================================================================================
As filed with the Securities and Exchange Commission on August 28,1996
Registration No. 333-7575
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
under
THE SECURITIES ACT OF 1933
---------------
CHASE MANHATTAN AUTO TRUSTS
(Issuer of Securities)
CHASE MANHATTAN BANK USA, N.A. CHASE MANHATTAN BANK USA, N.A.
(Originators of the Trust described herein)
(Exact name as specified in registrants' charters)
United States United States
(States or other jurisdictions of incorporation)
11-2741948 22-2382028
(I.R.S. employer identification numbers)
200 Jericho Quadrangle 802 Delaware Avenue
Jericho, New York 11759 Wilmington, Delaware 19801
(516) 935-9935 (302) 575-5000
(Address, including zip code, and telephone number,
including area code, of registrants' Principal Executive Offices)
ANDREW T. SEMMELMAN ANDREW T. SEMMELMAN
Secretary Secretary
Chase Manhattan Bank USA, N.A. Chase Manhattan Bank USA, N.A.
802 Delaware Avenue 802 Delaware Avenue
Wilmington, Delaware 19801 Wilmington, Delaware 19801
(302) 575-5033 (302) 575-5033
(Name, address, including zip code, and telephone number,
including area code, of agents for service)
Copies to:
MARTIN R. JOYCE LAURA PALMA WILLIAM A. GRAY
The Chase Manhattan Bank Simpson Thacher & Bartlett Orrick, Herrington & Sutcliffe
270 Park Avenue 425 Lexington Avenue 666 Fifth Avenue
New York, New York 10017 New York, New York 10017 New York, New York 10103
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 any of the securities being registered on this Form are to be
offered pursuant to dividend or interest reinvestment plans, please 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, please 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, please check the following box. |_|
CALCULATION OF REGISTRATION FEE
================================================================================================================================
Proposed Maximum Proposed Maximum Amount of
Title of Securities to be Amount to be Aggregate Price Per Aggregate Offering Registration
Registered(1) Registered(2) Unit(2) Price(2) Fee(2)(3)
- --------------------------------------------------------------------------------------------------------------------------------
Asset-Backed Securities $5,000,000,000 100% $5,000,000,000 $1,724,138
================================================================================================================================
(1) The Securities are also being registered for the purpose of market making.
(2) Estimated solely for the purpose of calculating the registration fee.
(3) Of which $1,723,793 is paid herewith, and $345 has been previously paid.
================================================================================
Explanatory Note
- ----------------
The Seller with respect to each of the Trusts described in this
Registration Statement will be one of two national banking association
subsidiaries of The Chase Manhattan Corporation, each of which is named Chase
Manhattan Bank USA, N.A. See "Chase USA (New York) and Chase USA (Delaware)" in
the Prospectus. The Seller with respect to any Trust will be Chase USA (New
York) until the Chase USA Merger is consummated; following the Chase USA merger,
Chase USA (Delaware), the surviving bank, will be the Seller.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus Supplement and the accompanying Prospectus shall not
constitute an offer to sell or the solicitation of an offer to buy nor shall
there be any sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED AUGUST 28, 1996
PROSPECTUS SUPPLEMENT
(To Prospectus dated ________________, 199__)
[$____________]
CHASE MANHATTAN AUTO GRANTOR TRUST 199__-__
$___________ ___% Automobile Loan Pass-Through Certificates, Class A
$___________ ___% Automobile Loan Pass-Through Certificates, Class B
Chase Manhattan Bank USA, N.A.
Seller and Servicer
The Chase Manhattan Auto Grantor Trust 199_-_ (the "Trust") will be formed
pursuant to a Pooling and Servicing Agreement, to be dated as of ___________,
199_, among Chase Manhattan Bank USA, N.A., in its capacities as seller (the
"Seller") and as servicer (the "Servicer") and _________________, as Trustee.
The Trust will issue $______________ aggregate principal amount of ____% Asset
Backed Certificates, Class A (the "Class A Certificates") and $_______________
aggregate principal amount of ____% Asset Backed Certificates, Class B (the
"Class B Certificates" and, together with the Class A Certificates, the
"Certificates"). The Class A Certificates will evidence in the aggregate an
approximate ____% undivided ownership interest in the Trust, and the Class B
Certificates will evidence in the aggregate an approximate ____% undivided
ownership interest in the Trust. The rights of the Class B Certificateholders to
receive distributions with respect to the Receivables are subordinated to the
rights of the Class A Certificateholders to the extent described herein.
Principal and interest to the extent of the Pass-Through Rate generally will be
distributed to the Certificateholders on the _th day of each month (or, if such
_th day is not a Business Day, the next following Business Day), beginning
______ __, 199_. The Trust property will include a pool of [simple interest]
[actuarial] retail installment sales contracts and purchase money loans secured
by new and used automobiles and light-duty trucks, certain monies due [or
received] thereunder on or after ___________ __, 199_ (the "Cutoff Date"),
security interests in the vehicles financed thereby, benefits under a Cash
Collateral Guaranty and the Cash Collateral Account securing such guaranty and
proceeds from claims on certain insurance policies, all as more fully described
herein. [The final Distribution Date of the Certificates will be ______ __, ____
(the "Final Distribution Date").]
(continued on the following page)
----------------
There currently is no secondary market for the Certificates and there is
no assurance that one will develop.
The Underwriter expects, but is not obligated, to make a market in the
Certificates. There is no assurance that any such market will develop or
continue.
THE CERTIFICATES REPRESENT INTERESTS IN THE TRUST ONLY AND DO NOT REPRESENT
INTERESTS IN OR OBLIGATIONS OF CHASE MANHATTAN BANK USA, N.A OR THE CHASE
MANHATTAN BANK OR ANY AFFILIATE THEREOF. A CERTIFICATE IS NOT A DEPOSIT AND IS
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (THE "FDIC"). THE
RECEIVABLES ARE NOT INSURED OR GUARANTEED BY THE FDIC OR ANY OTHER GOVERNMENTAL
AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospective investors should consider, among other things, the information
set forth under the heading "Risk Factors" in this Prospectus Supplement
commencing on page S-7 and in the accompanying Prospectus.
================================================================================
Price to Underwriting Proceeds to
Public(1) Discount the Seller (1)(2)
- --------------------------------------------------------------------------------
Per Class A Certificate % % %
- --------------------------------------------------------------------------------
Per Class B Certificate % % %
- --------------------------------------------------------------------------------
Total $ $ $
================================================================================
(1) Plus accrued interest from ________ __ , 199_, if any.
(2) Before deduction of expenses estimated at $___________.
This Prospectus Supplement may be used by Chase Securities Inc., an
affiliate of the Seller and a subsidiary of The Chase Manhattan Corporation (the
"Underwriter"), in connection with offers and sales related to market-making
transactions in the Certificates. The Underwriter may act as principal or agent
in such transactions. Such sales will be made at prices related to prevailing
prices at the time of sale.
The Certificates are being offered by the Underwriter, subject to prior
sale, when, as and if issued to and accepted by the Underwriter, subject to
approval of certain legal matters by counsel for the Underwriter. The
Underwriter reserves the right to reject orders in whole or in part. It is
expected that the Certificates will be delivered in book-entry form, on or about
_________ 199_ (the "Closing Date"), through the facilities of The Depository
Trust Company ("DTC"), CEDEL and Euroclear.
----------------
[UNDERWRITER]
----------------
The date of this Prospectus Supplement is _______ __, 199_
ii
(continued from previous page)
The Certificates initially may be represented by Certificates registered
in the name of Cede & Co., the nominee of DTC. The interests of beneficial
owners of the Certificates will be represented by book entries on the records of
DTC and participating members thereof. Definitive Certificates will be available
only under the limited circumstances described herein.
Until __________ __, 199_ (90 days after the date of this Prospectus
Supplement) all dealers effecting transactions in the Certificates, whether or
not participating in this distribution, may be required to deliver this
Prospectus Supplement and the Prospectus. This delivery requirement is in
addition to the obligation of dealers to deliver this Prospectus Supplement and
the Prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT THE
OFFERING OF THE CERTIFICATES. ADDITIONAL INFORMATION IS CONTAINED IN THE
PROSPECTUS. PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE CERTIFICATES MAY NOT BE
CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE CERTIFICATES AT
A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
Upon receipt of a request by an investor, or his or her representative,
within the period during which there is a prospectus delivery obligation, the
Underwriter will transmit or cause to be transmitted promptly, without charge
and in addition to any such delivery requirements, a paper copy of this
Prospectus Supplement and a Prospectus or this Prospectus Supplement and a
Prospectus encoded in an electronic format.
iii
TABLE OF CONTENTS
Page
PROSPECTUS SUPPLEMENT...................................................... i
SUMMARY OF TERMS.....................................................S-1
RISK FACTORS.........................................................S-7
THE TRUST............................................................S-8
THE RECEIVABLES POOL.................................................S-9
CHASE USA...........................................................S-14
USE OF PROCEEDS.....................................................S-14
WEIGHTED AVERAGE LIFE OF THE CERTIFICATES...........................S-14
YIELD CONSIDERATIONS................................................S-14
THE CERTIFICATES....................................................S-14
POOLING AND SERVICING AGREEMENT.....................................S-19
CERTAIN FEDERAL INCOME TAX CONSEQUENCES.............................S-21
CERTAIN STATE TAX CONSEQUENCES......................................S-24
ERISA CONSIDERATIONS................................................S-25
UNDERWRITING........................................................S-27
LEGAL MATTERS.......................................................S-27
INDEX OF TERMS......................................................S-28
ANNEX I
PROSPECTUS
SUMMARY OF PROSPECTUS..................................................6
RISK FACTORS..........................................................17
THE TRUSTS............................................................21
THE RECEIVABLES POOLS.................................................22
WEIGHTED AVERAGE LIFE OF THE SECURITIES...............................29
POOL FACTORS AND TRADING INFORMATION..................................30
USE OF PROCEEDS.......................................................31
[CHASE USA (NEW YORK)] [CHASE USA (DELAWARE)].........................31
DESCRIPTION OF THE NOTES..............................................32
DESCRIPTION OF THE CERTIFICATES.......................................37
CERTAIN INFORMATION REGARDING THE SECURITIES..........................39
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS..................47
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES..............................61
ERISA CONSIDERATIONS..................................................63
PLAN OF DISTRIBUTION..................................................66
RATINGS...............................................................67
LEGAL MATTERS.........................................................67
INDEX OF TERMS........................................................68
iv
SUMMARY OF TERMS
This Summary of Terms is qualified in its entirety by reference to the
detailed information appearing elsewhere herein and in the Prospectus. Certain
capitalized terms used in this Summary are defined elsewhere in this Prospectus
Supplement on the pages indicated in the "Index of Terms" or, to the extent not
defined herein, have the meanings assigned to such terms in the Prospectus.
Issuer........................ Chase Manhattan Auto Grantor Trust 199_-_ (the
"Trust" or the "Issuer").
Seller........................ Chase Manhattan Bank USA, N.A., a national
banking association ("Chase USA"), a
wholly-owned subsidiary of The Chase Manhattan
Bank (in such capacity, the "Seller" or
individually, the "Bank").
Servicer...................... Chase USA (in such capacity, the "Servicer").
Securities Offered............ The Trust will issue Automobile Loan
Pass-Through Certificates pursuant to the
Agreement in an aggregate initial principal
amount of $[____________]. The Certificates
will represent fractional undivided interests
in the Trust.
The Certificates will consist of
$[________________] aggregate principal amount
of ____% Automobile Loan Pass-Through
Certificates, Class A, and $[______________]
aggregate principal amount of ____% Automobile
Loan Pass-Through Certificates, Class B. The
Trust property will include the Receivables,
[with respect to Actuarial Receivables, all
monies due thereunder on or after the Cutoff
Date and, with respect to Simple Interest
Receivables, all monies due or received
thereunder on or after the Cutoff Date],
security interests in the Financed Vehicles,
benefits under the Cash Collateral Guaranty
and Cash Collateral Account described below,
proceeds from the exercise of the Seller's
recourse rights against Dealers, proceeds from
claims on certain insurance policies, rights
with respect to repossessed vehicles and
certain rights under the Pooling and Servicing
Agreement (the "Agreement") between the
Seller, the Servicer, and
______________________, as trustee (the
"Trustee").
The Class A Certificates will evidence in the
aggregate an approximate ____% undivided
ownership interest (the "Class A Percentage")
in the Trust, and the Class B Certificates
will evidence in the aggregate an approximate
____% undivided ownership interest (the "Class
B Percentage") in the Trust. The Class B
Certificates are subordinated to the Class A
Certificates to the extent described herein.
The Certificates will be offered for purchase
in denominations of $1,000 and integral
multiples thereof. See "The
Certificates--General" herein and "The Trusts"
and "Description of the Certificates--General"
in the Prospectus.
S-1
Registration of the
Certificates.................. The Certificates initially will be represented
by Certificates registered in the name of
Cede, as the nominee of DTC.
Certificateholders will not be entitled to
receive a Definitive Certificate representing
such person's interest in the Trust, except in
the event that Definitive Certificates are
issued under the limited circumstances
described in the Prospectus.
Certificateholders may elect to hold their
Certificates through DTC (in the United
States) or CEDEL or Euroclear (in Europe). All
references herein to Certificateholders shall
reflect the rights of Certificateholders, as
such rights may be exercised through DTC and
its Participants (including CEDEL and
Euroclear), except as otherwise specified
herein. See "Certain Information Regarding the
Securities--Book-Entry Registration" and
"--Definitive Securities" in the Prospectus.
Pass-Through Rate............. ____% per annum (the "Pass-Through Rate"),
calculated on the basis of a 360-day year
comprised of twelve 30-day months, payable
monthly.
Distribution Date............. The __th day of each month (or, if such __th
day is not a day on which the Trustee and
banks located in New York, New York, [and
_____, ____] are open for the purpose of
conducting a commercial banking business (a
"Business Day"), the next following Business
Day) commencing ______ __, 199_.
Interest...................... On each Distribution Date, interest will be
distributed to the holders of record of the
Class A Certificates and the Class B
Certificates (the "Class A Certificateholders"
and "Class B Certificateholders,"
respectively) as of the date immediately
preceding such Distribution Date or, if
Definitive Certificates are issued, the last
day of the immediately preceding calendar
month (each such date, a "Record Date"),
generally in an amount equal to (i) the
product of one-twelfth of the Pass-Through
Rate and the Class A Certificate Balance with
respect to the Class A Certificates and (ii)
the product of one-twelfth of the Pass-
Through Rate and the Class B Certificate
Balance with respect to the Class B
Certificates.
Principal..................... All payments, including full and partial
prepayments, of principal collected by the
Servicer during the preceding Collection
Period and certain other payments allocable to
principal, as described more fully herein,
will be distributed by the Trustee on each
Distribution Date pro rata to the Class A
Certificateholders and to the Class B
Certificateholders of record on the preceding
Record Date. See "Description of the
Certificates-- Distributions on Certificates"
herein. The rights of the Class B
Certificateholders to receive payments of
principal will be subordinated to the rights
of the Class A Certificateholders to receive
payments of interest and principal to the
extent described herein. The "Class A
Certificate Balance" and "Class B Certificate
Balance" will initially equal
$[________________] and $[_________________],
respectively, and, in each case, will
thereafter equal the initial Class A
Certificate Balance or the
S-2
initial Class B Certificate Balance, as the
case may be, reduced by all principal
distributions on the Class A Certificates and
the Class B Certificates, respectively.
Subordination of Class B
Certificates................ Distributions of interest and principal on the
Class B Certificates will be subordinated in
priority of payment to interest and principal
due on the Class A Certificates to the extent
described herein. The Class B
Certificateholders will not receive any
distributions of interest with respect to a
Collection Period until the full amount of
interest on the Class A Certificates relating
to such Collection Period has been deposited
in the Class A Distribution Account. The Class
B Certificateholders will not receive any
distributions of principal with respect to
such Collection Period until the full amount
of interest on and principal of the Class A
Certificates relating to such Collection
Period has been deposited in the Class A
Distribution Account. See "Risk
Factors--Subordination; Limited Assets" herein
and in the Prospectus.
Advances...................... On each Deposit Date, the Servicer may, in its
sole discretion, make an Advance with respect
to each [Simple Interest] Receivable (other
than a Defaulted Receivable) equal to the
excess, if any, of (x) the product of the
principal balance of such Receivable as of the
related Settlement Date and one-twelfth of its
Contract Rate, over (y) the interest actually
received by the Servicer with respect to such
Receivable from the Obligor or from payments
of the Repurchase Amount during or with
respect to such Collection Period. The
Servicer may elect not to make any Advance
with respect to a Receivable to the extent
that the Servicer, in its sole discretion,
determines that such Advance is not
recoverable from subsequent payments on such
Receivable or from demands under the Cash
Collateral Guaranty. See "Description of the
Certificates--Advances" herein.
Servicing Fee................. The Servicer shall receive a Servicing Fee,
payable on each Distribution Date, in an
amount equal to the sum of (i) the product of
the Servicing Fee Rate and the Pool Balance as
of the related Settlement Date and (ii) any
Late Fees paid by the Obligors during the
related Collection Period. A "Settlement Date"
with respect to a Distribution Date will be
the close of business on the last day of the
Collection Period immediately preceding the
related Collection Period. A "Collection
Period" with respect to a Distribution Date
will be the calendar month preceding the
calendar month in which such Distribution Date
occurs. In addition, the Servicing Fee will
include Investment Earnings on amounts on
deposit in the Collection Account; provided,
however, that from and after the Collection
Period in which the Servicer fails to deposit
an Advance with respect to a Receivable other
than because such Receivable has been declared
a Defaulted Receivable, such investment income
will not be paid to the Servicer, but will be
deposited in the Cash Collateral Account or
applied pursuant to the Loan Agreement. See
"The Certificates--Servicing Compensation"
herein and "Description of
S-3
the Transfer and Servicing
Agreements--Servicing Compensation and Payment
of Expenses" and "--Net Deposits" in the
Prospectus.
