As filed with the Securities and Exchange Commission on July 13, 1999
Registration No. 33- ____
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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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) Identificaiton No.)
475 Half Day Road
Lincolnshire, Illinois 60069
(847) 955-0228
(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 Jeffrey S. O'Connor
Mayer, Brown & Platt Kirkland & Ellis
190 South LaSalle Street 200 East Randolph Drive
Chicago, Illinois 60603-3441 Chicago, Illinois 60601
(312) 782-0600 (312) 861-2000
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. [ ]
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CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Maximum Maximum
Title of Each Amount Offering Offering Amount of
Class of Securities to be Price Price Registration
to be Registered Registered Per Unit(1) Price(1) Fee
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Asset Backed
Securities.............. $1,000,000 100% $1,000,000 $278
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(1) Estimated solely for the purpose of calculating the registration fee.
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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.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL THESE SECURITIES UNTIL WE DELIVER A FINAL PROSPECTUS. 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.
SUBJECT TO COMPLETION, DATED ______________
PROSPECTUS
Case Equipment Receivables Trusts
Asset Backed Notes
Asset Backed Certificates
Case Receivables II Inc.
Seller
Case Credit Corporation
Servicer
The Trusts--
Consider carefully the
risk factors beginning o We (Case Receivables II Inc.) will form a new
on page 4 in this trust to issue each series of securities
prospectus and in your offered by this prospectus.
prospectus supplement. The assets of each trust:
o The assets of each trust:
o will be those described below and will
primarily be a pool of receivables of one
or more of the following types:
Notes in your series - retail installment sale contracts or
represent obligations loans secured by new or used
only of the trust that agricultural and construction or other
issues them. Certificates equipment,
in your series will
represent beneficial - leases of similar equipment,
interests only in the
trust that issues them. - term loans to eqipment dealers secured
No one else is liable by rental equipment, rolling stock or
for the payments due computer systems, and
on your securities.
- unsecured term loans to equipment dealers.
o will also include interests in financed or
leased equipment, proceeds from claims on
related insurance policies, and amounts
This prospectus may be on deposit in specified bank accounts and
used to offer and sell may also include other credit enhancements.
any series of securities
only if accompanied by the The Securities--
prospectus supplement
for that series. o will be asset-backed securities issued
periodically in designated series of one
or more classes.
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.
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.
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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.
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TABLE OF CONTENTS
Page
Summary: Overview of Transactions............................................3
Risk Factors.................................................................4
You will bear the reinvestment
risk and other interest rate risk if
receivables are prepaid,
repurchased or extended................................................4
Our bankruptcy or the
bankruptcy of Case Credit
Corporation may cause payment
delays or losses.......................................................5
Bankruptcy of an equipment
dealer or broker may cause
payment delays or losses...............................................6
Possible liability for third party
claims may cause payment delays
or losses..............................................................7
Defaults on the receivables may
cause payment delays
or losses..............................................................8
Characteristics of the Receivables...........................................8
Selection Criteria...........................................................8
Payment Terms............................................................11
Insurance................................................................12
Extension Procedures.....................................................12
Terms of Leases..........................................................12
Origination of Receivables..................................................13
Credit Approval Process..................................................14
Loan/Lease-to-Value Ratio................................................15
Dealer Agreements........................................................16
Delinquencies, Repossessions and
Net Losses............................................................16
Use of Proceeds.............................................................17
Important Parties...........................................................17
Case Receivables II Inc..................................................17
Case Credit Corporation..................................................17
Case Corporation.........................................................18
The Trustee..............................................................19
The Indenture Trustee....................................................19
Description of the Notes....................................................19
Principal and Interest on
the Notes................................................................20
The Indenture...............................................................20
Description of the Certificates.............................................25
Administrative Information About
the Securities..............................................................26
Denominations............................................................26
Fixed Rate Securities....................................................26
Floating Rate Securities.................................................26
Indexed Securities.......................................................27
Book-Entry Registration..................................................28
Definitive Securities....................................................32
List of Securityholders..................................................33
Reports to Securityholders...............................................34
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Description of the Transaction
Agreements..................................................................36
Commercial Paper Program.................................................36
Additional Sales of
Receivables..............................................................38
Accounts............................................................39
Servicing Procedures.....................................................41
Collections..............................................................42
Servicing Compensation...................................................43
Rights Upon Servicer Default.............................................44
Waiver of Past Defaults...............................................45
Amendment................................................................45
Payment of Notes.........................................................46
Termination..............................................................46
Administration Agreement.................................................46
Credit and Cash Flow
Enhancement.................................................................47
Legal Aspects of the
Receivables.................................................................48
Bankruptcy Considerations
Relating to Case Credit..................................................48
Bankruptcy Considerations
Relating to Dealers...................................................50
Perfection and Priority With
Respect to Receivables................................................50
Security Interests in Financed
Equipment.............................................................50
Security Interests in Leased
Equipment.............................................................52
Bankruptcy Considerations
Relating to a Lessee..................................................53
Repossession.............................................................54
Notice of Sale; Redemption Rights........................................55
Uniform Commercial Code
Considerations........................................................55
Vicarious Tort Liability.................................................55
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Deficiency Judgments and Excess
Proceeds; Other Limitations...........................................56
U.S. Federal Income Tax
Consequences..........................................................57
Tax Characterization of
the Trust................................................................58
Tax Consequences to Holders of
the Notes.............................................................59
Tax Consequences to Holders of
the Certificates......................................................62
Illinois State Tax Consequences.............................................69
Treatment of the Notes................................................70
Classification of Trust as a
Partnership...........................................................70
Treatment of Nonresident
Certificateholders....................................................70
Risks of Alternative
Characterization......................................................71
ERISA Considerations........................................................71
Plan of Distribution........................................................72
Legal Opinions..............................................................72
Where You Can Find More
Information..............................................................73
Index of Terms..............................................................75
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Summary: Overview of Transactions
_____________ _____________
| | | Case | ( )
| Case Credit | Receivables |Receivables |Receivables ( Trust ) Securities
| Corporation |-------------> | II Inc. |----------->( ) ---------->
|_____________| |_____________|
Each series of securities will be issued by a separate trust and will include:
o one or more classes of notes, representing debt of the trust; and
o one or more classes of certificates, representing ownership interests in
the trust.
Payments on the certificates issued by a trust will be junior in priority
to payments on the related notes. 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. We will disclose the details of these timing,
priority and other matters in a prospectus supplement.
The primary assets of each trust will be a pool of receivables. Each trust
will also include spread accounts or other credit enhancements for the
benefit of some or all of the trust's securities.
We will sell receivables to each trust on the issuance date for that
trust's securities. In addition, to the extent described in the related
prospectus supplement, each trust will have a pre-funding period. In that
case, a portion of the cash raised from the sale of the related securities
will be placed in a pre-funding account. The trust will use that cash to
buy additional receivables from us during a pre-funding period, which will
last not more than six months.
Each trust's receivables will be originated directly or indirectly by Case
Credit. We will buy those receivables from Case Credit either directly or
indirectly through another of its subsidiaries. Case Credit continues to
service receivables that are transferred to trusts under one of the
agreements entered into by each trust, subject to removal upon specified
servicer defaults. Case Credit also acts as administrator for each trust.
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Risk Factors
You should consider the following risk factors in deciding whether to
purchase the securities.
You will bear the The principal payment on any series of securities on
reinvestment risk and any payment date will depend mostly upon the amount
other interest rate of collections received on that trust's receivables
risk if receivables are during a related collection period. As a result,
prepaid, repurchased the rate at which payments on the receivables are
received will affect the rate at which principal is
paid on the related securities. Each receivable has
a fixed payment schedule, but the actual rate at
which payments are received may vary from that
schedule for a number of reasons.
o Receivables may be voluntarily prepaid, in
full or in part, or obligors may be
required to prepay receivables as a result
of defaults, casualties to the related
equipment, death of an obligor or other
reasons. Prepayments of agricultural
equipment retail installment sale contracts
or loans, 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. However, prepayment rates may be
influenced by a variety of factors, and we
cannot predict them with any certainty.
o We or the servicer of the receivables may
be required to repurchase one or more
receivables from a trust. In that case the
repurchase price received by the trust will
be treated like a prepayment of the
receivable. This would happen if we or Case
Credit have made inaccurate representations
about a receivable or the servicer violated
specified servicing obligations.
o The servicer may purchase all of a trust's
receivables after they have paid down to
10% of their aggregate balance when they
were transferred to the trust. In this
case, the purchase price received by the
trust will be treated like a prepayment of
the remaining receivables.
Each prepayment, repurchase or purchase will
shorten the average life of the related
securities. On the other hand, the payment
schedule under a receivable may be extended
or revised by the servicer, which may
lengthen the average life of the related
securities.
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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.
Our bankruptcy or the Case Credit Corporation will sell receivables to
bankruptcy of Case us, and we will in turn sell receivables to each
Credit Corporation trust. However, a court could conclude that we or
may cause payment Case Credit Corporation effectively still own the
delays or losses. This receivables supporting any series of
securities. This could happen because the
court concludes either that the sales
referred to above were not "true sales" or
that we or the trust should be treated as
the same person as Case Credit Corporation
or the trust should be treated as the same
person as us 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;
o tax or government liens on Case Credit
Corporation's or our 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; or
o the fact that the trust might not have a
perfected interest in (a) some equipment
subject to certificate of title statutes
or (b) any cash collections on the
receivables held by Case Credit
Corporation at the time that a bankruptcy
proceeding begins.
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Bankruptcy of an
equipment dealer or A substantial portion of the receivables was
broker may cause originated by equipment dealers or brokers and
payment delays or purchased by Case Credit Corporation. A portion of
losses. those receivables provide for recourse to the
originating broker or dealer for defaults by the
obligors. In addition, Case dealers have the right
to repurchase at any time the receivables they
sell to Case Credit.
In the event of a dealer or broker's
bankruptcy, a creditor or bankruptcy trustee
of the dealer or broker or the dealer or
broker itself might assert that the sales of
receivables to Case Credit are loans to the
dealer or broker secured by the receivables.
Such an assertion could result in payment
delays and, if successful, losses on the
affected receivables. In those circumstances,
a dealer or broker or its bankruptcy trustee
might also be able to reject any leases
originated by the dealer or broker that were
deemed to be "true leases," resulting in the
termination of scheduled payments under those
leases.
Possible liability for The sales of receivables from Case Credit to us
third party claims may and from us to each trust are intended to reduce
cause payment delays the possibility that cash flows from the
or losses. receivables will be subject to claims
other than the rights of investors in the
related securities and of the parties to the
applicable transaction agreements. However,
to the extent that Case Credit or a dealer or
broker violates 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
transaction agreements, we must repurchase
any affected receivable from the trust.
However, if we fail for any reason to perform
our repurchase obligation, you could
experience delays or reductions in payments
on your securities as a result of any
liabilities imposed upon your trust.
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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. If applicable law
permits an action, and that action is
successful, the related trust and its assets
may be subject to liability to any 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
that loss.
Defaults on the You will rely primarily upon collections on the
receivables may cause receivables in your trust for payments on your
payment delays or securities. Your securities may have the benefit
losses. 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.
Characteristics of the Receivables
We will provide information about each trust's pool of receivables in
the related prospectus supplement. The information will include, to the extent
appropriate, the types and composition of the receivables, the distribution by
interest rate or spread over a designated floating rate, type of equipment,
payment frequency and contract value of the receivables and the geographic
distribution of the receivables.
Selection Criteria
We will select receivables to sell to each trust using several
criteria. These criteria will include that each receivable transferred to a
trust must:
(1) be secured by new or used agricultural, construction or
other equipment, or be leases of such equipment, except that
receivables that are term loans to equipment dealers may be secured by
other collateral or not be secured;
(2) be originated in the United States;
(3) provide for payments that fully amortize the amount
financed over its original term to maturity-which payments may, in the
case
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of any lease, include a termination value similar to a final balloon
payment payable by either the lessee or the dealer that originated the
lease;
(4) not be a non-performing receivable and 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;
and
(5) not have an obligor that is shown in Case Credit's
records as being the subject of a bankruptcy proceeding.
Additional criteria for any particular trust's receivables may be
listed in the related prospectus supplement. We will not use selection
procedures that we believe to be adverse to you in selecting the receivables
for your trust.
Each trust's receivables may include receivables with respect to
which the initial payment has not been made. They may also include interest
waiver receivables, under which interest does not begin to accrue for a
designated time period, as well as receivables originated through special
interest rate financing programs.
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. 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.
Interest and Amortization Types
A trust's receivables may include fixed rate receivables and
floating rate receivables, as well as receivables that provide for
different fixed or floating interest rates or different formulae to
calculate the floating interest rate at different times during the life of
the receivable. Receivables that are loans or retail installment contracts
have an explicit interest rate that is usually named in the contract that
evidences the receivable. Other receivables, including leases, may not
disclose an explicit interest rate, but they have an implicit interest rate
that Case Credit uses to calculate the periodic rental payments in a way
similar to the way that it calculates periodic installment payments under a
retail installment contract or retail installment loan.
All of the receivables in each trust will be either precomputed
receivables or simple interest receivables. The difference between these
two types of receivables is the way that each installment payment is
divided between principal and interest.
Under a precomputed receivable, each installment payment is divided
between interest and principal on a predetermined basis, without regard to the
period of time that has elapsed since the prior payment was made. This
allocation is made either on an actuarial basis or according to a variation on
the rule of 78's. (See box.) In contrast, under a simple interest receivable,
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each installment payment is divided between interest and principal based on
the actual date on which a payment is received. The interest component
equals the unpaid principal amount financed, multiplied by the annual
interest rate, multiplied by the fraction of a calendar year that has
elapsed since the preceding payment of interest was made.
Under a simple interest receivable, 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. The final
installment on a simple interest receivable is increased or decreased as
necessary to adjust for variations in the amounts of prior installments
applied to principal, based upon the date on which they were made.
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Under an actuarial receivable, the interest component of each
installment equals the unpaid principal amount financed,
multiplied by the annual interest rate, multiplied by an
appropriate fraction. On a receivable that requires payments
every month, the appropriate fraction would be 1/12, since that
is the portion of a year that elapses between the required
payment dates. On a receivable that requires payments every three
months, the appropriate fraction would be 3/12, or 1/4.
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Under a rule of 78's receivable, the interest component of each
installment is determined using a method equivalent to the rule
of 78's. 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 at any time is equal to
that portion of the finance charge which the sum of the number of
months the obligations are outstanding after the calculation date
(counting 1 month as 1, 2 months as 3 (1 + 2), etc., up to 78)
bears to 78.
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If a precomputed receivable is prepaid in full, the obligor is entitled
to a rebate equal to the portion of the total amount of payments that is
allocable to unearned add-on interest. 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 the rebate on a precomputed
receivables is determined based upon whether the receivable is an actuarial
receivable or a rule of 78's receivable and the requirements of the law of the
state where the obligor is located.
The amount of the rebate under a rule of 78's receivable generally will
be less than the amount of the rebate on an actuarial receivable for the same
amount 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. These amortization features and related
rebates for precomputed receivables should not result in shortfalls of principal
payments on your 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.
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Payment 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. Receivables secured by
construction equipment are normally financed with equal monthly payments.
However, obligors can select a "skip payment" schedule, under which
payments in up to three predetermined consecutive months are "skipped" to
coincide with slow work periods. 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. Obligors can only make this election at the time the
receivable is originated.
Insurance
Obligors are required to obtain and maintain physical damage insurance
with respect to the financed or leased equipment and, in the case of a
lease, liability insurance with respect to the leased equipment. Dealers
that sell receivables to Case Credit are responsible for verifying physical
damage insurance coverage on the equipment at the time the receivable is
originated. If a dealer fails to verify insurance coverage and the obligor
did not obtain insurance coverage at the time the receivable was
originated, the dealer will be responsible for any resulting loss. At the
time the receivable is originated, Case Credit offers customers physical
damage insurance and life insurance that can be financed under the
receivable.
Extension Procedures
Case Credit may agree to extend a receivable when payment
delinquencies result from temporary interruptions in an obligor's cash
flow. In an extension, Case Credit moves one or more payments to a future
date, which may be before or after the original final maturity of the
receivable. Case Credit charges obligors an extension fee, which is usually
payable at the time a receivable is extended. The extension fee is
generally equal to interest accrued on the unpaid balance of the receivable
during the period that payments are not required to be made as a result of
the extension. Any extension fees paid in connection with receivables sold
to a trust will be paid to that trust.
Terms of Leases
The leases transferred to the trusts will call for two kinds of
payments: rental payments that are due periodically during the term of the
lease; and a termination value payment. Under the leases, the lessee's
obligation to make rental payments is absolute and unconditional, without
set-off or counterclaim, and notwithstanding any damages to, or loss of, the
leased equipment or any other event. However, lessees are not required to make
termination value payments. Instead, the lessee has the option to purchase the
leased equipment at the end of the lease term for an amount equal to the
termination value payment.
The termination value payment is in an amount generally equal to
the portion of the original equipment cost that has not been amortized
through the principal component of the periodic rental payments. If a
lessee does not elect to purchase the leased equipment at the end of the
lease term, then, under the leases that are eligible to be transferred to
trusts, 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 for any trust,
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obtain possession of any leased equipment or be entitled to the proceeds from
the sale of such equipment, other than termination value payments and proceeds
of equipment that 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.
Origination of Receivables
Case Credit originates receivables that may be sold to the trusts in
several ways:
o It purchases retail installment contracts and leases from
dealers in agricultural, construction and other equipment
manufactured or otherwise distributed by Case Corporation and
other equipment not distributed by Case Corporation. As of
December 31, 1998, there were approximately 1,000
independently owned Case dealer outlets in the United States.
o It finances retail installment contracts and leases originated
through one retail outlet directly owned by Case which are
immediately assigned to Case Credit.
o It purchases retail installment contracts, retail installment
loans and leases from other dealers and through brokers in
agricultural, construction and other equipment.
o It makes, or may in the future make, retail installment loans
directly to purchasers of agricultural, construction and other
equipment.
o It makes term loans directly to equipment dealers. These
include loans secured by rental equipment, rolling stock and
computer systems and unsecured loans.
Case Credit finances the following categories of equipment:
- -------------------------------------------------------------------------------
Agricultural equipment:tractors, combines, cotton pickers,
equipment: soil management equipment, planting and seeding
equipment, hay and forage equipment, crop care
equipment (such as sprayers and irrigation
equipment) and other related equipment
- -------------------------------------------------------------------------------
Construction excavators, backhoes, wheel loaders, skid steer loaders,
equipment: tractor loaders, trenchers, Horizontal directional drilling
equipment, telescopic handlers, forklifts, compaction
equipment, crawlers, cranes and other related equipment
- -------------------------------------------------------------------------------
Other equipment: trucks, commercial vehicles, forestry equipment, mining
equipment, trailers, all-terrain vehicles, snowmobiles, snow
grooming equipment 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
- -------------------------------------------------------------------------------
Credit Approval Process
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Case Credit requires each prospective customer to complete a credit
application that lists the applicant's liabilities, income, credit history and
other demographic and personal information. This information is obtained by a
dealer or Case Credit, and in either case is sent to one of four regional
finance offices maintained by Case Credit. The regional finance office then
processes this information and obtains additional information to evaluate the
prospective customer's creditworthiness. The extent of the additional
information varies based primarily on the amount of financing requested. In most
cases, Case Credit obtains a credit bureau report on the applicant from an
independent credit bureau or checks credit references provided by the applicant,
typically banks or finance companies or suppliers that have furnished credit to
the applicant. In some cases, Case Credit obtains audited or certified financial
statements of the applicant.
As part of the credit review process for retail installment contracts,
retail installment loans and leases, Case Credit analyzes data regarding the
applicant and additional information using a credit scoring model. Case Credit
uses a credit scoring model that was developed for Case Credit by Fair, Isaac
and Company, Inc. Case Credit periodically evaluates credit scoring and may
utilize a different credit scoring model for trucks. The models are 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 at least a five-year loan history on all
past and present customers it reviews.
Case Credit evaluates creditworthiness based on criteria established by
its management. It uses the same credit criteria for retail installment
contracts, retail installment loans and leases and similar credit criteria for
dealer loans. It also uses the same credit criteria regardless of which of its
regional finance offices reviews the application and whether the related
receivable will be purchased by Case Credit from a dealer, assigned by Case to
Case Credit or take the form of a direct loan by Case Credit to an equipment
purchaser.
Loan/Lease-to-Value Ratio
The maximum amount that Case Credit will finance under a retail
installment contract, retail installment loan or lease varies based on the
obligor's credit history, the type of equipment financed, whether the equipment
is new or used, the payment schedule and the length of the receivable. The
amount financed is calculated as a percentage of the value of the related
equipment, which may not exceed 105% unless an authorized senior credit manager
specifically approves an exception to this limit. For this purpose, the value of
new equipment is based on the dealer's cost plus freight charges. The value of
used equipment is based on the equipment's "as-is" value reported in the most
recent edition of the North American Equipment Dealers Association guidebook or
other comparable guidebook.
Exceptions to the 105% limit are unusual. Case Credit makes exceptions
only when the senior credit manager 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 overall limit on the
ratio that may be approved by a senior credit manager. The limit in each case
would be based upon the senior credit manager's judgement about the obligor's
overall financial condition.
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Case Credit continues to operate under its traditional guidelines and
practices for loan/lease to asset value ratios. Consequently, we do not believe
that those ratios should reasonably be expected to cause any trust to have
credit loss and repossession experience materially different from the historical
experience reflected in the related prospectus supplement.
The maximum amount that Case Credit will finance under a dealer loan is
generally based upon an analysis of the dealer's overall financial condition, in
addition to 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 a receivable or leased under a receivable
depreciates in value over time. However, Case Credit's practice is to provide
for repayment schedules under the receivables that will generally result in the
outstanding principal balance of a receivable at any time in its life being less
than the anticipated value of the equipment at the time.
Dealer Agreements
Some of the receivables that Case Credit buys from dealers provide for
recourse to the dealer if the obligor defaults on the receivable. A portion of
the receivables that Case Credit purchases from Case dealers provide for
recourse to the dealer through a reserve account maintained by the dealer with
Case Credit in which the dealer is required to maintain amounts on deposit. Case
Credit will assign to us, and we will assign to the trusts any rights to
recourse against dealers, except for recourse to the dealers' reserve accounts.
