolio interest..........................................................36
Pre-Funded Amount............................................................6
Pre-Funding Account..........................................................6
Precomputed Receivables......................................................7
Precomputed Simple Rebate Receivables........................................8
prepayments.................................................................10
prohibited transaction......................................................41
Purchase Agreement..........................................................22
Purchase Amount.............................................................23
rebate.......................................................................8
Receivables..................................................................1
refund.......................................................................8
Related Documents...........................................................15
related person..............................................................36
Reorganization...............................................................7
reserve account..............................................................9
Retail Installment Contracts.................................................1
Rule of 78's Receivables.....................................................7
Sale and Servicing Agreement................................................22
46
<PAGE>
Page
Schedule of Receivables......................................................22
SEC..........................................................................42
Securities....................................................................1
Securities Act...............................................................13
Securityholders...........................................................6, 19
Seller....................................................................4, 11
Seller Collateral............................................................24
Seller Loan..................................................................24
Servicer.....................................................................12
Servicer Default.............................................................28
Servicing Fee................................................................26
Servicing Fee Rate...........................................................26
Short-Term Note..............................................................36
Simple Interest Receivables...................................................8
skip payment..................................................................9
skipped.......................................................................9
Specified Party..............................................................28
Spread.......................................................................17
Spread Account...............................................................27
Spread Multiplier............................................................17
Standard Precomputed Receivables..............................................8
Stock Index..................................................................18
Stock Indexed Securities.....................................................18
Strip Certificates...........................................................16
Strip Notes..................................................................13
Subsequent Receivables........................................................6
Subsequent Transfer Date.....................................................23
sum of monthly payments.......................................................7
sum of periodic balances......................................................7
Terms and Conditions.........................................................20
The Trust....................................................................16
Transfer and Servicing Agreements............................................22
true lease..............................................................4,31,32
true leases...................................................................6
true sales....................................................................4
Trust.........................................................................6
Trust Accounts...............................................................25
Trust Agreement...............................................................6
Trustee.......................................................................7
UCC..........................................................................23
Underwriting Agreements......................................................41
unearned......................................................................8
unrelated debt-financed income...............................................38
Unsecured Dealer Loans........................................................1
Wisconsin Tax Counsel........................................................40
47
<PAGE>
Case Equipment Receivables Trusts
Asset Backed Notes
Asset Backed Certificates
Case Receivables II Inc.
Seller
Case Credit Corporation
Servicer
$________ Class A Notes
$___ A-1 Notes
$___ A-2 Notes
$___ A-3 Notes
$_______ Class B [Notes/Certificates]
----------------------------
PROSPECTUS SUPPLEMENT
----------------------------
Underwriters
[ ]
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We
have not authorized anyone to provide you with different information.
We are not offering the Class A Notes or the [Class B Notes/Certificates]
in any state where the offer is not permitted.
Dealers will deliver a prospectus supplement and prospectus when acting as
underwriters of the Class A Notes or the Class B [Notes/Certificates] and
with respect to their unsold allotments or subscriptions. In addition, all
dealers selling the Class A Notes or the Class B [Notes/Certificates] will
deliver a prospectus supplement and prospectus until __________.
48
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Estimated expenses in connection with the offering of the Securities
being registered herein are as follows:
SEC filing fee....................................................$ 733,162.52
Legal fees and expenses........................................... 175,000.00
Accounting fees and expenses...................................... 210,000.00
Rating agency fees................................................ 420,000.00
Trustee fees and expenses......................................... 14,000.00
Indenture Trustee fees and expenses............................... 7,000.00
Blue Sky expenses................................................. 28,000.00
Printing and engraving............................................ 210,000.00
Miscellaneous..................................................... 2,837.48
--------
Total........................................................$1,800,000.00
============
Item 15. Indemnification of Directors and Officers.
