SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------
FORM 10-K
ANNUAL REPORT
pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
33-99298
(Commission file number)
CASE RECEIVABLES II INC.
(Exact name of registrant as specified in its charter)
Delaware 76-0439709
(State or other jurisdiction of I.R.S. employer identification number)
incorporation or organization)
475 Half Day Road
Lincolnshire, IL 60069
(Address of principal executive offices)
847-955-0228
(Registrant's telephone number)
Securities registered pursuant to Section 12 (b) of the Act: None
Securities registered pursuant to Section 12 (g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes x No ___
As of June 23, 1999, 200 shares of Case Receivables II Inc.'s common stock,
$5.00 par value, were outstanding.
No documents have been incorporated by reference in this Form 10-K.
<PAGE>
TABLE OF CONTENTS
Page
PART I
Item 1. Business....................................................1
Item 2. Properties..................................................1
Item 3. Legal Proceedings...........................................1
Item 4. Submission of Matters to a Vote of Security Holders.........1
PART II
Item 5. Market for Registrant's Common Equity and Realty Stockholder
Matters.....................................................1
Item 6. Selected Financial Data.....................................2
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operation....................................2
Item 8. Financial Statements and Supplementary Data.................2
Item 9. Changes in and Disagreements With Accounts on Accounting
and Financial Disclosure....................................2
PART III
Item 10. Directors and Executive Officers of the Registrant..........2
Item 11. Executive Compensation......................................2
Item 12. Security Ownership of Certain Beneficial Owners
and Management..............................................2
Item 13. Certain Relationships and Related Transactions..............3
PART IV
Item 14. Exhibits, Financial Statements Schedules, and Reports on
Form 8-K ...................................................3
<PAGE>
On March 24, 1993, a letter (the "No-Action Letter") was submitted
on behalf of Case Equipment Loan Trust 1992-A and similarly situated trusts
to the Office of Chief Counsel, Division of corporation finance, of the
Securities and Exchange (the "Commission") requesting that the Commission
raise no objection if trusts originated by Case Corporation file reports
pursuant to Sections 13, 15(d) and 16 of the Securities Exchange Act of
1934, as amended, in the manner described in the No-Action Letter. Case
Receivables II, Inc. has prepared and filed this Annual Report on Form 10-K
in accordance with the No-Action Letter.
PART I
ITEM 1. BUSINESS
Omitted pursuant to the No-Action Letter.
ITEM 2. PROPERTIES
The Case Equipment Receivables Trust 1996-B (the "Trust") was
formed pursuant to the Trust Agreement, dated as of September 1, 1996 (the
"Agreement"), between Case Receivables II Inc., as seller (the
"Depositor"), and The Chase Manhattan Bank Delaware, as Trustee. The assets
of the Trust include, among other things, receivables consisting of retail
installment sale contracts secured by new or used agricultural or
construction equipment, rights to receive certain payments made with
respect to such receivables, security interests in the equipment financed
thereby and the proceeds thereof. On September 19, 1996, the Trust issued
$125,000,000 Class A-1 5.5625% Asset Backed Notes, $362,000,000 Class A-2
6.25% Asset Backed Notes, $329,000,000 Class A-3 6.65% Asset Backed Notes
(collectively, the "Notes") and $34,000,000 6.70% Asset Backed Certificates
(the "Certificates," and together with the Notes, the "Securities").
Reference is made to the Annual Statement of Compliance included
under Item 14.
ITEM 3. LEGAL PROCEEDINGS
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
There is no established public trading market for the Certificates.
-1-
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
Omitted pursuant to the No-Action Letter.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
Omitted pursuant to the No-Action Letter.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Omitted pursuant to the No-Action Letter.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Omitted pursuant to the No-Action Letter.
ITEM 11. EXECUTIVE COMPENSATION
Omitted pursuant to the No-Action Letter.
-2-
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of June 30, 1999, the following participants in the DTC
system were known to be the holders of more than 5% of the total principal
amount of Securities outstanding on that date:
Class A Asset Backed Notes
Name and Address of Beneficial Owner Amount Percent of Class
- ------------------------------------ ------ ----------------
The Bank of New York $10,530,477 8.2%
925 Patterson Plank Road
Secaucus, NJ 07094
Bankers Trust Company $30,741,823 24.0%
c/o BT Services Tennessee Inc.