Cash Collateral Account....... The Trustee will have the right to demand
payments under the Cash Collateral Guaranty
issued pursuant to the Trust Agreement
described below, under certain circumstances
described below. The Cash Collateral Guaranty
will be secured by the Cash Collateral
Account, which will be held in the name of the
Cash Collateral Trustee. Pursuant to the Trust
Agreement among the Cash Collateral Depositor,
the Cash Collateral Trustee, the Trustee, the
Seller or the Servicer, the Cash Collateral
Account will be funded on the Closing Date in
the amount of the Initial Cash Collateral
Amount from the proceeds of a loan to be made
by the Cash Collateral Depositor pursuant to
the Loan Agreement. The Cash Collateral
Guaranty will not be a recourse obligation of
the Cash Collateral Depositor, the Cash
Collateral Trustee, the Trustee, the Seller or
the Servicer, and will be secured and funded
solely with amounts, if any, on deposit in the
Cash Collateral Account. The Cash Collateral
Account and any amounts therein will not be
property of the Trust, but will be held in
accordance with the Trust Agreement for the
benefit of the Trustee and the Cash Collateral
Depositor, as secured parties and as provided
in the Trust Agreement.
On each Deposit Date, the Trustee shall demand
payment under the Cash Collateral Guaranty to
the extent of Payment Deficiencies, but in no
event in an amount greater than the Available
Cash Collateral Amount with respect to such
Distribution Date. See "The Certificates--The
Cash Collateral Account" herein.
Demands under the Cash Collateral Guaranty
will be funded solely from amounts, if any, on
deposit in the Cash Collateral Account. If the
amount deposited in the Cash Collateral
Account is reduced to zero, and in the case of
the Class A Certificateholders, if the
subordination of the Class B Certificates is
insufficient, Certificateholders will bear
directly the credit and other risks associated
with ownership of the Receivables, including
the risk that the Trust may not have a
perfected security interest in the Financed
Vehicles. See "Certain Legal Aspects of the
Receivables" in the Prospectus.
On each Distribution Date, any amounts on
deposit in the Collection Account with respect
to the preceding Collection Period, after
payments to Certificateholders and the
Servicer have been made, will be paid to the
Cash Collateral Trustee for application in
accordance with the Trust Agreement. See "The
Certificates--The Cash Collateral Account"
herein and "Description of the Transfer and
Servicing Agreements--Credit and Cash Flow
Enhancement" in the Prospectus.
Repayment on each Distribution Date of
principal and interest on the loan made by the
Cash Collateral Depositor to the Cash
S-4
Collateral Trust 199_-_ will be made from
funds available in the Collection Account
after distributions of interest and principal
have been made to Certificateholders and the
Servicer, from amounts on deposit in the Cash
Collateral Account in excess of the Required
Cash Collateral Amount (after taking into
account any required deposits to, and
withdrawals from, the Cash Collateral
Account), and from earnings on permitted
investments in the Cash Collateral Account.
Repayment of the loan made by the Cash
Collateral Depositor will not be recourse to
the Trust, the Trustee, the Seller, the
Servicer, the Cash Collateral Trustee or a
Certificateholder.
Required Cash Collateral
Amount........................ The amount on deposit in the Cash Collateral
Account on the initial Distribution Date will
be $________. On each Distribution Date
thereafter, the Required Cash Collateral
Amount will equal ____% of the Pool Balance as
of the related Settlement Date, but in any
event not less than the lesser of (i) $_______
and (ii) the sum of the Pool Balance as of the
related Settlement Date, accrued interest
thereon and an amount equal to the product of
such Pool Balance and the Servicing Fee Rate
(except that under certain circumstances the
Required Cash Collateral Amount will be the
amount set forth above using a percentage of
___%). See "The Certificates--The Cash
Collateral Account" herein and "Description of
the Transfer and Servicing Agreements--Credit
and Cash Flow Enhancement" in the Prospectus.
Optional Purchase............. The Servicer may purchase all the Receivables
on any Distribution Date following the last
day of any Collection Period as of which the
Pool Balance has declined to 5% or less of the
Pool Balance as of the Cutoff Date. See "The
Certificates--Termination" herein and
"Description of the Transfer and Servicing
Agreements--Termination" in the Prospectus.
Trustee....................... _________________________ (the "Trustee"). The
Trustee's Corporate Trust Office is located at
_______________________, telephone
(___)___-____. The Bank and its respective
affiliates may have normal banking
relationships with the Trustee and its
affiliates.
Cash Collateral Trustee....... ___________________________.
Tax Status.................... In the opinion of Simpson Thacher & Bartlett,
special counsel to the Seller, the Trust will
be treated as a grantor trust for United
States federal income tax purposes and not as
an association taxable as a corporation.
Certificateholders must report their
respective allocable shares of income earned
on Trust assets and, subject to certain
limitations applicable to individuals, estates
and trusts, may deduct their respective
allocable shares of reasonable servicing and
other fees paid or incurred by the Trust. See
"Certain Federal Income Tax Consequences" and
"Certain State Tax Consequences" herein.
S-5
Rating........................ It is a condition of issuance of the Class A
Certificates that they be rated in the highest
investment rating category by at least two
nationally recognized statistical rating
organizations (each a "Rating Agency"), and it
is a condition to the issuance of the Class B
Certificates that they be rated at least
investment grade by at least one Rating
Agency.
There can be no assurance that these ratings
will not be lowered or withdrawn if, in the
sole judgment of any such rating agency,
circumstances in the future so warrant.
ERISA Considerations.......... The Class A Certificates may, in general, be
purchased by Plans that are subject to ERISA
or Section 4975 of the Code, and by persons
investing Plan Assets of any Plan, upon
satisfaction of certain conditions described
herein.
The Class B Certificates may not be acquired
by, on behalf of, or with, Plan Assets.
See "ERISA Considerations" herein and in the
Prospectus.
S-6
RISK FACTORS
Investors should consider, among other things, the matters discussed under
"Risk Factors" in the Prospectus and the following risk factors in connection
with the purchase of Certificates.
Limited Liquidity
There is currently no secondary market for the Certificates offered hereby. The
Underwriter currently intends to make a market in the Certificates offered
hereby, but it is under no obligation to do so. There can be no assurance that a
secondary market will develop or, if a secondary market does develop, that it
will provide the Certificateholders with liquidity of investment or that it will
continue for the life of the Certificates offered hereby.
Trust's Relationship to the Seller and the Servicer
Neither the Seller nor the Servicer is generally obligated to make any payments
in respect of the Certificates or the Receivables. In addition, if the Bank were
to cease acting as Servicer, delays in processing payments on the Receivables
and information in respect thereof could occur and result in delays in payments
to the Certificateholders. See "Description of the Transfer and Servicing
Agreements -- Sale and Assignment of the Receivables" in the Prospectus.
Subordination; Limited Assets
The rights of the Class B Certificateholders to receive payments of principal
will be subordinated to the rights of the Class A Certificateholders to receive
payments of interest and principal to the extent described herein. The Class B
Certificateholders will not receive any distributions of interest with respect
to a Collection Period until the full amount of interest on the Class A
Certificates relating to such Collection Period has been deposited in the Class
A Distribution Account. The Class B Certificateholders will not receive any
distributions of principal with respect to such Collection Period until the full
amount of interest on and principal of the Class A Certificates relating to such
Collection Period has been deposited in the Class A Distribution Account.
The Trust will not have, nor is it permitted or expected to have, any
significant assets or sources of funds other than the Receivables and the right
to receive payments under certain circumstances under the Cash Collateral
Guaranty. The Certificates represent interests solely in the Trust.
Certificateholders must rely for repayment upon payments on the Receivables and,
pursuant to the terms of the Cash Collateral Guaranty, the Available Cash
Collateral Amount, if any. However, the amounts deposited in the Cash Collateral
Account are limited. If the amount on deposit in the Cash Collateral Account is
exhausted, and in the case of the Class A Certificateholders, if the
subordination of the Class B Certificates is insufficient, the Trust will depend
solely on current distributions on the Receivables to make payments on the
Certificates. The Certificates will not be insured or guaranteed by any
Affiliate, the Bank, the Servicer, the Trustee or any other person or entity.
Ratings of the Certificates
It is a condition to the issuance of the Class A Certificates that they be rated
in the highest investment rating category, by at least two Rating Agencies, and
it is a condition to the issuance of the Class B Certificates that they be rated
at least [investment grade] by at least one Rating Agency. A rating is not a
recommendation to purchase, hold or sell Certificates, inasmuch as such rating
does not comment as to market price or suitability for a particular investor.
The ratings of the Certificates address the likelihood of the timely payment of
interest on and the ultimate payment of principal of the Certificates pursuant
to their terms. There can be no assurance that a rating will remain for any
given period of time or that a rating will not be lowered or withdrawn entirely
by a Rating Agency if in its judgment circumstances in the future so warrant.
S-7
Federal Income Taxation; Effect of Subordination on Class B Certificateholders
It is expected that, for federal income tax purposes, amounts otherwise payable
to the Class B Certificateholders that are paid to the Class A
Certificateholders pursuant to the subordination provisions described above
under "--Subordination; Limited Assets" will be deemed to have been received by
the Class B Certificateholders and then paid by them to the Class A
Certificateholders pursuant to a guaranty. See generally "Certain Federal Income
Tax Consequences" herein.
If the Class B Certificateholders received distributions of less than their
share of the Trust's receipts of principal or interest (the "Shortfall Amount")
because of the subordination of the Class B Certificates, holders of Class B
Certificates would probably be treated for Federal income tax purposes as if
they had (1) received as distributions their full share of such receipts, (2)
paid over to the Class A Certificateholders an amount equal to such Shortfall
Amount, and (3) retained the right to reimbursement of such amounts to the
extent of future collections otherwise available for deposit in the Cash
Collateral Account.
Under this analysis, (1) Class B Certificateholders would be required to accrue
as current income any interest or OID income of the Trust that was a component
of the Shortfall Amount, even though such amount was in fact paid to the Class A
Certificateholders, (2) a loss would only be allowed to the Class B
Certificateholders when their right to receive reimbursement of such Shortfall
Amount became worthless (i.e., when it becomes clear that that amount will not
be available from any source to reimburse such loss), and (3) reimbursement of
such Shortfall Amount prior to such a claim of worthlessness would not be
taxable income to Class B Certificateholders because such amount was previously
included in income. Those results should not significantly affect the inclusion
of income for Class B Certificateholders on the accrual method of accounting,
but could accelerate inclusion of income to Class B Certificateholders on the
cash method of accounting by, in effect, placing them on the accrual method.
Moreover, character and timing of loss deductions is unclear.
THE TRUST
The Seller will establish the Trust by selling and assigning the Trust
property, as described below, to the Trustee in exchange for the Certificates.
Each Certificate will represent a fractional undivided interest in the Trust.
The Trust property will include a pool (the "Receivables Pool") comprised of the
Receivables and all payments due [or received] thereunder on or after the Cutoff
Date (other than the Retained Yield). The Trust property will also include (i)
such amounts as from time to time may be held in the Collection Account and the
Certificate Distribution Accounts established and maintained by the Servicer in
the name of the Trustee pursuant to the Agreement; (ii) security interests in
the vehicles securing the Receivables (the "Financed Vehicles"); (iii) the
benefit of the right to demand payments under the Cash Collateral Guaranty that
will be secured by the Cash Collateral Account; (iv) the rights to proceeds as a
result of the Seller's exercise of its recourse rights against Dealers (as
described in the Prospectus under "The Receivables Pools--Origination and
Servicing of Motor Vehicle Loans"); (v) an assignment of the rights of the
Seller to receive proceeds from claims on theft and physical damage, credit life
and credit disability insurance policies covering the Financed Vehicles or the
Obligors, as the case may be, to the extent that such insurance policies relate
to the Receivables; and (vi) the rights with respect to any Financed Vehicle
that has been repossessed by the Servicer, on behalf of the Trustee. The
Agreement sets forth criteria that must be satisfied by each Receivable. See
"Description of the Transfer and Servicing Agreements--Sale and Assignment of
Receivables" in the Prospectus. Each Receivable will be identified in a schedule
appearing as an exhibit to the Agreement.
The Trust will be formed for this transaction pursuant to the Agreement
and prior to formation will have had no assets or obligations. After formation,
the Trust will not engage in any activity other than acquiring and holding the
Receivables, issuing the Certificates, distributing payments thereon and as
otherwise described herein and as provided in the Agreement. The Trust will not
acquire any contracts or assets other than the Trust property described above
and will not have any need for additional capital resources. As the Trust does
not have any operating history and will not engage in any activity other than
issuing the Certificates and making distributions thereon, there has not been
included any historical or pro forma financial statements or ratio of earnings
to fixed
S-8
charges with respect to the Trust. Inasmuch as the Trust has no operating
history, it is not possible to predict the operating performance of the Trust
while the Certificates are outstanding. While management of the Seller believes
that the loss and delinquency experience contained herein for recent periods are
representative of past performance of Motor Vehicle Loans in the Chase Auto
Finance Portfolio, there is no assurance that such performance is indicative of
the future performance of the Receivables, since future performance is
dependent, among other things, on general economic conditions and economic
conditions in the geographical areas in which the Obligors reside including, for
example, unemployment rates.
THE RECEIVABLES POOL
The Receivables represent Motor Vehicle Loans from the portfolio of the
Seller that, in addition to satisfying the criteria set forth in the Prospectus
under "The Receivables Pool-General":
(a) have a remaining maturity, as of the Cutoff Date, of at least
___ months and not more than ___ months;
(b) are secured by either new Financed Vehicles that had an original
maturity of at least ___ months and not more than ___ months, or used
Financed Vehicles that had an original maturity of at least ___ months and
not more than ___ months;
(c) are fully-amortizing fixed rate simple interest [actuarial]
contracts that provide for level scheduled monthly payments over their
respective remaining terms, have an annual contract rate of interest (a
"Contract Rate") of at least ____% and not more than ____%, and are not
secured by any interest in real estate;
(d) have not been paid more than three months in advance as of the
Cutoff Date;
(e) have remaining principal balances, as of the Cutoff Date, of at
least $__________ and not greater than $__________;
(f) have no payment that is delinquent for more than [____] days
past due as of the related Cutoff Date; and
(g) are not Chase Lincoln Loans, Chase Maryland Loans, Motor Vehicle
Loans originated by or through a Dealer located in the State of
___________ or the subject of a previous securitization.
The Receivables were selected from the Motor Vehicle Loans in the
portfolio of the Seller that met the above criteria. For administrative reasons,
the Seller first selected from the Motor Vehicle Loans in its portfolio all
otherwise eligible Motor Vehicle Loans originated since _________ __, 19__,
which were segregated and held for sale by the Seller. The Seller believes that
such selection procedures are not materially adverse to Certificateholders.
Approximately ____% of the aggregate principal balance of the Receivables, as of
the Cutoff Date, were secured by new Financed Vehicles and approximately ___% of
the aggregate principal balance of the Receivables, as of the Cutoff Date, were
secured by used Financed Vehicles. [Approximately __% and %__ of the aggregate
principal balance of the Receivables, as of the Cutoff Date, were Simple
Interest Receivables and Actuarial Receivables, respectively.] [Approximately
___% of the aggregate principal balance of the Receivables, as of the Cutoff
Date, were originated by Chase Auto Finance directly with Obligors.] Virtually
none of the Receivables provide for recourse to the Dealer in the event of
default by the Obligor except for breaches of the Dealer's representations and
warranties that do not relate to the creditworthiness of the Obligor. The Seller
may not substitute other Motor Vehicle Loans from its portfolio or any other
motor vehicle receivables, for the Receivables at any time during the term of
the Agreement. See "The Receivables Pool-General" in the Prospectus for a
description of how prepayments made under Simple Interest and Actuarial
Receivables are allocated.
S-9
The composition of the Receivables, distribution of the Receivables by
Contract Rate distribution of the Receivables and the geographic distribution of
the Receivables, in each case as of the Cutoff Date, are set forth in the
following tables.
Composition of the Receivables
New Financed Vehicles Used Financed Vehicles Total
-----------------------------------------------------------
Aggregate Principal $ $ $
Balance
Number of Receivables
Average Principal $ $ $
Balance
Average Original $ $ $
Balance
Weighted Average % % %
Contract Rate
Contract Rate (Range) __ __ %
Weighted Average
Original Term months months months
Original Term (Range) months months months
Weighted Average
Remaining Term months months months
Remaining Term (Range) months months months
Distribution By Contract Rate Of The Receivables
Percent Of
Number of Aggregate
Contract Rate Range Receivables Principal Balance Pool Balance(1)
- ------------------- ----------- ----------------- ---------------
.................... $ %
....................
....................
....................
....................
....................
Total............... $ %
----------------- ------------------
- ------------------------
(1) Amounts shown do not total 100.00% due to rounding.
S-10
Geographic Distribution Of The Receivables(1)
Percent Of
Number of Aggregate
State(3) Receivables Principal Balance Pool Balance(2)
-------- ----------- ----------------- ---------------
.................... $ %
....................
....................
....................
....................
....................
....................
....................
....................
Total............... $ 100.00%
- ------------------------
(1) Based on location of the Dealer from which the Motor Vehicle Loan
was acquired or through which it was made.
(2) Amounts shown do not total 100.00% due to rounding.
[(3) Alabama excluded for administrative reasons.]
Delinquency and Loan Loss Information
The following tables set forth information with respect to delinquencies,
loan losses and recoveries for the Chase Auto Financial Portfolio as of the
dates indicated and for each of the one year periods ended December 31, 199_,
199_, 199_, 199_ and 199_ and for each of the ____ month periods ended ________
__, 199_ and ________ __, 199_. [The portions of the Chase Auto Finance
Portfolio that provide for payments based upon variable rate simple interest
[and the actuarial method] are included in the following tables but Motor
Vehicle Loans of such type[s] are not included in the Trust.] [Chase Auto
Finance does not maintain separate records that distinguish among the
delinquency and loan loss experience for Motor Vehicle Loans that provide for
payments based upon [fixed rate simple interest], variable rate simple interest
and the actuarial method. The Seller believes, however, that the delinquency and
loan loss experience with respect to the fixed rate simple interest [and
actuarial method] Motor Vehicle Loans included in the Trust is not materially
different from the performance of the Chase Auto Finance Portfolio set forth
below.
See "The Receivables Pool--General" and "--Delinquency and Loan Loss
Information" for a description of the composition of the Chase Auto Finance
Portfolio.
The data presented in the following tables are for illustrative purposes
only. Delinquency and loan loss experience may be influenced by a variety of
economic, social and other factors. No assurance can be given that the
delinquency and loan loss information of the Bank, or of the Trust with respect
to the Receivables, in the future will be similar to that set forth above.