The By-Laws of Case Corporation (the "Company") include the following
provisions:
Section 15.1. Right to Indemnification. The Company shall indemnify
and hold harmless, to the fullest extent permitted by applicable law as it
presently exists or may hereafter be amended, any person who was or is made
or is threatened to be made a party or is otherwise involved in any action,
suit or proceeding, whether civil, criminal, administrative or
investigative (a "proceeding"), by reason of the fact that he, or a person
for whom he is the legal representative, is or was a director or officer of
the Company or is or was serving at the request of the Company as a
director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust, enterprise or nonprofit entity,
including service with respect to employee benefit plans (an "indemnitee"),
against all liability and loss suffered and expenses (including attorneys'
fees) reasonably incurred by such indemnitee. Subject to Section 14.3
hereof, the Company shall be required to indemnify an indemnitee in
connection with a proceeding (or part thereof) initiated by such indemnitee
only if the initiation of such proceeding (or part thereof) by the
indemnitee was authorized by the Board of Directors of the Company.
Section 15.2. Prepayment of Expenses. The Company shall pay the
expenses (including attorneys' fees) incurred by an indemnitee in defending
any proceeding in advance of its final disposition, provided, however, that
the payment of expenses incurred by a director or officer in advance of the
final disposition of the proceeding shall be made only upon receipt of an
undertaking by the director or officer to repay all amounts advanced if it
should be ultimately determined that the director or officer is not
entitled to be indemnified under this Section 15 or otherwise.
Section 15.3. Claims. If a claim for indemnification or payment of
expenses under this Section 14 is not paid in full within ninety days after
a written claim therefor by the indemnitee has been received by the
Company, the indemnitee may file suit to recover the unpaid amount of such
claim and, if successful in whole or in part, shall be entitled to be paid
the expense of prosecuting such claim. In any such action the Company shall
have the burden of proving that the indemnitee was not entitled to the
requested indemnification or payment of expenses under applicable law.
<PAGE>
Section 15.4. Nonexclusivity of Rights. The rights conferred on any
person by this Section 14 shall not be exclusive of any other rights which
such person may have or hereafter acquire under any statute, provision of
the certificate of incorporation, these By-Laws, agreement, vote of
stockholders or disinterested directors or otherwise.
Section 15.5. Other Indemnification. The Company's obligation, if any,
to indemnify or advance expenses to any person who was or is serving at its
request as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, enterprise or nonprofit entity shall be
reduced by any amount such person may collect as indemnification from such
other corporation, partnership, joint venture, trust, enterprise or
nonprofit entity.
Section 15.6. Amendment or Repeal. Any repeal or modification of the
foregoing provisions of Section 14 shall not adversely affect any right or
protection hereunder of any person in respect of any act or omission
occurring prior to the time of such repeal or modification.
The Company has purchased insurance that purports to insure it against
certain costs of indemnification that may be incurred by it pursuant to the
foregoing By-Law provisions, and to insure the officers and directors of
the
II-1
<PAGE>
Company, and of its subsidiary companies, against certain liabilities
incurred by them in the discharge of their function as such officers and
directors except for liabilities resulting from their own malfeasance.
Item 16. Exhibits.
1(a)* --Form of Underwriting Agreement for Notes
1(b)* --Form of Underwriting Agreement for Certificates
3(a)* --Certificate of Incorporation of Case Receivables II Inc.
3(b)* --By-Laws of Case Receivables II Inc.
3(c)** --Form of Certificate of Trust of Case Equipment Loan
Trusts (included as part of Exhibit 4(b))
4(a)** --Form of Indenture between the Trust and the Indenture
Trustee
4(b)** --Form of Trust Agreement between Case Receivables II Inc.
and the Trustee
4(c)** --Form of Class A-1 Note (included as part of Exhibit 4(a))
4(d)** --Form of Class A-2 Note (included as part of Exhibit 4(a))
4(e)** --Form of Class A-3 Note (included as part of Exhibit 4(a))
4(f)** --Form of Class B Note (included as part of Exhibit 4(a))
4(g)** --Form of Certificate (included as part of Exhibit 4(b))
5** --Opinion of Mayer, Brown & Platt with respect to legality
8(a)** --Opinion of Mayer, Brown & Platt with respect to Federal
income tax matters
8(b)** --Opinion of Foley & Lardner with respect to Wisconsin tax
matters
10* --Receivables Purchase Agreement dated as of August 1,
1994, between Case Credit Corporation and Case
Receivables II Inc.