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.
Even when Case Credit purchases a receivable without recourse to the
dealer for obligor defaults, the selling dealer makes limited representations
and warranties about the receivables. Case Credit will assign to us, and we will
assign to the trusts, any rights against dealers arising as a result of a breach
of these representations and warranties.
We make no representation as to the financial condition of any of the
dealers or about their abilities to perform any repurchase obligations that may
arise.
Delinquencies, Repossessions and Net Losses
We provide you with historical information concerning delinquencies,
repossessions and net losses on the entire portfolio of receivables serviced by
Case Credit in the prospectus supplement for your securities. This information
may exclude any category of receivables not included in your trust.
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Use of Proceeds
Each trust will apply the net proceeds from the sale of its securities
to buy receivables from us and to make deposits in various trust accounts,
including any pre-funding account for that trust. We will use that portion of
the net proceeds paid to us to repay outstanding indebtedness under our
asset-backed commercial paper facility or to purchase related receivables from
Case Credit.
Important Parties
Case Receivables II Inc.
We will sell receivables to each trust. We are a wholly-owned
subsidiary of Case Credit and were incorporated in the State of Delaware on
June 15, 1994. We were organized for the limited purpose of buying
receivables from Case Credit, transferring those receivables to third
parties and any related activities. Our principal executive offices are
located at 475 Half Day Road, Suite 200, Lincolnshire, Illinois 60069, and
our telephone number is (847) 955-1002. You can find information about our
legal separateness from Case Credit, the restrictions on our activities and
possible effects on you if we were to enter bankruptcy, reorganization or
other insolvency proceedings under "Legal Aspects of the Receivables -
Bankruptcy Considerations Relating to Case Credit."
Case Credit Corporation
Case Credit Corporation, a Delaware corporation (often referred
to as "Case Credit"), will service the receivables owned by each trust.
Case Credit is a wholly owned finance subsidiary of Case Capital
Corporation which is a wholly owned 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 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 equipment dealers, including Case and non-Case
dealers. In addition, Case Credit facilitates and finances the sale of insurance
products to retail customers, provides financing for dealers and rental
equipment yards, and also provides other retail financing programs for end-use
customers in the United States, Canada, Australia and other parts of the world.
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. As
required by that act, Case Credit files reports and other information with the
SEC. You can find more information about Case Credit in the reports and other
information that are described under "Where You Can Find More Information."
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Case Corporation
Case Corporation, a Delaware corporation (often referred to as "Case"),
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. When we refer to Case in this prospectus and any
prospectus supplement, we are referring 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, through Case Credit, offers various types of
retail financing to qualified end-users in the United States, Canada,
Australia and other parts of the world. 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 sale 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.
On May 15, 1999, Case, Fiat S.p.A., a company organized under the
laws of Italy, New Holland N.V., a company organized under the laws of the
Netherlands, and Fiat Acquisition Corporation, a Delaware corporation and a
wholly owned subsidiary of Fiat S.p.A., entered into an Agreement and Plan
of Merger under which Fiat Acquisition Corporation will merge into Case,
with Case as the surviving corporation. At the effective time of the
merger, Case's common stock will be converted into the right to receive
cash and Case will become a wholly-owned subsidiary of Fiat S.p.A.
Consummation of the merger is subject to a number of conditions, including
(1) the adoption of the Agreement and Plan of Merger by the stockholders of
Case entitled to vote on this matter, (2) the expiration of all applicable
regulatory waiting periods and (3) other customary conditions.
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 Securities Exchange Act. As required by that
act, Case files reports and other information with the SEC. You can find more
information about Case in the reports and other information that are described
under "Where You Can Find More Information."
The Trustee
We will identify the trustee for your trust in your prospectus
supplement. A trustee's liability in connection with the issuance and sale of
the related securities is limited solely to its express obligations under the
related agreements. A trustee may resign at any time, in which event Case
Credit, as servicer, must appoint a successor trustee. The administrator of a
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trust may also remove the trustee if the trustee ceases to be eligible to
continue as trustee or if the trustee becomes insolvent. In that case, the
administrator must appoint a successor trustee. No resignation or removal
of a trustee or appointment of a successor trustee will become effective
until acceptance of the appointment by the successor trustee.
The Indenture Trustee
We will identify the indenture trustee for your series of notes in your
prospectus supplement. An indenture trustee may resign at any time, and may be
removed by the trustee if the indenture trustee becomes insolvent or ceases to
be eligible to continue as indenture trustee. If an indenture trustee resigns or
is removed, the trust must appoint a successor indenture trustee. No resignation
or removal of an indenture trustee or appointment of a successor indenture
trustee will become effective until the successor indenture trustee has accepted
its appointment.
Description of the Notes
Each trust will issue one or more classes of notes pursuant to an
indenture between the trust and an indenture trustee. We have filed a form of
the indenture to be used as an exhibit to the registration statement of which
this prospectus is a part. In addition to the notes offered by this prospectus,
each trust may issue one or more additional classes of notes that may be sold in
transactions exempt from registration under the Securities Act or retained by us
or our affiliates. Those additional classes of notes may be issued under the
related indenture or under a separate agreement. We summarize the material terms
of the notes and indentures below. This summary does not include all of the
terms of the notes and the indentures and is qualified by reference to the
actual notes and indentures.
Principal and Interest on the Notes
We will describe the timing and priority of payment, seniority,
redeemability, allocations of losses, interest rate and amount of or method of
determining payments of principal and interest on each class of notes of a
series 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
the same series. Each series may include one or more classes of notes of a type
known as "strip notes." Strip notes are entitled to (a) principal payments with
disproportionate, nominal or no interest payments or (b) interest payments with
disproportionate, nominal or no principal payments. Each class of notes may have
a different interest rate, which may be a fixed or floating rate and may be zero
for strip notes.
The Indenture
Modification of Indenture. The indenture for each trust may be amended
with the consent of the holders of at least a majority of the outstanding
principal amount of notes of the related series, the trust and the indenture
trustee. However, the following changes may not be made to any indenture without
the consent of each affected noteholder:
(1) any change to the due date of any installment of
principal of or interest on any note or any reduction of the principal
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amount of any note, the interest rate for any note or the redemption
price for any note, or any change to the place for or currency of
any payment on any note;
(2) any change that impairs the right of a noteholder to take
legal action to enforce payment under the provisions of the indenture;
(3) any reduction in the percentage of noteholders, by
aggregate principal balance, that is required to consent to any
amendment or to any waiver of defaults or compliance with provisions
of the indenture;
(4) any modification of the provisions of the indenture
regarding the voting of notes held by us, the applicable trust, any
other obligor on the notes, or any of our respective affiliates;
(5) any reduction in the percentage of noteholders, by
aggregate principal balance, that is required to direct the indenture
trustee to sell or liquidate the receivables if the proceeds of sale
would be insufficient to pay the notes in full, with interest; or
(6) any change that adversely affects the status or priority
of the lien of the indenture on any collateral.
Also, unless otherwise provided in the applicable prospectus
supplement, a trust and the applicable indenture trustee may enter into
supplemental indentures without obtaining the consent of the noteholders of the
related series, for the purpose of:
(a) changing the related indenture or the rights of
noteholders, if the change will not materially and adversely affect
the interests of any noteholder; or
(b) substituting credit enhancement for any class of notes, if
the applicable rating agencies confirm in writing that the substitution
will not result in the reduction or withdrawal of the rating of those
notes or any other class of securities in the same series.
Events of Default; Rights upon Event of Default. Any one of the
following events will be an event of default for the notes in your series,
unless otherwise specified in your prospectus supplement:
o the trust fails to pay any interest on any note within five
days after its due date;
o the trust fails to pay any installment of the principal of
any note on its due date;
o the trust breaches any of its other covenants in the indenture
for 30 days after notice of the breach is given to the trust
by the indenture trustee or to the trust and the indenture
trustee by the holders of at least 25% of the outstanding
principal amount of the notes in your series;
o the trust fails to correct a breach of a representation or
warranty it made in the indenture, or in any certificate
delivered in connection
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with the indenture, that was incorrect in a material respect
at the time it was made, for 30 days after notice of the
breach is given to the trust by the indenture trustee or to
the trust and the indenture trustee by the holders of at least
25% of the outstanding principal amount of the notes in your
series; or
o the trust becomes bankrupt or insolvent or is liquidated.
You should note, however, that until the final scheduled maturity date
for any class of notes, the amount of principal due to noteholders in your
series generally will be limited to amounts available for that purpose. Also, if
specified in the applicable prospectus supplement, the amount of interest due to
noteholders of any class may be limited to amounts available for that purpose.
Therefore, 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 that class of notes.
If an event of default with respect to the notes of any series occurs
and is not remedied as provided in the applicable indenture, then the principal
of the notes of that series may be declared to be immediately due and payable by
the indenture trustee, holders of a majority in principal amount of those notes
or, if so specified in the applicable prospectus supplement, holders of a
majority in principal amount of one or more particular classes of those notes.
Unless otherwise specified in your prospectus supplement, that declaration may
be rescinded by holders of a majority of the outstanding principal amount of the
notes of that series, but only after payment of any past due amounts and cure or
waiver of all other events of default. Noteholders' voting rights may vary by
class.
If the notes of any series have been declared due and payable following
an event of default, the indenture trustee for that series 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 those receivables and continue to apply
collections on them as if there had been no declaration of acceleration. Unless
otherwise specified in the related prospectus supplement, however, the each
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 in the payment of any interest on any note that continues for five
days or more, unless (i) the holders of all the outstanding notes of that series
consent to the sale, (ii) the proceeds of the sale are sufficient to pay in full
the principal of and the accrued interest on those notes at the date of such
sale or (iii) the indenture trustee for that series determines that the proceeds
of receivables would not be sufficient on an ongoing basis to make all payments
on those notes as those payments would have become due if those obligations had
not been declared due and payable, and the indenture trustee obtains the consent
of the holders of 66 2/3% of the outstanding principal amount of those notes.
Each indenture will provide that, subject to the duty of the indenture
trustee to act with the required standard of care if an event of default occurs,
the indenture trustee is not required to exercise any of its rights or powers
under the indenture at the request or direction of any of the noteholders, if
the indenture trustee reasonably believes it will not be adequately indemnified
against the costs, expenses and liabilities which might be incurred by it in
complying with that request. Subject to the provision of adequate
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indemnification of the indenture trustee, the holders of a majority of the
outstanding principal amount of the notes of a series (or of one or more
classes of those notes, if so specified in the applicable prospectus
supplement) will have the right to direct the time, method and place for
any remedy available to the indenture trustee.
Unless otherwise specified in the related prospectus supplement, no
noteholder will have the right to take legal action under the related
indenture, unless:
o the noteholder gives the indenture trustee written notice of a
continuing event of default;
o the holders of at least 25% of the outstanding principal
amount of notes of that series have requested in writing that
the indenture trustee take legal action and offered reasonable
indemnity to the indenture trustee;
o the indenture trustee has not received a direction not to take
legal action from the holders of a majority of the outstanding
principal amount of the notes in that series; and
o the indenture trustee has failed to take legal action within
60 days.
In addition, each indenture trustee and the noteholders, by accepting
their notes, will covenant that they will not at any time institute any
bankruptcy or insolvency proceeding against their trust.
None of the trustee for any trust, the related indenture trustee in its
individual capacity, any holder of a certificate representing an ownership
interest in a trust or any of their respective owners, beneficiaries, agents,
officers, directors, employees, affiliates, successors or assigns will 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. In its indenture, each trust will agree not to
consolidate with or merge into any other entity, unless:
o the entity formed by or surviving the consolidation or merger
is organized under the laws of the United States or any state,
o that entity expressly assumes the trust's obligations relating
to the notes,
o immediately after the transaction, no event of default would
have occurred and not have been remedied,
o the trust has been advised that the ratings of the notes or
the certificates of the particular series then in effect would
not be reduced or withdrawn by the applicable rating agencies
as a result of the transaction, and
o the trust has received an opinion of counsel to the effect
that the consolidation or merger would have no material
adverse tax
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consequence to the trust or to any related noteholder or
certificateholder.
Each trust will also agree not to take the following actions:
o sell or otherwise dispose of any of its assets, except as
permitted by its transaction documents,
o claim any credit on or make any deduction from the principal
and interest payable in respect of its notes, other than
amounts withheld under the Internal Revenue Code or applicable
state law,
o assert any claim against any present or former holder of
those notes because of the payment of taxes levied or
assessed upon the trust,
o dissolve or liquidate in whole or in part, except as
contemplated by its transaction documents,
o permit the validity or effectiveness of its indenture to be
impaired or permit any person to be released from any
obligations with respect to the notes under its indenture,
except as may be expressly permitted by its indenture,
o permit any lien, claim or other encumbrance to affect its
assets or any part of the trust, any interest in its assets
or the trust or any related proceeds, or
o incur, assume or guarantee any indebtedness other than
indebtedness incurred pursuant to its notes and its other
transaction documents.
Each trust may engage in only the activities described in the related
prospectus supplement.
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 its indenture.
Indenture Trustee's Annual Report. The indenture trustee for each trust
will be required to mail each year to all of the related noteholders a brief
report relating to its eligibility and qualification to continue as indenture
trustee, any amounts advanced by it under the indenture, information about
indebtedness owing by the trust to the indenture trustee in its individual
capacity, any property and funds physically held by the 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 may be discharged
with respect to the collateral securing the related notes upon the delivery to
the related indenture trustee for cancellation of all of the related notes or
upon deposit with the indenture trustee of funds sufficient for the payment in
full of the notes.
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Description of the Certificates
Each trust will issue one or more classes of certificates pursuant
to a trust agreement between us and a trustee. We have filed a form of the
trust agreement to be used as an exhibit to the registration statement of
which this prospectus is a part. A trust's certificates may be offered by
this prospectus or may be sold in transactions exempt from registration
under the Securities Act or retained by us or our affiliates. We summarize
the material terms of the certificates below. This summary does not include
all of the terms of the certificates and is qualified by reference to the
actual certificates.
We will describe the timing and priority of payment, seniority,
redeemability, allocations of losses, interest rate and amount of or method of
determining payments of principal and interest on each class of certificates of
a series in the related prospectus supplement. Certificateholders' rights to
receive payments on their certificates will be junior to the payment rights of
noteholders in the same series to the extent described in the applicable
prospectus supplement. In addition, the right of holders of any class of
certificates to receive payments of principal and interest may be senior or
subordinate to the rights of holders of any other class or classes of
certificates of the same series. Each series may include one or more classes of
certificates of a type known as "strip certificates." Strip certificates are
entitled to (a) principal payments with disproportionate, nominal or no interest
payments or (b) interest payments with disproportionate, nominal or no principal
payments. Each class of certificates may have a different interest rate, which
may be a fixed or floating interest rate and may be zero for strip certificates.
Administrative Information About the Securities
Denominations
We will identify minimum denominations for purchase of securities in
the related prospectus supplement. If we do not specify any denomination, then
the securities will be available for purchase in minimum denominations of $1,000
and in greater whole-dollar denominations.
Fixed Rate Securities
Each class of securities may bear interest at a fixed or floating rate
per annum. We will identify the applicable interest rate for each class of fixed
rate securities 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, unless we specify a different computation basis in the
applicable prospectus supplement.
Floating Rate Securities
Each class of floating rate securities will bear interest for interest
periods specified in the applicable prospectus supplement at a rate per annum
equal to:
o a specified base interest rate, which will be based upon the
London interbank offered rate (commonly known as "LIBOR"),
commercial paper rates, federal funds rates, U.S. Government
treasury securities rates, negotiable certificates of deposit
rates or another index rate we specify in the applicable
prospectus supplement;
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o plus or minus a "spread" of a number of basis points (i.e.,
one-hundredths of a percentage point) we will specify in the
applicable prospectus supplement;
o or multiplied by a "spread multiplier," which is a percentage
that we will specify in the applicable prospectus supplement.
In the prospectus supplement for any floating rate securities we may
also specify either or both of the following for any class:
o a maximum, or ceiling, on the rate at which interest may
accrue during any interest period and
o a minimum, or floor, on the rate at which interest may accrue
during any interest period.
In addition to any maximum interest rate specified in the applicable prospectus
supplement, 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.
Each trust that issues floating rate securities will appoint a
calculation agent to calculate interest rates on each class of its floating rate
securities. The applicable prospectus supplement will identify the calculation
agent for each class of floating rate securities in the offered series.
Determinations of interest by a calculation agent will be binding on the holders
of the related floating rate securities, in the absence of manifest error. 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,
unless we specify a different rounding rule in the related prospectus
supplement.
Indexed Securities
We may also specify in any prospectus supplement that any class of
securities of the related series will be "indexed securities." In that case, the
principal amount payable at the final scheduled payment date for that class
would be determined by reference to an index related to:
o the difference in the rate of exchange between United States
dollars and a currency or composite currency specified in the
prospectus supplement;
o the difference in the price of a specified commodity on
specified dates;
o the difference in the level of a specified stock index, which
may be based on U.S. or foreign stocks on specified dates; or
o another objective price or economic measure described in the
prospectus supplement.
We will disclose the manner of determining the principal amount payable
on any indexed security and historical and other information concerning the
index used in that determination in the applicable prospectus supplement,
together with
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information concerning tax consequences to the holders of the indexed
securities. This may include alternate means to calculate an index if a third
party that initially calculates or announces the index ceases to do so or
changes the basis upon which the index is calculated.
Unless we specify otherwise in the applicable prospectus supplement,
interest on an indexed security will be payable based on the amount designated
in the prospectus supplement as the "face amount" of the indexed security. We
will also specify in the applicable prospectus supplement whether the principal
amount of any indexed security that would be payable upon redemption or
repayment prior to the applicable final scheduled payment date would be its face
amount, its principal amount based on the applicable index at the time of
redemption or repayment or some other amount.
Book-Entry Registration
The Clearing Organizations. We will specify in the related prospectus
supplement whether or not investors may hold their securities in book-entry
form, directly or indirectly, through one of three major securities clearing
organizations:
o in the United States, The Depository Trust Company (commonly
known as "DTC"); or
o in Europe, either Cedel Bank, societe anonyme (commonly known
as "Cedel") or Euroclear (also known as the "Euroclear
System").
Each of these entities holds securities for its participating organizations and
facilitates the clearance and settlement of securities transactions between its
participants through electronic book-entry changes in the participants'
accounts. This eliminates the need for physical movement of certificates
representing the securities.
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 Section 17A of the Securities Exchange Act. 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. The rules
applicable to DTC and its participants are on file with the SEC.
Cedel is incorporated under the laws of Luxembourg as a professional
depository. It settles transactions in a number of currencies, including United
States dollars. Cedel provides its 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's 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
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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.
Euroclear was created in 1968. It settles transactions in a number of
currencies, including United States dollars. Euroclear includes various other
services, including securities lending and borrowing. Euroclear interfaces with
domestic markets in many countries generally similar to the arrangements for
cross-market transfers with DTC described below. Euroclear is operated by Morgan
Guaranty Trust Company of New York, Brussels, Belgium office, under contract
with Euroclear Clearance System, Societe Cooperative, a Belgian cooperative
corporation. All operations are conducted by Euroclear's operator, and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear operator, not the cooperative. The board of the cooperative
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 Euroclear 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. These Terms and
Conditions govern transfers of securities and cash within Euroclear, withdrawal
of securities and cash from Euroclear, and receipts of payments with respect to
securities in Euroclear. All securities in 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.
Book-Entry Clearance Mechanics. If book-entry arrangements are made,
then a nominee for DTC will hold global certificates representing the
securities. Cedel and Euroclear will hold omnibus positions on behalf of their
respective participants, through customers' securities accounts in Cedel's and
Euroclear's names on the books of their respective depositaries, which in turn
will hold positions in customers' securities accounts in the depositaries' names
on the books of DTC.
Transfers between DTC's participants will occur in accordance with DTC
rules. Transfers between Cedel's participants and Euroclear's 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
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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 Cedel's and Euroclear's
depositaries.
Because of time-zone differences, credits of securities in Cedel or
Euroclear as a result of a transaction with a DTC participant will be made
during the subsequent securities settlement processing, dated the business day
following the DTC settlement date. Credits or other transactions in securities
settled during any processing will be reported to the relevant Cedel participant
or Euroclear participant on that 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, unless
the book-entry system for the securities is discontinued. Because of this,
unless and until definitive securities for such series are issued,
securityholders will not be recognized by the applicable indenture trustee or
trustee as "noteholders," "certificateholders" or "securityholders," as the case
may be. Hence, unless and until definitive securities are issued,
securityholders will only be able to exercise their rights as 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. The deposit
of securities with DTC and their registration in the name of its nominee effects
no change in beneficial ownership. DTC has no knowledge of the actual
securityholders of the securities. Its 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 are responsible for keeping
account of their holdings on behalf of their customers.
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Notices and other communications conveyed by DTC to DTC participants,
by DTC participants to indirect participants, and by DTC participants and
indirect participants to securityholders are governed by arrangements among them
and any statutory or regulatory requirements that are in effect from time to
time.
Neither DTC nor its nominee 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 its nominee'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 securities cleared through DTC will
be made to DTC. DTC's practice is to credit participants' accounts on the
applicable payment 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 the payment 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 the DTC participant and not of
DTC, the trustee or us, subject to any statutory or regulatory requirements that
are in effect from time to time. Payment of principal and interest to DTC is the
responsibility of the trustee, disbursement of those payments to DTC
participants is the responsibility of DTC, and disbursement of the payments to
securityholders is the responsibility of DTC participants and indirect
participants.
Principal and interest payments on 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. Those payments will be
subject to tax reporting in accordance with relevant United States tax laws and
regulations, as described below in "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.
We obtained the information in this section concerning DTC, Cedel and
Euroclear and their respective book-entry systems from sources that we believe
to be reliable, but we take no responsibility for its accuracy.
Definitive Securities
Notes or certificates that are initially cleared through DTC will be
issued in definitive, fully registered, certificated form to investors or their
respective nominees, rather than to DTC or its nominee, only if:
o the administrator for any trust advises the related indenture
trustee or the related trustee, as applicable, in writing that
DTC is no longer willing or able to discharge properly its
responsibilities as
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depository with respect to such securities, and the
administrator is unable to locate a qualified successor,
o the administrator, at its option, elects to terminate the
book-entry system through DTC or
o after the occurrence of an event of default or a servicer
default with respect to a series of securities,
securityholders representing at least a majority of the
outstanding principal amount of the notes or the certificates,
as the case may be, in that 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 the notes or certificates is no longer in the best
interest of their holders.
