EXHIBIT 99(b)-4
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 1998-B, CNH Receivables Inc. and Case Credit
Corporation dated as of August 26, 1998, for the period from August 26,
1998 to December 31, 1999. 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.
/s/ Arthur Andersen LLP
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin,
April 21, 2000
<PAGE>
Exhibit A
Section
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4.01 Duties of Servicer. The Servicer, for the benefit of the Issuer and
(to the extent provided herein), Indenture Trustee 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, 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
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 purchase 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 1999 to determine whether the collections were
properly applied to principal and interest owed on the contract.
Reviewed all extensions granted in 1999 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 was
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 to 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 receivables serviced by the Servicer.
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 4
Section
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.
Section
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4.06 Purchase of Receivables upon Breach. The Servicer or the Trustee shall
inform the other party, 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 5
Section
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4.07 Servicing Fee. The Servicing Fee for each Collection Period shall be
equal to 1/12th of 1.00% 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.
Section
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4.08 Servicer's Certificate. On each Determination 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 and
the deposits to the Collection Account pursuant to Section 5.02 for the
Collection Period 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 the Schedule of Receivables delivered on the
Closing Date or attached to the applicable Second-tier Subsequent
Transfer Assignment).
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 6
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 of each year, an Officer's 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 to December
31, 1997) 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 report may be obtained by any Certificateholder or
Noteholder by request in writing to the Trustee addressed to the Corporate
Trust Office. Upon the written 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 Officers' Certificate.
Findings
--------
We were informed by management that the Officers' Certificate was filed as
of April 21, 2000. We reviewed the signed Officers' Certificate dated
December 31, 1999.
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 that with the giving of notice or
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 7
Section
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4.11 Access to Certain Documentation and Information Regarding Receivables.
The Servicer shall provide to the Trustee and the Indenture Trustee access
to the Receivable Files in such cases where the Trustee, or the Indenture
Trustee 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.
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 instance where Servicer's expenses were deducted from the
amount to be distributed to the Trust.
<PAGE>
Exhibit A
Page 8
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.