S-11
Delinquency Experience
Months Ended Months Ended Year Ended
----------------------------------------------------------------------------------------------------------------------
December 31, December 31, December 31, December 31, December 31,
, 199_ , 199_ 199_ 199_ 199_ 199_ 199_
----------------------------------------------------------------------------------------------------------------------
Dollars Number Dollars Number Dollars Number Dollars Number Dollars Number Dollars Number Dollars Number
(000's) of Loans (000's) of Loans (000's) of Loans (000's) of Loans (000's) of Loans (000's) of Loans (000's) of Loans
----------------------------------------------------------------------------------------------------------------------
Outstanding
Principal
Amount........
Delinquencies($)(1)(2)
30-59 Days....
60-89 Days....
90 Days or
More.........
TOTAL
Delinquencies.
Repossession
Inventory(3)...
TOTAL Delinquencies &
Repossession Inventory
Delinquencies(%)(1)(2)(4)
30-59 Days.....
60-89 Days.....
90 Days or
More..........
TOTAL
Delinquencies..
Repossession
Inventory......
TOTAL
Delinquencies &
Repossession
Inventory......
- ------------------------
(1) Delinquencies include principal amounts only.
(2) The period of delinquency is based on the number of days payments are
contractually past due.
(3) For December 31, 1994 and earlier, amounts shown in repossession inventory
represent loans which have been written down to the fair market value of
the collateral, but where the related financed vehicles have not yet been
sold. For December 31, 1995, the amount shown in repossession inventory
represent the total outstanding principal balance of the loans at that
time.
(4) As a percent of outstanding principal in dollars.
(5) At ________, approximately __% of the aggregate principal balance of Motor
Vehicle Loans in the portfolio presented were Chase Maryland Loans.
S-12
Loan Loss Experience
(Dollars in 000's)
Months Ended Months Ended Year Ended
----------------------------------------------------------------------------------------------------------------------
December 31, December 31, December 31, December 31, December 31,
, 199_ , 199_ 199_ 199_ 199_ 199_ 199_
----------------------------------------------------------------------------------------------------------------------
Number of
Loans(1)......
Period End
Outstanding
Principal
Amount........
Average
Outstanding
Principal
Amount (2)....
Number of
Repossessions.
Number of Gross
Charge-Offs(3).
Gross
Charge-Offs as
a % of Period
End Outstanding
Principal
Amount.........
Gross Charge-Offs
as a % of Average
Outstanding
Principal
Amount.........
Recoveries(4)...
Net
Charge-Offs(5).
Net Charge-Offs
as a % of Period
End Outstanding
Principal
Amount.........
Net Charge-Offs
as a % of Average
Outstanding
Principal
Amount.........
- ------------------------
(1) Number of loans as of period end.
(2) Averages for 1993, 1994 and 1995 were computed by taking a simple average
of monthly average outstanding principal amounts for each period presented
and averages for 1991 and 1992 were computed by taking a simple average of
month end outstanding principal amounts for each period presented.
(3) Amount charged off is remaining principal balance less proceeds from sale
of repossessed vehicles.
(4) Recoveries generally include amounts received with respect to loans
previously charged off, except for proceeds realized in connection with
the sale of the financed vehicles.
(5) Net charge-offs mean gross charge-offs minus recoveries of loans
previously charged off.
(6) As of _______, approximately ___% of the aggregate principal balance of
Motor Vehicle Loans in the portfolio presented were Chase Maryland Loans.
S-13
CHASE USA
Information regarding the Seller and the Servicer is set forth under
"Chase USA (New York) and Chase USA (Delaware)" in the Prospectus. At
__________, 199__, Chase USA's total assets were approximately $____ billion,
total liabilities were approximately $____ billion, and total stockholders'
equity was approximately $____ billion.
USE OF PROCEEDS
The net proceeds to be received by the Seller from the sale of
Certificates, estimated to be approximately $___________, will be added to its
general funds.
WEIGHTED AVERAGE LIFE OF THE CERTIFICATES
Information regarding certain maturity and prepayment considerations with
respect to the Certificates is set forth under "Weighted Average Life of the
Securities" in the Prospectus.
YIELD CONSIDERATIONS
Interest on the Receivables will be passed through on each Distribution
Date to the Certificateholders of each Class in an amount equal to the
Pass-Through Rate applied to the Class A Certificate Balance or the Class B
Certificate Balance, in each case as of the prior Distribution Date. In the
event of principal prepayment on a Receivable, Certificateholders will generally
receive interest for the full month on such Receivable. See "The
Certificates--Distributions on Certificates" herein.
Chase Auto Finance maintains certain records of the historical prepayment
experience of the Chase Auto Finance Portfolio. The Seller believes that such
records are not adequate to provide meaningful information with respect to the
Receivables. In any event, no assurance can be given that prepayments on the
Receivables would conform to any historical experience, and no prediction can be
made as to the actual prepayment experience to be expected with respect to the
Receivables.
[Although the Receivables have different Contract Rates, each Receivable's
Contract Rate exceeds the sum of the Pass-Through Rate and the Servicing Fee
Rate. Therefore, disproportionate rates of prepayments between Receivables with
higher and lower Contract Rates will not affect the yield to
Certificateholders.]
THE CERTIFICATES
General
The Certificates offered hereby will be issued pursuant to the Agreement,
a form of which has been filed as an exhibit to the Registration Statement. A
copy of the Agreement will be filed with the Commission following the issuance
of the Certificates. The following, as well as other pertinent information
included elsewhere in this Prospectus Supplement and the Prospectus, summarizes
the material terms of the Certificates and the Agreement. The following summary
does not purport to be complete and is subject to, and qualified in its entirety
by reference to, the Agreement. The following summary supplements the
description of the general terms and provisions of the Certificates of any given
series and the related Pooling and Servicing Agreement set forth in the
Prospectus, to which description reference is hereby made.
The Certificates will constitute Fixed Rate Securities, as such term is
defined under "Certain Information Regarding the Securities-Fixed Rate
Securities" in the Prospectus. The Certificates will evidence undivided
S-14
ownership interests in the Trust created pursuant to the Agreement. The Class A
Certificates will evidence in the aggregate an undivided ownership interest of
the Class A Percentage of the Trust and the Class B Certificates will evidence
in the aggregate an undivided ownership interest of the Class B Percentage of
the Trust. In general, it is intended that the Class A Certificateholders
receive, on each Distribution Date, the Class A Percentage of the amounts
allocable to the principal balance of the Receivables for the related Collection
Period plus one-month's interest at the Pass-Through Rate on the Class A
Certificate Balance. Subject to the prior rights of the Class A
Certificateholders, it is intended that the Class B Certificateholders receive,
on each Distribution Date, the Class B Percentage of the amounts allocable to
the principal balance of the Receivables for the related Collection Period plus
one-month's interest at the Pass-Through Rate on the Class B Certificate
Balance.
Interest to Certificateholders may be provided by payments made by or on
behalf of the Obligors, Advances or demands under the Cash Collateral Guaranty.
A prepayment of a Receivable may be made by or on behalf of an Obligor, by
application of insurance proceeds, as a result of a repurchase made by the
Seller or purchase made by the Servicer under the circumstances specified in the
Agreement, or, by foreclosure upon the related Financed Vehicle or other
enforcement measures taken with respect to a Receivable that is delinquent prior
to its being designated a Defaulted Receivable and the realization of
liquidation proceeds with respect thereto. See "The Certificates--The Cash
Collateral Account" herein and "Description of the Transfer and Servicing
Agreements--Sale and Assignment of Receivables" and "--Servicing Procedures" in
the Prospectus.
Distributions of principal of and interest on the Certificates with
respect to each Collection Period will made by, or on behalf of, the Trustee on
the Distribution Date immediately succeeding such Collection Period, commencing
_____ [15], 199_. Each Collection Period will be one calendar month.
Denominations and Registration of Certificates
The Certificates will be offered for purchase in denominations of $1,000
and integral multiples thereof and will initially be represented by Certificates
registered in the name of the nominee of DTC except as provided below. The
Seller has been informed by DTC that DTC's nominee will be Cede. See "Certain
Information Regarding the Securities--Book-Entry Registration" and "--Definitive
Certificates" in the Prospectus.
Trust Accounts
The Servicer will establish and maintain a segregated account (the
"Collection Account"), in the name of the Trustee on behalf of the
Certificateholders, into which all payments made on or with respect to the
Receivables will be deposited. The Servicer will also establish and maintain a
segregated distribution account for the Class A Certificates (the "Class A
Distribution Account") and a segregated distribution account for the Class B
Certificates (the "Class B Distribution Account," and together with the Class A
Distribution Account, each a "Certificate Distribution Account"). The Collection
Account and each Certificate Distribution Account will be a Trust Account as
described under "Description of the Transfer and Servicing Agreements--Accounts"
in the Prospectus. The Collection Account and each Certificate Distribution
Account will be established initially with the trust department of The Chase
Manhattan Bank ("Chase"). Chase, in its capacity as the initial paying agent
(the "Paying Agent"), will have the revocable right to withdraw funds from each
Certificate Distribution Account for the purpose of making distributions to
Certificateholders in the manner provided in the Agreement.
The Cash Collateral Account
On the Closing Date, a cash collateral guaranty (the "Cash Collateral
Guaranty") will be issued pursuant to a cash collateral trust agreement (the
"Trust Agreement") among a financial institution (the "Cash Collateral
Depositor"), selected by the Bank, __________, as cash collateral trustee (the
"Cash Collateral Trustee") the Seller and the Servicer. The Cash Collateral
Guaranty will be secured by an account (the "Cash Collateral Account"), which
will be established pursuant to the Trust Agreement, and the Cash Collateral
Account will be funded on the Closing Date in the amount of $_________ (the
"Initial Cash Collateral Amount") from the proceeds of a loan to be made by the
Cash Collateral Depositor pursuant to a loan agreement (the "Loan Agreement").
The Cash Collateral Guaranty will not be a recourse obligation of the Cash
Collateral Depositor,
S-15
the Cash Collateral Trustee, the Trustee, the Seller or the Servicer, and will
be funded and secured solely with amounts, if any, on deposit in the Cash
Collateral Account. The Cash Collateral Account will be a Trust Account. Funds
on deposit in the Cash Collateral Account will be invested in Permitted
Investments. It is expected that such funds will be invested in the debt
obligations of the Cash Collateral Depositor or its affiliates so long as such
obligations qualify as Permitted Investments. The Cash Collateral Account and
any amounts therein will not be the property of the Trust, but will be held in
accordance with the Trust Agreement for the benefit of the Trustee and the Cash
Collateral Depositor as secured parties and as provided in the Trust Agreement.
On each Distribution Date, the amount available in the Cash Collateral
Account (the "Available Cash Collateral Amount") will equal the lesser of (i)
the amount on deposit in the Cash Collateral Account (exclusive of investment
earnings) and (ii) the Cash Collateral Amount.
On each Deposit Date, the Trustee shall demand payment under the Cash
Collateral Guaranty to the extent that the sum of the amounts required to be
distributed to Certificateholders and the Servicing Fee payable to the Servicer
on such Distribution Date exceeds the amount on deposit in the Collection
Account with respect to related Collection Period (net of investment income and
amounts to be applied in reimbursement of outstanding Advances) ("Payment
Deficiencies"). Such Payment Deficiencies may result from, among other things,
the failure by the Servicer to make any remittance required to be made under the
Agreement or the election of the Servicer not to make any Advance. The amount of
any demand under the Cash Collateral Guaranty shall be payable solely from funds
available in the Cash Collateral Account. The aggregate amount demanded under
the Cash Collateral Guaranty on any Deposit Date will not exceed the Available
Cash Collateral Amount with respect to the related Distribution Date. The
Trustee will deposit the proceeds of such demands into the Collection Account on
or before the Deposit Date related to the Distribution Date with respect to
which the demands were made. The Servicer will be obligated to follow its normal
practices and procedures to realize upon Defaulted Receivables and any net
proceeds so realized will be remitted to the Collection Account. The Cash
Collateral Guaranty will also be reinstated as a result of and to the extent of
receipt by the Cash Collateral Depositor of the other amounts described below.
The Required Cash Collateral Amount on the initial Distribution Date will
be $________. On each Distribution Date thereafter, the Required Cash Collateral
Amount will equal _____% of the Pool Balance as of the related Settlement Date,
but in any event will not be less than the lesser of (i) $_________ and (ii) the
Pool Balance; provided, however, that the Required Cash Collateral Amount will
be calculated as set forth above using a percentage of _____% on any
Distribution Date on which (a) the average of the Charge-Off Rates for the three
preceding Collection Periods exceeds ___% or (b) the average of the Delinquency
Percentages for the three preceding Collection Periods exceeds ___%, unless
thereafter the average of the Charge-off Rates and the average of the
Delinquency Percentages for a period of three consecutive Collection Periods are
less than or equal to the ___% and ___%, respectively, in which event the
Required Cash Collateral Amount for each succeeding Distribution Date shall be
computed using a percentage of ___%. "Charge-off Rate" means, for any Collection
Period, the Aggregate Net Losses with respect to the Receivables, expressed, on
an annualized basis, as a percentage of the average of (x) the Pool Balance on
the last day of the Collection Period preceding such Collection Period and (y)
the Pool Balance on the related Settlement Date. "Delinquency Percentage" means,
for any Collection Period, the sum of the outstanding principal balances of all
Receivables that are 60 days or more delinquent (including Receivables, which
are not Defaulted Receivables, relating to Financed Vehicles that have been
repossessed), as of the end of such Collection Period, determined in accordance
with the Servicer's normal practices, such sum expressed as a percentage of the
Pool Balance on the last day of such Collection Period. "Aggregate Net Losses"
means, with respect to a Collection Period, the amount equal to (i) the
principal balance of the Receivables that became Defaulted Receivables during
such Collection Period minus (ii) the Liquidation Proceeds allocable to
principal collected during such Collection Period with respect to any Defaulted
Receivables.
Repayment on each Distribution Date of principal and interest on the loan
made by the Cash Collateral Depositor to the trust established under the Trust
Agreement for the benefit of the Trustee and the Cash Collateral Depositor (the
"Cash Collateral Trust 199_-_") will be made from amounts on deposit in the Cash
Collateral Account in excess of the Required Cash Collateral Amount (after
taking into account any required deposits to, and withdrawals from, the Cash
Collateral Account), and from earnings on Permitted Investments in the Cash
Collateral
S-16
Account. Repayment of the loan made by the Cash Collateral Depositor will not be
recourse to the Trust, the Trustee, the Seller, the Servicer, the Cash
Collateral Trustee or any Certificateholder.
Distributions On Certificates
On or before the __th day of each month (or, if such __th day is not a
Business Day, the preceding Business Day), the Servicer will inform the Trustee
and the Paying Agent of the following amounts with respect to the preceding
Collection Period: (i) the amount of aggregate collections on the Receivables;
(ii) the aggregate amount of Advances to be remitted by the Servicer; (iii) the
aggregate Purchase Amount of Receivables to be repurchased by the Seller or
purchased by the Servicer; (iv) the aggregate demands to be made on the Cash
Collateral Guaranty; (v) the aggregate amount to be distributed as principal and
interest on the Class A Certificates and Class B Certificates; (vi) the
Servicing Fee; and (vii) the amount to be paid to the Cash Collateral Trustee.
On each Distribution Date, after payment to the Servicer of amounts in
respect of Advances previously made by the Servicer (as described above under
"--Advances") with respect to the related Collection Period, the Servicer will
make the following deposits and distributions from the Collection Account, to
the extent of the sum of Available Interest and any Available Cash Collateral
Amount remaining after such payment in respect of Advances (and, in the case of
shortfalls occurring under clause (b) below in the Class A Interest
Distributable Amount, the Class B Percentage of Available Principal to the
extent of such shortfalls), in the following priority:
(a) to the Servicer, any unpaid Servicing Fee for the related
Collection Period and all unpaid Servicing Fees from prior Collection
Periods;
(b) to the Class A Distribution Account, the Class A Interest
Distributable Amount for such Distribution Date; and
(c) to the Class B Distribution Account, the Class B Interest
Distributable Amount for such Distribution Date.
On each Distribution Date, the Servicer will make the following deposits
and distributions, to the extent of the portion of Available Principal,
Available Interest and any Available Cash Collateral Amount remaining after the
application of clauses (a), (b) and (c) above, in the following priority:
(d) to the Class A Distribution Account, the Class A Principal
Distributable Amount for such Distribution Date;
(e) to the Class B Distribution Account, the Class B Principal
Distributable Amount for such Distribution Date; and
(f) to the Cash Collateral Trustee, any amounts remaining for
application in accordance with the Trust Agreement.
On each Distribution Date, the Trustee or the Paying Agent, as the case
may be, will distribute all amounts on deposit in the Class A Distribution
Account to the Class A Certificateholders as of the Record Date and all amounts
on deposit in the Class B Distribution Account to the Class B Certificateholders
as of the Record Date.
"Available Interest" means, for any Distribution Date, that portion of
Collections on the Receivables received during the related Collection Period
allocated to interest, all Advances made by the Servicer with respect to such
Distribution Date and, to the extent attributable to interest, the Purchase
Amount received with respect to each Receivable repurchased by the Seller or
purchased by the Servicer under an obligation that arose during the related
Collection Period.
"Available Principal" means, for any Distribution Date, that portion of
Collections on the Receivables received during the related Collection Period
allocated to the principal balance of the Receivables, and, to the extent
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attributable to principal, the Purchase Amount received with respect to each
Receivable repurchased by the Seller or purchased by the Servicer under an
obligation that arose during the related Collection Period.
"Class A Interest Carryover Shortfall" means, (a) for the initial
Distribution Date, zero, and (b) for any other Distribution Date, the excess of
Class A Monthly Interest for the preceding Distribution Date and any outstanding
Class A Interest Carryover Shortfall for such preceding Distribution Date over
the amount in respect of interest that is actually deposited in the Class A
Distribution Account on such preceding Distribution Date, plus 30 days of
interest on such excess, to the extent permitted by law, at the Pass-Through
Rate.
"Class A Interest Distributable Amount" means, for any Distribution Date,
the sum of Class A Monthly Interest for such Distribution Date and the Class A
Interest Carryover Shortfall for such Distribution Date.