If any of these events occur, the applicable trustee will be required
to notify all holders of the securities in the affected series through clearing
organization 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 the securities to the securityholders as definitive
securities.
Principal and interest payments on all 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
the securities in the related prospectus supplement. Those payments will be made
by check mailed to the address of each holder as it appears on the register
maintained by the applicable trustee. The final payment on any definitive
security, however, will be made only upon presentation and surrender of the
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 with a transfer or exchange.
List of Securityholders
Three or more holders of the notes of any series or one or more holders
of notes evidencing at least 25% of the aggregate outstanding principal balance
of the notes of a series may, by written request to the related indenture
trustee, obtain access to the list of all noteholders maintained by the
indenture trustee for the purpose of communicating with other noteholders with
respect to their rights under the related indenture or the notes. The 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 their
series.
Three or more holders of the certificates of any series or one or more
holders of certificates evidencing at least 25% of the aggregate outstanding
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balance of the certificates of a series may, by written request to the related
trustee, obtain access to the list of all certificateholders maintained by the
trustee for the purpose of communicating with other certificateholders with
respect to their rights under the related trust agreement or the certificates.
Reports to Securityholders
On or prior to each payment date, the servicer for each trust will
prepare and provide to the trust's indenture trustee a statement to be delivered
to the related noteholders and to the trustee a statement to be delivered to the
related certificateholders on the payment date. Each of these statements will
include, to the extent applicable to the particular series or class or
securities, the following information (and any other information specified in
the related prospectus supplement) with respect to the payment date or the
period since the previous payment date:
(1) the amount of any principal payment on each class of
securities;
(2) the amount of any interest payment on each class of
securities;
(3) the aggregate balance of receivables in the trust at
the end of the preceding collection period;
(4) the aggregate outstanding principal balance and the note
pool factor for each class of notes, and the aggregate outstanding
balance and the certificate pool factor for each class of such
certificates, each after giving effect to all payments reported under
clause (1) above;
(5) the amount of the servicing fee paid to the servicer
for the related collection period;
(6) the interest rate for the next period for any
floating rate securities;
(7) the amount of the administration fee paid to the
administrator for the related collection period;
(8) the amount of the net losses on receivables, if any,
for the related collection period;
(9) the aggregate purchase price paid for receivables, if any,
that were repurchased or purchased by us or the servicer in the related
collection period;
(10) the balance on deposit in any spread account or the
amount available under any other credit enhancement on the payment
date, after giving effect to any changes on that date;
(11) for each payment date during a pre-funding period, the
remaining balance in the pre-funding account; and
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(12) for the first payment date that is on or immediately
following the end of a pre-funding period, the amount of any remaining
balance in the pre-funding account that has not been used to fund the
purchase of receivables and is being paid as principal on the
securities.
Each amount described in subclauses (1), (2), (5) and (7) will be
expressed as a dollar amount per $1,000 of the initial principal balance of the
related notes or certificates.
The note pool factor for each class of notes will be a seven-digit
decimal 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 percentage of the initial outstanding principal balance
of such class of notes. Similarly, the certificate pool factor for each class of
certificates will be a seven-digit decimal indicating the remaining 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
outstanding balance of such class of certificates. Each note pool factor and
each certificate pool factor will initially be 1.0000000 and will decline over
time to reflect reductions in the outstanding balance of the applicable class of
notes or certificates.
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
the noteholder's note and (ii) the applicable note pool factor. A
certificateholder's portion of the aggregate outstanding balance of 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.
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.
Description of the Transaction Agreements
We summarize below the material terms of the agreements under which we
will buy receivables, directly or indirectly, from Case Credit and sell them to
each trust, and under which Case Credit will agree to service the trust's
receivables and administer the trust. We will disclose any additional material
terms relating to a particular trust's agreements in the related prospectus
supplement. We have filed forms of these agreements as exhibits to the
registration statement of which this prospectus is a part. The following summary
does not include all of the terms of the agreements and is qualified by
reference to the actual agreements.
Commercial Paper Program
We buy a significant portion of the receivables that we will sell to
most trusts prior to the closing date for the particular trust. In connection
with an asset-backed commercial paper program that we established in August
1994, we entered into a Receivables Purchase Agreement dated as of August 1,
1994, and subsequently amended, with Case Credit. Under that agreement, we
generally buy from Case Credit on a monthly basis all retail installment
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contracts meeting our eligibility requirements that Case Credit originated
in the preceding calendar month. We expect to sell most of the contracts
that we buy from Case Credit under this arrangement to a trust that will
issue securities offered under this prospectus.
If Case Credit elects to sell us any retail installment contracts under
this agreement in a month, Case Credit is obligated to sell to us all of the
eligible retail installment contracts originated by Case Credit in the preceding
month, unless the aggregate balance of the contract would exceed the purchase
limit under the agreement. In that case, Case Credit must use procedures to
select the contracts to be sold that are not adverse to our interests.
Under the 1994 Receivables Purchase Agreement, we buy retail
installment contracts and related security interests without recourse to Case
Credit for defaults by the obligors. However, Case Credit represents and
warrants to us on each monthly purchase date as to the retail installment
contracts being sold on that date, among other things, that:
(1) each of the retail installment contracts meets our
eligibility requirements;
(2) the information Case Credit has provided to us about the
retail installment contracts is correct in all material respects;
(3) the obligor on each of the retail installment contracts is
required to maintain physical damage insurance covering the financed
equipment in accordance with Case Credit's normal requirements;
(4) as of the purchase date, the 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;
(5) as of the purchase date, each of the retail installment
contracts is or will be secured by a first priority perfected security
interest in the financed equipment in favor of Case Credit; and
(6) each of the retail installment contracts complied at the
time it was originated and complies as of the purchase date with
applicable Federal and state laws in all material respects, including
consumer credit, truth in lending, equal credit opportunity and
disclosure laws.
If Case Credit breaches any of these representations or warranties,
Case Credit must repurchase from us any retail installment contract materially
and adversely affected by the breach at a price equal to the contract's balance
on the settlement date immediately succeeding the month in which such repurchase
obligation arises. The repurchase obligation is the sole remedy available to us
for any such breach.
While we hold the contracts that we buy from Case Credit under this
arrangement, we borrow against them under a Loan and Security Agreement dated as
of August 1, 1994, and subsequently amended, between us and Case Equipment Loan
Trust 1994-B. Under the Loan and Security Agreement, Case Equipment Loan Trust
1994-B has agreed to make or increase the principal amount of a loan to us on a
monthly basis. In return, we have granted the trust a security interest in
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the retail installment contracts we have purchased as described above and that
have not been previously released, along with some other collateral. The trust
obtains funds to make these loans by issuing commercial paper notes or borrowing
under a Liquidity Agreement among the trust, a group of banks and The Chase
Manhattan Bank, as administrative agent.
Under the Loan and Security Agreement, we have the right to obtain the
release of retail installment contracts and related rights from the lien of the
Loan and Security Agreement for the purpose of transferring those contracts to a
trust that will issue securities for offer under this prospectus. Prior to any
transfer, we must obtain written confirmation from the applicable rating
agencies that the transfer will not result in the withdrawal or downgrade of the
current ratings on the outstanding securities issued by Case Equipment Loan
Trust 1994-B. Also, after giving effect to the transfer and related
transactions, the outstanding principal amount of loans outstanding under the
Loan and Security Agreement must not exceed an amount based on the aggregate
balance of the retail installment contracts pledged under the Loan and Security
Agreement. In connection with any release of retail installment contracts from
the lien of the Loan and Security Agreement, we are required to deposit into the
related collection account an amount equal to the aggregate balance of the
retail installment contracts being released, plus accrued interest at the
applicable interest rates to the release date.
Additional Sales of Receivables
In addition to retail installment contracts that we buy from Case
Credit on a monthly basis as described above, we may also buy receivables from
Case Credit to transfer to a trust on the closing date for that trust under a
separate purchase agreement. We buy those receivables on substantially the same
terms as under the 1994 Receivables Purchase Agreement, as described above. Case
Credit may also sell receivables to another one of its subsidiaries, and we may
buy the receivables from the subsidiary on substantially the same terms as our
purchases from Case Credit.
We then sell receivables that we have bought from Case Credit (or a
Case Credit subsidiary) to a trustee, for the benefit of one of the trusts,
pursuant to a sale and servicing agreement. These sales are also made without
recourse. The related trustee will, concurrently with this sale, execute and
deliver the related notes and certificates. The trust will apply the net
proceeds received from the sale of its notes and certificates to pay us for the
related receivables, and, to the extent specified in the related prospectus
supplement, to make a deposit in a pre-funding account and initial deposits in
other trust accounts. If there is a pre-funding account, then we will buy
additional receivables from Case Credit, and sell them to the trust from time to
time during a pre-funding period, as described further in the related prospectus
supplement.
If we breach any of our representations or warranties made in a sale
and servicing agreement, and our breach is not cured by the last day of the
second (or, if we elect, the first) month following the discovery by or notice
to the trustee of the breach, we will repurchase any receivable materially and
adversely affected by our breach as of such last day at a price equal to the
contract value of the receivable, as specified in the related prospectus
supplement. Our obligation to repurchase any receivable with respect to which
any representation or warranty has been breached is subject to Case Credit's
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repurchase of the receivable. This repurchase obligation is the only remedy
available to the noteholders, the indenture trustee, the certificateholders
or the trustee for any trust for any uncured breach.
Under 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 its services. In order to assure uniform quality in servicing the
receivables and to reduce administrative costs, we and each trust will designate
the servicer as custodian to maintain possession, as the agent for each trust,
of the receivables and related documents. However, notes evidencing any
unsecured dealer loans that we sell to a trust will be delivered to the related
indenture trustee. The obligors on the receivables are not notified that their
receivables have been sold by Case Credit to us or by us to the trust. However,
Case Credit marks its accounting records to reflect these sales, and Uniform
Commercial Code financing statements reflecting the sales are filed.
Under each sale and servicing agreement, the servicer has an option to
purchase all of the remaining receivables held by the trust after their
aggregate contract values fall below 10% of the sum of the contract values of
all of the trust's receivables, measured for each receivable at the time of its
sale to the trust.
Accounts
Case Credit, as servicer, will establish and maintain the following
bank accounts for each trust:
o a collection account, into which all payments made on or with
respect to the related receivables will be deposited;
o a note distribution account, into which amounts available for
payment to the noteholders will be deposited and from which
those payments will be made;
o a certificate distribution account, into which amounts
available for payment to the certificateholders will be
deposited and from which those payments will be made; and
o if so specified in the prospectus supplement, a pre-funding
account.
We will describe any other accounts to be established for a trust in
the related prospectus supplement.
Funds held in a trust's bank accounts will be invested in the following
types of investments:
(a) direct obligations of, or obligations fully
guaranteed as to timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit
of any domestic depository institution or trust company or any domestic
branch of a foreign bank that is subject to supervision and examination
by federal or state banking or depository institution authorities, in
each case where the issuer has at the time of the investment or
contractual commitment to invest short-term credit ratings from each of
the applicable rating agencies in its highest investment category;
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(c) commercial paper having, at the time of the investment or
contractual commitment to invest, a rating from each of the applicable
rating agencies in its highest investment category;
(d) investments in money market funds having a rating from
each of the applicable rating agencies in its highest investment
category, 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 of its agencies or
instrumentalities 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.
Investments described in clauses (d) and (g) 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.
During any pre-funding period, no investments in money market funds will be made
with funds in any account other than the collection account. Also, so long as
they meet the criteria listed above, these investments may include securities
issued by us or our affiliates or trusts originated by us or our affiliates.
Except as described below with respect to spread accounts, the investments made
in each trust's bank accounts are limited to obligations or securities that
mature on or before the business day preceding the next payment date
In the unlikely event of defaults on investments made in a trust's bank
accounts, investors in the securities could experience losses or payment delays.
Earnings from these investments, net of losses and investment expenses, will be
deposited in the applicable collection account on each payment date and treated
as collections on the related receivables.
Each trust's bank accounts will be maintained in one of the following
forms:
o as segregated accounts with (a) the corporate trust department
of the related indenture trustee or the related trustee, or
(b) a depository institution organized under the laws of the
United States of America, any state or the District of
Columbia (or any domestic branch of a foreign bank) (1) 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 (2) whose deposits are insured by the
FDIC;
o as segregated trust account with the corporate trust
department of a depository institution organized under the
laws of the United States
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of America, any state 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; or
o as any other segregated account the deposit of funds in which
has been approved by the applicable rating agencies.
Servicing Procedures
Case Credit, as servicer, will agree to make reasonable efforts to
collect all payments on the receivables held by each trust in a manner
consistent with the related sale and servicing agreement, and to use the
collection procedures it follows with respect to comparable agricultural,
construction and other equipment receivables 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. However, no such arrangement will be permitted to
extend the final payment date of any receivable beyond the final scheduled
maturity date specified for the related securities in the applicable
prospectus supplement unless the servicer purchases the receivable from the
trust for a purchase price equal to its contract value.
If the servicer forecloses on the collateral for a receivable, the
servicer may sell the collateral at public or private sale, or take any other
action permitted by applicable law. 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 servicer no longer needs it, unless the related loan has been
paid in full.
Collections
The servicer will deposit all payments received on a trust's
receivables during each collection period specified in the related prospectus
supplement into the related collection account within two business days after
receipt. However, at any time when (a) Case Credit is the servicer, (b) there
exists no servicer default and (c) 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 payments into the collection account until on or
before the business day preceding the applicable payment date. Pending deposit
into the collection account, the servicer may invest collections at its own risk
and for its own benefit, and the collections 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 described 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.
At any time when the servicer is permitted to remit collections once a
month, the servicer will be permitted to make that deposit net of distributions
to be made to the servicer with respect to the same collection period. The
servicer, however, will account to the indenture trustee, the trustee, the
noteholders and the
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certificateholders with respect to each trust as if all deposits, distributions
and transfers were made individually.
Servicing Compensation
With respect to each trust, the servicer will be entitled to receive a
servicing fee for each collection period in an amount equal to a percentage per
annum specified in the related prospectus supplement of the aggregate contract
value of the trust's receivables as of the first day of the collection period.
The servicing fee will be paid solely from the sources, and at the priority,
specified in the related prospectus supplement.
Evidence as to Compliance
Each sale and servicing agreement will require that a firm of
independent public accountants 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 specified standards relating to the servicing of
the applicable receivables, the servicer's accounting records and computer files
and certain other matters.
Each sale and servicing agreement will also require that an officer of
the servicer deliver to the related trust and indenture trustee, substantially
simultaneously with the delivery of the accountants' statement, a certificate
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.
Securityholders may obtain copies of such statements and certificates
by written request addressed to the applicable trustee.
Resignation, Liability and Successors of the Servicer
Case Credit will not be permitted to resign from its obligations and
duties as servicer for any trust, except upon determination that Case Credit's
performance of such duties is no longer permissible under applicable law. No
resignation will become effective until the related indenture trustee or a
successor servicer has assumed Case Credit's servicing obligations and duties.
Neither the servicer nor any of its directors, officers, employees and
agents will be under any liability to any trust or the related noteholders or
certificateholders for taking any action or for refraining from taking any
action under the applicable sale and servicing agreement or for errors in
judgment. However, none of the listed parties 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, the servicer will not be under any obligation to appear in, prosecute
or defend any legal action that is not incidental to the servicer's servicing
responsibilities under the related sale and servicing agreement and that, in its
opinion, may cause it to incur any expense or liability.
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Upon compliance with procedural requirements specified in the related
sale and servicing agreement, any of the following entities will be the
successor of the servicer under that sale and servicing agreement:
o 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,
o any entity succeeding to the business of the servicer, or
o any corporation 50% or more of the voting stock of which is
owned, directly or indirectly, by Case or Case Credit, which
assumes the obligations of the servicer.
Servicer Default
The following events will constitute "servicer defaults" under each
sale and servicing agreement:
o the servicer fails to make required deposits or to direct the
indenture trustee to make required distributions, subject to a
three business day cure period after discovery or notice;
o we or the servicer breach our respective obligations under the
sale and servicing agreement, subject to materiality
limitations and a 60 day cure period after notice; and
o bankruptcy or insolvency of the servicer or us.
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 at least 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 the sale and servicing agreement. In that event, the
indenture trustee or a successor servicer appointed by the indenture trustee
will succeed to all the responsibilities, duties and liabilities of the servicer
under the 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 that
appointment has occurred, the trustee or other official may have the power to
prevent the indenture trustee or noteholders from effecting a transfer of
servicing.
If the indenture trustee is unwilling or unable to act as successor
servicer, 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. The indenture
trustee may make arrangements for compensation to be paid to the successor
servicer, but the compensation may in no event be greater than the servicing fee
provided for under the sale and servicing agreement. Neither the trustee nor the
certificateholders have the right to remove the servicer if a servicer default
occurs when any notes of the same series remain outstanding.
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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 may, on
behalf of all 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. Therefore, the
noteholders have the ability to waive defaults by the servicer which could
materially adversely affect the certificateholders. In addition, unless
otherwise provided in the related prospectus supplement, the holders of the
related certificates evidencing at least a majority of the outstanding
certificate balance may, on behalf of all noteholders and certificateholders,
waive any servicer default that does not adversely affect the related indenture
trustee or noteholders. None of these waivers will impair the noteholders' or
certificateholders' rights with respect to subsequent defaults.
Amendment
Unless otherwise provided in the related prospectus supplement, each of
a trust's transaction agreements may be amended by the parties to the agreement,
without the consent of the related noteholders or certificateholders, so long as
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 of the trust's noteholders or certificateholders. In addition,
unless otherwise provided in the related prospectus supplement, each of a
trust's transaction agreements may be amended by the parties to the agreement,
without the consent of the related noteholders or certificateholders, to
substitute or add credit enhancement for any class of securities, so long as the
applicable rating agencies confirm in writing that such substitution or addition
will not result in a reduction or withdrawal of the rating of any class of
securities in the related series.
Unless otherwise specified in the related prospectus supplement, each
of a trust's transaction agreements may be amended by the parties to the
agreement, 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. However, no such amendment may (a)
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 (b) reduce the required percentage of the notes or
certificates of that are required to consent to any such amendment, without the
consent of the holders of all the outstanding notes or certificates, as the case
may be, of such series.
Payment of Notes
Upon the payment in full of all outstanding notes of a given series and
the satisfaction and discharge of the related indenture, the related trustee
will succeed to all the rights of the indenture trustee, and the
certificateholders will succeed to all the rights of the noteholders, under the
related sale and servicing agreement, except as otherwise provided therein in
the sale and servicing agreement.
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Termination
With respect to each trust, our obligations and the obligations of the
servicer, the related trustee and the related indenture trustee pursuant to the
trust's transaction agreements will terminate upon (a) 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 (b) the payment
to noteholders and certificateholders of the related series of all amounts
required to be paid to them pursuant to the transaction agreements. 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 administration agreement with each trust
and the related indenture trustee under which Case Credit will act as
administrator for the trust. The administrator will perform on behalf of the
trust administrative obligations required by the related indenture. Unless
otherwise specified in the prospectus supplement for any trust, as compensation
for the performance of the administrator's obligations under the administration
agreement and as reimbursement for its related expenses, the administrator will
be entitled to a quarterly administration fee in an amount equal to $500.
Credit and Cash Flow Enhancement
We will describe the amounts and types of credit enhancement
arrangements and the provider of the credit enhancements, if applicable, with
respect to each class of securities of a given series 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 the full amount of principal and
interest due on their securities and to decrease the likelihood that the
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, with
interest. 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
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class or series of securities, securityholders of any one class or series will
be subject to the risk that the credit enhancement will be exhausted by the
claims of securityholders of other classes or series.
We may replace the credit enhancement for any class of securities with
another form of credit enhancement without the consent of securityholders, if
the applicable rating agencies confirm in writing that the substitution will not
result in the reduction or withdrawal of their rating of any class of securities
of the related series.
Spread Account. If so provided in the related prospectus supplement,
the servicer will establish for a series or class of securities a spread
account, which will be maintained in the name of the applicable indenture
trustee. We may initially fund any spread account by a deposit on the applicable
closing date in an amount set forth in the related prospectus supplement. As
further described in the related prospectus supplement, the amount on deposit in
the spread account may be increased on each payment date up to a balance
specified in the related prospectus supplement by the deposit of collections on
the related receivables remaining after all higher priority payments on that
payment date. We will describe in the related prospectus supplement the
circumstances and manner under which distributions may be made out of the spread
account to holders of securities, to us or to any of our transferees or
assignees.
To the extent permitted by the applicable rating agencies, funds in a
trust's spread account may be invested in securities that will not mature prior
to the next payment date. As a result, the amount of cash in a 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 related securities.
We may at any time, without consent of the securityholders, sell or
otherwise transfer our rights to any spread account, if (a) the applicable
rating agencies confirm in writing that doing so will not result in a reduction
or withdrawal of the rating of any class of securities, (b) we provide to the
trustee and the indenture trustee a written opinion from independent counsel to
the effect that the transfer 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 (c) the transferee or assignee agrees in writing to take
positions for tax purposes consistent with the tax positions agreed to be taken
by us.
Legal Aspects of the Receivables
Bankruptcy Considerations Relating to Case Credit
We and Case Credit will take steps in structuring the transactions
described in this prospectus that are intended to ensure that the voluntary or
involuntary application for relief by Case Credit under the United States
Bankruptcy Code or other insolvency laws will not result in consolidation of our
assets and liabilities with those of Case Credit. These steps include our
creation as a separate, limited-purpose subsidiary pursuant to a certificate of
incorporation containing restrictions on the nature of our business and a
restriction on our ability to
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commence a voluntary case or proceeding under any insolvency law without the
unanimous affirmative vote of all our directors. However, there can be no
assurance that our activities would not result in a court concluding that our
assets and liabilities should be consolidated with those of Case Credit in a
proceeding under any insolvency law.
In addition, the indenture trustee, the trustee, all noteholders and
all certificateholders will covenant that they will not at any time institute
against us any bankruptcy, reorganization or other proceeding under any federal
or state bankruptcy or similar law.