648 Grassmere Park Drive
Nashville, TN 37211
Bank One Trust Company, N.A. $10,839,571 8.5%
1900 Polaris Parkway
Columbus, OH 43240
Boston Safe Deposit and Trust Company $22,670,535 17.7%
c/o Mellon Bank N.A.
Three Mellon Bank Center, Room 153-3015
Pittsburgh, PA 15259
Chase Manhattan Bank $15,635,927 12.2%
4 New York Plaza
New York, NY 10004
State Street Bank and Trust Company $12,673,987 9.9%
1776 Heritage Drive
North Quincy, MA 02171
State Street Bank and Trust Company - Bank $12,155,647 9.5%
Portfolio
1776 Heritage Drive
North Quincy, MA 02171
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTS ON FORM 8-K
(a) Listed below are the documents filed as a part of this report:
Exhibit
Number
-------
99(a) Annual Statement of Compliance
99(b) Accountant's Statement
(b) Omitted pursuant to the No-Action Letter.
(c) Omitted pursuant to the No-Action Letter.
(d) Omitted pursuant to the No-Action Letter.
-3-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.
CASE RECEIVABLES II INC.
(Registrant)
By: /s/ Ralph A. Than July 9, 1999
----------------------------
Ralph A. Than
Vice President and Treasurer
-4-
<PAGE>
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO
SECTION 15(D) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES
PURSUANT TO SECTION 12 OF THE ACT.
No annual report to security holders and no proxy statement, form of proxy
or other proxy soliciting material has been sent to any security holder of
the registrant.
-5-
EXHIBIT 99(a)
CERTIFICATE
We, Robert A. Wegner, Vice President and Chief Financial Officer
of Case Credit Corporation (the "Company") and Ralph A. Than, Vice
President and Treasurer of the Company, pursuant to Section 4.09 of the
Sales and Servicing Agreement dated as of September 1, 1996, among Case
Equipment Loan Trust 1996-B, Case Credit Corporation and Case Receivables
II Inc. (the "Agreement"), do hereby certify as follows:
(i) a review of the activities of the Servicer during the 12-month
period ended December 31, 1998, and of its performance under the
Agreement has been made under our supervision; and
(ii) to the best of our knowledge, based on such review, the
Servicer has fulfilled all of its obligations under the Agreement
throughout such period.
Capitalized terms used herein but not defined herein shall have the
meanings given such terms in the Agreement.
Dated: As of December 31, 1998.
CASE CREDIT CORPORATION
/s/ Robert A. Wegner
------------------------------------------
Robert A. Wegner
Vice President and Chief Financial Officer
/s/ Ralph A. Than
----------------------------
Ralph A. Than
Vice President and Treasurer
Exhibit 99(b)
ARTHUR ANDERSEN LLP
INDEPENDENT ACCOUNTANTS REPORT ON
APPLYING AGREED-UPON PROCEDURES
To Board of Directors of Case Credit Corporation,
The Chase Manhattan Bank - USA,
and Harris Trust and Savings Bank:
We have performed the procedures enumerated below, which were agreed to by
the managements of Case Credit Corporation (the "Servicer"), The Chase
Manhattan Bank (USA), as Trustee, and Harris Trust and Savings Bank, as
Indenture Trustee, solely to assist you in evaluating the Servicer's
compliance with the Sales and Servicing Agreement (the "Agreement"), among
Case Equipment Loan Trust 1996-B, Case Receivables II, Inc. and Case Credit
Corporation dated as of September 1, 1996, for the year ended December 31,
1998. This agreed-upon procedures engagement was performed in accordance
with standards established by the American Institute of Certified Public
Accountants. The sufficiency of these procedures is solely the
responsibility of the specified users of the report. Consequently, we make
no representation regarding the sufficiency of the procedures described
below either for the purpose for which this report has been requested or
for any other purpose. This report does not constitute legal determination
as to the Seller's compliance with the aforementioned Agreement.
The administration and servicing of the retail installment contracts is
described in Sections 4.01, 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09,
4.11, 4.12, and 4.13 of the Agreement. We performed certain procedures to
assist the Servicer in evaluating whether it is in compliance with the
provisions of Sections 4.01, 4.02, 4.03, 4.04, 4.05, 4.06, 4.07, 4.08,
4.09, 4.11, 4.12, and 4.13 of the Agreement. The provisions of those
sections, the specific procedures performed and our findings are contained
in Exhibit A of this report. All capitalized terms herein are used with the
meaning as defined in the Agreement.