"Class A Monthly Interest" means, for any Distribution Date, one-twelfth
of the Pass-Through Rate multiplied by the Class A Certificate Balance as of the
Distribution Date occurring in the preceding Collection Period (after giving
effect to any payments made on such Distribution Date) or, in the case of the
first Distribution Date, as of the Closing Date.
"Class A Monthly Principal" means, for any Distribution Date, the sum of
(a) the Class A Percentage of the Available Principal for such Distribution Date
and (b) the Class A Percentage of Realized Losses with respect to the related
Collection Period.
"Class A Principal Carryover Shortfall" means, for any Distribution Date,
the excess of Class A Monthly Principal for the preceding Distribution Date and
any outstanding Class A Principal Carryover Shortfall for such preceding
Distribution Date over the amount in respect of principal that is actually
deposited in the Class A Distribution Account on such preceding Distribution
Date.
"Class A Principal Distributable Amount" means, for any Distribution Date,
the sum of Class A Monthly Principal for such Distribution Date and, in the case
of any Distribution Date other than the initial Distribution Date, the Class A
Principal Carryover Shortfall for such Distribution Date. In addition, on the
Final Distribution Date, the Class A Principal Distributable Amount shall
include any additional amount required to reduce the outstanding aggregate
principal balance of the Class A Certificates to zero.
"Class B Interest Carryover Shortfall" means, (a) for the initial
Distribution Date, zero, and (b) for any other Distribution Date, the excess of
Class B Monthly Interest for the preceding Distribution Date and any outstanding
Class B Interest Carryover Shortfall for such preceding Distribution Date over
the amount in respect of interest that is actually deposited in the Class B
Distribution Account on such preceding Distribution Date, plus 30 days of
interest on such excess, to the extent permitted by law, at the Pass-Through
Rate.
"Class B Monthly Interest" means, for any Distribution Date, one-twelfth
of the Pass-Through Rate multiplied by the Class B Certificate Balance as of the
Distribution Date occurring in the preceding Collection Period (after giving
effect to any payments made on such Distribution Date) or, in the case of the
first Distribution Date, as of the Closing Date.
"Class B Monthly Principal" means, with respect to any Distribution Date,
the sum of (a) the Class B Percentage of the Available Principal for such
Distribution Date and (b) the Class B Percentage of Realized Losses with respect
to the related Collection Period.
"Class B Principal Carryover Shortfall" means, for any Distribution Date,
the excess of Class B Monthly Principal for the preceding Distribution Date and
any outstanding Class B Principal Carryover Shortfall for such preceding
Distribution Date over the amount in respect of principal that is actually
deposited in the Class B Distribution Account for such preceding Distribution
Date.
"Class B Principal Distributable Amount" means, for any Distribution Date,
the sum of Class B Monthly Principal for such Distribution Date and, in the case
of any Distribution Date other than the initial Distribution Date,
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the Class B Principal Carryover Shortfall for such Distribution Date. In
addition, on the Final Distribution Date, the Class B Principal Distributable
Amount will include any additional amount required to reduce the outstanding
aggregate principal balance of the Class B Certificates to zero.
"Liquidation Proceeds" means with respect to any Receivable (i) insurance
proceeds, (ii) the monies collected during a Collection Period from whatever
source on a Defaulted Receivable and (iii) proceeds of a Financed Vehicle sold
after repossession, in each case net of any liquidation expenses and payments
required by law to be remitted to the Obligor.
"Realized Losses" means, with respect to any Collection Period and for
each Receivable that became a Defaulted Receivable during such Collection
Period, the excess of the principal amount of such Receivable over Liquidation
Proceeds with respect to such Receivable, to the extent allocable to principal.
In the event that the Available Cash Collateral Amount has been reduced to
zero and, in the case of the Class A Certificateholders, the subordination of
the Class B Certificates is insufficient, the Certificateholders will bear
directly the credit and other risks associated with ownership of the
Receivables. In such a case, the amount available for distribution may be less
than that described above, and the Certificateholders may experience delay or
suffer losses as a result of, among other things, defaults or delinquencies by
the Obligors or previous extensions made by the Servicer. In addition, because
the market value of motor vehicles generally declines with age and because of
the difficulties in enforcing motor vehicle contracts described under "Certain
Legal Aspects of the Receivables" in the Prospectus, the Servicer may not
recover the entire amount owing under a Defaulted Receivable.
In such a case, the Certificateholders may suffer a corresponding loss.
As an administrative convenience, the Servicer will be permitted under
certain circumstances to make deposits of Advances and Purchase Amounts for, or
with respect to, a Collection Period net of distributions to be made to the
Servicer with respect to such Collection Period. The Servicer, however, will
account to the Trustee and to the Certificateholders as if all such deposits and
distributions were deposited and distributed separately. On each Distribution
Date the Servicer will also distribute to itself, to the extent not previously
netted, any reimbursements of Advances, the Servicing Fee, and the amount of any
Servicing Fee previously due but not paid, if any.
POOLING AND SERVICING AGREEMENT
Servicing Compensation and Payment of Expenses
The Servicer will be entitled to receive the Servicing Fee for each
Collection Period. The "Servicing Fee Rate" with respect to the Servicing Fee
for the Servicer will be 1% per annum and the Servicing Fee for any Distribution
Date shall equal an amount equal to the sum of (i) the product of the Servicing
Fee Rate divided by 12 and the Pool Balance as of the related Settlement Date
and (ii) Late Fees received for Obligors during such Collection Period and
Investment Earnings on amounts on deposit in the Collection Account; provided,
however, that from and after the Collection Period in which the Servicer fails
to deposit an Advance with respect to a Receivable (other than because such
Receivable has been declared a Defaulted Receivable), such investment income
will not be paid to the Servicer, but will be deposited in the Cash Collateral
Account or applied pursuant to the Loan Agreement.
The amount of the Servicing Fee (including the portion thereof
attributable to Late Fees) was determined in light of the duties of the Servicer
under the Agreements as well as with a view toward providing the Servicer with a
reasonable profit. The Servicing Fee (including such Late Fees) is comparable to
fees that would be paid to parties unaffiliated with the Bank. The Bank expects
that the Receivables will provide the Trust with funds in an amount sufficient
to pay the Servicing Fee to the Servicer and interest each month at the
Pass-Through Rate on the related Pool Balance to the Certificateholders. See
"Description of the Transfer and Servicing Agreements-Servicing Compensation and
Payment of Expenses" and "--Net Deposits" in the Prospectus.
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Servicing Procedures
The Servicer will service the Receivables and will make reasonable efforts
to collect all payments due with respect to the Receivables and, in a manner
consistent with the Agreement and with the terms of the Receivables, will follow
such collection and servicing procedures as it follows with respect to
comparable new or used automobile receivables that it services for itself or
others and that are consistent with prudent industry standards. Except as
otherwise specified in the Agreement, no extensions of, or other modifications
to, the Receivables will be made by the Servicer if such modifications would
have a material adverse effect on the interests of the Certificateholders. In
addition, among other things, the Agreement will provide that the Servicer may
not change the amount of (except with respect to a prepayment of a scheduled
payment that does not result in a deferral of any other scheduled payment), or
reschedule the Due Date of, any scheduled payment to a date more than 30 days
from the original Due Date, change the Contract Rate of, or extend any
Receivable or change any material term of a Receivable, except with respect to
certain unilateral changes provided by the terms of the Receivable or of the
Agreement or as required by law or court order; provided, however, that the
Servicer may grant extensions of the Due Date for a payment on any Receivable
that is in default, or if it determines that, absent such extension, a default
on the Receivables is reasonably foreseeable, and the Servicer would grant such
extension with respect to comparable new or used automobile receivables that it
services for itself, but only if (a) the Available Cash Collateral Amount is
greater than zero at the time of such extension, (b) the extension is for no
more than three months, (c) the total period of all credit-related extensions
granted on the Receivable will not exceed the number of months equal to the
number of whole years comprising the original term of the Receivable, (d) the
maturity of such Receivable would not be extended beyond the Collection Period
immediately preceding the Final Distribution Date and (e) the rescheduling or
extension would not modify the terms of such Receivable in such a manner as to
constitute a cancellation of such Receivable and the creation of a new
receivable for federal income tax purposes. In accordance with its normal and
customary servicing procedures, the Servicer also considers other criteria when
making credit-related extensions.
In the event that the Servicer fails to comply with the foregoing terms of
the Agreement, it will be required to purchase the affected Receivable for the
Purchase Amount as of the last day of the Collection Period on which it became
aware or receives written notice from the Trustee of such failure. The purchase
obligation will constitute the sole remedy available to the Certificateholders
or the Trustee for any such uncured breach.
The Bank will offer certain obligors or classes of obligors on an annual
basis a one month noncredit related extension of a regularly scheduled payment
otherwise due under a Receivable. The Agreement establishes criteria governing
such extensions.
See "Description of the Transfer and Servicing Agreements-Servicing
Procedures" in the Prospectus.
[Advances
With respect to any Distribution Date, the Servicer may, in its sole
discretion, make a payment (an "Advance") with respect to each Receivable (other
than a Defaulted Receivable) equal to the excess, if any, of (x) the product of
the principal balance of such Receivable as of the related Settlement Date and
one-twelfth of its Contract Rate, over (y) the interest actually received by the
Servicer with respect to such Receivable from the Obligor or from the payment of
the Repurchase Amount during or with respect to such Collection Period. The
Servicer may elect not to make any Advance with respect to a Receivable to the
extent that the Servicer, in its sole discretion, determines that such Advance
is not recoverable from subsequent payments on such Receivable or from demands
on the Cash Collateral Guaranty with respect to such Receivable. In the event
that the Servicer does not make an Advance, any Payment Deficiency resulting
therefrom will be funded by a demand under the Cash Collateral Guaranty and
application of amounts in the Cash Collateral Account.
To the extent that the amount set forth in clause (y) above plus amounts
demanded under the Cash Collateral Guaranty during or with respect to such
Collection Period and allocable to interest with respect to a Receivable is
greater than the amount set forth in clause (x) above with respect thereto, such
amount shall be distributed to the Servicer on the related Distribution Date to
reimburse the Servicer for previous unreimbursed
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Advances with respect to such Receivable. Any such reimbursement will only be
from accrued interest due from the Obligor under such Receivable.
The Servicer will deposit all Advances with respect to any Distribution
Date into the Collection Account on the related Deposit Date.]
The Cash Collateral Trustee
_____________________ is the Cash Collateral Trustee under the Trust
Agreement. Pursuant to the terms of the Trust Agreement, the Cash Collateral
Guaranty will be issued thereunder for the benefit of the Trustee, and the Cash
Collateral Account will be established and funded in order to secure the Cash
Collateral Guaranty. The Cash Collateral Guaranty will not be an obligation of
the Cash Collateral Trustee, but the Cash Collateral Trustee will honor demands
by the Trustee under the Cash Collateral Guaranty pursuant to the terms of the
Trust Agreement and the Cash Collateral Guaranty.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of certain United States ("U.S.")
federal income tax consequences relevant to the purchase, ownership and
disposition the Certificates. This summary is based upon the Internal Revenue
Code of 1986, as amended (the "Code"), the Treasury regulations promulgated
thereunder, administrative rulings or pronouncements and judicial decisions, all
as in effect on the date hereof and all of which are subject to change, possibly
retroactively. The following discussion does not deal with all aspects of U.S.
income taxation, nor does it address U.S. federal income tax consequences that
may be relevant to certain types of investors, such as banks, insurance
companies, dealers in securities, tax-exempt organizations or persons whose
functional currency is not the U.S. dollar, who may be subject to special
treatment under the Code. In addition, the following discussion does not address
the tax consequences of an investment in the Certificates under state and local
tax laws or foreign tax laws. Accordingly, investors should consult their own
tax advisors to determine the federal, state, local, and other tax consequences
that may be relevant to their purchase, ownership and disposition of the
Certificates based upon their particular facts and circumstances. Prospective
investors should note that no rulings have been or will be sought from the
Internal Revenue Service ("IRS") with respect to any of the U.S. federal income
tax consequences discussed herein and opinions of counsel are not binding on the
IRS or the courts. Thus, no assurance can be given that the IRS will not take
positions contrary to those described below. The opinions of Simpson Thacher &
Bartlett, special counsel to the Seller ("Federal Tax Counsel"), described
herein will be based upon certain representations and assumptions, including,
but not limited to, the assumption that all relevant parties will comply with
the terms of the Agreement and related documents.
Because the Certificates have certain features characteristic of
debt, the Certificates might be considered debt of the Seller or Trust. Any such
characterization generally would not result in materially adverse tax
consequences as compared to the tax consequences described below. The following
discussion assumes that (i) the Trust will be classified as a grantor trust and
(ii) the Certificateholders will be treated as owning a undivided beneficial
ownership interest in each Receivable and the proceeds thereof.
This summary is intended as an explanatory discussion of the
possible effects of the classification of the Trust as a grantor trust and not
as an association taxable as a corporation for federal income tax purposes or
investors generally and related tax matters affecting investors generally, but
does not purport to furnish information in the level of detail or with the
attention to the investor's specific tax circumstances that would be provided by
an investor's own tax adviser. Accordingly, each investor is advised to consult
its own tax advisers with regard to the tax consequences to it of investing in
the Certificates. An opinion of Federal Tax Counsel will be filed as an exhibit
to a Form 8-K filed in connection with the establishment of the Trust and the
issuance of the Certificates.
For purposes of the following discussion, except as otherwise
provided herein, the term "Certificateholder" refers to the beneficial owner of
a Certificate. In addition, the discussion below assumes that
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Certificateholders will hold their Certificates as "capital assets" (generally
property held for investment) within the meaning of Section 1221 of the Code.
Trust Classified as Grantor Trust
Tax Characterization of the Trust as a Grantor Trust. In the opinion
of Federal Tax Counsel, the Trust will be classified as a grantor trust and not
as an association taxable as a corporation for such purposes. Accordingly, for
U.S. federal income tax purposes, each Certificateholder will be treated as the
owner of a fractional undivided interest in each asset of the Trust and will be
treated as though it paid directly its share of all reasonable expenses paid by
the Trust.
Tax Consequences to Certificateholders. For U.S. federal income tax
purposes, the Seller has retained a fixed portion of the interest due on each
Receivable (the "Retained Yield") equal to the difference between (x) the
Contract Rate of such Receivable and (y) the sum of the Pass-Through Rate and
the Servicing Fee Rate. The Seller and the Certificateholders (by accepting a
beneficial interest in a Certificate) will agree to treat the Certificates as
ownership interests in the Receivables (other than the Retained Yield). The
Servicer and the Seller have represented that the Servicing Fee Rate and all
other amounts paid to, or retained by, the Servicer represents a reasonable
servicing fee, and accordingly, the Trustee and the Servicer intend to treat the
Retained Yield as being equal to the excess of the Contract Rate of each
Receivable over the sum of the Pass-Through Rate and the Servicing Fee Rate. The
Retained Yield will be treated as "stripped coupons" within the meaning of
Section 1286 of the Code and the Receivables sold to the Trust will be treated
as "stripped bonds."
Accordingly, the Certificates will represent an ownership interest
in stripped bonds and each Certificateholder will be treated as owning its pro
rata share of such stripped bonds. These stripped bonds will be subject to the
OID rules of the Code. Consequently, the tax treatment of a Certificateholder
will depend upon whether the amount of OID on a Certificate is less than a
statutorily defined de minimis amount.
Under Treasury regulations issued under Section 1286 of the Code
(the "Regulations"), the amount of OID on a Receivable treated as a "stripped
bond" generally will be considered de minimis if it is less than 1/4 of one
percent for each full year of weighted average life remaining after the purchase
date until the maturity of the Receivable, although it is not clear whether
expected prepayments are taken into account. It is anticipated that the portion
of the interest on each Receivable payable to the Certificateholders will be
treated as "qualified stated interest". As a result, the amount of OID on a
Receivable should equal the amount by which the price at which a
Certificateholder is deemed to have acquired an interest in the Receivable (the
"Purchase Price") is less than the portion of the remaining principal balance of
the Receivable allocable to the interest acquired.
If the amount of OID is de minimis under the rule set forth above,
the Certificates would not be treated as having been issued with OID.
Accordingly, each Certificateholder would be required to report on its U.S.
federal income tax return its share of the gross income of the Trust, including
interest and certain other charges accrued on the Receivables and any gain
realized upon the collection or disposition of the Receivables (but not
including any portion of the Retained Yield). Such gross income attributable to
interest on the Receivables would exceed the Pass-Through Rate by an amount
equal to the Certificateholder's share of the expenses of the Trust for the
period during which it owns a Certificate. The Certificateholder would be
entitled to deduct its share of the expenses of the Trust to the extent
described below.
Assuming that OID on each Receivable is de minimis, a
Certificateholder would report its share of the Trust's income under its usual
method of accounting. Accordingly, interest would be includible in a
Certificateholder's gross income when it accrues on the Receivables, or, in the
case of Certificateholders who are cash method taxpayers, when received by the
Servicer on behalf of the Certificateholders. Because (i) interest accrues on
the Receivables over differing monthly periods and is paid in arrears and (ii)
interest collected on Receivables generally is paid to Certificateholders in the
following month, the amount of interest accruing to a Certificateholder during
any calendar month generally will not equal the interest distributed in that
month. The actual amount of any discount on a Receivable would be includible in
income as principal payments are received on the Receivables.
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If the OID on a Receivable is not treated as being de minimis, in
addition to the amounts described above, a Certificateholder will be required to
include in income any OID as it accrues on a daily basis, regardless of when
cash payments are received, using a method reflecting a constant yield on the
Receivable. It is possible that the IRS could require use of a prepayment
assumption in computing the yield of a Receivable. If a Receivable is deemed to
be acquired by a Certificateholder at a significant discount, such treatment
could accelerate the accrual of income by a Certificateholder.
The Trustee intends to account for OID, if any, reportable by
Certificateholders by reference to the price paid for a Certificate by an
initial purchaser, although the amount of OID will differ for subsequent
purchasers. Such subsequent purchasers should consult their tax advisers
regarding the proper calculation of OID on the interest in Receivables
represented by a Certificate. In addition, the Trustee intends to compute OID on
Certificates by aggregating all payments on the Receivables allocable to the
Certificateholders (not including the Retained Yield), and treating the portion
of all payments on the Receivables allocable to Certificateholders as a single
obligation. The IRS could require, instead, that the computation be performed on
a Receivable-by-Receivable basis. Any such recalculation could adversely affect
the timing and character of a Certificateholder's income.