Case Credit will warrant that each sale of receivables by Case Credit
to us is a valid sale. If Case Credit were to become a debtor in a bankruptcy
case, and a creditor or trustee-in-bankruptcy or Case Credit itself were to take
the position that any sale of receivables to us should instead be treated as a
pledge of the receivables to secure a borrowing by Case Credit, then delays in
payments of collections of receivables to us could occur. If the court ruled in
favor of the creditor, trustee or Case Credit, reductions in the amount of such
payments could result. Also, under these 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 remaining scheduled payments under the
lease.
If any transfer of receivables to us by Case Credit 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 us may have priority over
our interest in the receivable. If those transfers are treated as sales, the
receivables would not be part of Case Credit's bankruptcy estate and would not
be available to Case Credit's creditors, except under limited circumstances. In
addition, while Case Credit is the servicer, cash collections on the receivables
may, under some 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 those 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 Uniform Commercial Code, would be included in
the bankruptcy estate of a transferor regardless of whether the transfer is
treated as a sale or a secured loan. Although the receivables are not likely to
be viewed as accounts, many of the accounts are "chattel paper." 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 by Case Credit to us and by us to the trust were treated as a sale,
the receivables would be part of Case Credit's bankruptcy estate and would be
subject to claims of some of its creditors and delays and reductions in payments
to us and securityholders could result.
Bankruptcy Considerations Relating to Dealers
A substantial portion of the receivables was originated by Case dealers
and purchased by Case Credit. A significant portion of those receivables provide
for recourse to the originating dealer for defaults by the obligors. In
addition, Case dealers retain the right to repurchase at any time the
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receivables they sell to Case Credit. In the event of a Case dealer's
bankruptcy, a creditor or bankruptcy trustee of the Case dealer or the Case
dealer itself 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 us, Case Credit has warranted 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.
Perfection and Priority With Respect to Receivables
A purchaser of retail installment contracts, retail installment
loans or leases who gives new value and takes possession of the chattel
paper that evidences the retail installment contracts or leases in the
ordinary course of the purchaser's business may have priority over the
interest of the related trust in the retail installment contracts or
leases. Any 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 some states, retail installment sale contracts like the ones that
may be included in your trust evidence the credit sale of agricultural,
construction and other equipment. In those states, the contracts also
constitute personal property security agreements and include grants of
security interests in the equipment under the applicable Uniform Commercial
Code, as do retail installment loans made directly by Case Credit.
Perfection of security interests in the equipment is generally governed by
the Uniform Commercial Code. However, under the laws of some other states,
perfection of security interests in some agricultural, construction or
other equipment, including trucks, may be governed by certificate of title
registration laws of the state in which the equipment is located.
Case Credit takes or requires the applicable dealer to take appropriate
action under the laws of each state in which financed equipment is located to
perfect Case Credit's security interest in the equipment. We are required to
repurchase from each trust any retail installment contract or retail installment
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 those actions will materially
adversely affect the interest of the trust in the receivable and the 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 us. In addition, Case Credit, as the servicer, is
required to take appropriate steps to maintain perfection of security interests
in the financed 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, any security
interests obtained in connection with those loans may not have first priority
status.
Due to administrative burden and expense, no action will be taken to
record the transfer of security interests from Case Credit to us or from us to
the trust. In most states, an assignment like the sales from Case Credit to us
and from us to each trust is effective to convey a security interest, without
any action to record the transfer of record. In those states, the proper initial
filing of the
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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 the related 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 the
trust in financed equipment could be defeated through fraud or negligence.
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 equipment. We will represent to each trust that, as of the
date the related receivable is sold to such trust, each security interest in
financed equipment is or will be prior to all other present liens on and
security interests in the 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 we
nor the servicer must repurchase a receivable if any of the occurrences
described above, other than any action by the servicer, result in the trust's
losing the priority of its security interest or its security interest in the
financed equipment after the date the security interest was assigned to the
trust.
Under the laws of most states, a 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, or, if applicable, in which the equipment 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.
Security Interests in Leased Equipment
When we sell leases to a trust, we also assign to the trust any
security or ownership interest that we hold in the leased equipment. Each lease
is either a "true lease" or a lease intended for security (often referred to as
a "finance lease"). Whether we are 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.
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"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, any lease transferred to a trust
that has a nominal termination value should be deemed to be finance leases.
While the term "nominal" is not clearly defined for this purpose, it is clear
that any lease with a $1 termination value should be treated as a finance lease.
The treatment of other 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 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 to obtain a
precautionary first priority perfected security interest in the leased
equipment, in case the leases are deemed to be finance leases. 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 leased equipment. As a result
of these actions, for 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, and the same repurchase
obligations apply if there is no first priority perfected security interest.
Case Credit also obtains a security interest in leased equipment
against originating Case dealers in case the leased equipment is deemed to be
owned by the dealer, which would be the case for any lease that is deemed to be
a true lease, and the transfer of the 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 leases that might be true leases will be included in the property
of a 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 us, in case the transfer of such leased equipment from Case Credit to us, or
from us to the applicable trust, respectively, is deemed not to be a true sale.
Due to administrative burden and expense, it is anticipated that those 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 us could
take priority over the interests of the applicable trust in that leased
equipment if the originating dealer, Case Credit or we were not deemed to have
made a true sale and any security interest in the leased equipment granted to
Case Credit, us 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.
Bankruptcy Considerations Relating to a Lessee
If the lessee under any lease included in the property of a trust
becomes a debtor in federal bankruptcy proceedings or any similar applicable
state law
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proceedings, the trust may be delayed or prevented from enforcing some of its
rights under the leases and obtaining possession of the leased equipment from
the lessee. 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 lessee, which claim will generally have the benefit of
a perfected security interest in the leased equipment, subject to the
qualifications set out under " - Security Interests in Financed Equipment"
above. If a given lease is a true lease, the lessee's bankruptcy trustee or
the lessee 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 lessee will have possession of the leased equipment during such period.
If a lease is assumed, the bankruptcy trustee or the lessee must:
o cure any default, other than a default based on the lessee'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 a lease is rejected:
o the scheduled payments due thereafter under the 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 an unsecured claim for
damages resulting from the rejection of the lease.
Repossession
Upon a default by an equipment purchaser, the holder of a retail
installment sale contract, loan or a lease that is treated as a personal
property security interest, has all the remedies of a secured party under
the Uniform Commercial Code, except where specifically limited by other
state laws. Under those remedies, the secured party may perform self-help
repossession unless it 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. Some
jurisdictions require that the obligor be notified of the default and be
given time to 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
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appropriate state court, and the equipment must then be repossessed in
accordance with that order.
Notice of Sale; Redemption Rights
The Uniform Commercial Code and other state laws require a secured
party to provide an obligor with reasonable notice of the date, time and place
of any public sale and/or the date after which any private sale of 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.
Uniform Commercial Code Considerations
Many states have adopted a version of Article 2A of the Uniform
Commercial Code 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, to the best of its knowledge, each
lessee has accepted the equipment leased to it and, after reasonable opportunity
to inspect and test, has not notified Case Credit of any defects. 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 the 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 the loss, you could incur a loss on
your investment.
Lessees are required to obtain and maintain physical damage insurance
and liability insurance. Dealers are responsible for verifying physical damage
insurance on the leased equipment at the time the lease is originated. If a
dealer fails to verify physical damage insurance coverage and the lessee did not
obtain insurance coverage at the time the lease was originated, the dealer is
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required to repurchase the lease. If insurance has lapsed or has not been
maintained in full force and effect, the dealers will not be obligated to
repurchase the lease.
Deficiency Judgments and Excess Proceeds; Other Limitations
The proceeds of resale of equipment generally will be applied first to
the expenses of resale and repossession and then to the satisfaction of the
indebtedness. Some states impose prohibitions or limitations on deficiency
judgments if the net proceeds from resale do not cover the full amount of the
indebtedness. In other states, a deficiency judgment against the debtor can be
sought for the shortfall. 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 Uniform
Commercial Code requires the creditor to remit the surplus to any holder of a
lien on 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 Uniform Commercial Code 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
Uniform Commercial Code 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.
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
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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. Some of the
receivables may be deemed to be consumer finance contracts under applicable
federal or state laws.
Case Credit warrants to us upon each sale of receivables that each
receivable sold complies with all requirements of law in all material respects.
We make similar warranties to each trustee. Accordingly, if an obligor has a
claim against the related trust for violation of any law and such claim
materially and adversely affects the trust's interest in a receivable, the
violation would be a breach of our warranties and would create an obligation on
our part to repurchase the receivable unless the breach is cured. Our obligation
to repurchase any receivables in these circumstances is subject to Case Credit's
repurchase of the receivables. If the claim existed at the time Case Credit sold
the receivable to us, the violation would also be a breach of Case Credit's
warranties, and Case Credit would be required to repurchase the receivable
unless the breach is cured.
U.S. Federal Income Tax Consequences
The following is a summary of the material Federal income tax
consequences of the purchase, ownership and disposition of the notes and
certificates. This summary is based upon current provisions of the Internal
Revenue Code of 1986, called the "Code", proposed, temporary and final Treasury
regulations thereunder, and published rulings and court decisions currently in
effect. The current tax laws and the current regulations, rulings and court
decisions may be changed, possibly retroactively. The portions of this summary
which relate to matters of law or legal conclusions represent the opinion of
Mayer, Brown & Platt, special Federal tax counsel for each trust, as qualified
in this summary. 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 they are correct in all material respects.
The following summary does not furnish information in the level of
detail or with the attention to an investor's specific tax circumstances that
would be provided by an investor's own tax advisor. For example, it does not
discuss the tax consequences of the purchase, ownership and disposition of the
notes and certificates by investors that are subject to special treatment under
the Federal income tax laws, including banks and thrifts, insurance companies,
regulated investment companies, dealers in securities, holders that will hold
the notes or certificates as a position in a "straddle" for tax purposes or as a
part of a "synthetic security" or "conversion transaction" or other integrated
investment comprised of the notes or certificates and one or more other
investments, trusts and estates and pass-through entities, the equity holders of
which are any of these specified investors. In addition, the discussion
regarding the notes and certificates is limited to the Federal income tax
consequences of the initial investors and not a purchaser in the secondary
market and to investors who have purchased notes and who hold those notes as
capital assets within the meaning of Section 1221 of the Code.
Each trust will be provided with an opinion of Mayer, Brown & Platt
regarding certain Federal income tax matters discussed below. An opinion of
Mayer, Brown & Platt, however, is not binding on the Internal Revenue Service,
called 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
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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 refer, unless
otherwise specified, to each trust and the notes, certificates and related
terms, parties and documents applicable to that trust.
Tax Characterization of the Trust
Mayer, Brown & Platt is of the opinion that the trust will not be an
association (or publicly traded partnership) taxable as a corporation for
Federal income tax purposes. This opinion is based on the assumption of
compliance by all parties with the terms of the trust agreement and related
documents.
If the trust were taxable as a corporation for Federal income tax
purposes, the trust would be subject to corporate income tax on its taxable
income. The trust's taxable income would include all its income on the
receivables, possibly reduced by its interest expense on the notes. Any
corporate income tax imposed on the trust could materially reduce cash available
to make payments on the notes and distributions on the certificates, and
certificateholders could be liable for any tax that is unpaid by the trust.
Tax Consequences to Holders of the Notes
Treatment of the Notes as Indebtedness. We will agree, and if you
purchase notes, you will agree by your purchase of the notes, to treat the notes
as debt for Federal, state and local income and franchise tax purposes. Mayer,
Brown & Platt is of the opinion that the notes will be classified as debt for
Federal income tax purposes. The discussion below assumes the notes are
classified as debt for Federal income tax purposes.
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. Additionally, the discussion assumes that
the interest formula for the notes meets the requirements for "qualified stated
interest" under Treasury regulations, called the "OID Regulations," relating to
original issue discount, or "OID." This discussion assumes that any OID on the
notes is a de minimis amount, within the meaning of the OID Regulations. Under
the OID Regulations, the notes will have OID to the extent the principal amount
of the notes exceeds their issue price. Further, if the notes have any OID, it
will be de minimis if it is less than 1/4% of the principal amount of the notes
multiplied by the number of full years included in their term. 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
for these notes will be disclosed in the applicable prospectus supplement.
Interest Income on the Notes. Based on the above assumptions, except as
discussed below, the notes will not be considered issued with OID. If you buy
notes, you will be required to report as ordinary interest income the stated
interest on the notes when received or accrued in accordance with your method of
tax accounting. Under the OID Regulations, if you hold a note issued with a de
minimis amount of OID, you must include this OID in income, on a pro rata basis,
as principal payments are made on the note. If you purchase a note for more or
less than its principal amount, you will generally be subject, respectively, to
the premium amortization or market discount rules of the Code.
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If you have purchased a note that has a fixed maturity date of not more
than one year from the issue date of the note, called a "Short-Term Note", you
may be subject to special rules. Under the OID Regulations, all stated interest
on a Short-Term Note will be treated as OID. If you are an accrual basis holder
of a Short-Term Note or a cash basis holder specified in Section 1281 of the
Code, including regulated investment companies, you will generally be required
to report interest income as OID accrues on a straight-line basis over the term
of each interest period. If you are a cash basis holder of a Short-Term Note
other than those specified in Section 1281, you will, 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, if you are a cash basis holder of a
Short-Term Note reporting interest income as it is paid, you may be required to
defer a portion of any interest expense otherwise deductible on indebtedness
incurred to purchase or carry the Short-Term Note. This interest expense would
be deferred until the taxable disposition of the Short-Term Note. If you are a
cash basis taxpayer, you 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. If you have so elected, you would include OID on the Short-Term Note in
income as it accrues, but you would not be subject to the interest expense
deferral rule. Special rules not discussed in this summary apply to a Short-Term
Note purchased for more or less than its principal amount.
Sale or Other Disposition. If you sell a note, you will recognize gain
or loss in an amount equal to the difference between the amount realized on the
sale and your adjusted tax basis in the note. The adjusted tax basis of a note
will equal your cost for the note, increased by any market discount, OID and
gain previously included in your income with respect to the note and decreased
by the amount of premium, if any, previously amortized and by the amount of
principal payments you have previously received with respect to the note. Any
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 and at a maximum rate of 20% if the note is
held for more than 12 months.
Foreign Holders. If you are a nonresident alien, foreign corporation or
other non-United States person, called a "foreign person", any interest paid or
accrued to you will generally 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 you and you:
o are not actually or constructively a "10 percent shareholder"
of the trust or us, including a holder of 10% of the
outstanding certificates, or a "controlled foreign
corporation" with respect to which we or the trust are a
"related person" within the meaning of the Code; and
o satisfy the statement requirement set forth in section 871(h)
and section 881(c) of the Code and the regulations thereunder.
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To satisfy this statement requirement, you, or a financial institution holding
the note on your behalf, must provide, in accordance with specified procedures,
a paying agent of the trust with a statement to the effect that you are not a
United States person. Currently these requirements will be met if you provide
your name and address, and certify, under penalties of perjury, that you are not
a United States person (which certification may be made on an IRS Form W-8 or on
new IRS Form W-8BEN), or if a financial institution holding the note on your
behalf certifies, under penalties of perjury, that the required statement has
been received by it and furnishes a paying agent with a copy of the statement.
Under recently finalized Treasury regulations, called 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, 2000. We recommend that you consult your own tax advisors regarding
the Final Regulations.
If you are a foreign person and interest paid or accrued to you is not
"portfolio interest," then it will be subject to a 30% withholding tax unless
you provide the trust or its paying agent, as the case may be, with a properly
executed:
o IRS Form 1001, or new IRS Form W-8BEN, claiming an
exemption from withholding tax or a reduction in withholding
tax under the benefit of a tax treaty, or
o IRS Form 4224, or new IRS Form W-8ECI, stating that interest
paid on the note is not subject to withholding tax because it
is effectively connected with your conduct of a trade or
business in the United States.
If you are a foreign person engaged in a trade or business in the
United States and interest on the note is effectively connected with the conduct
of the trade or business, although you will be exempt from the withholding tax
discussed above, you will be subject to United States Federal income tax on your
interest on a net income basis in the same manner as if you were a United States
person. In addition, if you are a foreign corporation, you may be subject to a
branch profits tax equal to 30%, or lower treaty rate, of your effectively
connected earnings and profits for the taxable year, subject to adjustments.
If you are a foreign person, any capital gain realized by you on the
sale, redemption, retirement or other taxable disposition of a note by you will
be exempt from United States Federal income and withholding tax; provided that:
o the gain is not effectively connected with the conduct of a
trade or business in the United States by you, and
o if you are an individual foreign person, you have not been
present in the United States for 183 days or more in the
taxable year.
Backup Withholding. If you are not an exempt holder including 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, you will be required to provide,
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under penalties of perjury, a certificate containing your name, address,
correct federal taxpayer identification number and a statement that you are
not subject to backup withholding. If you are not an exempt holder and you
fail to provide the required certification, the trust will be required to
withhold 31% of the amount otherwise payable to you, and remit the withheld
amount to the IRS as a credit against your Federal income tax liability.
The Final Regulations make modifications to the backup withholding rules.
We recommend that you consult your own tax advisors regarding the Final
Regulations.
Possible Alternative Treatments of the Notes. If, contrary to the
opinion of Mayer, Brown & Platt, 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 this case, the trust would
be treated as a publicly traded partnership. This publicly traded partnership
would not, however, be taxable as a corporation because it would meet certain
qualifying income tests. Nonetheless, treatment of the notes as equity interests
in a publicly traded partnership could have adverse tax consequences to you. For
example, if you are a foreign person, income to you might be subject to U.S. tax
and U.S. tax return filing and withholding requirements, and if you are an
individual holder, you might be subject to certain limitations on your ability
to deduct your share of trust expenses.
Tax Consequences to Holders of the Certificates
The following discussion applies only to the extent certificates are
offered in a related prospectus supplement. Until that time, because the
certificates will be held solely by us or one of our affiliates, under current
Treasury regulations, the trust will be disregarded as an entity separate from
us or one of our affiliates, for Federal income tax purposes.
Treatment of the trust as a Partnership. We and the servicer will
agree, and you will agree by your 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. The assets of the
partnership will be the assets held by the trust, the partners of the
partnership will be the certificateholders, including us in our capacity as
recipient of distributions from any account specified in the related prospectus
supplement in which we have an interest, and the notes will be debt of the
partnership. However, the proper characterization of the arrangement involving
the trust, the certificates, the notes, us and the servicer is not clear because
there is no authority on transactions closely comparable to this arrangement.
A variety of alternative characterizations are possible. For example,
because the certificates have certain features characteristic of debt, the
certificates might be considered our debt or debt of the trust. Any such
characterization should not result in materially adverse tax consequences to
certificateholders 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
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satisfied with respect to any given series of certificates, additional tax
considerations with respect to those certificates will be disclosed in the
applicable prospectus supplement.
Partnership Taxation. As a partnership, the trust will not be subject
to Federal income tax. Rather, you will be required to separately take into
account your accruals of guaranteed payments from the trust and your 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 on 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,
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 as ordinary income to you. The trust will have a calendar year tax
year and will deduct the guaranteed payments under the accrual method of
accounting. If you use a calendar year tax year, you will be required to include
the accruals of guaranteed payments in income in your taxable year that
corresponds to the year in which the trust deducts the payments. If you use a
taxable year other than a calendar year, you will be required to include the
payments in income in your 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 you
will be allocated taxable income of the trust for each collection period equal
to the sum of:
o 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;
o prepayment premium, if any, payable to you for such month; and
o any other amounts of income payable to you for the month.
This allocation will be reduced by any amortization by the trust of premium on
receivables corresponding 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 us.
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. However, no assurance can be given that
the IRS would not require a greater amount of income to be allocated to you.
Moreover, even under the method of allocation described above, you may be
subject to tax on income equal to the interest rate on the certificates plus the
other items described above even though the trust might not have sufficient cash
to make current cash distributions of this amount. Thus, if you are a cash basis
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taxpayer, you will in effect be required to report income from the
certificates on the accrual basis and you may become liable for taxes on
trust income even if you have not received cash from the trust to pay those
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, you may
be required to report on your tax returns taxable income that is greater or
less than the amount reported to you 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 the holder
under the Code.
Your share of expenses of the trust, including fees to the servicer but
not interest expense, would be miscellaneous itemized deductions. These
deductions might be disallowed to you in whole or in part and, as a result, you
might be taxed on an amount of income that exceeds the amount of cash actually
distributed to you over the life of the trust. It is not clear if these rules
would apply to a certificateholder who accrues guaranteed payments.
The trust intends to make all tax calculations for income and
allocations to certificateholders on an aggregate basis. If the IRS were to
require that these 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 you.
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, respectively. 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 discount in income currently as it accrues
over the life of the receivables or to offset any premium against interest
income on the receivables. As indicated above, a portion of any market discount
income or premium deduction may be allocated to you.
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 a termination occurs,
the trust will be considered to have contributed the assets of the trust,
constituting the old partnership, to a 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 if 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
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between the amount realized and your tax basis in the certificates sold.
Your tax basis in a certificate will generally equal your cost for the
certificate increased by your share of trust income and accruals of
guaranteed payments (includible in income) and decreased by any
distributions received by you with respect to the certificate. In addition,
both the tax basis in the certificates and the amount realized on a sale of
a certificate would include your share of the notes and other liabilities
of the trust. If you acquire certificates at different prices, you may be
required to maintain a single aggregate adjusted tax basis in the
certificates, and, upon sale or other disposition of some of the
certificates, allocate a pro rata portion of the 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 your share of
unrecognized accrued market discount on the receivables would generally be
treated as ordinary income to you and would give rise to special tax reporting
requirements. The trust does not expect to have any other assets that would give
rise to these special reporting requirements. Thus, to avoid those special
reporting requirements, the trust will elect to include market discount in
income as it accrues.
If you are 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
paid to you on the certificates, this excess will generally give rise to a
capital loss upon the retirement of the certificates.
Allocations Between Transferors and Transferees. In general, the
trust's taxable income and losses will be determined monthly and the tax items
and accruals of guaranteed payments for a particular calendar month will be
apportioned among the certificateholders in proportion to the principal amount
of certificates owned by them as of the close of the last day of such month. As
a result, you may be allocated tax items and accruals of guaranteed payments,
which will affect your tax liability and tax basis, attributable to periods
before you purchased your certificates.
The use of 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. We are authorized to revise the trust's method of allocation
between transferors and transferees to conform to a method permitted by future
Treasury regulations.