We were not engaged to, and did not, perform an examination, the objective
of which would be the expression of an opinion on the Servicer's compliance
with the Agreement. Accordingly, we do not express such an opinion. Had we
performed additional procedures, other matters might have come to our
attention that would have been reported to you.
We are independent with respect to Case Credit Corporation within the
meaning of the Code of Professional Conduct of the American Institute of
Certified Public Accountants.
This report is intended solely for the use of the Boards of Directors and
managements of Case Credit Corporation, The Chase Manhattan Bank (USA), and
Harris Trust and Savings Bank and should not be used by those who have not
agreed to the procedures and taken responsibility for the sufficiency of
the procedures for their purposes.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
April 9, 1999
<PAGE>
Exhibit A
Section
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4.01 Duties of Servicer. The Servicer, for the benefit of the Issuer and
the Indenture Trustee (to the extent provided herein), shall manage,
service, administer and make collections on the Receivables with reasonable
care, using that degree of skill and attention that the Servicer exercises
with respect to all comparable equipment receivables that it services for
itself or others. The Servicer's duties shall include collection and
posting of all payments, responding to inquiries of Obligors on such
Receivables, investigating delinquencies, sending payment coupons to
Obligors, reporting tax information to Obligors, accounting for collections
and furnishing monthly and annual statements to the Trustee and the
Indenture Trustee with respect to distributions. Subject to the provisions
of Section 4.02, the Servicer shall follow its customary standards,
policies and procedures in performing its duties as Servicer. Without
limiting the generality of the foregoing, the Servicer is authorized and
empowered to execute and deliver, on behalf of itself, the Issuer, the
Trustee, the Indenture Trustee, the Certificateholders and the Noteholders
or any of them, any and all instruments of satisfaction or cancellation, or
partial or full release or discharge, and all other comparable instruments,
with respect to such Receivables or to the Financed Equipment securing such
Receivables. If the Servicer shall commence a legal proceeding to enforce a
Receivable, the Issuer shall thereupon be deemed to have automatically
assigned, solely for the purpose of collection, such Receivable to the
Servicer. If in any enforcement suit or legal proceeding it shall be held
that the Servicer may not enforce a Receivable on the ground that it shall
not be a real party in interest or a holder entitled to enforce such
Receivable the Trustee shall, at the Servicer's expense and direction, take
steps to enforce such Receivable, including bringing suit in its name or
the name of the Trust, the Indenture Trustee, the Certificateholders or the
Noteholders. The Trustee or the Indenture Trustee shall upon the written
request of the Servicer furnish the Servicer with any powers of attorney
and other documents reasonably necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties hereunder.
AA LLP Agreed Upon Procedures
-----------------------------
Discussed the duties for collections, posting of payments, responding to
inquiries of Obligors, investigating delinquencies, sending payment coupons
to Obligors, reporting tax information to Obligors, accounting for
collections and furnishing monthly and annual statements to the Trustee and
the Indenture Trustee with respect to distributions of the Servicer with
management to determine if the Receivables are serviced similar to other
retail installment notes serviced by the Servicer.
Findings
--------
Based on our discussion of the duties noted at left, no exceptions were
noted. Management informed us that they believe the Receivables are
serviced in a manner similar to the servicing performed for other retail
installment contracts serviced by the Servicer.
<PAGE>
Exhibit A
Page 2
Section
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4.02 Collection and Allocation of Receivable Payments. The Servicer shall
make reasonable efforts to collect all payments called for under the terms
and provisions of the Receivables as and when the same shall become due and
shall follow such collection procedures as it follows with respect to all
comparable equipment receivables that it services for itself or others. The
Servicer shall allocate collections between principal and interest in
accordance with the customary servicing procedures it follows with respect
to all comparable equipment receivables that it services for itself or
others. The Servicer may grant extensions or adjustments on a Receivable;
provided, however, that if the Servicer extends the date for final payment
by the Obligor of any Receivable beyond the Final Scheduled Maturity Date,
it shall promptly repurchase the Receivable from the Issuer in accordance
with the terms of Section 4.06. The Servicer may in its discretion waive
any late payment charge or any other fees (other than extension fees or any
other fees that represent interest charges on deferred Scheduled Payments)
that may be collected in the ordinary course of servicing a Receivable. The
Servicer shall not agree to any decrease of the interest rate on any
Receivable or reduce the aggregate amount of the Scheduled Payments due on
any Receivable.