In the event that a Receivable is treated as purchased at a premium
(i.e., its Purchase Price exceeds the portion of the remaining principal balance
of such Receivable allocable to the Certificateholder), such premium will be
amortizable by the Certificateholder as an offset to interest income (with a
corresponding reduction in the Certificateholder's basis) under a constant yield
method over the term of the Receivable if an election under Section 171 of the
Code is made with respect to the interests in the Receivables represented by the
Certificates or was previously in effect. Any such election also will apply to
all debt instruments held by the Certificateholder during the year in which the
election is made and all debt instruments thereafter acquired.
A Certificateholder will be entitled to deduct, consistent with its method
of accounting, its pro rata share of reasonable servicing fees and other fees
paid or incurred by the Trust as provided in Section 162 or 212 of the Code. If
a Certificateholder is an individual, estate or trust, the deduction for such
Certificateholder's share of such fees will be allowed only to the extent that
all such Certificateholder's miscellaneous itemized deductions, including such
Certificateholder's share of such fees, exceed 2% of such Certificateholder's
adjusted gross income. In addition, in the case of Certificateholder's who are
individuals, certain otherwise allowable itemized deduction will be reduced, but
not by more than 80%, by an amount equal to 3% of such Certificateholder's
adjusted gross income in excess of a statutorily defined threshold ($117,950 in
the case of a married couple filing jointly for the taxable year beginning
1996). Because the Servicer will not report to Certificateholders the amount of
servicing compensation that is attributable to the Servicer's right to receive
certain fees collected from Obligors and interest earned on Collections, a
Certificateholder subject to the foregoing limitations may effectively
underreport its net taxable income.
Effect of Subordination. If the Class B Certificateholders received
distributions of less than their share of the Trust's receipts of principal or
interest (the "Shortfall Amount") due to the subordination of the Class B
Certificates, holders of Class B Certificates would probably be treated for
Federal income tax purposes as if they had (1) received as distributions their
full share of such receipts and (2) paid over to the Class A Certificateholders
an amount equal to such Shortfall Amount, and (3) retained the right to
reimbursement of such amounts to the extent of future collections otherwise
available for deposit in the Cash Collateral Account.
Under this analysis, (1) Class B Certificateholders would be
required to accrue as current income any interest or OID income of the Trust
that was a component of the Shortfall Amount, even though such amount was in
fact paid to the Class A Certificateholders and (2) a loss would only be allowed
to the Class B Certificateholders when their right to receive reimbursement of
such Shortfall Amount became worthless (i.e., when it becomes clear that that
amount will not be available from any source to reimburse such loss), and (3)
reimbursement of such Shortfall Amount prior to such a claim of worthlessness
would not be taxable income to Class B Certificateholders because such amount
was previously included in income. This treatment should not significantly
affect the inclusion of income for Class B Certificateholders on the accrual
method of accounting, but could accelerate inclusion of income to Class B
Certificateholders on the cash method of accounting by, in effect, placing them
on the accrual method. Moreover, the character and timing of loss deductions is
unclear.
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Sale of a Certificate. If a Certificate is sold, gain or loss will
be recognized equal to the difference between the amount realized by the
Certificateholder on the sale and the Certificateholder's adjusted tax basis in
the Receivables and any other assets held by the Trust. A Certificateholder's
adjusted tax basis will equal the Certificateholder's cost for the Certificate,
increased by any discount previously included in income, and decreased by any
deduction previously allowed for accrued premium and by the amount of principal
payments previously received on the Receivables. Any gain or loss not
attributable to accrued interest will be treated as long-term capital gain or
loss if the Certificate was held as a capital asset for more than one year. The
deductibility of capital losses is subject to limitations.
Foreign Certificateholders. For purposes of this discussion, the
term "Foreign Investor" means any person other than (i) a citizen or resident of
the United States, (ii) a corporation, partnership or other entity organized in
or under the laws of the United States or any political subdivision thereof or
(iii) an estate or trust the income of which is includible in gross income for
U.S. federal income tax purposes regardless of its source.
Interest on Receivables, including OID, paid to a Foreign Investor
will be subject to U.S. withholding tax at a rate of 30% unless (i) such
interest income is "effectively connected" with the conduct by such Foreign
Investor of a trade or business carried on in the United States and the investor
evidences this fact by delivering an IRS Form 4224, (ii) the interest income is
exempt from (or subject to a reduced rate of) U.S. withholding tax under an
applicable U.S. tax treaty and the Foreign Investor claims this exemption (or
reduced rate) by delivering an IRS Form 1001, or (iii) the Foreign Investor and
each securities clearing organization, bank, or other financial institution that
holds the Certificates on behalf of such Foreign Investor in the ordinary course
of its trade or business in the chain between the Foreign Investor and the U.S.
person otherwise required to withhold the U.S. tax, complies with the applicable
identification requirements described below (and the Foreign Investor does not
actually or constructively own 10% or more of the voting stock of the Seller or
any of its affiliates and is not a "controlled foreign corporation" with respect
to the Seller or any of its affiliates (or the Certificateholder of such an
interest)). The identification requirement described in (iii) above generally
will be satisfied if there is delivered to a securities clearing organization an
IRS Form W-8 signed under penalties of perjury by the Certificateholder, stating
that the Certificateholder is not a U.S. person and providing such
Certificateholder's name and address; provided that in any such case (x) the
applicable form is delivered pursuant to applicable procedures and is properly
transmitted to the United States entity otherwise required to withhold tax and
(y) none of the entities receiving the form has actual knowledge that the
Certificateholder is a U.S. person.
If a Foreign Investor is engaged in the conduct of a trade or
business in the United States and the interest income (including OID) allocable
to the Certificates held by such Foreign Investor is effectively connected with
the conduct of such trade or business, such interest income, although exempt
from the U.S. withholding tax described above, will be subject to U.S. federal
income tax on a net income basis in the same manner as if the Foreign Investor
were a U.S. person. In addition, if the Foreign Investor is a foreign
corporation, it also may be subject to a U.S. "branch profits tax" equal to 30%
of its effectively connected earnings and profits for the taxable year (subject
to adjustments).
A Foreign Investor generally will not be subject to U.S. federal
income tax on gain realized upon the sale, exchange or redemption of a
Certificate, provided that (i) such gain is not effectively connected with the
conduct of a trade or business in the United States, (ii) in the case of a
Foreign Investor that is an individual, such individual is not present in the
U.S. for 183 days or more during the taxable year in which such sale, exchange
or redemption occurs or certain other conditions are not met, and (iii) in the
case of gain representing accrued interest, the conditions described above are
satisfied.
Backup Withholding. Payments made on the Certificates and proceeds
from the sale of Certificates generally will not be subject to 31% U.S. backup
withholding tax unless the Certificateholder fails to comply with certain
reporting procedures and is not an exempt recipient under applicable provisions
of the Code.
CERTAIN STATE TAX CONSEQUENCES
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The above discussion does not address the tax treatment of the
Trust, the Certificates or Certificateholders under any state tax laws.
Prospective investors are urged to consult with their own tax advisors regarding
the state tax treatment of the Trust as well as any state tax consequences to
them of purchasing, holding and disposing of Certificates.
ERISA CONSIDERATIONS
General
ERISA and Section 4975 of the Code impose certain requirements on employee
benefit plans and certain other plans and arrangements, including individual
retirement accounts and annuities, Keogh plans and certain collective investment
funds or insurance company general or separate accounts in which such plans,
accounts or arrangements are invested, that are subject to the fiduciary
responsibility provisions of ERISA and/or Section 4975 of the Code
(collectively, "Plans"), and on persons who are fiduciaries with respect to
Plans, in connection with the investment of "plan assets" of any Plan ("Plan
Assets"). ERISA generally imposes on Plan fiduciaries certain general fiduciary
requirements, including those of investment prudence and diversification and the
requirement that a Plan's investments be made in accordance with the documents
governing the Plan. Generally, any person who has discretionary authority or
control respecting the management or disposition of Plan Assets, and any person
who provides investment advice with respect to such assets for a fee, is a
fiduciary with respect to such Plan Assets.
The U.S. Department of Labor ("DOL") has issued a final regulation (29
C.F.R. Section 2510.3-101) concerning the definition of what constitutes the
Plan Assets of a Plan (the "Plan Asset Regulation"). This regulation provides
that, as a general rule, the underlying assets and properties of corporations,
partnerships, grantor trusts and certain other entities in which a Plan makes an
"equity" investment will be deemed, for purposes of ERISA and Section 4975 of
the Code, to be assets of the investing Plan unless certain exceptions set forth
in the Plan Asset Regulation apply. Accordingly, if a Plan purchases the
Certificates, the Trust could be deemed to hold Plan Assets unless one of the
exceptions under the Plan Assets Regulation is applicable to the Trust.
Under the terms of the Plan Asset Regulation, if the Trust were deemed to
hold Plan Assets by reason of a Plan's investment in a Certificate, such Plan
Assets would include an undivided interest in the Trust and Receivables
underlying assets of the Trust, and the persons providing services with respect
to the assets of the Trust, including the Receivables, would be subject to the
fiduciary responsibility provisions of ERISA and the prohibited transaction
provisions of ERISA and Section 4975 of the Code with respect to transactions
involving such assets. Absent an applicable statutory, regulatory or
administrative exemption, such transactions could give rise to a violation of
the prohibited transaction rules, resulting in the imposition of an excise tax
and other liabilities under ERISA and Section 4975 of the Code.
Class A Certificates
The DOL has granted to _____________________, the managing underwriter, an
administrative exemption, Prohibited Transaction Exemption [____] (Federal
Register ____________ __, 19____) (the "Exemption"), from certain of the
prohibited transaction rules of ERISA and Section 4975 of the Code with respect
to the initial purchase, the holding and the subsequent resale by Plans of
certificates representing interests in asset-backed pass-through trusts that
consist of certain receivables, loans and other obligations that meet the
conditions and requirements of the Exemption. The receivables covered by the
Exemption include motor vehicle installment obligations and purchase money loans
such as the Receivables. The Exemption will apply to the acquisition, holding
and resale of the Class A Certificates by a Plan, provided that certain
conditions (some of which are described below) are met.
Among the conditions which must be satisfied for the Exemption to apply
are the following:
(1) The acquisition of the Class A Certificates by a Plan is on terms
(including the price for the Certificates) that are at least as
favorable to the Plan as they would be in an arm's-length
transaction with an unrelated party;
S-25
(2) The rights and interests evidenced by the Class A Certificates
acquired by the Plan are not subordinated to the rights and
interests evidenced by other Certificates issued by the Trust;
(3) The Class A Certificates acquired by the Plan have received a rating
at the time of such acquisition that is in one of the three highest
generic rating categories from either S&P, Moody's, Duff & Phelps
Inc. or Fitch Investors Service L.P.
(4) The sum of all payments made to the Underwriters in connection with
the distribution of the Class A Certificates represents not more
than reasonable compensation for underwriting the Class A
Certificates; the sum of all payments made to and retained by the
Seller pursuant to the sale of the Receivables to the Trust
represents not more than the fair market value of such Receivables;
and the sum of all payments made to and retained by the Servicer
represents not more than reasonable compensation for the Servicer's
services under the Agreement and reimbursement of the Servicer's
reasonable expenses in connection therewith;
(5) The Trustee must not be an affiliate of any other member of the
Restricted Group (as defined below); and
(6) The Plan investing in the Class A Certificates is an "accredited
investor" as contained in Rule 501(a)(1) of Regulation D of the
Securities and Exchange Commission under the Securities Act of 1933,
as amended.
Moreover, the Exemption provides relief from certain self-dealing/conflict
of interest prohibited transaction that may occur when a Plan fiduciary that is
an obligor with respect to the Receivables held in the Trust (or affiliate of
such obligor) causes a Plan to acquire Class A Certificates issued by the Trust,
provided that, among other requirements (i) in the case of an acquisition in
connection with the initial issuance of Class A Certificates, at least 50% of
each class of Class A Certificates in which Plans have invested is acquired by
persons independent of the Restricted Group and at least 50% of the aggregate
interest in the Trust is acquired by persons independent of the Restricted
Group; (ii) such obligor is an obligor with respect to 5% or less of the fair
market value of the obligations contained in the Trust; (iii) the Plan's
investment in Class A Certificates does not exceed 25% of all of the Class A
Certificates outstanding at the time of the acquisition; and (iv) immediately
after the acquisition, no more than 25% of the assets of the Plan are invested
in certificates representing an interest in one or more trusts containing assets
sold or serviced by the same entity. The Exemption, however, does not apply to
the acquisition and holding of the Class A Certificates by Plans sponsored by
the Seller, the Underwriters, the Trustee, the Servicer, any obligor with
respect to Receivables included in the Trust constituting more than 5% of the
aggregate unamortized principal balance of the assets in the Trust, or any
affiliate of such parties (the "Restricted Group").
As of the date hereof, no obligor with respect to Receivables included in
the Trust is an obligor with respect to more than 5% of the aggregate
unamortized principal balance of the assets of the Trust.
Class B Certificates
Because the Class B Certificates are subordinated to the Class A
Certificates, the Exemption will not apply to the acquisition of the Class B
Certificates and accordingly, the Class B Certificates may not be purchased by,
on behalf of, or with, Plan Assets of any Plan. In addition, each purchaser of
the Class B Certificates will be deemed to have represented that it is neither a
Plan nor purchasing the Class B Certificates on behalf of, or with, Plan Assets
of a Plan.
The foregoing restrictions shall not apply to acquisitions of Certificates
with assets of the general account of an insurance company, to the extent
permitted under Section 401(c) of ERISA.
S-26
Any fiduciary or other Plan investor considering whether to purchase any
Certificates on behalf of or with Plan Assets of any Plan should consult with
its counsel and refer to this Prospectus Supplement and the Prospectus for
guidance regarding the ERISA Considerations applicable to the Certificates
offered hereby.
For further information see "ERISA Considerations" in the Prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in an underwriting
agreement, the Seller has agreed to sell to the Underwriter, and the Underwriter
has agreed to purchase, the Certificates. [The Underwriter has agreed to
reimburse the Seller for certain expenses in connection with the issuance and
distribution of the Securities.]
The Seller has been advised by the Underwriter that it proposes initially
to offer the Certificates to the public at the prices set forth on the cover
page hereof, and to certain dealers at such prices less an initial concession
not in excess of _____% of the principal amount of the Class A Certificates and
____% of the principal amount of the Class B Certificates. The Underwriter may
allow, and such dealers may reallow, concessions not in excess of ___% of the
principal amount of the Class A Certificates and ____% of the principal amount
of the Class B Certificates to certain brokers and dealers. After the initial
public offering, the public offering price and other selling terms may be
changed by the Underwriter.
This Prospectus Supplement and Prospectus may be used by Chase Securities
Inc., an affiliate of the Seller and a subsidiary of The Chase Manhattan
Corporation, in connection with offers and sales related to market-making
transactions in the Certificates. Chase Securities Inc. may act as principal or
agent in such transactions. Such sales will be made at prices related to
prevailing market prices at the time of sale. Chase Securities Inc. has no
obligation to make a market in the Certificates, and it may discontinue any such
market-making activities at any time without notice, in its sole discretion.
[Chase Securities Inc. is among the Underwriters participating in the initial
distribution of the Certificates.]
[In the ordinary course of their respective businesses, each Underwriter
and its affiliates have engaged and may in the future engage in commercial
banking and investment banking transactions with the Seller.]
The Seller will indemnify the Underwriter against certain liabilities,
including liabilities under the Securities Act of 1933, as amended, or
contribute to payments the Underwriter may be required to make in respect
thereof.
LEGAL MATTERS
Certain legal matters relating to the issuance of the Certificates will be
passed upon for the Seller by Simpson Thacher & Bartlett (a partnership that
includes professional corporations), New York, New York and certain other legal
matters will be passed upon for the Seller by ___________________, Esq., a
____________ of the Bank, and for the Underwriter by Orrick, Herrington &
Sutcliffe, New York, New York. From time to time Simpson Thacher & Bartlett and
Orrick, Herrington & Sutcliffe will provide legal services to the Seller and its
affiliates.
S-27
INDEX OF TERMS
Advance...................................................................S-20
Aggregate Net Losses......................................................S-16
Agreement..................................................................S-1
Available Cash Collateral Amount..........................................S-16
Available Interest........................................................S-17
Available Principal.......................................................S-17
Bank.......................................................................S-1
Business Day...............................................................S-2
Cash Collateral Account...................................................S-15
Cash Collateral Depositor.................................................S-15
Cash Collateral Guaranty..................................................S-15
Cash Collateral Trust 199_-_..............................................S-16
Cash Collateral Trustee...................................................S-15
Certificateholder.........................................................S-21
Certificates..............................................................Cover
Charge-off Rate...........................................................S-16
Chase.....................................................................S-15
Chase USA..................................................................S-1
Class A Certificate Balance................................................S-2
Class A Certificateholders.................................................S-2
Class A Certificates.........................................................i
Class A Distribution Account..............................................S-15
Class A Interest Carryover Shortfall......................................S-18
Class A Interest Distributable Amount.....................................S-18
Class A Monthly Interest..................................................S-18
Class A Monthly Principal.................................................S-18
Class A Percentage.........................................................S-1
Class A Principal Carryover Shortfall.....................................S-18
Class A Principal Distributable Amount....................................S-18
Class B Certificate Balance................................................S-2
Class B Certificateholders.................................................S-2
Class B Certificates.........................................................i
Class B Distribution Account..............................................S-15
Class B Interest Carryover Shortfall......................................S-18
Class B Monthly Interest..................................................S-18
Class B Monthly Principal.................................................S-18
Class B Percentage.........................................................S-1
Class B Principal Carryover Shortfall.....................................S-18
Class B Principal Distributable Amount....................................S-18
Closing Date................................................................ii
Code......................................................................S-21
Collection Account........................................................S-15
Collection Period..........................................................S-3
Contract Rate..............................................................S-9
Cutoff Date..................................................................i
Delinquency Percentage....................................................S-16
DOL.......................................................................S-25
DTC.........................................................................ii
Exemption.................................................................S-25
FDIC.........................................................................i
Federal Tax Counsel.......................................................S-21
Final Distribution Date......................................................i
Financed Vehicles..........................................................S-8
Initial Cash Collateral Amount............................................S-15
IRS.......................................................................S-21
Issuer.....................................................................S-1
Liquidation Proceeds......................................................S-19
Loan Agreement............................................................S-15
Paying Agent..............................................................S-15
Payment Deficiencies......................................................S-16
Plan Asset Regulation.....................................................S-25
Plan Assets...............................................................S-25
Plans.....................................................................S-25
Purchase Price............................................................S-22
Rating Agency..............................................................S-6
Realized Losses...........................................................S-19
Receivables Pool...........................................................S-8
Record Date................................................................S-2
Regulations...............................................................S-22
Restricted Group..........................................................S-26
Retained Yield............................................................S-22
S-28
Seller.....................................................................S-1
Servicer...................................................................S-1
Servicing Fee Rate........................................................S-19
Settlement Date............................................................S-3
Shortfall Amount...........................................................S-8
Trust......................................................................S-1
Trust Agreement...........................................................S-15
Trustee....................................................................S-1
Underwriter..................................................................i
U.S. .....................................................................S-21
S-29
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Chase Manhattan
Grantor Trust 199_-_ Automobile Pass-Through Certificates, Class A and Class B
(collectively, the "Global Securities") to be issued will be available only in
book-entry form. Investors in the Global Securities may hold such Global
Securities through any of the Depository Trust Company ("DTC"), CEDEL or
Euroclear. The Global Securities will be tradeable as home market instruments in
both the European and U.S. domestic markets. Initial settlement and all
secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities
through CEDEL and Euroclear will be conducted in the ordinary way in accordance
with their normal rules and operating procedures and in accordance with
conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between CEDEL or Euroclear and DTC
Participants holding Certificates will be effected on a delivery-against-payment
basis through the respective Depositaries of CEDEL and Euroclear (in such
capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing corporation
organizations or their participants.