23(a)** --Consent of Mayer, Brown & Platt (included as part of
Exhibit 5)
23(b)** --Consent of Mayer, Brown & Platt (included as part of
Exhibit 8(a))
23(c)** --Consent of Foley & Lardner (included as part of
Exhibit 8(b))
99(a)** --Form of Sale and Servicing Agreement between Case
Receivables II Inc., the Trust and Case
Credit Corporation
99(b)** --Form of Administration Agreement between the Trust, Case
Credit Corporation and the Indenture Trustee
99(c)** --Form of Purchase Agreement between Case Credit
Corporation and Case Receivables II Inc.
- --------------------
* Incorporated by reference to Registrants' Registration Statement
No. 33-84922.
** Previously filed.
<PAGE>
Item 17. Undertakings
(a) As to Rule 415: The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made of the securities registered hereby, a post-effective
amendment to this registration statement;
(i) to include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933, as amended;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of this registration
statement (or the most recent post-effective amendment
hereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in this
registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the
total dollar volume of securities offered would not exceed
that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement;
(iii) to include any material information with respect
to the plan of distribution not previously disclosed in this
registration statement or any material change to such
information in this registration statement;
provided, however, that the undertakings set forth in clauses (i) and (ii)
above do not apply if the information required to be included in a
post-effective amendment by those clauses is contained in periodic reports
filed with or furnished to the Commission by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as
amended, that are incorporated by reference in this registration statement.
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<PAGE>
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(b) As to documents subsequently filed that are incorporated by
reference: The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, as amended,
each filing of the registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934, as amended, that is
incorporated by reference in this registration statement shall be deemed to
be a new registration statement relating to the securities offered herein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) As to indemnification: Insofar as indemnification for
liabilities arising under the Securities Act of 1933, as amended, may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the provisions described in Item 15 herein, or otherwise, the
registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933, as amended, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act of 1933, as amended, and will be governed by the final
adjudication of such issue.
(d) As to information omitted in reliance on Rule 430A: The
undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, as amended, the information omitted from the
form of prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus filed
by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under
the Securities Act of 1933, as amended, shall be deemed to be part
of this registration statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, as amended, each post-effective amendment
that contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3, reasonably believes
that the security rating requirement for the asset-backed securities being
registered on this form will be met by the time of the sale and has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Racine, Wisconsin,
on the date of July 17, 1998.
CASE RECEIVABLES II INC.
By: /s/ THEODORE R. FRENCH
---------------------------
Theodore R. French
Senior Vice President
By: /s/ ROBERT A. WEGNER
---------------------------
Robert A. Wegner
Vice President and Controller
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- -----
* Principal Executive Officer May 6, 1998
- -------------------------------
Kenneth R. Gangl
/s/ THEODORE R. FRENCH Principal Financial Officer July 17, 1998
- -------------------------------- and Director
Theodore R. French
/s/ ROBERT A. WEGNER Principal Accounting July 17, 1998
- -------------------------------- Officer
Robert A. Wegner
* Director May 6, 1998
- ---------------------------------
Michael Fredrich
- --------------------------------- Director
Kenneth K. Chalmers
* Director May 6, 1998
- ---------------------------------
Jean-Pierre Rosso
* Signature by Theodore R. French as Attorney-in-Fact under
Power of Attorney
/s/ Theodore R. French
- ------------------------------------
Theodore R. French
Attorney-in-Fact
II-4