AA LLP Agreed Upon Procedures
-----------------------------
Selected 10 retail installment contracts from the pool for which cash
collections were received in 1998 to determine whether the collections were
properly applied to principal and interest owed on the contract.
Reviewed all extensions granted in 1998 for retail installment contracts in
the pool to determine whether the date to which the extensions were granted
exceeded the Final Maturity Date.
Inquired of management as to whether the interest rate for any Receivable
was reduced or whether the aggregate amount of any Scheduled Payments were
reduced.
Findings
--------
We noted the cash collections for the contracts selected were properly
applied to the principal and interest owed on the contracts.
We noted all the dates to which extensions were granted for the retail
installment contracts in the pool did not exceed the Final Maturity Date of
the pool sold to the Trust.
Management has informed us that for all Receivables where the interest rate
was reduced, or the aggregate amount of any Scheduled Payments was reduced,
the Servicer repurchased the applicable Receivable from the Trust.
<PAGE>
Exhibit A
Page 3
Section
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4.03 Realization upon Receivables. For the benefit of the Issuer and the
Indenture Trustee, the Servicer shall use reasonable efforts, consistent
with its customary servicing procedures, to repossess or otherwise convert
the ownership of the Financed Equipment securing any Receivable as to which
the Servicer shall have determined eventual payment in full is unlikely.
The Servicer shall follow such customary and usual practices and procedures
as it shall deem necessary or advisable in its servicing of equipment
receivables, which may include reasonable efforts to realize upon any
recourse to Dealers and selling the Financed Equipment at public or private
sale. The foregoing shall be subject to the provision that, in any case in
which the Financed Equipment shall have suffered damage, the Servicer shall
not expend funds in connection with the repair or the repossession of such
Financed Equipment unless it shall determine in its discretion that such
repair and/or repossession will increase the Liquidation Proceeds by an
amount greater than the amount of such expenses.
AA LLP Agreed Upon Procedures
-----------------------------
Inquired of management as the procedures used to realize amounts for which
collection appears unlikely for the Receivables and for other receivables
serviced by the Servicer.
Findings
--------
Based on our discussions with management, we noted the procedures used to
realize amounts for which collection appears unlikely are the same for the
Receivables and for other equipment receivables serviced by the Servicer.
<PAGE>
Exhibit A
Page 4
Section
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4.04 Maintenance of Security Interests in Financed Equipment. The Servicer
shall, in accordance with its customary servicing procedures, take such
steps as are necessary to maintain perfection of the security interest
created by each Receivable in the related Financed Equipment. The Servicer
is hereby authorized to take such steps as are necessary to re-perfect such
security interest for the benefit of the Issuer and the Indenture Trustee
in the event of the relocation of a Financed Equipment or for any other
reason.
AA LLP Agreed Upon Procedures
-----------------------------
Discussed with management the procedures to maintain perfection of the
security interest created by each Receivable in the related Financed
Equipment to determine if the procedures are similar to the procedures in
place for other retail installment contracts serviced by the Servicer.
Findings
--------
Based on our discussions with management, the procedures in place to
maintain perfection of the security interest created by each Receivable in
the related Financial Equipment are similar to the procedures in place for
other retail installment contracts serviced by the Servicer.
<PAGE>
Exhibit A
Page 5
Section
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4.05 Covenants of Servicer. The Servicer shall not release the Financed
Equipment securing any Receivable from the security interest granted by
such Receivable in whole or in part except in the event of payment in full
by the Obligor thereunder or repossession, nor shall the Servicer impair
the rights of the Issuer, the Indenture Trustee, the Certificateholders or
the Noteholders in such Receivables. The Servicer shall, in accordance with
its customary servicing procedures, require that each Obligor shall have
obtained physical damage insurance covering the Financed Equipment as of
the execution of the Receivable.
AA LLP Agreed Upon Procedures
-----------------------------
Discussed with management whether any release of the Financed Equipment
which secures any Receivable was granted in whole or in part except in the
event of payment in full by the Obligor thereunder or repossession.
Discussed with management the procedures to require that each Obligor shall
have adequate physical damage insurance coverage covering the Financed
Equipment to determine if the procedures are similar to the procedures in
place for other receivables serviced by the Servicer.
Findings
--------
Management has informed us that the Servicer has not released the Financed
Equipment which secures any Receivable except in the event of payment in
full by the Obligor thereunder or repossession.