Initial Settlement
All Global Securities will be held in book-entry form by DTC in the name
of Cede & Co. as nominee or DTC. Investors' interests in the Global Securities
will be represented through financial institutions acting on their behalf as
direct and indirect Participants in DTC. As a result, CEDEL and Euroclear will
hold positions on behalf of their participants through their respective
Depositaries, which in turn will hold such positions in accounts as DTC
Participants.
Investors electing to hold their Global Securities through DTC will follow
the settlement practice applicable to U.S. corporate debt obligations. Investor
securities custody accounts will be credited with the holdings against payment
in same-day funds on the settlement date.
Investors electing to hold their Global Securities through CEDEL or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global Securities will be credited to the
securities custody accounts on the settlement date against payment in same-day
funds.
Secondary Market Trading
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to U.S. corporate
debt obligations in same-day funds.
Trading between CEDEL and/or Euroclear Participants. Secondary market
trading between CEDEL Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
Trading between DTC seller and CEDEL or Euroclear purchaser. When Global
Securities are to be transferred from the account of a DTC Participant to the
account of a CEDEL Participant or a Euroclear Participant, the purchaser will
send instructions to CEDEL, or Euroclear through a CEDEL Participant or
Euroclear Participant at least one business day prior to settlement. CEDEL or
Euroclear will instruct the respective Depositary to receive the Global
Securities against payment. Payment will include interest accrued on the Global
Securities from and including the last coupon payment date to and excluding the
settlement date. Payment will then be made by the respective Depositary to the
DTC Participant's account against delivery of the Global Securities. After
settlement has been completed, the Global Securities will be credited to the
respective clearing system and by the clearing system, in accordance with its
usual procedures, to the CEDEL Participant's or Euroclear Participant's account.
The Global Securities credit will appear the next day (European time) and the
cash debit will be backed-valued to, and the interest on the Global Securities
will accrue from, the value date (which would be the preceding day when
settlement occurred in New York). If settlement is not completed on the intended
value date (i.e., the trade fails), the CEDEL or Euroclear cash debit will be
valued instead as of the actual settlement date.
CEDEL Participants and Euroclear Participants will need to make available
to the respective clearing systems the funds necessary to process same-day funds
settlement. The most direct means of doing so is to preposition funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within CEDEL or Euroclear. Under this approach,
they may take on credit exposure to CEDEL or Euroclear until the Global
Securities are credited to their accounts one day later.
As an alternative, if CEDEL or Euroclear has extended a line of credit to
them, CEDEL Participants or Euroclear Participants can elect not to preposition
funds and allow that credit line to be drawn upon the finance settlement. Under
this procedure, CEDEL Participants or Euroclear Participants purchasing Global
Securities would incur overdraft charges for one day, assuming they cleared the
overdraft when the Global Securities were credited to their accounts. However,
interest on the Global Securities would accrue from the value date. Therefore,
in many cases the investment income on the Global Securities earned during the
one-day period may substantially reduce or offset the amount of such overdraft
charges, although this result will depend on each CEDEL Participant's or
Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities to
the respective Depositary for the benefit of CEDEL Participants or Euroclear
Participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC Participant a cross-market transaction will
settle no differently than a trade between two DTC Participants.
Trading between CEDEL or Euroclear seller and DTC purchaser. Due to time
zone differences in their favor, CEDEL Participants and Euroclear Participants
may employ their customary procedures for transactions in which Global
Securities are to be transferred by the respective clearing system, through the
respective Depositary, to a DTC Participant. The seller will send instructions
to CEDEL or Euroclear through a CEDEL Participant or Euroclear Participant at
least one business day prior to settlement. In these cases, CEDEL or Euroclear
will instruct the respective Depositary, as appropriate, to deliver the bonds to
the DTC Participant's account against payment. Payment will include interest
accrued on the Global Securities from and including the last coupon payment date
to and excluding the settlement date. The payment will then be reflected in the
account of the CEDEL Participant or Euroclear Participant the following day, and
receipt of the cash proceeds in the CEDEL Participant's or Euroclear
Participant's account would be back-valued to the value date (which would be the
preceding day, when settlement occurred in New York). Should the CEDEL
Participant or Euroclear Participant have a line of credit with its respective
clearing system and elect to be in debit in anticipation of receipt of the sale
proceeds in its account, the back-valuation will extinguish any overdraft
charges incurred over that one-day period. If settlement is not completed on the
intended value date (i.e., the trade fails), receipt of the cash proceeds in the
CEDEL Participant's or Euroclear Participant's account would instead be valued
as of the actual settlement date.
S-A-2
Finally, day traders that use CEDEL or Euroclear and that purchase Global
Securities from DTC Participants for delivery to CEDEL Participants or Euroclear
Participants should note that these trades would automatically fail on the sale
side unless affirmative action were taken. At least three techniques should be
readily available to eliminate this potential problem:
(a) borrowing through CEDEL or Euroclear for one day (until the
purchase side of the day trade is reflected in their CEDEL or Euroclear
accounts) in accordance with the clearing system's custom procedures;
(b) borrowing the Global Securities in the U.S. from a DTC
Participant no later than one day prior to settlement, which would give
the Global Securities sufficient time to be reflected in their CEDEL
Euroclear account in order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the
trade so that the value date for the purchase from the DTC Participant is
at least one day prior to the value date for the sale to the CEDEL
Participant or Euroclear Participant.
Certain U.S. Federal Income Tax Documentation Requirements
A beneficial owner of Global Securities holding securities through CEDEL
or Euroclear (or through DTC if the holder has an address outside the U.S.) will
be subject to the 30% U.S. withholding tax that generally applies to payments of
interest (including original issue discount) on registered debt issued by U.S.
Persons, unless (i) each clearing system, bank or other financial institution
that holds customers' securities in the ordinary course of its trade or business
in the chain of intermediaries between such beneficial owner and the U.S. entity
required to withhold tax complies with applicable certification requirements and
(ii) such beneficial owner takes one of the following steps to obtain an
exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of
Certificates that are non-U.S. Persons can obtain a complete exemption from the
withholding tax by filing a signed Form W-8 (Certificate of Foreign Status). If
the information shown on Form W-8 changes, a new Form W-8 must be filed within
30 days of such change.
Exemption for non-U.S. Persons with effectively connected income (Form
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in the United
States).
Exemption or reduced rate for non-U.S. Persons resident in treaty
countries (Form 1001). Non-U.S. Persons that are Certificate Owners residing in
a country that has a tax treaty with the United States can obtain an exemption
or reduced tax rate (depending on the treaty terms) by filing Form 1001
(Ownership, Exemption of Reduced Rate Certificate). If the treaty provides only
for a reduced rate, withholding tax will be imposed at that rate unless the
filer alternatively files Form W-8. Form 1001 may be filed by the Certificate
Owner or his agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The Certificate Owner of a
Global Security or, in the case of a Form 1001 or a Form 4224 filer, his agent,
files by submitting the appropriate form to the person through whom it holds
(the clearing agency, in the case of persons holding directly on the books of
the clearing agency). Form W-8 and Form 1001 are effective for three calendar
years and Form 4224 is effective for one calendar year.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States or any political subdivision thereof or (iii) an estate
S-A-3
or trust the income of which is includible in gross income for United States tax
purposes, regardless of its source. This summary does not deal with all aspects
of U.S. Federal income tax withholding that may be relevant to foreign holders
of the Global Securities. Investors are advised to consult their own tax
advisors for specific tax advice concerning their holding and disposing of the
Global Securities.
No dealer, salesperson or other individual has been authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this Prospectus in connection with this offer made
by this Prospectus and, if given or made, such information or representations
must not be relied upon as having been authorized by Chase Manhattan Bank USA,
N.A.) or the Underwriter. Neither the delivery of this Prospectus nor any sale
made hereunder shall under any circumstance create an implication that there has
been no change in the affairs of Chase Manhattan Bank USA, N.A.) or the
Receivables since the date thereof. This Prospectus does not constitute an offer
or solicitation by anyone in any state in which such offer or solicitation is
not authorized or in which the person making such offer or solicitation is not
qualified to do so or to anyone to whom it is unlawful to make such offer or
solicitation.
S-A-4
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus Supplement and the accompanying Prospectus shall not
constitute an offer to sell or the solicitation of an offer to buy nor shall
there be any sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED AUGUST 28, 1996
PROSPECTUS SUPPLEMENT
(To Prospectus dated ________________, 199__)
[$------------]
CHASE MANHATTAN AUTO OWNER TRUST 199__-__
$___________ Class A-1 ___ % Asset Backed Notes
$___________ Class A-2 ___ % Asset Backed Notes
$___________ ___ % Asset Backed Certificates
Chase Manhattan Bank USA, N.A.
Seller and Servicer
The Chase Manhattan Auto Owner Trust 199_-_ (the "Trust") will be formed
pursuant to a Trust Agreement, to be dated as of ______________, 199___, among
Chase Manhattan Bank USA, N.A. (the "Seller"), [_____________] [the "General
Partner") and ___________________, as Owner Trustee. The Trust will issue
$________ aggregate principal amount of Class A-1 ___% Asset Backed Notes (the
"Class A-1 Notes"), and $_________ aggregate principal amount of Class A-2 ____%
Asset Backed Notes (the "Class A-2 Notes" and, together with the Class A-1
Notes, the "Notes") pursuant to an Indenture to be dated as of ______________,
199___, between the Trust and __________________, as Indenture Trustee. The
Trust will also issue $_____________ aggregate principal amount of ___% Asset
Backed Certificates (the "Certificates" and, together with the Notes,
(continued on following page)
There currently is no secondary market for the Securities and there is no
assurance that one will develop.
The Underwriter expects, but is not obligated, to make a market in the
Securities, and there is no assurance that any such market will develop or
continue.
THE NOTES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES REPRESENT BENEFICIAL
INTERESTS IN, THE TRUST ONLY AND DO NOT REPRESENT OBLIGATIONS OF OR INTERESTS IN
CHASE MANHATTAN BANK USA, N.A., THE CHASE MANHATTAN BANK, OR ANY OF THEIR
AFFILIATES. NONE OF THE NOTES OR CERTIFICATES ARE DEPOSITS AND NONE OF THE NOTES
OR CERTIFICATES ARE INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (THE
"FDIC"). THE RECEIVABLES ARE NOT INSURED OR GUARANTEED BY THE FDIC OR ANY OTHER
GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Prospective investors should consider, among other things, the information set
forth under the heading "Risk Factors" in this Prospectus Supplement commencing
on page S-10 and in the accompanying Prospectus.
=================================================================================================
Underwriting Discount
Price to Public(1) and Commissions Proceeds to the Seller(1)(2)
- -------------------------------------------------------------------------------------------------
Per Class A-1 Note.... % % %
- -------------------------------------------------------------------------------------------------
Per Class A-2 Note.... % % %
- -------------------------------------------------------------------------------------------------
Per Certificate....... % % %
- -------------------------------------------------------------------------------------------------
Total $ $ $
=================================================================================================
(1) Plus accrued interest, if any, from __________, 199___.
(2) Before deducting expenses, estimated to be $_______.
[This Prospectus Supplement and the accompanying Prospectus may be used by
Chase Securities Inc., an affiliate of the Seller and a subsidiary of The Chase
Manhattan Corporation (the "Underwriter"), in connection with offers and sales
related to market-making transactions in the Notes and the Certificates. The
Underwriter may act as principal or agent in such transactions. Such sales will
be made at prices related to prevailing market prices at the time of sale.]
The Notes and Certificates are being offered by the Underwriter, subject
to prior sale, when, as and if issued to and accepted by the Underwriter,
subject to approval of certain legal matters by counsel to the Underwriter. The
Underwriter reserves the right to reject orders in whole or in part. It is
expected that delivery of the Notes and the Certificates will be made in
book-entry form on or about the Closing Date through the facilities of The
Depository Trust Company on or about ____________, 199_ (the "Closing Date").
[Underwriter]
The date of this Prospectus Supplement is _____________, 199___.
(continued from preceding page)
the "Securities"). The assets of the Trust will include a pool of retail
installment sales contracts secured by new or used automobiles or light-duty
trucks (the "Receivables"), including certain monies due [or received]
thereunder on and after the Cutoff Date (as defined herein) and security
interests in the vehicles financed thereby, transferred to the Trust by the
Seller on or prior to the Closing Date (as defined herein). The Notes will be
secured by the assets of the Trust pursuant to the Indenture.
Interest on all classes of Notes will accrue at the fixed per annum
interest rates specified above. Interest on the Notes will generally be payable
on the __th day of each month (each, a "Payment Date"), commencing ________,
199___.
Principal of the Notes will be payable on each Payment Date to the extent
described herein, except that no principal will be paid on the Class A-2 Notes
until the Class A-1 Notes have been paid in full.
The Certificates will represent fractional undivided interests in the
Trust. Interest, to the extent of the Pass Though Rate (as defined herein), will
be generally distributed to the Certificateholders (as defined herein) on the
__th day of each month (each, a "Distribution Date"). Principal, to the extent
described herein, will be distributed to the Certificateholders on each
Distribution Date commencing with the Distribution Date on which the Notes were
paid in full. Distributions of [interest and] principal on the Certificates will
be subordinated in priority to payments due on the Notes as described herein.
As set forth herein, each class of the Notes will be payable in full on
its respective Final Scheduled Payment Date (as defined herein). The
Certificates are expected to be paid in full on the Final Scheduled Certificate
Distribution Date (as defined herein). Investors should be aware that payment in
full of a class of Notes or the Certificates could occur earlier than such dates
as described herein. In addition, the Class A-2 Notes and the Certificates will
be subject to prepayment in whole, but not in part, on any Distribution Date on
which Chase Manhattan Bank USA, N.A., in its capacity as servicer (in such
capacity, the "Servicer"), exercises its option to purchase the Receivables. The
Servicer may purchase all the Receivables on any Distribution Date on which the
Pool Balance (as defined herein) shall have declined to 5% or less of the
Initial Pool Balance (as defined herein).
The Issuer, a newly formed limited-purpose Delaware business trust, will
generally be prohibited from incurring any indebtedness other than the Notes,
and its assets will include the Receivables, the Collection Account, the Note
Distribution Account, the Certificate Distribution Account, and the Reserve
Account, as described herein.
No dealer, sales person or other person has been authorized to give any
information or to make any representations not contained in this Prospectus
Supplement and the Prospectus and, if given or made, such information or
representations must not be relied upon as having been authorized by the Seller,
the Servicer or by the Underwriter. This Prospectus Supplement and the
Prospectus do not constitute an offer to sell, or a solicitation of an offer to
buy, the securities offered to anyone in any jurisdiction in which the person
making such offer or solicitation is not qualified to do so or to anyone to whom
it is unlawful to make any such offer or solicitation. Neither the delivery of
this Prospectus Supplement and the Prospectus nor any sale made hereunder shall,
under any circumstances, create an implication that there has been no change in
the affairs of the Seller, the Servicer or the Receivables since the date hereof
or thereof or that the information contained or incorporated by reference herein
or therein is correct as of any time subsequent to its date.
Until ________, ____ (90 days after the date of this Prospectus
Supplement), all dealers effecting transactions in the Securities described in
this Prospectus Supplement, whether or not participating in this distribution,
may be required to deliver this Prospectus Supplement and the Prospectus. This
is in addition to the obligation of dealers to deliver this Prospectus
Supplement and the Prospectus when acting as underwriters and with respect to
their unsold allotments or subscriptions.
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT THE
OFFERING OF THE NOTES AND THE CERTIFICATES. ADDITIONAL INFORMATION IS CONTAINED
IN THE PROSPECTUS AND PROSPECTIVE INVESTORS ARE URGED TO READ BOTH
ii
THIS PROSPECTUS SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE NOTES OR THE
CERTIFICATES MAY NOT BE CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICES OF THE NOTES AND THE
CERTIFICATES AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
There is currently no secondary market for the Notes or Certificates and
there is no assurance that one will develop. The Underwriter expects, but is not
obligated, to make a market in the Notes and Certificates. However, even if the
Underwriter does make such a market, there is no assurance that any such market
will continue.