Section 754 Election. If 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 this election. As a result, you
might be allocated a greater or lesser amount of trust income than would be
appropriate based upon your own purchase price for certificates.
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Administrative Matters. The trustee is required to keep or have kept
complete and accurate books of the trust. These 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 on 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 certificateholders
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 these nominees will be required to forward such information
to the beneficial owners of the certificates. Generally, you must file tax
returns that are consistent with the information return filed by the trust or be
subject to penalties unless you notify the IRS of all 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. This information includes the name, address and
taxpayer identification number of the nominee, and, as to each beneficial owner:
o the name, address and taxpayer identification number of that
person,
o whether that 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 a foreign
government or an international organization, and
o certain information on certificates that were held, bought or
sold on behalf of that 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 regarding
themselves and their ownership of certificates. A clearing agency registered
under Section 17A of the Securities Exchange Act is not required to furnish this
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.
We will be designated as the tax matters partner in the trust agreement
and, as such, will be responsible for representing you 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 your tax returns, and, under
certain circumstances, you may be precluded from separately litigating a
proposed adjustment to the items of the trust. An adjustment could also result
in an audit of your tax 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
55
<PAGE>
the United States for purposes of Federal withholding taxes on non-U.S.
persons because there is no clear authority dealing with this issue under
facts substantially similar to ours. Although it is not expected that the
trust would be engaged in a trade or business in the United States for
these 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 pursuant to Section 1446 of the
Code, on the portion of its taxable income allocable to foreign
certificateholders as if this income were effectively connected to a U.S.
trade or business, at a rate of 35% for foreign certificateholders that are
taxable as corporations and 39.6% for all other foreign certificateholders.
Subsequent adoption of Treasury regulations or the issuance of other
administrative pronouncements may require the trust to change its
withholding procedures. In determining a certificateholder's nonforeign
status, the trust may rely on IRS Form W-8, new IRS Form W-8BEN, IRS Form
W-9 or the certificateholder's certification of nonforeign status signed
under penalties of perjury.
Each foreign certificateholder 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 certificateholder must obtain a taxpayer identification number from
the IRS and submit that number to the trust on Form W-8 or new IRS Form W-8BEN
in order to assure appropriate crediting of the taxes withheld. A foreign
certificateholder generally would be entitled to file with the IRS a claim for
refund for 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 certificateholder is an exempt recipient
under applicable provisions of the Code. The Final Regulations discussed above
contain modifications to the backup withholding and information reporting rules.
We recommend that prospective investors consult their own tax advisors regarding
the Final Regulations. See "Tax Consequences to Holders of the Notes - Backup
Withholding."
Illinois State Tax Consequences
The following is a summary of the material Illinois income tax
consequences of the purchase, ownership and disposition of the notes and
certificates. This summary is based upon current provisions of Illinois statutes
and regulations, and applicable judicial or ruling authority. The current
Illinois statutes and regulations, and judicial and ruling authority may be
changed, possibly retroactively. The portions of the following summary that
relate to matters of law or legal conclusions represent the opinion of Mayer,
Brown & Platt, special Illinois tax counsel for each trust subject to the
qualifications set forth in this summary. Mayer, Brown & Platt have prepared or
reviewed the statements in this prospectus under the heading "Illinois State
Tax Consequences" and are of the opinion that they are correct in all material
respects.
56
<PAGE>
Each trust will be provided with an opinion of Illinois tax counsel
regarding Illinois income tax matters discussed below. An opinion of Illinois
tax counsel, however, is not binding on the Illinois Department of Revenue,
called the "IDOR", or the courts. Additionally, there are no cases or IDOR
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 IDOR 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 IDOR.
The State of Illinois imposes a state income tax on individuals,
corporations, partners in partnerships and beneficiaries of trusts earning
income in, or as residents of, the State of Illinois. The State of Illinois
imposes a Personal Property Replacement Income Tax, called the "Illinois
Replacement Tax", on individuals, corporations, partnerships and trusts earning
income in, or as residents of, the State of Illinois. The State of Illinois also
imposes a franchise tax on corporations doing business in Illinois. If the
certificates were treated as equity interests in a partnership, the partnership
may be subject to the Illinois Replacement Tax.
Treatment of the Notes
If the notes are characterized as indebtedness for Federal income tax
purposes, in the opinion of Illinois tax counsel, although the matter is not
free from doubt, this treatment would also apply for Illinois tax purposes. If
the notes are characterized as debt, noteholders not otherwise subject to
taxation in Illinois will not, although the matter is not free from doubt,
become subject to such taxes solely because of their ownership of notes.
Noteholders already subject to taxation in Illinois, however, could be required
to pay tax on, or measured by, interest income, including original issue
discount, if any, generated by, and on gain from the disposition of, notes.
Classification of Trust as a Partnership
If a trust were treated as a partnership, not taxable as a corporation,
for Federal income tax purposes, in the opinion of Illinois tax counsel,
although the matter is not free from doubt, the same treatment would also apply
for Illinois tax purposes. In such case, the partnership may be treated as
earning income in the State of Illinois and therefore would be subject to the
Illinois Replacement Tax. If this tax were applicable, distributions to
noteholders and certificateholders could be reduced.
Treatment of Nonresident Certificateholders
Under current law, certificateholders that are nonresidents of the
State of Illinois and are not otherwise subject to Illinois income tax and
Illinois Replacement Tax should not be subject to Illinois income tax and
Illinois Replacement Tax on income from a trust. In any event, classification of
the arrangement as a partnership would not cause a certificateholder not
otherwise subject to taxation in Illinois to pay Illinois tax on income beyond
that derived from the certificates. Certificateholders already subject to
taxation in Illinois, however, could be required to pay tax on, or measured by,
interest income, including original issue discount, if any, generated by, and on
gain from the disposition of, notes and certificates.
57
<PAGE>
Risks of Alternative Characterization
If the trust were instead treated as an association taxable as a
corporation or a "publicly traded partnership" taxable as a corporation for
Federal income tax purposes, then the trust could be subject to the Illinois
income tax, the Illinois Replacement Tax, or the Illinois franchise tax. If any
of these taxes were applicable, distributions to certificateholders could be
reduced.
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 Internal Revenue Code with respect to the
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
these 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 relating to plan assets, 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
We will enter into one or more underwriting agreements with respect to
the notes of each series and an underwriting agreement with respect to the
certificates of a given series, if offered under this prospectus. In each
underwriting agreement, we will agree to cause the related trust to sell to the
underwriters, and each of the 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 in the underwriting agreement 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
58
<PAGE>
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 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 that offering, or specify that the related notes and
certificates 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 notes and certificates the public offering prices and
concessions may be changed.
Each underwriting agreement will provide that we 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 underwriters.
Pursuant to each of the underwriting agreements with respect to a given
series of securities, the closing of the sale of each class of securities
subject to any of those agreements will be conditioned on the closing of the
sale of all other classes subject to any of those agreements. 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, us 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.
Where You Can Find More Information
We filed a registration statement relating to the securities with the
Securities and Exchange Commission. This prospectus is part of the registration
statement, but the registration statement includes additional information.
We will file with the SEC all required annual, monthly and special SEC
reports and other information about any trust we originate.
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 we
file with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus. Information that we file later with
59
<PAGE>
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. We incorporate 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.
Our 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 Securities
Exchange Act and is incorporated into this prospectus by reference and made
a part hereof. Since that time, we have not been, nor are we currently,
required to file reports pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act, except for the filing of Current Reports on Form
8-K in connection with the trusts it originates. Our Current Reports on
Form 8-K dated May 10, 1996, September 19, 1996, January 13, 1997, March 18,
1997, June 11, 1997, September 10, 1997, September 22, 1997, December 5,
1997, February 9, 1998, June 8, 1998, August 18, 1998, August 26, 1998,
September 9, 1998, September 15, 1998, October 15, 1998, November 6, 1998,
November 16, 1998, November 18, 1998, December 15, 1998, January 13, 1999,
January 15, 1999, February 15, 1999, March 8, 1999, March 15, 1999, April 15,
1999, May 15, 1999 and June 15, 1999 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 we incorporate 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., 475 Half Day Road,
Lincolnshire, Illinois 60069, Attention: Vice President (Telephone (847)
955-0228). You may also access the servicer's Internet site at
(http://www.casecorp.com).
60
<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.
Benefit Plan .........................................................71
Code .........................................................57
ERISA .........................................................71
Final Regulations .........................................................61
foreign person .........................................................60
IDOR .........................................................69
Illinois Replacement Tax...................................................70
IRS .........................................................58
OID .........................................................59
OID Regulations .........................................................59
portfolio interest.........................................................60
Short-Term Note .........................................................59
true lease .........................................................52
61
<PAGE>
Case Equipment Receivables Trust _____-___
Asset Backed Notes
Asset Backed Certificates
Case Receivables II Inc.
Seller
Case Credit Corporation
Servicer
$___________ A-1 Notes
$___________ A-2 Notes
$___________ A-3 Notes
$___________ A-4 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 notes [or 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 __________ __, _____ (90 days after the date of this prospectus).
62
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
MAY NOT SELL THESE SECURITIES UNTIL WE DELIVER A FINAL PROSPECTUS. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT
SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR
SALE IS NOT PERMITTED.
Prospectus Supplement to Prospectus dated _________ ___, ______
Case Equipment Receivables Trust _____-__
Case Receivables II Inc.
Seller
Case Credit Corporation
Servicer
The trust will issue the following [classes of notes,][securities,]
which are offered under this prospectus supplement--
Consider carefully the risk factors beginning on page S-___ in
this prospectus supplement and on page ___ 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] 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.
- -------------------------------------------------------------------------------
Class A Notes
[Class B
Notes]
A-1 A-2 A-3 A-4 [Certifi-
Notes Notes Notes Notes cates] Total
Principal Amount $ $ $ $ $ $
- -------------------------------------------------------------------------------
Interest Rate % % % % % N.A.
- -------------------------------------------------------------------------------
Final Scheduled _____ _____ _____ _____ _____
Payment Date ___, ___, ___, ___, ___, N.A.
----- ----- ----- ----- -----
- -------------------------------------------------------------------------------
Price to Public (1) % % % % % $
- -------------------------------------------------------------------------------
Underwriting % % % % % $
Discount
- -------------------------------------------------------------------------------
Proceeds to Seller % % % % % $
- -------------------------------------------------------------------------------
(1) Plus accrued interest, if any, from _______ ___, _____.
Credit Enhancement
o [The trust will also issue $____________ ______% asset backed
certificates, which] [The certificates] are subordinated to the notes.
o A spread account will be established with an initial balance of
$____________ (___% of the contract value of the initial receivables).
o A yield supplement account may also be established.
o [The Class B Notes are subordinated to the Class A Notes, and provide
additional credit enhancement for the Class A Notes.]
o [This prospectus supplement and the accompanying prospectus related
only to the offering of the notes. The certificates are not offered
under these documents.]
<PAGE>
Delivery of the [notes][securities], in book-entry form only, will be made
through The Depository Trust Company, Cedel Bank, societe anonyme, and the
Euroclear System on or about _________ ___, _____ against payment in
immediately available funds.
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
[Underwriter]
[Underwriter]
[Underwriter
Underwriters of the [Class B Notes] [Certificates]
__________ ___, _______
<PAGE>
Important Notice about Information Presented in this
Prospectus Supplement and the Accompanying Prospectus
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 these securities in any state where the offer is not
permitted.
Dealers will deliver a prospectus supplement and prospectus when
acting as underwriters of the securities and with respect to their unsold
allotments or subscriptions. In addition, all dealers selling the
securities will deliver a prospectus supplement and prospectus until
________ ___, _____.
We tell you about the 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 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" beginning
on page S-___ in this prospectus supplement and under the caption "Index of
Terms" beginning on page ___ in the accompanying prospectus.
-----------
<PAGE>
Table of Contents
Page
Summary of Terms............................................................S-2
Offered Securities..........................................................S-2
Subordination............................................................S-2
Closing Date.............................................................S-2
Indenture Trustee........................................................S-2
Trustee..................................................................S-2
Payment Dates............................................................S-3
Principal Payments.......................................................S-3
Final Scheduled Maturity Dates...........................................S-3
Optional Redemption......................................................S-4
Mandatory Redemption.....................................................S-4
The Initial Receivables..................................................S-4
Pre-Funding..............................................................S-4
Negative Carry Account...................................................S-5
Credit Enhancement..........................................................S-5
Spread Account...........................................................S-5
Yield Supplement Account.................................................S-5
[The Certificates].......................................................S-6
Subordination............................................................S-6
Priority of Distributions...................................................S-6
Tax Status..................................................................S-6
ERISA Considerations........................................................S-7
Legal Investment............................................................S-7
Rating of the [Notes] [Securities]
............................................................................S-7
Risk Factors................................................................S-8
It may not be possible to find a purchaser
for your securities...................................................S-8
Prepayments could result from pre-
funding...............................................................S-8
The trust is dependent upon Case Credit
and Case for additional receivables
.....................................................................S-8
Variations in economic and other factors
may reduce the rate of creation of
additional receivables................................................S-8
Characteristics of the pool of receivables
may change due to pre-funding.........................................S-9
Payments on the receivables vary
seasonally............................................................S-9
Payments on the [Class B
Notes][certificates] are junior to
payments on the Class A Notes........................................S-10
Prepayments of higher interest rate
receivables could result in payment
shortfalls...........................................................S-10
[The certificateholders
remedies are limited in the
case of a servicer default]............................................S-10
Case Corporation and Case Credit
Corporation................................................................S-11
The Trust..................................................................S-14
General.................................................................S-14
Capitalization of the Trust.............................................S-15
The Trustee.............................................................S-15
The Receivables Pool.......................................................S-15
Delinquencies, Repossessions, and Net
Losses...............................................................S-22
<PAGE>
Weighted Average Life of the [Notes]
[Securities]...............................................................S-24
Description of the Notes...................................................S-30
General.................................................................S-30
Payments of Interest....................................................S-30
Payments of Principal...................................................S-30
Record Dates............................................................S-33
Mandatory Redemption....................................................S-33
Optional Redemption.....................................................S-34
Registration of Notes...................................................S-34
The Indenture Trustee...................................................S-34
Description of the Certificates............................................S-34
Distributions of Interest Income........................................S-35
Mandatory Repurchase....................................................S-35
Optional Repurchase.....................................................S-36
Description of the Transaction
Agreements.................................................................S-36
Sales of Receivables....................................................S-36
Servicing Compensation and Payment of
Expenses.............................................................S-37
Distributions...........................................................S-37
Negative Carry Account..................................................S-39
Spread Account..........................................................S-40
Yield Supplement Account................................................S-41
Legal Investment...........................................................S-42
ERISA Considerations.......................................................S-42
The Notes...............................................................S-42
Underwriting...............................................................S-43
[Class A] Notes.........................................................S-43
[Class B Notes] [Certificates]..........................................S-44
Legal Opinions.............................................................S-45
Index of Terms.............................................................S-46
<PAGE>
Summary of Terms
o This summary highlights selected information from this
prospectus supplement 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 prospectus supplement 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
We are offering [certificates and] [five] classes of notes issued by Case
Equipment Receivables Trust _____-__:
Aggregate Principal Interest
Class Amount Rate
A-1 $__________ _____%
A-2 $__________ _____%
A-3 $__________ _____%
A-4 $__________ _____%
[B $__________ _____%]
[Certi- $__________ _____%]
ficates
The [notes] [securities] will be 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.
Subordination
The A-1, A-2, A-3 and A-4 Notes are all Class A Notes. 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
______ ___, _____.
S-2
<PAGE>
Indenture Trustee
Harris Trust and Savings Bank.
Trustee
________________________.
Payment Dates
Payments on the [notes][securities] will be made on the 15th day of each
calendar month (or, if not a business day, the next business day),
beginning with ________ ___, _____ [except that interest and principal on
the A-1 Notes will also be paid on ________ ___, _____ if any A-1 Notes
remain outstanding after the ________ _____ payment date].
Principal Payments
Principal will be paid on the [notes] [securities] on each payment date in
an amount generally equal to the decrease during the prior collection
period in the sum of the contract value of the receivables and the amount
on deposit in the trust's pre-funding account. The contract value of the
receivables equals the discounted present value of their scheduled cash
flows, using a discount rate equal to the average annual percentage rate of
all receivables sold to the trust on a particular day. A collection period
is a period the length of a calendar month that ends about nine days prior
to a payment date.
Principal payments on each payment date will generally be allocated between
the Class A Notes and the [Class B Notes] [certificates] so that the ratio
of [Class B Note] [certificates] principal to the sum of the contract
values of the receivables and the amount on deposit in the pre-funding
account remains constant. However, the following exceptions to this general
rule will apply:
o Until the A-1 Notes have been repaid in full, distributions of
principal to the [Class B Notes] [certificates] will be limited to the
amount of prepayments on the receivables during the related collection
period. The balance will be applied to the A-1 Notes.
o Any shortfall in the amount of funds available for principal payments on
any payment date will reduce the principal payment on the [Class B
Notes] [certificates] (up to the amount of the full target payment on the
[Class B Notes][certificates]) before the principal payment on the
Class A Notes is reduced.
Principal payments on the Class A Notes will generally be made 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. For
instance, no principal will be paid on the A-2 Notes until the A-1 Notes
have been paid in full.
S-3
<PAGE>
See "Description of the Transfer and Servicing Agreements-Distributions" for
additional detail on some of the calculations described above and for
special priority rules that would apply in a default situation.
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 or the payment date falling in
the month specified for each below:
Class Final Maturity Date
- ----- --------------------
A-1......................... _______, ____
A-2......................... _______, ____
A-3......................... _______, ____
A-4......................... _______, ____
[B ........................ _______, ____]
[Certificates............... _______, ____]
Optional Redemption
Any [notes][securities] that remain outstanding on any payment date on
which Case Credit, as 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 aggregate contract
value of the receivables declines to 10% or less of the aggregate initial
contract value of the receivables, as measured for each receivable at the
time of its sale to the trust. The redemption price for any class of
[notes] [securities] in connection with any optional redemption will equal
the unpaid principal balance of that class of [notes] [securities], plus
accrued and unpaid interest thereon.
[Mandatory Redemption
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 that date will be applied to prepay the [notes] [securities]
then outstanding in whole or in part in the same sequence and proportions
that would apply in a normal principal distribution.]
The Initial Receivables
On the closing date, we will sell the trust retail installment contracts
with an aggregate contract value of $__________ and leases with an
aggregate contract value of $__________, measured as of ________
___, _____.
[Pre-Funding
We will sell the trust additional retail installment contracts and leases
during a pre-funding period beginning on the closing date and ending not
later than the close of business on the ________ _____ payment date.
The trust will pay for the subsequent receivables with funds on deposit in
a pre- funding account established for the trust, with an initial deposit
of $__________. We expect to sell subsequent receivables to the trust with
an aggregate contract value approximately equal to the amount deposited in
the pre-funding account. Prior to being used to purchase receivables, funds
on deposit in the pre-funding account will be invested from time to time in
highly rated short-term securities.
S-4
<PAGE>
The pre-funding period will end earlier than the ________ _____ payment
date if and when the balance in the pre-funding account is reduced to less
than $100,000. The pre-funding period will also terminate early if certain
defaults or other adverse events occur. Any balance remaining in the
pre-funding account at the end of the pre-funding period will be payable to
the [noteholders] [securityholders] as principal.]
[Negative Carry Account
We anticipate that the average interest rate earned by the trust on
investment of funds in the pre-funding account may be less than the
weighted average interest rate on the [notes] [securities]. To provide a
source of funds to cover any short fall resulting from this difference, we
will deposit $__________ into the trust's negative carry account.]
Credit Enhancement
Spread Account
As credit enhancement for the [notes] [securities], Case Credit, as
servicer, will establish and maintain a spread account in the name of your
indenture trustee. The spread account will be funded as follows:
o On the closing date, we will deposit $__________ (_____% of the
contract value of the initial receivables) into the spread account.
[o On the date of each subsequent sale of receivables to the trust, the
indenture trustee will transfer cash or highly rated, short-term
securities having a value approximately equal to _____% of the
aggregate contract value of the receivables purchased from the pre-
funding account to the spread account.]
o On each payment date after any draw has been made on the spread
account, available collections remaining after other more senior
payments have been made will be deposited into the spread account to
the extent necessary to maintain a specified minimum balance.
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] [securities]. [Funds on deposit in the spread account will not be
used to cover shortfalls in any distributing on the certificates].
Yield Supplement Account
As further enhancement for the [notes][securities], the servicer will
establish and maintain a yield supplement account in the name of your
indenture trustee. However, no deposit is required to be made into the
yield supplement account on or before the closing date. After the closing
date, deposits will only be required to be made into the yield supplement
account on the date of each subsequent sale of receivables to the trust,
and then only if necessary to maintain the original credit ratings of the
[notes][securities].
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<PAGE>
Prior to each payment date, for any receivable that has either prepaid or
been liquidated during the related collection period, the servicer will
calculate the excess (if any) of the contract value of that receivable over
its outstanding principal balance. Any funds available in the yield
supplement account up to the amount of that excess will be added to the
funds available for distribution to [noteholders][securityholders] to the
extent that there would otherwise be a shortfall before any withdrawal from
the spread account.
[The Certificates
On the closing date, the trust will issue certificates to us in an
aggregate principal amount of $__________. We will initially retain the
entire principal amount of the certificates. Distributions of interest on
the certificates will be junior in priority of payment to interest and
principal due on the notes, and no principal will be paid on the
certificates until the notes have been repaid in full.]
[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.]
Priority of Distributions
On each payment date, available collections, plus funds transferred from
various trust accounts as described above, will be applied to the following
(in the priority indicated):
(1) administration fees;
(2) interest on the Class A Notes;
[(3) interest on the Class B Notes;]
(4) to pay principal on the notes in the priority described above under
"Offered Securities-Principal Payments";
(5) to the spread account, to the extent necessary to maintain a specified
balance;
(6) interest on the certificates;
(7) after the notes have been repaid in full, principal on the
certificates;
(8) servicing fees, except that if neither Case Credit nor any of its
affiliates is the servicer, servicing fees will be paid prior to
any other application of funds; and
(9) the remaining balance, if any, to us.
See "Description of the Transfer and Servicing Agreements-Distributions"
for additional details and for special priority rules that would apply in a
default situation.