Based on our discussions with management, the procedures requiring that
each Obligor shall have adequate physical damage insurance coverage
covering the Financed Equipment are similar to procedures in place for
other equipment receivables serviced by the Servicer.
<PAGE>
Exhibit A
Page 6
Section
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4.06 Purchase of Receivables upon Breach. The Servicer or the Trustee shall
inform the other party and the Indenture Trustee, the Seller and Credit
promptly, in writing, upon the discovery of any breach pursuant to Section
4.02, 4.04 or 4.05. Unless the breach shall have been cured by the last day
of the Collection Period in which such breach is discovered, the Servicer
shall purchase any Receivable materially and adversely affected by such
breach as of such last day. If the Servicer takes any action during any
Collection Period pursuant to Section 4.02 that impairs the rights of the
Issuer, the Indenture Trustee, the Certificateholders or the Noteholders in
any Receivable or as otherwise provided in Section 4.02, the Servicer shall
purchase such Receivable as of the last day of such Collection Period. As
consideration of the purchase of any such Receivable pursuant to either of
the two preceding sentences, the Servicer shall remit the Purchase Amount
in the manner specified in Section 5.04. Subject to Section 7.02, the sole
remedy of the Issuer, the Trustee, the Indenture Trustee, the
Certificateholders or the Noteholders with respect to a breach pursuant to
Section 4.02, 4.04 or 4.05 shall be to require the Servicer to purchase
Receivables pursuant to this Section. The Trustee shall have no duty to
conduct any affirmative investigation as to the occurrence of any condition
requiring the repurchase of any Receivable pursuant to this Section.
AA LLP Agreed Upon Procedures
-----------------------------
Discussed with management as to whether the Servicer has breached any of
the provisions in Sections 4.02, 4.04, or 4.05.
Findings
--------
Management has informed us that the Servicer has not breached Sections
4.02, 4.04, or 4.05. Also, see previous sections of this exhibit.
<PAGE>
Exhibit A
Page 7
Section
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4.07 Servicing Fee. The Servicing Fee for each Collection Period shall be
equal to 1.00% per annum of the Pool Balance as of the first day of such
Collection Period.
AA LLP Agreed Upon Procedures
-----------------------------
Recomputed the Servicing Fee for one month of the Period.
Findings
--------
We recomputed the Servicing Fee for one month of the Period noting
agreement of the amount.
<PAGE>
Exhibit A
Page 8
Section
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4.08 Servicer's Certificate. On each Determination Date preceding a Payment
Date, the Servicer shall deliver to the Trustee, the Indenture Trustee and
the Seller, with a copy to the Rating Agencies, a Servicer's Certificate
containing all information necessary to make the distributions pursuant to
Sections 5.05 and 5.06 for the Collection Period preceding the date of such
Servicer's Certificate. On each other Determination Date, the Servicer
shall deliver to the Trustee, the Indenture Trustee and the Seller an
Officers' Certificate of the Servicer containing all information necessary
to make the deposits to the Collection Account pursuant to Section 5.02 for
the calendar month preceding the date of such Servicer's Certificate.
Receivables to be repurchased by the Seller or purchased by the Servicer
shall be identified by the Servicer by account number with respect to such
Receivable (as specified in Schedule A).
AA LLP Agreed Upon Procedures
-----------------------------
Obtained the Servicer's Certificate and tied in the collections for one
month of the Period to the Servicer's reconciliation of beginning and
ending Receivable balance.
Inquired of management as to whether the Servicer's Certificate was
delivered to the appropriate parties.
Findings
--------
The collections for the month selected from the Servicer's reconciliation
of beginning and ending Receivable balance agreed to the Servicer's
Certificate.
Management informed us that the Servicer's Certificate was delivered to the
appropriate parties.
As previously communicated to the Trustee, management has informed us that
the losses reported on the Servicer's Certificate were understated due to a
system error. The system report used to prepare the Servicer's Certificate,
which quantified losses on the Receivables pledged to the Trust, did not
include losses on receivables which provided for no recourse provisions
with the dealers.