Upon receipt of a request by an investor, or his or her representative,
within the period during which there is a prospectus delivery obligation, the
Underwriter will transmit or cause to be transmitted promptly, without charge
and in addition to any such delivery requirements, a paper copy of this
Prospectus Supplement and a Prospectus or this Prospectus Supplement and a
Prospectus encoded in an electronic format.
iii
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT Page
----
SUMMARY OF TERMS.......................................................... S-1
RISK FACTORS..............................................................S-10
THE TRUST.................................................................S-10
THE RECEIVABLES POOL......................................................S-12
CHASE USA.................................................................S-17
USE OF PROCEEDS...........................................................S-17
GENERAL PARTNER...........................................................S-17
WEIGHTED AVERAGE LIFE OF THE SECURITIES...................................S-17
DESCRIPTION OF THE NOTES..................................................S-19
DESCRIPTION OF THE CERTIFICATES...........................................S-20
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS......................S-22
LEGAL INVESTMENT..........................................................S-28
CERTAIN FEDERAL INCOME TAX CONSEQUENCES...................................S-28
CERTAIN STATE TAX CONSEQUENCES............................................S-35
ERISA CONSIDERATIONS......................................................S-35
UNDERWRITING..............................................................S-37
LEGAL MATTERS.............................................................S-38
ANNEX X...................................................................S-39
INDEX OF TERMS............................................................S-43
PROSPECTUS
SUMMARY OF PROSPECTUS........................................................6
RISK FACTORS................................................................17
THE TRUSTS..................................................................21
THE RECEIVABLES POOLS.......................................................22
WEIGHTED AVERAGE LIFE OF THE SECURITIES.....................................29
POOL FACTORS AND TRADING INFORMATION........................................30
USE OF PROCEEDS.............................................................31
CHASE USA (NEW YORK) AND CHASE USA (DELAWARE)...............................31
DESCRIPTION OF THE NOTES....................................................32
DESCRIPTION OF THE CERTIFICATES.............................................37
CERTAIN INFORMATION REGARDING THE SECURITIES................................39
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS........................47
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES....................................61
ERISA CONSIDERATIONS........................................................65
PLAN OF DISTRIBUTION........................................................66
RATINGS.....................................................................67
LEGAL MATTERS...............................................................67
INDEX OF TERMS..............................................................68
iv
SUMMARY OF TERMS
This Summary of Terms is qualified in its entirety by reference to the detailed
information appearing elsewhere herein and in the Prospectus. Certain
capitalized terms used in this Summary are defined elsewhere in this Prospectus
Supplement on the pages indicated in the "Index of Terms" or, to the extent not
defined herein, have the meanings assigned to such terms in the Prospectus.
Issuer........................... The Chase Manhattan Auto Owner Trust 199_-_
(the "Trust" or the "Issuer"), a Delaware
business trust established pursuant to a trust
agreement (as amended and supplemented, the
"Trust Agreement"), dated as of
___________________, 199__ among the Seller,
the General Partner and the Owner Trustee.
Seller........................... Chase Manhattan Bank USA, N.A.("Chase USA"), a
national banking association and a
wholly-owned subsidiary of The Chase Manhattan
Bank ("Chase") (in such capacity, the
"Seller," or individually, the "Bank").
Servicer......................... Chase USA (in such capacity, the "Servicer").
Indenture Trustee................ ________________, as trustee under the
Indenture (the "Indenture Trustee").
Owner Trustee.................... ________________, as trustee under the Trust
Agreement (the "Owner Trustee").
The Notes........................ Class A-1 ____% [Money Market] Asset Backed
Notes (the "Class A-1 Notes") in the aggregate
principal amount of $----------.
Class A-2 ___% Asset Backed Notes (the "Class
A-2 Notes"; together with the Class A-1 Notes,
the "Notes") in the aggregate principal amount
of $________.
The Notes will be issued by the Trust pursuant
to an Indenture to be dated as of _______ __,
____ (the "Indenture"), between the Trust and
the Indenture Trustee. The Notes will be
secured by the assets of the Trust.
The Notes will be available for purchase in
book-entry form only in minimum denominations
of $1,000 and integral multiples thereof. The
Noteholders will not be entitled to receive
Notes in fully registered, certificated form
("Definitive Notes") except in the limited
circumstances described herein. See
"Description of the Notes-General" and
"Certain Matters Regarding the
Securities-Book-Entry Registration" in the
Prospectus.
The Certificates................. ___% Asset Backed Certificates (the
"Certificates"; together with the Notes, the
"Securities") with an initial Certificate
Balance of $_______. The Certificates will
represent fractional undivided interests in
the Trust and will be issued pursuant to the
Trust Agreement.
S-1
[_____________] (the "General Partner") will
purchase $______ principal amount of the
Certificates. The Certificates will be
available for purchase in minimum
denominations of $______ and integral
multiples of $1,000 in excess thereof. The
Certificateholders will not be entitled to
receive Certificates in fully registered,
certificated form ("Definitive Certificates")
except in the limited circumstances described
herein. See "Description of the
Certificates-General" and "Certain Matters
Regarding the Securities-Book-Entry
Registration" in the Prospectus. No beneficial
interest in a Certificate may be held directly
or indirectly by a Foreign Investor.
Purchasers of Certificates and their assignees
will be deemed to represent (i) that the
beneficial owners of such Certificates are not
Foreign Investors, and (ii) that they are not
a Plan and that no assets of a Plan were used
to acquire the Certificates.
The rights of Certificateholders to receive
distributions with respect to the Certificates
will be subordinated to the rights of the
Noteholders to receive interest on and
principal of the Notes.
General Partner.................. [_______________] has been formed for the
limited purpose of purchasing a portion of the
Certificates issued by the Trust and
asset-backed certificates issued by other
trusts, acting as the General Partner of the
Trust and such other trusts for federal income
tax purposes and engaging in incidental
activities. As described herein, the General
Partner will purchase approximately 1% of the
Certificates. Any Certificates purchased by
the General Partner are not transferable
except under the limited circumstances set
forth in the Trust Agreement.
The Trust........................ The Trust is a business trust established
under the laws of Delaware pursuant to the
Trust Agreement. The activities of the Trust
are limited by the terms of the Trust
Agreement to acquiring, owning and managing
the Receivables, issuing and making payments
on the Notes and Certificates and other
activities related thereto. The Trust Property
will include (i) the Receivables, (ii) with
respect to the Actuarial Receivables, all
monies due thereunder on or after ______,199__
(the "Cutoff Date"), and with respect to
Simple Interest Receivables, all monies due or
received thereunder on or after the Cutoff
Date, (iii) such amounts as from time to time
may be held in one or more Trust Accounts
established and maintained by the Servicer and
the Seller pursuant to the Sale and Servicing
Agreement, as described herein, (iv) the
security interests in the Financed Vehicles,
(v) the rights to proceeds as a result of the
Seller's exercise of its recourse rights
against Dealers, (vi) an assignment of the
rights of the Seller to receive proceeds from
claims on theft and physical damage, credit
life and credit disability insurance policies
covering the Receivables, (vii) the rights
with respect to any Financed Vehicle that has
been repossessed by the Servicer on behalf the
Trust, and (viii) any and all proceeds of the
foregoing.
S-2
The Receivables.................. The Receivables will consist of retail
installment sales contracts and purchase money
loans secured by new and used automobiles and
light-duty trucks (the "Financed Vehicles").
On the Closing Date, the Trust will purchase
Receivables having an aggregate principal
balance of approximately $____________ as of
the Cutoff Date from the Seller pursuant to a
Sale and Servicing Agreement to be dated as of
_______________, 199___ (as amended and
supplemented from time to time, the "Sale and
Servicing Agreement"), among the Trust, the
Seller and the Servicer. See "Description of
the Transfer and Servicing Agreements" herein
and in the Prospectus.
The Receivables have been selected from the
contracts owned by the Bank based on the
criteria specified in the Sale and Servicing
Agreement and described herein and in the
Prospectus. See "The Receivables Pool" herein
and "The Receivables Pools" in the Prospectus.
No Receivable will have a scheduled maturity
that, after giving prospective effect to any
permitted extensions or deferrals, would be
later than __________ (the "Final Scheduled
Maturity Date"). As of the Cutoff Date, the
weighted average remaining maturity of the
Receivables was approximately _____ months and
the weighted average original maturity of the
Receivables was approximately ____ months. As
of the Cutoff Date, approximately ___% of the
aggregate principal balance of the Receivables
represents financing of new vehicles and the
remainder represents financing of used
vehicles.
The "Pool Balance" at any time will represent
the aggregate principal balance of the
Receivables as of the close of business on the
last day of the preceding Collection Period,
after giving effect to all payments received
from Obligors and Purchase Amounts to be
remitted by the Servicer or the Seller, as the
case may be, for such Collection Period and
all losses realized on Receivables liquidated
during such Collection Period. The aggregate
principal balance of the Receivables as of the
Cutoff Date (the "Initial Pool Balance") was
$________.
Terms of the Notes............... The principal terms of the Notes are described
below:
Payment Dates. Payments of interest and
principal on the Notes will be made on the
[__th] day of each month or, if any such day
is not a Business Day, on the next succeeding
Business Day (each, a "Payment Date"),
commencing _________________, 199___. Unless
the context otherwise requires, each reference
to a "Distribution Date" herein and in the
Prospectus shall refer to a Payment Date
herein. Payments will be made to holders of
record of the Notes (the "Noteholders") as of
the day immediately preceding such
Distribution Date or, if Definitive Notes are
issued, as of the last day of the preceding
calendar month (a "Record Date"). A "Business
Day" is a day on which banks located in New
York, New York [and __________, ____________]
are open for the purpose of conducting a
commercial banking business.
S-3
Interest Rates. The Class A-1 Notes will bear
interest at the rate of ___% per annum and the
Class A-2 Notes will bear interest at the rate
of ___% per annum. The interest rates for both
classes of Notes are referred to herein
collectively as "Interest Rates".
Interest. Interest on the outstanding
principal amount of the Notes of each class
will accrue at the applicable Interest Rate
from and including the Closing Date (in the
case of the first Payment Date) or from and
including the most recent Payment Date on
which interest has been paid to but excluding
the following Payment Date (each an "Interest
Accrual Period"). On each Payment Date, the
Indenture Trustee will distribute pro rata to
the Noteholders of each class accrued interest
at the applicable Interest Rate on the
outstanding principal balance generally to the
extent of funds available following [payment
of the Servicing Fee and the Administration
Fee] from the Total Distribution Amount and
the Reserve Account. Interest on the Notes
will be calculated on the basis of a 360-day
year consisting of twelve 30-day months. See
"Description of the Notes--Payments of
Interest" herein.
Principal. Principal of the Notes will be
payable on each Payment Date in an amount
equal to the Noteholders' Principal
Distributable Amount for the calendar month
preceding such Payment Date (the "Collection
Period"), to the extent of funds available
therefor as described herein.
No principal payments will be made on the
Class A-2 Notes until the Class A-1 Notes have
been paid in full.
The outstanding principal amount of the Class
A-1 Notes, to the extent not previously paid,
will be payable on the ____________________
199___ Payment Date (the "Class A-1 Final
Scheduled Payment Date"), and the outstanding
principal amount of the Class A-2 Notes, to
the extent not previously paid, will be
payable on the ____________ 199_ Payment Date,
in each case from funds available therefor
(including amounts on deposit in the Reserve
Account) (the "Class A-2 Final Scheduled
Payment Date" and, together with the Class A-1
Final Scheduled Payment Date, each a "Final
Scheduled Payment Date").
Optional Redemption. After the Class A-1 Notes
have been paid in full, the Class A-2 Notes
will be redeemed in whole, but not in part, on
any Payment Date on which the Servicer
exercises its option to purchase the
Receivables, which can occur following the
last day of any Collection Period as of which
the Pool Balance declines to 5% or less of the
Initial Pool Balance, at a redemption price
equal to the unpaid principal amount of the
Class A-2 Notes plus accrued and unpaid
interest thereon. See "Description of the
Notes--Optional Redemption" herein.
S-4
Terms of the Certificates........ The principal terms of the Certificates are
described below:
Distribution Dates. Distributions with respect
to the Certificates will be made on each
Distribution Date, commencing _________,
199___. Distributions will be made to holders
of record of the Certificates (the
"Certificateholders" and, together with the
Noteholders, the "Securityholders") as of the
related Record Date (which will be the last
day of the preceding month).
Pass Through Rate. ___% per annum (the "Pass
Through Rate").
Interest. Interest in respect of a
Distribution Date will accrue during the
related Interest Accrual Period. On each
Distribution Date, the Owner Trustee will
distribute pro rata to Certificateholders
accrued interest at the Pass Through Rate on
the outstanding Certificate Balance generally
to the extent of funds available following
payment of the Servicing Fee, Administration
Fee and distributions in respect of interest
on the Notes from the Total Distribution
Amount and the Reserve Account. Interest will
be calculated on the basis of a 360-day year
consisting of twelve 30-day months. Payment of
interest on the Certificates is subordinated
to payment of interest on the Notes. If an
Event of Default shall occur and the Notes are
accelerated, or upon the occurrence of an
Insolvency Event with respect to the General
Partner, distribution of amounts on the
Certificates will be subordinated in priority
of payment to payment of principal on the
Notes. Interest on the Certificates for any
Distribution Date due but not paid on such
Distribution Date will be due on the next
Distribution Date together with interest on
such amount at the Certificate Rate.
Principal. [No distributions of principal on
the Certificates will be made until all of the
Notes have been paid in full.] On each
Distribution Date commencing on the
Distribution Date on which the Class A-2 Notes
are paid in full, principal of the
Certificates will be payable in an amount
generally equal to the Certificateholders'
Principal Distributable Amount for the
Collection Period preceding such Distribution
Date, to the extent of funds available
therefor following payment of the Servicing
Fee, Administration Fee, payments of interest
and principal, if any, due in respect of the
Notes and distribution of interest in respect
of the Certificates.
[On and after any Distribution Date on which
the Notes have been paid in full, funds in the
Reserve Account will be applied to reduce the
Certificate Balance to zero if, after giving
effect to all distributions to the Servicer,
the Administrator, the Noteholders and the
Certificateholders on such Distribution Date,
the amount on deposit in the Reserve Account
would be equal to or greater than the
Certificate Balance. See "Description of the
Certificates-Distributions of Principal
Payments."
S-5
The outstanding principal amount, if any, of
the Certificates will be payable in full on
the ______________ Distribution Date (the
"Final Scheduled Certificate Distribution
Date").
Optional Prepayment. If the Servicer exercises
its option to purchase the Receivables, which
can occur following the last day of any
Collection Period as of which the Pool Balance
declines to 5% or less of the Initial Pool
Balance, the Certificateholders will receive
an amount in respect of the Certificates equal
to the Certificate Balance together with
accrued interest at the Pass Through Rate, and
the Certificates will be retired. See
"Description of the Certificates--Optional
Prepayment" herein.
[Advances........................ On or prior to the Business Day preceding each
Distribution Date (the "Deposit Date"), the
Servicer may, in its sole discretion, make a
payment (an "Advance") with respect to each
Actuarial Receivable in the Receivables Pool
(other than a Defaulted Receivable) in an
amount generally equal to the excess, if any,
of (i) the payment due on such Actuarial
Receivable during the related Collection
Period, over (ii) the payment actually
received by the Servicer with respect to such
Actuarial Receivable from the Obligor or from
payments of the Purchase Amount during or with
respect to such Collection Period. The
Servicer may elect not to make any Advance
with respect to an Actuarial Receivable to the
extent that the Servicer, in its sole
discretion, determines that such Advance is
not recoverable from subsequent payments on
such Actuarial Receivable or funds in the
Reserve Account. See "Description of the
Transfer and Servicing Agreements--Advances"
herein.]
Reserve Account.................. A reserve account (the "Reserve Account") will
be created with an initial deposit by the
Seller of cash or certain investments having a
value of at least $______ (the "Reserve
Account Initial Deposit"). In addition, on
each Distribution Date, any amounts on deposit
in the Collection Account with respect to the
preceding Collection Period after payments to
the Noteholders, the Certificateholders, the
Servicer and the Administrator have been made
will be deposited into the Reserve Account
until the amount on deposit in the Reserve
Account is equal to the Specified Reserve
Account Balance (as defined herein).
On or prior to each Deposit Date, the Trustee
will withdraw funds from the Reserve Account,
to the extent of the funds therein (exclusive
of investment earnings), (i) to the extent
required to reimburse the Servicer for
outstanding Advances and (ii) to the extent
(x) the sum of the amounts required to be
distributed to Noteholders,
Certificateholders, the Servicer and the
Administrator on the related Distribution Date
exceeds (y) the amount on deposit in the
Collection Account with respect to the
preceding Collection Period (net of investment
income). If the amount in the Reserve Account
is reduced to zero, Noteholders and
Certificateholders will bear the credit and
other risks associated with ownership of the
Receivables, including the risk
S-6
that the Trust may not have a perfected
security interest in the Financed Vehicles.
See "Description of the Certificates--The
Reserve Account" herein and "Certain Legal
Aspects of the Receivables" in the Prospectus.
Collection Account;
Priority of Payments............. The Servicer will be required to remit
collections received with respect to the
Receivables to one or more accounts in the
name of the Indenture Trustee (collectively,
the "Collection Account") on each Deposit Date
(as defined herein), net of any amounts due
the Seller and the Servicer to the extent
described in "Description of the Transfer and
Servicing Agreement--Net Deposits" in the
Prospectus, except upon the occurrence of
certain conditions described in "Description
of the Transfer and Servicing
Agreement--Collections" in the Prospectus.
Pursuant to the Sale and Servicing Agreement,
the Servicer will have the revocable power to
instruct the Trustee or the Paying Agent to
withdraw funds on deposit in the Collection
Account and to apply such funds on each
Distribution Date to the following (in the
priority indicated): [(i) reimbursement of
Servicer Advances (if not deducted from the
Servicer's remittance as described above),
(ii) the Servicing Fee, together with any
unpaid Servicing Fees from prior Distribution
Dates (if not deducted from the Servicer's
remittance as described above), (iii) the
Administration Fee, together with any unpaid
Administration Fees from prior Distribution
Dates, (iv) the Noteholders' Interest
Distributable Amount into the Note
Distribution Account, (v) Certificateholder's
Interest Distributable Amount into the
Certificate Distribution Account, (vi) the
Noteholders' Principal Distributable Amount
into the Note Distribution Account, and (vii)
after the Notes have been paid in full, the
Certificateholders' Principal Distributable
Amount into the Certificate Distribution
Account.]
Notwithstanding the foregoing, if an Event of
Default has occurred and the maturity of the
Notes has been accelerated or upon the
occurrence of an Insolvency Event with respect
to the General Partner, the Certificateholders
will not be entitled to receive any
distributions of interest or principal until
the Notes have been paid in full.