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<PAGE>
Tax Status
Mayer, Brown & Platt, our special 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 partnership) taxable as a corporation [and that the trust will be
treated as a partnership in which the certificateholders are partners].
Mayer, Brown & Platt, our special Illinois tax counsel, is also of the
opinion that the same characterizations should apply for Illinois tax
purposes as for federal income tax purposes.
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.]
Legal Investment
The A-1 Notes will be eligible securities for purchase by money market
funds under paragraph (a)(10) of Rule 2a-7 under the Investment Company Act
of 1940, as
amended.
Rating of the [Notes] [Securities]
The trust will not issue the [notes] [securities] unless the A-1 Notes are
rated in the highest short-term rating category, the A-2 Notes, A-3 Notes
and A-4 Notes are rated in the highest long-term rating category and that
the [Class B Notes] [certificates] are rated at least in the "A" category
or its equivalent, in each case by at least two nationally recognized
statistical rating agencies.
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<PAGE>
Risk Factors
You should consider the following risk factors in deciding whether to
purchase the [notes] [securities].
It may not be possible The underwriters may assist in resales of the
to find a purchaser for [notes][securities], but they are not required
your securities. to do so. A trading market for the [notes]
[securities] may not develop. If a trading
market does develop, it might not continue
or it might not be sufficiently liquid to
allow you to resell any of your [notes]
[securities].
[Prepayments could If the principal amount of eligible receivables
result from purchased or directly originated by Case Credit
pre-funding. during the trust's pre-funding period is less
than the amount deposited in the trust's
pre-funding account, we will not have
sufficient receivables to sell to the trust
during the pre-funding period. This would
result in a prepayment of principal to the
[noteholders] [securityholders] in the same
sequence and proportions that would apply
in a normal principal distribution. Any
prepayment will shorten the weighted
average life of the affected [notes]
[securities]. The amount of the [notes]
[securities] that will be prepaid is not
known at this time, but the greater the
prepayment, the shorter the weighted average
life of the [notes][securities].]
[The trust is dependent The trust will not be able to purchase
upon Case Credit and receivables from us during the pre-funding
Case for additional period unless Case Credit generates receivables
receivables. which we are able to purchase from Case Credit.
Case Credit's ability to generate receivables
depends primarily upon sales of agricultural,
construction and other equipment manufactured
or distributed by Case. If, during the
pre-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 our ability to sell receivables to
the trust. Case's use of manufacturer's
rebate and other incentive programs may
also affect retail sales, and neither we
nor the trust have any control over Case's
future use of such incentives.]
S-8
<PAGE>
Variations in economic The ability of dealers financed by Case Credit
and other factors may to sell agricultural, construction, and other
reduce the rate of equipment and generate receivables through
creation of additional those sales is affected by the general level of
receivables. activity in the agricultural, construction and
other industries, including the rate of
North American agricultural production and
demand, weather conditions, commodity
prices, consumer confidence, government
subsidies for the agricultural sector,
interest rates, prevailing levels of
construction (especially housing starts)
and levels of total industry capacity and
equipment inventory. We have no basis to
predict whether or to what extent these
factors will affect the level of sales of
agricultural, construction or other
equipment.
[Characteristics of the There will be no required characteristics of
pool of receivables the receivables transferred to the trust during
may change due to the pre-funding period, except that each
pre-funding. additional receivable must satisfy the
eligibility criteria specified in the sale and
servicing agreement between us and the trust at
the time of its addition. Additional 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 annual
percentage rate, equipment type, payment
frequency, average maturity, current
contract value and geographic distribution,
may vary from those of the initial
receivables. 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]. However, the trust will not
purchase any receivables that have a
remaining term in excess of ___ months or any
receivables that would cause the weighted
average original term of the receivables in
the trust to be greater than ___ months.
These requirements are intended to minimize
the effect of the addition of subsequent
receivables on the weighted average life of
the [notes] [securities].]
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<PAGE>
Payments on the Payments on the receivables may be made on a
receivables vary monthly, quarterly, semiannual, annual or an
seasonally. irregular basis. The majority of the initial
receivables (representing approximately
_____% of the aggregate contract value of
the initial receivables) are agricultural
equipment sale contracts or leases 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 may reflect 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.
Payments on the If you buy [Class B Notes][certificates],
[Class B Notes] your interest payments will junior be junior to
[certificates] are interest payments on the Class A Notes, and your
junior to payments on principal payments will be junior to principal
the Class A Notes. payments 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 that collection period
has been deposited in the note distribution
account. You will not receive any principal
payments on your [Class B
Notes][certificates] with respect to a
collection period until the principal
payments on the Class A Notes relating to
that collection period have been paid (or
provided for) in full.
Prepayments of higher The receivables are subject to voluntary
interest rate prepayment. Upon any prepayment in full of a
receivables could receivable, the contract value of that
result in payment receivable will be reduced to zero, and the
shortfalls. contract value of that receivable will
be added to the amount of principal to be paid
on the notes on the related payment date.
However, some receivables have a contract value
that is greater than their outstanding principal
balances. When a receivable of this type is
prepaid, the principal collected through
the prepayment will be less than the
resulting increase in the targeted
principal distribution by an amount roughly
equal to the excess of the receivable's
contract value over its outstanding
principal balance immediately prior to the
prepayment. See "Description of the
Notes-Payments of Principal."
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<PAGE>
To the extent necessary to maintain the
initial credit ratings on the notes, funds
will be deposited in the trust's yield
supplement account each time that the trust
buys additional receivables during the
pre-funding period. Those funds, if any,
are intended to make up for potential cash
flow short falls that could result from
prepayments of this type. Upon such a
prepayment, an amount equal to the excess
of the contract value of the prepaid
receivable over its outstanding principal
balance prior to the prepayment will be
withdrawn from the yield supplement account
and included in the funds distributed on
the related payment date to the extent
there would otherwise be a shortfall.
However, no funds may be required to be
deposited into the yield supplement
account, and in any event any required
deposit is expected to be less than the
maximum aggregate cash flow short flow that
might result if all receivables of this
type prepaid. You might not receive
ultimate payment in full of all amounts due
under your notes if the amount of the short
falls exceeds the amount of the deposits
and other available credit enhancement and
excess collections available to make up for
the short falls.
[The certificateholders [If servicer default occur, the indenture
remedies are limited in trustee or noteholders evidencing 25% or more
the case of a servicer of the outstanding principal amount of the
default.] notes may remove the servicer without the
consent of the trustee or any of the
certificateholders. If 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.]
Case Corporation and Case Credit Corporation
Case is a leading worldwide designer, manufacturer, marketer and
distributor of farm equipment and light- to medium-sized construction
equipment, which is sold worldwide predominantly through independent
dealers. For the year ended December 31, 1998, 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 $296 million (compared to $627 million for
the year ended December 31, 1997), and net income of $64 million (compared
to $403 million for the year ended December 31, 1997) on net sales of
approximately $5.7 billion (compared to $5.7 billion for the year ended
December 31, 1997). At December 31, 1998, Case's consolidated equity was
$2.1 billion.
S-11
<PAGE>
Case Credit recorded net income of $85 million in 1998, as compared to
net income of $82 million in 1997. The $3 million increase in
year-over-year income is primarily due to higher earnings as a result of
increased levels of on-balance-sheet receivables, and improved margins
resulting from the declining interest rate environment. Additionally,
higher lease income from operating leases and higher realized gains from
the sale of retail notes under asset-backed securitization transactions
also improved earnings. These amounts were partially offset by an increase
in the Company's credit loss provision as a result of a higher
loss-to-liquidation ratio in 1998, combined with the significant growth in
Case Credit's serviced portfolio. In addition, 1998 operating results
reflect increased interest expense as a result of higher average debt
levels, as well as increased depreciation of equipment on operating leases
and a higher year-over-year tax rate.
Year 2000
As used in this "Year 2000" disclosure, the term "Case" refers to Case
Corporation and its consolidated subsidiaries, including Case Credit and
its subsidiaries. In addition, all references to "Case Industrial" reflect
the consolidation of all majority-owned subsidiaries, excluding Case
Credit.
In July 1996, the Emerging Issues Task Force of the Financial
Accounting Standards Board adopted standards which require that costs
associated with modifying computer software for the year 2000 be expensed
as incurred. Through Case's ongoing process of evaluating and performing
systems and software upgrades and enhancements, Case has been actively
addressing year 2000 issues since 1995.
Case Corporation understands that it is important to its customers and
shareholders that Case's products, services and internal systems are not
adversely affected by the year 2000. Case has implemented procedures that
it deems necessary to safeguard Case from computer-related issues
associated with adverse effects as a result of improperly recognizing the
millennial date change. These procedures include, where necessary, the
inventorying/assessing, planning, constructing/testing, and
implementing/certifying of critical internal-use hardware and software
systems, as well as other embedded systems in Case's manufacturing plants,
other buildings, equipment and other infrastructure. Case believes that
these procedures will adequately address both the information technology
and non-information technology aspects of our business. Based upon its
review and efforts to date, Case believes 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 adverse effect on Case's
financial position, cash flows or results of operations.
Case believes, based upon its review and efforts to date, that external
and internal remediation costs to be incurred for the modification of
internal-use software to address year 2000 issues will, in the aggregate,
approximate $45 million to $50 million. As Case Industrial and Case Credit
share many technology resources and internal-use systems, all the
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<PAGE>
remediation costs to address year 2000 issues will be borne by Case
Industrial. As of December 31, 1998, Case Industrial has incurred
approximately $22 million of costs for year 2000 remediation, and the
Company currently anticipates that remaining year 2000 remediation costs
will approximate $22 million in 1999 and $3 million in 2000. These cost
estimates include the costs of external contractors, non-capitalizable
purchases of software and hardware, and the direct cost of internal
employees working on year 2000 projects. Case maintains a process that
tracks the cost and time of external contractors. However, the Company does
not separately track its own internal costs incurred for the year 2000
project. Internal costs are compiled principally from the related payroll
records for those personnel directly working on the year 2000 effort. The
Company's cost estimate does not include the cost of implementing
contingency plans, which are in the process of being developed, and also
does not include any potential litigation or warranty costs relating to
year 2000 issues if the Company's remediation efforts are not successful.
Case has also undertaken a program to alert its suppliers and dealers
of year 2000 issues. Based on its contracts with suppliers and dealers,
Case believes that a majority of its most important suppliers are year 2000
compliant, and Case anticipates that most of its dealers will be year 2000
compliant by mid-1999. Case will continue to work with its remaining
suppliers and its dealers throughout 1999 to secure year 2000 compliance by
December 31, 1999. Based on third-party representations and internal
testing, and subject to Case's ongoing compliance efforts, Case does not
reasonably expect the costs and uncertainties relating to timely resolution
of year 2000 issues applicable to Case's business and operations to have a
material adverse effect on Case's financial position, cash flows or results
of operations. For those suppliers and dealers that have not adequately
responded to Case's year 2000 concerns, Case is following up to ultimately
achieve an acceptable level of compliance within its supply chain. As there
can be no assurance that an acceptable level of year 2000 compliance will
be achieved, Case is in the process of developing contingency plans to
address potential issues.
Case has completed all steps with regards to year 2000 compliance that
it considers necessary regarding its agricultural and construction
equipment and, as a result, Case has no information to suggest that its
agricultural and construction equipment is not year 2000 compliant. Case
believes, based on its review and testing, that products purchased from
Case will accurately determine chronological dates and accurately perform
all calculations and data manipulations based upon such dates.
Based upon Case's review and efforts to date, Case currently
anticipates completion of critical year 2000 compliance issues by mid-1999,
and Case plans to continue integration testing throughout the balance of
1999. If Case's year 2000 compliance efforts, as well as the efforts of
Case's suppliers and dealers, individually and in the aggregate, are not
successful, it could have a material adverse effect on Case's financial
position, cash flows and results of operations. Factors that could cause
actual results to differ include unanticipated supplier or dealer failures,
disruption of utilities, transportation or telecommunications breakdowns,
foreign or domestic governmental failures, as well as unanticipated
S-13
<PAGE>
failures on our part to address year 2000 related issues. Case's most
reasonably likely worst case scenario in light of these risks would involve
a potential loss in sales resulting from order, production and shipping
delays throughout Case's supply chain caused by year 2000 related
disruptions. The degree of sales loss impact would depend on the severity
of the disruption, the time required to correct it, whether the sales loss
was temporary or permanent, and the degree to which our primary competition
were also impacted by the disruption.
Case is in the process of developing year 2000 contingency plans that
will be designed to mitigate the impact on Case in the event that its year
2000 compliance efforts are not successful. The targeted completion date
for this contingency planning is mid-1999. Case's contingency plans may
include the use of alternative systems and non-computerized approaches,
including manual procedures for machine operation, collecting and reporting
of information, as well as alternative sources of supply. At this time,
Case has not determined whether it will be necessary to stockpile inventory
or supplies as part of its contingency planning.
The information included in this "Year 2000" section 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 Trust
General
The trust will be formed pursuant to a trust agreement between us and
the trustee. After its formation, the trust will not engage in any activity
other than
o acquiring, holding and managing the receivables[, the
pre-funding account] and the other assets of the trust and proceeds
therefrom,
o issuing the notes and the certificates,
o making payments on the notes and the certificates, and
o engaging in other activities that are necessary, suitable or
convenient to accomplish the foregoing or are incidental thereto or
connected therewith.
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The trust will possess only the following property:
o receivables and related collections;
o bank accounts established for the trust;
o security interests in the equipment financed or leased
under the receivables;
o any property obtained in a default situation under those
security interests;
o rights to proceeds from certain insurance policies covering
equipment financed or leased under the receivables or
obligors on the receivables; and
o our interest in any proceeds from recourse to dealers
on receivables, which will exclude any amounts
contained in the dealers' reserve accounts.
The trust's principal offices are in ______________________, 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
____________ [initial cutoff date], as if the issuance and sale of the
notes and the certificates had taken place on that date:
A-1 _____% Asset Backed Notes.............................. $_________
A-2 _____% Asset Backed Notes.............................. $_________
A-3 _____% Asset Backed Notes.............................. $_________
A-4 _____% Asset Backed Notes.............................. $_________
[Class B _____% Asset Backed Notes......................... $_________]
[_____% Asset Backed Certificates.......................... $ ]
==========
Total .............................................. $
==========
The Trustee
_________________________ is the trustee under the trust agreement.
______________________________________is a _______________________________,
and its principal offices are located at _______________________________
___________________________________________________________________________.
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
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<PAGE>
advisory transactions with Case Credit and its affiliates. _________________
__________________ will act as co-trustee for the purpose of complying with
certain Delaware legal requirements.
The Receivables Pool
The pool of receivables held by the trust will include the initial
receivables purchased on the closing date and any additional receivables
purchased during the trust's pre-funding period.
A number of calculations described in this prospectus supplement, and
calculations required by the agreements governing the trust and the notes,
are based upon the Contract Value of the receivables. "Contract Value"
means, as of any calculation date, the present value of the scheduled and
unpaid payments on the receivables discounted monthly at an annual rate
equal to (a) in the case of the initial receivable,_____%, which is the
weighted average annual percentage rate of the initial receivables as of
________ ___, _____ plus any amount of past due payments and (b) in the
case of the additional receivables, the weighted average annual percentage
rate of the additional receivables sold as of the cutoff date designated
for such sale plus any amount of past due payments. Any defaulted
receivables liquidated by the servicer through the sale or other
disposition of the related equipment or that the servicer has, after using
all reasonable efforts to realize upon the related equipment, determined to
charge off without realizing upon the related equipment are deemed to have
a Contract Value of zero.
The Contract Value of the receivables is generally equivalent to their
outstanding principal amount. However, the Contract Value of any particular
receivable may be greater than or less than its outstanding principal
amount, depending primarily upon whether the annual percentage rate of that
receivable is greater or less than the annual percentage rate of as of the
initial cutoff date (in the case of an initial receivable) or the annual
percentage rate as of the applicable addition cutoff date (in the case of
additional receivables). If a receivable's annual percentage rate is
greater than the annual percentage rate used in calculating its Contract
Value, its Contract Value will be greater than its outstanding principal
balance because the discount rate used to determine its Contract Value is
lower than the annual percentage rate that generated the finance charge
component of the scheduled payments that are discounted to determine the
Contract Value. Conversely, if a receivable's annual percentage rate is
lower than the annual percentage rate used in calculating its Contract
Value, its Contract Value will be less than its outstanding principal
balance because the discount rate used to determine its Contract Value is
greater than the annual percentage rate that generated the finance charge
component of the scheduled payments that are discounted to determine the
Contract Value.
The [initial] receivables were selected [and the additional receivables
will be selected] from our portfolio using several criteria, including the
criteria set forth in the prospectus under Characteristics of the
Receivables -- Selection Criteria and the additional criteria that:
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(1) each receivable is retail installment contract or a lease;
(2) each receivable has an annual percentage rate that is equal to or
greater than _____%, and the annual percentage rate of each set of
additional receivables as of the end of the most prior to their sale to the
trust will be equal to or greater than _____%;
(3) each receivable has a remaining term to maturity of not more than
___ months;
(4) 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 1% of the aggregate
Contract Value of all the receivables;
(5) [after giving effect to each purchase of additional receivables,] the
weighted average original term of the receivables in the trust will not be
greater than ___ months; and
(6) [after giving effect to each purchase of additional 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 for an
addition of receivables will not deviate from the foregoing
characteristics.]
Each [initial] receivable is a precomputed receivable. No [initial]
receivable has[, and no additional receivable will have,] a scheduled
maturity later than the date that is six months prior to the final
scheduled maturity date for the notes. No dealer loans will be included in
the trust.
[The initial receivables will represent approximately _____% of the sum
of initial outstanding principal amount of the notes and the certificate
balance. Except for the criteria described in the preceding paragraphs,
there will be no required characteristics of the additional receivables.
Therefore, following the transfer of additional receivables to the trust,
the aggregate characteristics of the all of the receivables in the trust,
including the composition of the receivables, the distribution by annual
percentage rate, 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 pre-funding
period, we 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 all of the receivables in the trust, after the addition
of the additional receivables.]
The composition, distribution by annual percentage rate, receivable
type, equipment type, payment frequency, current Contract Value and
geographic distribution, in each case of the initial receivables as of
_______________________, are as set forth in the following tables. For
purposes of the data in the following tables, the "Statistical Contract
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Value" for each receivable has been calculated as either the sum of the
present value of the scheduled and unpaid payments on the receivable,
discounted monthly at an annual rate equal to its annual percentage rate
(instead of the weighted average annual percentage rate of the initial
receivable) plus any amount of past due payments or (b) the current balance
of the receivable on the servicer's records, depending upon the type of
receivable. Totals may not add to 100% due to rounding.
Composition of the Receivables
as of the Initial Cutoff Date
Aggregate Weighted Weighted Average
Contract Number Average Average Statistical
Statistical of Remaining Original Contract
APR Value Receivables Term Term Value
- --- ----------- ----------- --------- -------- -----------
_____% $__________ months months $__________
Distribution by Receivable Type of the Receivables Pool
as of the Initial Cutoff Date
Percent of
Aggregate Aggregate
Number of Statistical Statistical
Receivable Type Receivables Contract Value Contract Value
- --------------- ----------- --------------- --------------
Retail Installment
Contracts.................. $ %
Leases....................... %
------------- ---------------- -------------
Total........................ $ 100.00%
============= ================ =============
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Distribution by Annual Percentage Rate of the Receivables
as of the Initial Cutoff Date
Percent of
Aggregate Aggregate
Statistical Statistical
Number of Contract Contract
APR Range Receivables Value Value
- --------- ----------- ----------- -----------
3.000% to 3.999%.............. $ %
4.000% to 4.999%..............
5.000% to 5.999%..............
6.000% to 6.999%..............
7.000% to 7.999%..............
8.000% to 8.999%..............
9.000% to 9.999%..............
10.000% to 10.999%............
11.000% to 11.999%............
12.000% to 12.999%............
13.000% to 13.999%............
14.000% to 14.999%............
15.000% to 15.999%............
16.000% to 16.999%............
17.000% to 17.999%............
18.000% to 18.999%............
20.000% to 20.999%............
----------- ----------- -----------
Total......................... $ 100.00%
=========== =========== ===========
Distribution by Equipment Type of the Receivables
as of the Initial Cutoff Date
Percent of
Aggregate Aggregate
Number of Statistical Statistical
Type Receivables Contract Value Contract Value
- ---- ----------- -------------- --------------
Agricultural
New....................... $ %
Used......................
Construction
New.......................
Used......................
Forestry
New
Used......................
------------ ------------ ------------
Total........................ $ 100.00%
S-19
<PAGE>
Distribution by Payment Frequency of the Receivables
as of the Initial Cutoff Date
Percent of
Aggregate Aggregate
Number of Statistical Statistical
Frequency Receivables Contract Value Contract Value
- --------- ------------ --------------- --------------
Annual(1).................... $ %
Semiannual...................
Quarterly....................
Monthly......................
---------------- --------------- ------------
Total.................. $ 100.00%
================ =============== ============
- -----------
(1) Approximately _____%, _____%, _____%, _____%, _____%, _____%,
_____%, _____%, _____%, _____%, _____% and _____%, of the annual
receivables have scheduled payments within the collection periods
relating to the payment dates in January, February, March, April,
May, June, July, August, September, October, November and
December, respectively.
Distribution by Current Contract Value of the Receivables
as of the Initial Cutoff Date
Percent of
Aggregate Aggregate
Number of Statistical Statistical
Value Range Receivables Contract Value Contract Value
- ----------- ----------- -------------- --------------
Up 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 $ 100.00%
============= ============ ============
S-20
<PAGE>
Geographic Distribution of the Receivables
as of the Initial Cutoff Date
Percent of
Aggregate Statistical
State(1) Contract Value
- -------- ---------------------
Alabama.................................................... %
Alaska.....................................................
Arizona....................................................
Arkansas...................................................
California.................................................
Colorado...................................................
Connecticut................................................
Delaware...................................................
Florida....................................................
Georgia....................................................
Hawaii.....................................................
Idaho......................................................
Illinois...................................................
Indiana....................................................
Iowa.......................................................
Kansas.....................................................
Kentucky...................................................
Louisiana..................................................
Maine......................................................
Maryland...................................................
Massachusetts..............................................
Michigan...................................................