<PAGE>
Exhibit A
Page 9
Section
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4.09 Annual Statement as to Compliance; Notice of Default. (a) The Servicer
shall deliver to the Trustee and the Indenture Trustee, on or before April
30 of each year beginning April 30, 1996, an Officers' Certificate, dated
as of December 31 of the preceding year, stating that (i) a review of the
activities of the Servicer during the preceding 12-month period (or, in the
case of the first such certificate, from the Cutoff Date) and of its
performance under this Agreement has been made under such officers'
supervision and (ii) to the best of such officers' knowledge, based on such
review, the Servicer has fulfilled all its obligations under this Agreement
throughout such year or, if there has been a default in the fulfillment of
any such obligation, specifying each such default known to such officers
and the nature and status thereof. The Indenture Trustee shall send a copy
of such Certificate and the report referred to in Section 4.10 to the
Rating Agencies. A copy of such Certificate and the report referred to in
Section 4.10 may be obtained by any Certificateholder or Noteholder by a
request in writing to the Trustee addressed to the Corporate Trust Office.
Upon the telephone request of the Trustee, the Indenture Trustee will
promptly furnish the Trustee a list of Noteholders as of the date specified
by the Trustee.
AA LLP Agreed Upon Procedures
-----------------------------
Discussed with management the filing of the Officer's Certificate.
Findings
--------
We were informed by management that the Officers' Certificate was filed as
of April 9, 1999. We reviewed the signed Officers' Certificate dated
December 31, 1998.
<PAGE>
Exhibit A
Page 10
Section
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(b) The Servicer shall deliver to the Trustee, the Indenture Trustee and
the Rating Agencies, promptly after having obtained knowledge thereof, but
in no event later than five Business Days thereafter, written notice in an
Officers' Certificate of any event which with the giving of notice of lapse
of time, or both, would become a Servicer Default under Section 8.01(a) or
(b).
AA LLP Agreed Upon Procedures
-----------------------------
Discussed with management whether they were in compliance with Section
4.09(b).
Findings
--------
Management informed us that they are not aware of any events which are
required to be reported under Section 4.09(b).
<PAGE>
Exhibit A
Page 11
Section
-------
4.11 Access to Certain Documentation and Information Regarding Receivables.
The Servicer shall provide to the Certificateholders and Noteholders access
to the Receivables Files in such cases where the Certificateholders or
Noteholders shall be required by applicable statutes or regulations to
review such documentation. Access shall be afforded without charge, but
only upon reasonable request and during the normal business hours at the
respective offices of the Servicer. Nothing in this Section shall affect
the obligation of the Servicer to observe any applicable law prohibiting
disclosure of information regarding the Obligors and the failure of the
Servicer to provide access to information as a result of such obligation
shall not constitute a breach of this Section.
AA LLP Agreed Upon Procedures
-----------------------------
Discussed with management the Servicer's requirements to provide access to
certain documentation.
Findings
--------
We were informed by management that no such requests for access to certain
documentation were received during the Period.
<PAGE>
Exhibit A
Page 12
Section
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4.12 Servicer Expenses. The Servicer shall be required to pay all expenses
incurred by it in connection with its activities hereunder, including fees
and disbursements of independent accountants, taxes imposed on the Servicer
and expenses incurred in connection with distributions and reports to
Certificateholders and Noteholders.
AA LLP Agreed Upon Procedures
-----------------------------
Discussed with management the payment of expenses incurred in connection
with carrying out the activities dictated in the Agreement.
We reviewed one month's Servicer Certificate for Servicer expenses.
Findings
--------
Management has informed us that all expenses incurred as a result of
carrying out the duties of the Servicer have been paid by the Servicer.
During our review of the Servicer's Certificate of one month of the Period,
we noted no exceptions where Servicer's expenses were deducted from the
amount to be distributed to the Trust.
<PAGE>
Exhibit A
Page 13
Section
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4.13 Appointment of Subservicer. The Servicer may at any time appoint a
subservicer to perform all or any portion of its obligations as Servicer
hereunder; provided, however, that the Rating Agency Condition shall have
been satisfied in connection therewith; provided further that the Servicer
shall remain obligated and be liable to the Issuer, the Trustee, the
Indenture Trustee, the Certificateholders and the Noteholders for the
servicing and administering of the Receivables in accordance with the
provisions hereof without diminution of such obligation and liability by
virtue of the appointment of such subservicer and to the same extent and
under the same terms and conditions as if the Servicer alone were servicing
and administering the Receivables. The fees and expenses of the subservicer
shall be as agreed between the Servicer and its subservicer from time to
time and none of the Issuer, the Trustee, the Indenture Trustee, the
Certificateholders or the Noteholders shall have any responsibility
therefor.
AA LLP Agreed Upon Procedures
-----------------------------
Inquired of management as to whether a subservicer has been appointed.
Findings
--------
Management informed us that a subservicer was not appointed during the
Period.