Minnesota..................................................
Mississippi................................................
Missouri...................................................
Montana....................................................
Nebraska...................................................
Nevada.....................................................
New Hampshire..............................................
New Jersey.................................................
New Mexico.................................................
New York...................................................
North Carolina.............................................
North Dakota...............................................
Ohio.......................................................
Oklahoma...................................................
Oregon.....................................................
Pennsylvania...............................................
Rhode Island...............................................
South Carolina.............................................
South Dakota...............................................
Tennessee..................................................
Texas......................................................
Utah.......................................................
Vermont....................................................
Virginia...................................................
Washington.................................................
West Virginia..............................................
Wisconsin..................................................
Wyoming....................................................
---------------
Total................................................ 100.00%
- -----------
(1) Based upon billing addresses of the obligors.
S-21
<PAGE>
Delinquencies, Repossessions, and Net Losses
Set forth below is certain information concerning Case Credit's
experience pertaining to the entire portfolio of United States retail
agricultural, construction, and other equipment receivables that it
services, including receivables previously sold to trusts under prior
asset-backed securitizations. Since 1994, 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.
<TABLE>
<CAPTION>
Delinquency Experience(1)
At December 31,
1998 1997 1996 1995 1994
Number Number Amount Number Amount Number Amount Number
of of of of of
Contracts Amount Contracts Contracts Contracts Contracts Amount
--------- ------ --------- --------- --------- --------- ------
(Dollars in Millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Portfolio.............. 153,959 $4,150.3 145,101 $3,623.3 135,211 $3,262.4 135,722 $3,093.1 128,891 $2,641.0
Period of Delinquency 31-60
days................ 3,100 104.1 2,649 74.2 2,031 45.9 1,927 33.5 1,457 18.4
60 Days or More..... 3,251 133.0 2,502 65.3 1,778 36.3 1,509 18.5 855 9.4
-------- -------- ------- -------- ------- -------- ------- ------- ------ --------
Total Delinquencies.... 6,351 $237.1 5,151 $139.5 3,809 $82.2 3,436 $52.0 2,312 $27.8
Total Delinquencies as a
Percent of the Portfolio 4.1% 5.7% 3.6% 3.9% 2.8% 2.5% 2.5% 1.7% 1.8% 1.0%
</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. Case Credit
treats a receivable as delinquent when it is one day past due.
S-22
<PAGE>
<TABLE>
<CAPTION>
Credit Loss/Repossession Experience(1)
Year Ended December 31,
-----------------------
1998 1997 1996 1995 1994
(Dollars in Millions)
<S> <C> <C> <C> <C> <C>
Average Gross Portfolio Outstanding During the Period... $3,886.8 $3,442.9 $3,155.5 $2,857.7 $2,511.2
Repossessions as a Percent of Average Gross Portfolio Outstanding 1.22% 1.20% 1.07% 1.14% 1.33%
Net Losses as a Percent of Liquidations(2)(3)(4)........ 0.53% 0.34% 0.15% 0.22% 0.36%
Net Losses as a Percent of Average Gross Portfolio Outstanding (0.29% 0.20% 0.08% 0.11% 0.19%
</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,
construction and forestry 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.
Approximately 16%, 25%, 25%, 22% and 22% of the aggregate amounts
scheduled to be paid on the contracts acquired during the years
ended December 31, 1998, 1997, 1996, 1995 and 1994, respectively,
provide for recourse to dealers (excluding some contracts which
provide for partial 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.
(3) Net losses are equal to the aggregate of the principal balances of
all contracts (plus accrued but unpaid interest thereon) that are
determined to be uncollectible in the period, less any recoveries
on contracts charged off in the period or any prior periods,
excluding any losses resulting from repossession expenses and
excluding any recoveries from dealers' reserve accounts.
(4) Liquidations represent a reduction in the outstanding balances of the
contracts as a result of cash payments and charge-offs.
S-23
<PAGE>
Case Credit had recourse to dealers on a portion of the contracts.
This fact was taken into consideration in determining the principal balance
of the certificates and the required 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 of these 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
related equipment, if any, or when the servicer, has, after using all
reasonable efforts to realize upon the related equipment determined to
charge-off the receivable without realizing upon the related equipment.
Weighted Average Life of the [Notes] [Securities]
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] [securities] could occur significantly earlier than the final
maturity date for that class. You will bear the risk of being able to
reinvest principal payments on your [notes] [securities] at yields at least
equal to the yield on your [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-___, 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 required
spread account balance, (e) the balance in the yield supplement account on
any day is equal to the required yield supplement account Balance, (f) the
closing date occurs on ________ ___, _____ and (g) the servicer exercises
its option to purchase the receivables on the earliest permitted payment
date. The table indicates the projected weighted average life of each class
of [notes] [securities] and sets forth the percent of the initial principal
balance of each class of [notes] [securities] that is projected to be
outstanding after each of the payment dates shown at various CPR
percentages.
S-24
<PAGE>
The table also assumes that the receivables have been aggregated
into four hypothetical pools with all of the receivables within each pool
having the following characteristics:
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 receivable. Hypothetical pools 2, 3 and 4
have a Contract Value equal in the aggregate to the amount deposited in the
trust's pre- funding account. The cash flow characteristics of hypothetical
pools 2, 3 and 4 are proportionately identical to those of 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-___, 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 additional receivables may be less than the
amount deposited in the trust's pre-funding account. Moreover, the diverse
terms of receivables within each of the four hypothetical pools could
produce slower or faster principal distributions than indicated in the
table at the various CPR specified. Any difference between those
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-25
<PAGE>
Percent of Initial Principal Amount of the Notes at Various CPR Percentages
Payment Date 0% 13% 15% 17% 19% 0% 13% 15% 17% 19%
- ------------ -- --- --- --- --- --- --- --- --- ---
A-1 Notes A-2 Notes
--------- ---------
Closing Date............. 100 100 100 100 100 100 100 100 100 100
- ----------, -----........
- ----------, -----........
- ----------, -----........
- ----------, -----........
- ----------, -----........
- ----------, -----........
- ----------, -----........
- ----------, -----........
- ----------, -----........
- ----------, -----........
- ----------, -----........
- ----------, -----........
- ----------, -----........
- ----------, -----........
- ----------, -----........
- ----------, -----........
- ----------, -----........
- ----------, -----........
- ----------, -----........
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.
This table has been prepared based on the assumptions described on
pages S-___ and 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-26
<PAGE>
Percent of Initial Principal Amount of the Notes at Various CPR Percentages
Payment Date 0% 13% 15% 17% 19% 0% 13% 15% 17% 19%
- ----------- --- --- --- --- --- -- --- --- --- ---
A-3 Notes A-4 Notes
Closing Date............. 100 100 100 100 100 100 100 100 100 100
- ----------, -----........
- ----------, -----........
- ----------, -----........
- ----------, -----........
- ----------, -----........
- ----------, -----........
- ----------, -----........
- ----------, -----........
- ----------, -----........
- ----------, -----........
- ----------, -----........
- ----------, -----........
- ----------, -----........
- ----------, -----........
- ----------, -----........
- ----------, -----........
- ----------, -----........
- ----------, -----........
- ----------, -----........
- ----------, -----........
- ----------, -----........
Weighted Average
Life (years)(1)..........
- -----------
(1) The weighted average life of an A-3 Note or A-4 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
pages S-___ and 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-27
<PAGE>
Payment Date 0% 13% 15% 17% 19%
- ------------ -- --- --- --- ---
[B Notes] [Certificates]
Closing Date............................. 100 100 100 100 100
- ---------, -----.........................
- ---------, -----.........................
- ---------, -----.........................
- ---------, -----.........................
- ---------, -----.........................
- ---------, -----.........................
- ---------, -----.........................
- ---------, -----.........................
- ---------, -----.........................
- ---------, -----.........................
- ---------, -----.........................
- ---------, -----.........................
- ---------, -----.........................
- ---------, -----.........................
- ---------, -----.........................
- ---------, -----.........................
- ---------, -----.........................
- ---------, -----.........................
- ---------, -----.........................
- ---------, -----.........................
- ---------, -----.........................
- ---------, -----.........................
Weighted Average Life (years)(1).........
- -----------
(1) The weighted average life of a [Class B Note] [certificates] 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
pages S-___ and 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-28
<PAGE>
Description of the Notes
General
The following summarizes the material terms of the notes offered
hereby 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 it is inconsistent with, 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
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 _________ ___, _____,] except that interest on the A-1 Notes
will also be paid on _________ ___, _____ if any A-1 Notes remain
outstanding after the _________ _____ payment date]. Interest on the A-1
Notes and A-2 Notes will be calculated on the basis of the actual number of
days in the applicable interest period and a 360-day year. Interest on the
other notes will be calculated on the basis of a 360-day year of twelve
30-day months.
If the amount of interest on the Class A Notes payable on any
payment date exceeds the amounts available on that date, the holders of
Class A Notes will receive their ratable share (based upon the total amount
of interest due to each of them) of the amount available to be distributed
in respect of interest on the Class A Notes.
Interest on the [Class B Notes][certificates] will not be paid on
any payment date until interest on the Class A Notes has been paid in full.
Payments of Principal
Principal will be paid on the notes on each payment date in an
amount generally equal to the Principal Distribution Amount. For any
payment date, the "Principal Distribution Amount" will be an amount (not
less than zero) equal to (i) [the sum of] the Contract Value of all
receivables [and the Pre-Funded Amount] as of the beginning of the
immediately preceding collection period less (ii) [the sum of] the Contract
Value of all receivables [and the Pre-Funded Amount] as of the beginning of
the current collection period. On each payment date, the principal payments
will be allocated among the various classes of Notes as described below.
The principal of the Class A Notes will be payable on each payment
date[, except that principal on the A-1 Notes will also be paid on
__________ if any A-1 Notes remain outstanding after the ______ ____
payment date]. Principal payments will be made to the extent of funds
available therefor, in an amount generally equal to the Class A
Noteholders' Monthly Principal Distributable Amount 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. For instance, no
principal will be paid on the A-2 Notes until the A-1 Notes have been paid
in full). [The principal of the Class B Notes will be payable on each
payment date, to the extent of funds available therefor, in an amount
generally equal to the Class B Noteholders' Monthly Principal Distributable
Amount. However, no principal payments will be made on the Class B Notes on
any payment date until all amounts payable with respect to the Class A
Notes on that payment date have been paid in full.]
After an event of default and acceleration of the notes (and, if
any Notes remain outstanding, on and after the final scheduled maturity
date for the last of the notes, as specified 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 until the outstanding principal
amount of the Class B Notes has been paid in full.]
S-29
<PAGE>
The final principal payment with respect to each class of notes is
due not later than the payment date in the month specified for each class
below:
Class Final Maturity Date
- ----- -------------------
A-1 ....................................................... ______ ___, ____
A-2 ....................................................... ______ _____
A-3 ....................................................... ______ _____
A-4 ....................................................... ______ _____
[B ...................................................... ______ _____]
Upon any prepayment in full of a receivable, the Contract Value of
that receivable will be reduced to zero. This results in an increment to
the Principal Distribution Amount for the related payment date equal to the
full Contract Value of the prepaid receivable. However, in circumstances
where the Contract Value of the prepaid receivable exceeded its outstanding
principal balance, the principal collected through the prepayment will be
less than the resulting increment to the Principal Distribution Amount by
an amount roughly equal to the excess of the receivable's Contract Value
over its outstanding principal balance immediately prior to the prepayment.
This will generally happen when the annual percentage rate of the prepaid
receivable was greater than the annual percentage rate used to calculate
its Contract Value. See "The Receivables Pool."
[To the extent necessary to maintain the initial credit ratings on
the notes, funds will be deposited in the trust's yield supplement account
each time the trust buys any additional receivables during the pre-funding
period. Any such funds are intended to cover shortfalls that could result
from prepayments of this type. Upon a prepayment of such a receivable, an
amount equal to the excess of its Contract Value over its outstanding
principal balance immediately prior to the prepayment will be withdrawn
from the yield supplement account and included in the funds distributed on
that payment date to the extent that there are funds available in the yield
supplement account and there would otherwise be a shortfall. However, no
funds may be required to be deposited into the yield supplement account,
and in any event any required deposit is expected to be less than the
maximum aggregate shortfall that might result if all receivables of this
type prepaid. Therefore, if a significant number of those receivables
prepay, there may be insufficient funds available in the yield supplement
account to cover the resulting shortfall.]
As used herein, with respect to any payment date:
"Class A Noteholders' Monthly Principal Distributable Amount"
means, with respect to any payment date until the payment date on which the
outstanding amount of the Class A Notes has been reduced to zero, the
Principal Distributable Amount minus [the Class B Noteholders' Monthly
Principal Distributable Amount][the Certificateholders' Principal
Distributable Amount].
["Class B Noteholders' Adjusted Principal Distributable Amount"
means, with respect to each payment date, an amount equal to the excess, if
any, of: (a) the outstanding amount of the Class B Notes on the related
record date minus any Class B Noteholders' Principal Carryover Shortfall
over (b) the Initial Class B Percentage of the sum of the outstanding Pool
Balance and the amount on deposit in the trust's pre-funding account (the
"Pre-Funded Amount") as of the beginning of the current collection period;
provided, however, that if on the related Record Date any principal of the
A-1 Notes remains outstanding, then the Class B Noteholders' Adjusted
Principal Distributable Amount for such payment date shall not exceed an
amount equal to the aggregate unscheduled principal payments on the
receivables received during the related collection period. Notwithstanding
the above, on and after the payment date on which the Class A Notes are
reduced to zero, the Class B Noteholders' Adjusted Principal Distributable
Amount shall be the Principal Distributable Amount less the amount
necessary to reduce the Class A Notes to zero.]
["Class B Noteholders' Monthly Principal Distributable Amount"
means, with respect to any payment date, the sum of (a) the Class B
Noteholders' Adjusted Principal Distributable Amount for that payment date
S-30
<PAGE>
and (b) without duplication of any amounts included in (a), the Class B
Noteholders' Principal Carryover Shortfall for that payment date; provided,
however, that the sum of clauses (a) and (b) shall not exceed the
outstanding amount of the Class B Notes, and, on the final maturity date
for the Class B Notes, the Class B Noteholders' Monthly Principal
Distributable Amount will include the amount, to the extent of available
funds, necessary to reduce the outstanding amount of the Class B Notes to
zero.]
["Class B Noteholders' Principal Carryover Shortfall" means, with
respect to any payment date, the excess of the Class B Noteholders' Monthly
Principal Distributable Amount for the preceding payment date over the
amount that was actually deposited in the note distribution account in
respect of principal of the Class B Notes on that preceding payment date.]
["Initial Class B Percentage" means _____%.]
"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 us, as the case may be, with
respect to the preceding collection period and all losses realized on
receivables liquidated during that 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 that
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.
Collection Periods and Cutoff Dates
A number of important calculations relating to the receivables
will be made by reference to "cutoff dates" and "collection periods." For
instance, the Contract Value of the initial receivables and each set of
additional receivables that we sell to the trust will be determined as of a
related cutoff date. A cutoff date will be the last day of the calendar
month prior to the month during which the sale takes place.
Payments on the notes on each payment date will primarily be
funded with collections on the receivables that are received during a
related collection period. Each collection period will be about one month
long and will begin and end as follows. The initial collection period will
begin on the initial cutoff date and end on the sixth day of the first
calendar month following the one in which the closing date falls.
Subsequent collections periods will run from the sixth day of one calendar
month to the sixth day of the next calendar month.
Record Dates
Payments on the notes will be made on each payment date to holders
of record as of the fourteenth day of the calendar month in which the
payment date occurs or, if definitive notes are issued, the close of
business on the last day of the prior calendar month. [A special record
date of _______ will apply for the special _______ payment date relating to
the A-1 Notes.]
[Mandatory Redemption
On the payment date on or immediately following the last day of
the pre-funding period, any funds remaining in the pre-funding account
(after giving effect to the purchase of all additional receivables,
including any the purchase on that date) will be applied to redeem the
notes then outstanding in the same sequence and proportions that would
apply if the remaining funds were a part of the Principal Distribution
Amount.]
S-31
<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 sum of
(i) the Pool Balance as of the initial cutoff date plus (ii) the aggregate
Contract Value of all additional receivables sold to the trust as of their
respective cutoff dates. The redemption price for any class of notes in
connection with any optional redemption will equal the unpaid principal
balance of that class of notes, plus accrued and unpaid interest thereon.
Registration of Notes
The notes will be cleared through DTC. You may hold your notes
through DTC (in the United States) or Cedel or Euroclear (in Europe) if you
are a participant of those systems, or indirectly through organizations
that are a participant in those systems.
The Indenture Trustee
Harris Trust and Savings Bank is the indenture trustee under the
Indenture. Harris Trust and Savings Bank is an Illinois banking
corporation, and its corporate trust offices are located at 311 West Monroe
Street, Chicago, Illinois. 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, 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 that class of Notes and the successor's acceptance of that
appointment.]
Description of the Certificates
[On the closing date, the trust will issue $_________ asset-backed
certificates pursuant to the Trust Agreement. We will initially purchase
the entire principal amount of the certificates.
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 and the yield supplement account will not be available to cover
scheduled payments with respect to the certificates.]
The following summarizes the material terms of the certificates
and the Trust Agreement. 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 it is inconsistent with, 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.
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Distributions of Interest Income
The certificates will bear interest at the rate of ___% per annum,[
except that during the pre-funding period no interest will accrue on a
percentage of the certificates balance equal to the pre-funded amount
divided by the outstanding Pool 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 ____% on the certificate balance as of the last day of the
preceding collection period. 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 ____% (to the extent lawful). Interest on the
certificates will not be paid on any payment date until interest and
principal on the notes have been paid in full.
Distributions of Principal
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 Certificateholders' Principal Distributable Amount
for such payment date (to the extent of funds available) until paid in
full. As use herein, "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.
[Mandatory Repurchase
On the payment date on or immediately following the lst day of the
pre-funding period, any funds remaining in the pre-funding account (after
giving effect to the purchase of all additional receivables, including any
the purchase on that date) will be applied to redeem the notes and then to
purchase the certificates then outstanding in the same sequence and
proportions that would apply if the remaining funds were a part of the
Principal Distribution Amount.]
Optional Repurchase
Any certificates that remain outstanding on any payment date on
which the servicer exercises its clean-up call will be repurchased at the
applicable repurchase price on that payment date. The clean-up call cannot
be exercised until the Pool Balance declines to 10% or less of [the sum of
(i)] the Pool Balance as of the [initial] cutoff date [plus (ii) the aggregate
Contract Value of all additional receivables sold to the trust as of their
respective cutoff dates]. The repurchase price for the certificates in
connection with any optional redemption will equal the unpaid principal
balance of those certificates, plus accrued and unpaid interest thereon.
Registration of Certificates
The certificates will be cleared through DTC. You may hold your
certificates through DTC (in the United States) or Cedel or Euroclear (in
Europe) if you are a participant of those systems, or indirectly through
organizations that are in participant in those systems.
S-33
<PAGE>
Description of the Transaction Agreements
We summarize below some material terms of the agreements under
which we will buy receivables, directly or indirectly, from Case Credit and
sell them to the trust, and under which Case Credit will agree to service
the trust's receivables and administer the trust. This description
supplements the disclosure in the prospectus under the same heading. The
following summary does not include all of the terms of the agreements and
is qualified by reference to the actual agreements.
[Sales of Receivables
In addition to the receivables, we expect to sell the trust
additional receivables having an aggregate Contract Value of approximately
$__________, which equals the amount we will deposit in the trust's
pre-funding account. We expect to sell additional receivables to the trust
monthly on dates specified by us during the pre-funding period. The pre-
funding will begin on the closing date and end on the earliest of: (a) the
day on which the amount on deposit in the trust's pre-funding account is
reduced to less than $100,000, (b) the date on which an Event of Default or
a servicer Default occurs, (c) the date on which an insolvency event occurs
with respect to us or the servicer and (d) the close of business on the
_________ _____ payment date.
Upon any sale of additional receivables to the trust:
(1) the Pool Balance will increase in an amount equal to the
aggregate Contract Value of the additional receivables;
(2) an amount equal to _____% of the aggregate Contract
Value of the additional receivables will be withdrawn from the
pre-funding account and deposited in the spread account;
(3) if any deposit into the yield supplement account
will be withdrawn from the pre-funding account and deposited in
the yield supplement account is required, the necessary funds will
be withdrawn from the pre- funding account and deposited in the
yield supplement account; and
(4) an amount equal to the excess of the aggregate
Contract Value of the additional receivables over the sum of the
amounts described in clauses (2) and (3) will be withdrawn from
the pre-funding account and paid to us.]
Servicing Compensation and Payment of Expenses
The servicing fee payable to the servicer will accrue at a rate of
1.00% per annum on the Pool Balance as of the first day of each collection
period. The servicing fee will be paid solely to the extent that there are
funds available to pay it as described under "Distributions" below.
Distributions
On each payment date, the servicer will cause payments on the
notes and other trust liabilities to be made from the following sources:
o the aggregate collections on the receivables for the
related collection period, including proceeds of
liquidated receivables obtained through the sale or other
disposition of the related equipment, net of expenses
incurred by the servicer in connection with such
liquidation and any amounts required by law to be
remitted to the related obligor; however, no other monies
collected on any liquidated receivable during any
collection period after the collection period in which it
became a liquidated receivable will be included in the
funds available for distribution;
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[o collections received after the end of the preceding
calendar month on any additional receivables added to the
trust after the end of that month and on or prior to that
payment date;]
o any amounts withdrawn from [the negative carry account or]
the yield supplement account for that payment date;
o earnings from investment of funds held in the trust's bank
accounts; and
o the aggregate purchase prices for any receivables repurchased
by us or the servicer.
The aggregate funds available from these sources will be applied
in the following order of priority:
(1) to pay the trust's administrator, all accrued and unpaid
administration fees;
(2) to pay interest in the Class Interest Amount on each Class
of Class A Notes;
(3) [to pay interest in the Class Interest Amount on the Class B
Notes;][to pay interest in the Certificateholders' Interest Distributable
Amount on the certificates];
(4) to pay principal on the notes as follows:
o first, the Class Principal Distributable Amount
for each class of Class A Notes and
[o second, the Class B Noteholders' Monthly
Principal Distributable Amount;]
[(4)(5)] to pay principal on the certificates in the
Certificateholders' Principal Distributable Amount;]
[(5)(6)] to deposit in the spread account, to the extent necessary so
that the balance in that account will not be less than the required
balance;
[(6)(7)] to pay accrued and unpaid interest on the certificates;
[(7) after the notes have been repaid in full, to pay principal on
the certificates]; and
(8) to pay the servicer its accrued and unpaid servicing fee;
provided that if Case Credit or an affiliate of Case Credit is not the
servicer, the amounts described in this clause (8) will be paid prior to
any other application of funds on deposit in the collection account.
Any remaining funds will be paid to us.
After an event of default and acceleration of the notes (and, if
any notes remain outstanding, on and after the final scheduled maturity
date for the last of the notes), principal payments will be made first to
the Class A Noteholders ratably according to the amounts due 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].
S-35
<PAGE>
["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 Certificateholers' 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 ___% from such preceding
payment date to but excluding the current payment date.]
"Class Interest Amount" means, with respect to any payment date
(the "current payment date") and any class of notes, an amount equal to the
sum of (i) the aggregate amount of interest accrued on that class of notes
at the applicable interest rate from and including the preceding payment
date (or, in the case of the initial payment date, from and including the
closing date) to but excluding the current payment date plus (ii) the Class
Interest Shortfall for that class of notes and the current payment date.
"Class Interest Shortfall" means, with respect to any payment date
(the "current payment date") and any class of notes, the excess of the
Class Interest Amount for the preceding payment date over the amount in
respect of interest on that class of notes that was actually deposited in
the note distribution account on that preceding payment date, plus interest
on that excess, to the extent permitted by law, at a rate per annum equal
to the interest rate on that class of notes from that preceding payment
date to but excluding the current payment date.
"Class Principal Distributable Amount" means, with respect to any
Class of Class A Notes on a payment date, the remainder, if any, of the
Class A Noteholders' Monthly Principal Distributable Amount for that
payment date after subtracting the Class Principal Distributable Amount for
each Class of Class A Notes having priority of payment over that Class of
Class A Notes; provided that (a) in no event shall the Class Principal
Distributable Amount for any Class exceed the outstanding principal amount
of that Class, and (b) on the final maturity date for each class, the Class
Principal Distributable Amount for that class 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 that payment
date and allocable to principal) to reduce the outstanding principal amount
of that class to zero. For purposes of the foregoing, the various Classes
of Class A 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 A-4 Notes.
[Negative Carry Account
The servicer will establish and maintain the negative carry
account as a trust account in the name of the indenture trustee for the
benefit of the noteholders. On the closing date, we will make an initial
deposit of $________ into the negative carry account. The amount of that
initial deposit is determined by applying the following "Maximum Negative
Carry Amount" calculation as of the closing date:
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"Maximum Negative Carry Amount" equals the product of:
(a) the weighted average of the interest rate on each Class
of the notes minus _____%; multiplied by
(b) the percentage equivalent of a fraction the numerator
of which is the outstanding principal balance of the notes and the
denominator of which is the aggregate outstanding principal
balance of the notes and the certificates; multiplied by
(c) the amount on deposit in the pre-funding account;
multiplied by
(d) the fraction of a year represented by the number of
days until the expected end of the pre-funding period, calculated
on the basis of a 360-day year of twelve 30-day months.
On each payment date, the servicer will instruct the indenture
trustee to withdraw from the negative carry account and deposit into the
collection account and include in the funds available for distribution on
that payment date an amount equal to the excess, if any, of
(1) the product of (A) the aggregate interest payable on
all of the notes, 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) investment earnings on the pre-funding account for the
related period.
The "Pre-Funded Percentage" for each collection period is the percentage
derived from the fraction the numerator of which is the balance on deposit
in the pre-funding account and the denominator of which is the sum of the
Pool Balance and the balance on deposit in the pre-funding account, after
taking into account all transfers of additional receivables during that
collection period.
If the amount on deposit in the negative carry account on any
payment date, after giving effect to the withdrawal referred to above is
greater than the Maximum Negative Carry Account Balance, the excess will be
released to us. All amounts remaining on deposit in the negative carry
account at the end of the payment date on or immediately following the last
day of the pre-funding period will also be released to us.]
Spread Account
The servicer will establish and maintain the spread account as a
trust account in the name of the indenture trustee for the benefit of the
noteholders. On the closing date, we will make an initial deposit into the
spread account of $________, which equals __% of the aggregate Contract
Value of the initial receivables as of the initial cutoff date. On each day
that we sell additional receivables to the trust, cash or eligible
investments having a value approximately equal to _____% of the aggregate
Contract Value of those additional receivables as of their cutoff date will
be withdrawn from the pre-funding account from amounts otherwise
distributable to us in connection with the sale of additional receivables
and deposited in the spread account. Finally, on each payment date, the
servicers will transfer additional amounts into the spread account to the
extent that the balance in that account would otherwise be less than the
Specified Spread Account Balance, and funds are available for that purpose
after other higher priority distributions.
"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. We may reduce or otherwise modify the Specified Spread
Account Balance without the consent of the noteholders if the rating
agencies that have rated the notes confirm in writing that the reduction or
modification will not result in a reduction or withdrawal of the rating of
the notes.
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"Initial Pool Balance" means [the sum of (i)] the sum of (i) the
Pool Balance as of the [initial] cutoff date [plus (ii) the aggregate Contract
Value of all additional receivables sold to the trust as of their
respective 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 that
payment date) is greater than the Specified Spread Account Balance for that
payment date, the excess will be distributed to us. However, if, after
giving effect to all payments made on the notes on that payment date, the
sum of the Pool Balance [plus the balance on deposit in the pre-funding
account] as of the first day of the collection period in which that payment
date occurs is less than the aggregate outstanding principal balance of the
notes and certificates, that excess amount will not be distributed to us
and will be retained in the spread account.
After we receive any amounts duly released from the spread
account, the noteholders will not have any or claims to those amounts.
On each payment date, funds will be withdrawn from the spread
account and deposited in the note distribution account to the extent
necessary to cover shortfalls in the Noteholders' Distributable Amount in
the same order of priority applicable to distributions from the collection
account. For this purpose, the "Noteholders' Distributable Amount" for any
payment date means the sum of the Class Interest Amount for each class of
notes, the Class Principal Distributable Amount for each Class of Class A
Notes [and the Class B Noteholders' Monthly Principal Distributable Amount
for that payment date]. Funds on deposit in the spread account will not be
used to cover shortfalls in any distributions to the certificateholders.
Yield Supplement Account
The servicer will establish and maintain in the name of the
indenture trustee a yield supplement account for the benefit of the
[noteholders][securityholders]. However, no deposit is required to be made
into the yield supplement account on or before the closing date. After the
closing date, deposits will only be required to be made into the yield
supplement account on addition cutoff dates and then only if the Required
Yield Supplement Account Balance determined for the subject addition cutoff
date is greater than zero. [On each addition cutoff date, cash or eligible
investments having a value equal to any positive Required Yield Supplement
Account Balance for that addition cutoff date (minus any amount then on
deposit in the yield supplement account) will be withdrawn from the
pre-funding account and deposited in the yield supplement account.]
Prior to each payment date, the servicer will calculate an amount
(the "Available Yield Supplement Amount") equal to the Maximum Yield
Supplement Amount for all receivables that were liquidated or prepaid
during the related collection period, as calculated for each receivable
immediately prior to that liquidation or prepayment. On each payment date,
funds on deposit in the yield supplement account in an amount up to the
Available Yield Supplement Amount will be made available to cover any
shortfalls in distributions to Noteholders before any withdrawal is made
from the spread account.
Funds on deposit in the yield supplement account may be withdrawn
and paid to us on any day if each of the rating agencies for the notes has
confirmed that such action will not result in a withdrawal or downgrade of
its rating of any class of [Notes][securities].
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<PAGE>
"Required Yield Supplement Account Balance" means, for any
addition cutoff date, the excess, if any, of (a) the sum of the Maximum
Yield Supplement Amounts for each receivable as of the end of the prior
collection period [(or the applicable addition cutoff date for additional
receivables being transferred on that addition cutoff date)], over (b) the
Expected Excess Spread.
"Maximum Yield Supplement Amount" for each receivable is equal to
the difference (if positive) between (A) the present value on the scheduled
and unpaid payments of the receivable discounted monthly at an annual rate
equal to the annual percentage rate of the [initial] receivables as of the
[initial] cutoff date [or the annual percentage rate of the additional
receivables as of their addition cutoff date, as applicable,] minus (B) the
present value of the scheduled and unpaid payments on the receivable
discounted monthly at an annual rate equal to its individual annual
percentage rate.
"Expected Excess Spread" means, for any addition cutoff date, an
amount determined by the servicer to represent excess cash flows from the
receivables that can reasonably be expected to be available to cover
Maximum Yield Supplement Amounts, provided that each of the rating agencies
for the notes has confirmed that use of such amount determined by the
servicer in calculating the Required Yield Supplement Account Balance for
the addition cutoff date will not result in a withdrawal or downgrade of
its rating of any class of [Notes][securities].
Legal Investment
The A-1 Notes will be eligible for purchase by money market funds
under paragraph (a)(10) of Rule 2a-7 under the Investment Company Act of
1940, as amended.
ERISA Considerations
The Notes
We have been advised that, although there is little guidance on
the subject, the notes should not be treated as "equity interests" in the
trust under the Plan Asset Regulation. As a result, the notes may be
purchased by an employee benefit plan or an individual retirement account
(a "Plan") subject to the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), or Section 4975 of the Internal Revenue Code of 1986,
as amended.
However, whether or not 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.
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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 relating to the Class A Notes, we have agreed to cause the trust
to sell to each of the underwriters named below, and each of those
underwriters has severally agreed to purchase, the principal amount of the
Class A Notes set forth opposite its name below:
A-1 Notes A-2 Notes A-3 Notes A-4 Notes
[Underwriter]................ $_______ $_______ $_______ $_______
[Underwriter]................ $_______ $_______ $_______ $_______
[Underwriter]................ $_______ $_______ $_______ $_______
[Underwriter]................ $_______ $_______ $_______ $_______
[Underwriter]................ $_______ $_______ $_______ $_______
[Underwriter]................ $ $ $ $
======= ======= ======= =======
$______ $_______ $_______ $_______
The underwriters of the Class A Notes have advised us 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,
_____% per A-3 Note and _____% per A-4 Note. The underwriters of the Class
A Notes and such dealers may reallow a concession not in excess of _____%
per A-1 Note, _____% per A-2 Note, _____% per A-3 Note and _____% per A-4
Note to certain other dealers. After the initial public offering of the
Class A Notes, the public offering prices and such concessions may be
changed.
In the ordinary course of their respective businesses, the
underwriters of the Class A Notes 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.
[Lead Underwriter], on behalf of the underwriters of the Class A
Notes, may engage in stabilizing transactions, syndicate covering
transactions and penalty bids in accordance with Rule 104 of Regulation M
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. Penalty bids permit the
underwriters of the Class A Notes to reclaim a selling concession from an
underwriter of the Class A Notes or a dealer when the Class A Notes
originally sold by that underwriter or dealer are purchased in a syndicate
covering transaction to cover syndicate short positions. Such stabilizing
transactions, syndicate covering transactions and penalty bids 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.
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<PAGE>
[Class B Notes] [Certificates]
Subject to the terms and conditions set forth in an underwriting
agreement relating to the [Class B Notes][certificates], we have agreed to
cause the trust to sell to each of the underwriters named below, and each
of those underwriters has severally agreed to purchase, the principal
amount of [Class B Notes] [certificates] set forth opposite its name below:
[Class B Notes]
[Underwriter]................................. $_________
[Underwriter]................................. $
=========
$
=========
The underwriters of the [Class B Notes][certificates] have advised
us 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] [certificates]. The underwriters of the [Class B Notes]
[certificates] may allow and such dealers may reallow a concession not in
excess of _____% per Class B Note to certain other dealers. After the
initial public offering of the [Class B Notes] [certificates], the public
offering prices and such concessions may be changed.
In the ordinary course of their respective businesses, the
underwriters of the Class B Notes 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.
[Lead Underwriter], on behalf of the underwriters of the [Class B
Notes,] [certificates] may engage in stabilizing transactions, syndicate
covering transactions and penalty bids in accordance with Rule 104 of
Regulation M 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. Penalty bids permit the underwriters of the [Class B Notes]
[certificates] to reclaim a selling concession from an underwriter of the
[Class B Notes] [certificates] or a dealer when the [Class B Notes]
[certificates] originally sold by that underwriter or dealer are purchased
in a syndicate covering transaction to cover syndicate short positions.
Such stabilizing transactions, syndicate covering transactions and penalty
bids 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 Note) 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] [certificates] (representing _____% of the principal amount of each
[Class B Note][certificate]) after paying the underwriting discount of
$__________ (representing _____% of the principal amount of each [Class B
Note] [certificates]). Additional offering expenses are estimated to be
$__________.
Legal Opinions
Certain legal matters relating to the notes will be passed upon
for the trust, us and the servicer by Mayer, Brown & Platt. Certain legal
matters relating to the notes will be passed upon for the underwriters by
Kirkland & Ellis. Certain federal income tax, Illinois state tax and other
matters will be passed upon for the trust by Mayer, Brown & Platt.
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Index of Terms
Page
APR ........................................................S-15
Available Yield Supplement Amount.........................................S-41
Case ........................................................S-12
Case Industrial ........................................................S-12
Certificateholders' Principal Distributable Amount........................S-38
Certificateholders' Interest Distributable Amount.........................S-42
Certificateholders' Interest Carryover Shortfall..........................S-42
Class A Noteholders' Monthly Principal Distributable Amount...............S-32
Class B Note Underwriting Agreement.......................................S-44
Class B Noteholders' Adjusted Principal Distributable Amount..............S-32
Class B Noteholders' Monthly Principal Distributable Amount...............S-32
Class B Noteholders' Principal Carryover Shortfall........................S-32
Class Interest Amount.....................................................S-38
Class Interest Shortfall..................................................S-38
Class Principal Distributable Amount......................................S-39
Company ........................................................S-12
Contract Value ..................................................S-15, S-17
CPR ........................................................S-24
current payment date......................................................S-38
EITF ........................................................S-12
ERISA ........................................................S-42
Expected Excess Spread....................................................S-42
Initial Class B Percentage................................................S-32
Initial Pool Balance......................................................S-40
initial receivables.......................................................S-15
Liquidated Receivables....................................................S-16
Maximum Negative Carry Amount.............................................S-39
Maximum Yield Supplement Amount...........................................S-42
Noteholders' Distributable Amount.........................................S-41
Plan ........................................................S-42
Pool Balance ........................................................S-33
Pre-Funded Amount ........................................................S-32
Pre-Funded Percentage.....................................................S-40
Principal Carryover Shortfall.............................................S-33
Principal Distributable Amount............................................S-33
PTCE ........................................................S-43
Required Yield Supplement Account Balance.................................S-42
Specified Spread Account Balance..........................................S-40
Statistical Contract Value................................................S-17
You should rely only on 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 these securities in any state where the offer is
not permitted.
Dealers will deliver a prospectus supplement and prospectus when acting
as underwriters of the securities and with respect to their unsold
allotments or subscriptions. In addition, all dealers selling the
securities will deliver a prospectus supplement and prospectus until
_________ ___, _____.
S-42
<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........................................ $ 278.00
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......................................... 5,722.00
--------
Total............................... $ 1,070,000.00
============
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.
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.
II-1
<PAGE>
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 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**** --Opinion of Mayer, Brown & Platt with respect to Federal
income and Illinois 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 (to be included as part
of Exhibit 8)
24 --Power of Attorney (included on page II-4)
25*** --Form T-1 Statement of Eligibility
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.
** Incorporated by reference to Registrants' Registration Statement
No. 33-99298.
*** To be filed in accordance with Section 305(b)(2) of the Trust
Indenture Act of 1939.
**** To be filed by amendment.
II-2
<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.
(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.
<PAGE>
(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 qualification of Trust Indentures under Trust Indenture Act
of 1939 for delayed offerings:
The undersigned registrant hereby undertakes to file an application for:
The purpose of determining the eligibility of the trustee to act
under subsection (a) of Section 310 of the Trust Indenture Act in accordance
with the rules and regulations prescribed by the Commission under
Section 305(b) of the Act.
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 Lincolnshire, Illinois, on the date of
July 13, 1999.
CASE RECEIVABLES II INC.
By: /s/ Theodore R. French
-------------------------------
Theodore R. French
Chairman of the Board
By: /s/ Robert A. Wegner
-------------------------------
Robert A. Wegner
Senior Vice President and Chief
Financial Officer
KNOW ALL MEN BY THESE PRESENTS that each person whose signature
appears below constitutes and appoints Theodore R. French and Robert A.
Wegner and, and either of them, such person's true and lawful
attorneys-in-fact and agents, with full power of substitution and
revocation, for such person and in such person's name, place and stead, in
any and all capacities to sign any and all amendments (including
post-effective amendments to this Registration Statement) and to file the
same with all exhibits thereto, and the other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and things requisite and necessary to be
done, as fully to all intents and purposes as such person might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents or any of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue thereof.
<PAGE>
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
- --------- ----- ----
/s/ Andrew E. Graves Principal Executive Officer July 13, 1999
- --------------------------------
Andrew E. Graves
/s/ Robert A. Wegner Principal Financial Officer July 13, 1999
- -------------------------------- and Principal Accounting
Robert A. Wegner Officer
/s/ Theodore R. French Director July 13, 1999
- --------------------------------
Theodore R. French
/s/ Kenneth K. Chalmers Director July 13, 1999
- --------------------------------
Kenneth K. Chalmers
/s/ Michael Fredrich Director July 13, 1999
- --------------------------------
Michael Fredrich
/s/ Jean-Pierre Rosso Director July 13, 1999
- --------------------------------
Jean-Pierre Rosso
II-4
Exhibit 5
July 13, 1999
Case Credit Corporation
233 Lake Avenue
Racine, Wisconsin 53404
Case Receivables II Inc.
475 Half Day Road
Lincolnshire, Illinois 60069
Re: Case Receivables II Inc.
Registration Statement on
Form S-3 (Registration No. 33-______)
Ladies and Gentlemen:
We have acted as special counsel for Case Receivables II Inc., a
Delaware corporation (the "Company"), in connection with the
above-captioned Registration Statement (such registration statement,
together with the exhibits and any amendments thereto, the "Registration
Statement"), filed by the Company with the Securities and Exchange
Commission on July 13, 1999 in connection with the registration by the
Company of Asset Backed Notes (the "Notes") and Asset Backed Certificates
(the "Certificates" and together with the Notes, the "Securities"). As
described in the Registration Statement, the Notes and the Certificates
will be issued from time to time in series, with each series being issued
by a Delaware business trust (each, a "Trust") to be formed by the Company
pursuant to a Trust Agreement (each, a "Trust Agreement") between the
Company and a trustee. For each series, the Notes will be issued pursuant
to an Indenture (the "Indenture") between the related Trust and an
indenture trustee and a Sale and Servicing Agreement (each, a "Sale and
Servicing Agreement") among the related Trust, the Company and Case Credit
Corporation, as servicer (the "Servicer"), and the Certificates will be
issued pursuant to a Trust Agreement and such Sale and Servicing Agreement.
In that connection, we are familiar with the proceedings required
to be taken in connection with the proposed authorization, issuance and
sale of any series of Notes and Certificates and have examined copies of
such documents, corporate records and other instruments as we have deemed
necessary or appropriate for the purposes of this opinion, including the
Registration Statement and, in each case as filed or incorporated by
reference as an exhibit to the Registration Statement, the form of Sale and
Servicing Agreement, the form of Indenture (including the form of Notes
included as exhibits thereto), the form of Trust Agreement (including the
form of Certificate included as an exhibit thereto and including the form
of Certificate of Trust to be filed with the Delaware Secretary of State)
and the form of Underwriting Agreements between the Company and the various
underwriters named therein (collectively, the "Operative Documents"). Terms
used herein without definition have the meanings given to such terms in the
Registration Statement.
<PAGE>
Page 2
We are also familiar with the certificates of incorporation of the
Company and the Servicer and have examined all statutes, corporate records
and other instruments that we have deemed necessary to examine for the
purposes of this opinion.
Based on the foregoing and assuming that the Operative Documents
with respect to each series are executed and delivered in substantially the
form we have examined and that the transactions contemplated to occur under
the Operative Documents in fact occur in accordance with the terms thereof,
we of the opinion that, with respect to the Securities of any series, when:
(a) the Registration Statement becomes effective pursuant to the provisions
of the Securities Act of 1933, as amended, (b) the amount, price, interest
rate and other principal terms of such Securities have been fixed by or
pursuant to authorization of the Board of Directors of the Company, (c) the
Operative Documents relating to such series have each been duly completed,
executed and delivered by the parties thereto substantially in the form
filed as an exhibit to the Registration Statement reflecting the terms
established as described above, (d) the Certificate of Trust for the
related Trust has been duly executed by the Trustee and timely filed with
the Secretary of State of Delaware, (e) the related Indenture has been duly
qualified under the Trust Indenture Act of 1939, as amended, (f) such
Securities have been duly executed and issued by the related Trust and
authenticated by the Trustee or the Indenture Trustee, as applicable, and
sold by the Company, and (g) payment of the agreed consideration for such
Securities shall have been received by the Trust, all in accordance with
the terms and conditions of the related Operative Documents and in the
manner described in the Registration Statement: (i) such Certificates will
have been duly authorized by all necessary action of the Trust and will be
legally issued, fully paid and nonassessable (except to the extent the
Certificate retained by the Company is assessable pursuant to Section 2.7
of the Trust Agreement); and (ii) such Notes will have been duly authorized
by all necessary action of the Trust and will be legally issued and binding
obligations of the Trust and entitled to the benefits afforded by the
related Indenture.
Our opinions expressed herein are limited to the federal laws of
the United States, the laws of the State of New York and the business trust
laws of the State of Delaware.
We know that we are referred to under the heading "LEGAL OPINIONS"
in the form of Prospectus Supplement included in the Registration
Statement, and we hereby consent to the use of our name therein and to the
use of this opinion for filing with the Registration Statement as Exhibit 5
thereto.
Very truly yours,
/s/ Mayer, Brown & Platt
MAYER, BROWN & PLATT
EAR/RFH/NEL