[Funds will be withdrawn from amounts on
deposit in the Reserve Account to the extent
that the Total Distribution Amount (after [the
reimbursement of Servicer Advances and] the
payment of the Servicing Fee and the
Administration Fee) with respect to any
Collection Period is less than the
Noteholders' Distributable Amount and funds in
the amount of such deficiency will be
deposited in the Note Distribution Account. In
addition, funds will be withdrawn from amounts
on deposit in the Reserve Account to the
extent that the portion of the Total
Distribution Amount remaining after the
payment of the Servicing Fee and the
Administration Fee [, the reimbursement of
Servicer Advances] and the deposit of the
Noteholders' Distributable Amount in the
S-7
Note Distribution Account is less than the
Certificateholders' Distributable Amount, and
funds in the amount of such deficiency will be
deposited in the Certificate Distribution
Account.
Servicing Fee.................... The Servicer shall receive a Servicing Fee,
payable on each Distribution Date, in an
amount equal to the sum of (i) the product of
the Servicing Fee Rate and the Pool Balance as
of the close of business on the last day of
the second preceding Collection Period (the
"Settlement Date") and (ii) any Late Fees paid
by the Obligors during the related Collection
Period. In addition, [except under certain
circumstances] the Servicing Fee will include
Investment Earnings on amounts on deposit in
the Trust Accounts. See "Description of the
Transfer and Servicing Agreements--Servicing
Compensation and Payment of Expenses" herein
and "Description of the Transfer and Servicing
Agreements--Servicing Compensation and Payment
of Expenses" and "--Net Deposits" in the
Prospectus.
Administration Agreement......... Chase, in its capacity as administrator (the
"Administrator"), will enter into an agreement
(the "Administration Agreement") with the
Trust and the Indenture Trustee. As
compensation for the performance of the
Administrator's obligations under the
Administration Agreement and as reimbursement
for its expenses related thereto, the
Administrator will be entitled to a monthly
administration fee in an amount equal to
$[___] (the "Administration Fee"). See
"Description of the Transfer and Servicing
Agreements--Administration Agreement" in the
Prospectus.
Tax Status....................... Upon issuance of the Securities, Simpson
Thacher & Bartlett, special counsel to the
Seller, will deliver its opinion generally to
the effect that under current law the Notes
will be characterized as debt, and the Trust
will not be characterized as an association
(or a publicly traded partnership) taxable as
a corporation. Each Noteholder, by the
acceptance of a Note, will agree to treat the
Notes as indebtedness, and each
Certificateholder, by the acceptance of a
Certificate, will agree to treat the Trust as
a partnership in which the Certificateholders
are partners for federal, state and local
income tax purposes. Alternative
characterizations of the Trust and the
Certificates are possible, but would not
result in materially adverse tax consequences
to Certificateholders. See "Certain Federal
Income Tax Consequences" and "Certain State
Tax Consequences" herein.
[Legal Investment................ The Class A-1 Notes will be eligible
securities for purchase by money market funds
under paragraph (a)(5) of Rule 2(a)(7) under
the Investment Company Act of 1940, as
amended.]
ERISA Considerations............. Subject to the considerations described in
"ERISA Considerations" herein and in the
Prospectus, the Notes are eligible for
purchase with Plan Assets of any Plan. A
fiduciary or other person contemplating
purchasing the Notes on behalf of or with Plan
Assets of any Plan should carefully review
with its legal advisors
S-8
whether the purchase or holding of the Notes
could give rise to a transaction prohibited or
not otherwise permissible under ERISA or
Section 4975 of the Code.
The Certificates may not be acquired by, on
behalf of or with Plan Assets. See "ERISA
Considerations" herein and in the Prospectus.
Ratings of the Notes............. It is a condition to the issuance of the Notes
that each class of Notes be rated in the
highest investment rating category by at least
two nationally recognized statistical rating
organizations. There can be no assurance that
this rating will not be lowered or withdrawn
if, in the sole judgment of any such rating
agency, circumstances in the future so
warrant.
Rating of the Certificates....... It is a condition to the issuance of the
Certificates that they be rated at least
investment grade by at least two nationally
recognized statistical rating organizations.
There can be no assurance that a rating will
not be lowered or withdrawn if, in the sole
judgment of any such rating agency,
circumstances in the future so warrant.
S-9
RISK FACTORS
Investors should consider, among other things, the matters discussed under
"Risk Factors" in the Prospectus and the following risk factors in connection
with purchases of the Securities.
Limited Liquidity
There is currently no secondary market for the Securities offered hereby. The
Underwriter currently intends to make a market in the Securities offered hereby,
but it is under no obligation to do so. There can be no assurance that a
secondary market will develop or, if a secondary market does develop, that it
will provide the Securityholders with liquidity of investment or that it will
continue for the life of the Securities offered hereby.
Subordination; Limited Assets
Distributions of principal on the Certificates will be subordinated in priority
of payment to interest and principal due on the Notes. The Certificateholders
will not receive any distributions of interest with respect to a Collection
Period until the full amount of interest on the Notes due on such Distribution
Date has been deposited in the Note Distribution Account. The Certificateholders
will not receive any distributions of principal until the Distribution Date on
which all of the Notes have been paid in full.
The Trust will not have, nor is it permitted or expected to have, any
significant assets or sources of funds other than the Receivables and the
Reserve Account. Holders of the Notes and the Certificates must rely for
repayment upon payments on the Receivables and, if and to the extent available
on each Distribution Date to cover shortfalls in distributions of interest and
principal on the Notes and the Certificates, amounts to be deposited in the
Reserve Account. However, funds deposited in the Reserve Account. If the Reserve
Account is exhausted, the Trust will depend solely on current distributions on
the Receivables to make payments on the Notes and the Certificates. The
Securities will not be insured or guaranteed by the Bank, the Servicer, the
Trustee, the Indenture Trustee or any affiliate thereof.
Ratings of the Securities
It is a condition to the issuance of each class of the Notes and of the
Certificates that each class of the Notes be rated in the highest investment
rating category, and that the Certificates be rated at least investment grade,
by at least two nationally recognized statistical rating organizations (the
"Rating Agencies"). A rating is not a recommendation to purchase, hold or sell
Securities, inasmuch as such rating does not comment as to market price or
suitability for a particular investor. The ratings of the Securities address the
likelihood of the timely payment of interest on and ultimate payment of
principal of the Securities pursuant to their terms. There can be no assurance
that a rating will remain for any given period of time or that a rating will not
be lowered or withdrawn entirely by a Rating Agency if in its judgment
circumstances in the future so warrant.
THE TRUST
General
The Issuer, The Chase Manhattan Bank Auto Owner Trust 199_-__, is a
business trust formed under the laws of the State of Delaware pursuant to the
Trust Agreement for the transaction described in this Prospectus Supplement. The
activities of the Trust are limited by the terms of the Trust Agreement to (i)
acquiring, holding and managing the Receivables and the other assets of the
Trust and proceeds therefor, (ii) issuing the Notes and the Certificates to
finance such assets, (iii) making payments on the Notes and the Certificates
issued by it, and (iv) engaging in other activities that are necessary, suitable
or convenient to accomplish the foregoing or are incidental thereto or connected
therewith. The Trust will not acquire any contracts or assets other than the
Trust property described below and will not have any need for additional capital
resources. As the Trust does not have any operating history and will not engage
in any activity other than acquiring and holding the Receivables, issuing the
Notes and Certificates and making distributions thereon, there has not been
included any historical or pro forma
S-10
financial statements or ratio of earnings to fixed charges with respect to the
Trust. Inasmuch as the Trust has no operating history, it is not possible to
predict the operating performance of the Trust while the Notes and Certificates
are outstanding. While management of the Seller believes that the loss and
delinquency experience contained herein for recent periods are representative of
past performance of Motor Vehicle Loans in the Chase Auto Finance Portfolio,
there is no assurance that such performance is indicative of the future
performance of the Receivables, since future performance is dependent, among
other things, on general economic conditions and economic conditions in the
geographical areas in which the Obligors reside including, for example,
unemployment rates.
The Certificate Balance represents the equity in the Trust. The Notes and
the Certificates will be transferred to the Seller by the Trust in exchange for
the Receivables pursuant to the Sale and Servicing Agreement. The Seller will
sell approximately 1% of the initial Certificate Balance to the General Partner.
The Trust property will include a pool (the "Receivables Pool") comprised
of the Receivables and with respect to the Actuarial Receivables, all monies due
thereunder on or after the Cutoff Date and with respect to Simple Interest
Receivables, all monies due or received thereunder on and after the Cutoff Date.
The Trust property will also include: (i) such amounts as from time to time may
be held in one or more Trust Accounts established and maintained by the Servicer
pursuant to the Sale and Servicing Agreement, as described herein; (ii) security
interests in the Financed Vehicles; (iii) the rights to proceeds as a result of
the Seller's exercise of its recourse rights against Dealers (as described in
the Prospectus under "The Bank's Portfolio of Motor Vehicle Loans--Origination
and Servicing of Motor Vehicle Loans"); (v) an assignment of the rights of the
Seller to receive proceeds from claims on theft and physical damage, credit life
and credit disability insurance policies covering the Financed Vehicles or the
Obligors, as the case may be, to the extent that such insurance policies relate
to the Receivables; and (vi) the rights with respect to any Financed Vehicle
that has been repossessed by the Servicer, on behalf of the Trustee. The Sale
and Servicing Agreement sets forth criteria that must be satisfied by each
Receivable. See "Receivables Pools--General" in the Prospectus. Each Receivable
will be identified in a schedule appearing as an exhibit to the Sale and
Servicing Agreement.
[If the protection provided to the investment of the Securityholders by
the Reserve Account is insufficient, the Trust will look only to the Obligors on
the Receivables and the proceeds from the repossession and sale of Financed
Vehicles that secure Defaulted Receivables. In such event, certain factors, such
as the Trust's not having first priority perfected security interest in some of
the Financed Vehicles, may affect the Trust's ability to realize on the
collateral securing the Receivables, and thus may reduce the proceeds to be
distributed to Securityholders with respect to the Securities. See "Description
of the Transfer and Servicing Agreements-Distributions" and "Subordination of
Certificateholders; Reserve Account" herein and "Certain Legal Aspects of the
Receivables" in the Prospectus.]
The Trust's principal offices are in Delaware at the address listed below
under "-The Owner Trustee".
Capitalization of the Trust
The following table illustrates the capitalization of the Trust as of the
Cutoff Date, as if the issuance and sale of the Notes and the Certificates have
taken place on such date:
Class A-1 Notes......................$____________
Class A-2 Notes...................... ____________
Certificates......................... ____________
Total......................$
============
The Owner Trustee
___________________ is the Owner Trustee under the Trust Agreement.
______________ is a ___________________ and its principal offices are located at
_______________. The Seller and its affiliates may maintain normal commercial
banking relations with the Owner Trustee and its affiliates.
S-11
THE RECEIVABLES POOL
The Receivables represent Motor Vehicle Loans from the portfolio of the
Seller that, in addition to satisfying the criteria set forth in the Prospectus
under "The Receivables Pool-General":
(a) have a remaining maturity, as of the Cutoff Date, of at least
___ months and not more than ___ months;
(b) are secured by either new Financed Vehicles that had an original
maturity of at least ___ months and not more than ___ months, or used
Financed Vehicles that had an original maturity of at least ___ months and
not more than ___ months;
(c) are fully-amortizing fixed rate simple interest [or actuarial]
contracts that provide for level scheduled monthly payments over their
respective remaining terms, have an annual contract rate of interest (a
"Contract Rate") of at least ____% and not more than ____%, and are not
secured by any interest in real estate;
(d) have not been paid more than three months in advance as of the
Cutoff Date;
(e) have remaining principal balances, as of the Cutoff Date, of at
least $__________ and not greater than $__________; and
(f) have no payment that is delinquent for more than [__] days past
due as of the related Cutoff Date; and
(g) are not Chase Lincoln Loans, Chase Maryland Loans, Motor Vehicle
Loans originated by or through a Dealer located in the State of _________
or the subject of a previous securitization.
The Receivables were selected from the Motor Vehicle Loans in the
portfolio of the Seller that met the above criteria. For administrative reasons,
the Seller selected from the Motor Vehicle Loans in its portfolio all otherwise
eligible Motor Vehicle Loans originated since _________ __, 19__, which were
segregated and held for sale by the Seller. The Seller believes that such
selection procedures are not materially adverse to Securityholders.
Approximately ____% of the aggregate principal balance of the Receivables, as of
the Cutoff Date, were secured by new Financed Vehicles and approximately ___% of
the aggregate principal balance of the Receivables, as of the Cutoff Date, were
secured by used Financed Vehicles. [Approximately ___% and ___% of the aggregate
principal balance of the Receivables, as of the Cutoff Date, were Simple
Interest Receivables and Actuarial Receivables, respectively.] [Approximately
___% of the aggregate principal balance of the Receivables, as of the Cutoff
Date, were originated by Chase Auto Finance directly with Obligors.] Virtually
none of the Receivables provide for recourse to the Dealer in the event of
default by the Obligor except for breaches of the Dealer's representations and
warranties that do not relate to the creditworthiness of the Obligor. The Seller
may not substitute other Motor Vehicle Loans from its portfolio, or any other
motor vehicle receivables, for the Receivables at any time during the term of
the Sale and Servicing Agreement. See "The Receivables Pool-General" in the
Prospectus for a description of how prepayments made under Simple Interest and
Actuarial Receivables are allocated.
The composition of the Receivables, distribution of the Receivables by
Contract Rate and the geographic distribution of the Receivables, in each case
as of the Cutoff Date, are set forth in the following tables.
S-12
Composition of the Receivables
New Financed Used Financed
Vehicles Vehicles Total
------------ ------------- -----
Aggregate Principal Balance.... $ $ $
Number of Receivables..........
Average Principal Balance...... $ $ $
Average Original Balance....... $ $ $
Weighted Average Contract Rate. % % %
Contract Rate (Range).......... __ __ %
Weighted Average Original Term. months months months
Original Term (Range).......... months months months
Weighted Average Remaining Term months months months
Remaining Term (Range)......... months months months
Distribution By Contract Rate Of The Receivables
Percent Of
Number of Aggregate
Contract Rate Range Receivables Principal Balance Pool Balance(1)
- ------------------- ----------- ----------------- ---------------
.................... $ %
.................... $ %
.................... $ %
.................... $ %
.................... $ %
.................... $ %
- ------------
(1) Amounts shown do not total 100.00% due to rounding.
S-13
Geographic Distribution Of The Receivables(1)
Percent Of
Number of Aggregate
State(3) Receivables Principal Balance Pool Balance(2)
-------- ----------- ----------------- ---------------
................................ $ %
................................
................................
................................
................................
................................
................................
................................
------
Total........................... $ 100.00%
======
- ------------------------
(1) Based on location of the Dealer from which the Motor Vehicle Loan was
acquired or through which it was made.
(2) Amounts shown do not total 100.00% due to rounding.
[(3) Alabama excluded for administrative reasons.]
Delinquencies and Net Losses
The following tables set forth information with respect to delinquencies,
loan losses and recoveries for the Chase Auto Finance Portfolio as of the dates
indicated and for each of the one year periods ended December 31, 199_, 199_,
199_, 199_ and 199_ and for each of the ____ month periods ended ________ __,
199_ and ________ __, 199_. [The portions of the Chase Auto Finance Portfolio
that provide for payments based upon variable rate simple interest [and the
actuarial method] are included in the following tables but Motor Vehicle Loans
of such type are not included in the Trust.] [Chase Auto Finance does not
maintain separate records that distinguish among the delinquency and loan loss
experience for Motor Vehicle Loans that provide for payments based upon [fixed
rate simple interest], and the actuarial method. The Seller believes, however,
that the delinquency and loan loss experience with respect to the [fixed rate
simple interest] Motor Vehicle Loans included in the Trust is not materially
different from the performance of the Chase Auto Finance Portfolio set forth
below.]
See "The Receivables Pools-General" and "--Delinquency and Loan Loss
Information" for a description of the composition of the Chase Auto Finance
Portfolio.
The data presented in the following tables are for illustrative purposes
only. Delinquency and loan loss experience may be influenced by a variety of
economic, social and other factors. No assurance can be given that the
delinquency and loan loss information of the Bank, or of the Trust with respect
to the Receivables, in the future will be similar to that set forth above.
S-14
Delinquency Experience
Months Ended Months Ended Year Ended
----------------------------------------------------------------------------------------------------------------------
December 31, December 31, December 31, December 31, December 31,
, 199_ , 199_ 199_ 199_ 199_ 199_ 199_
----------------------------------------------------------------------------------------------------------------------
Dollars Number Dollars Number Dollars Number Dollars Number Dollars Number Dollars Number Dollars Number
(000's) of Loans (000's) of Loans (000's) of Loans (000's) of Loans (000's) of Loans (000's) of Loans (000's) of Loans
----------------------------------------------------------------------------------------------------------------------
Outstanding
Principal
Amount........
Delinquencies($)(1)(2)
30-59 Days....
60-89 Days....
90 Days or
More.........
TOTAL
Delinquencies.
Repossession
Inventory(3)...
TOTAL Delinquencies &
Repossession Inventory
Delinquencies(%)(1)(2)(4)
30-59 Days.....
60-89 Days.....
90 Days or
More..........
TOTAL
Delinquencies..
Repossession
Inventory......
TOTAL
Delinquencies &
Repossession
Inventory......
- ------------------------
(1) Delinquencies include principal amounts only.
(2) The period of delinquency is based on the number of days payments are
contractually past due.
(3) For December 31, 1994 and earlier, amounts shown in repossession inventory
represent loans which have been written down to the fair market value of
the collateral, but where the related financed vehicles have not yet been
sold. For December 31, 1995, the amount shown in repossession inventory
represent the total outstanding principal balance of the loans at that
time.
(4) As a percent of outstanding principal in dollars.
(5) At ________, approximately __% of the aggregate principal balance of Motor
Vehicle Loans in the portfolio presented were Chase Maryland Loans.
S-15
Loan Loss Experience
(Dollars in 000's)
Months Ended Months Ended Year Ended
----------------------------------------------------------------------------------------------------------------------
December 31, December 31, December 31, December 31, December 31,
, 199_ , 199_ 199_ 199_ 199_ 199_ 199_
----------------------------------------------------------------------------------------------------------------------
Number of
Loans(1)......
Period End
Outstanding
Principal
Amount........
Average
Outstanding
Principal
Amount (2)....
Number of
Repossessions.
Number of Gross
Charge-Offs(3).
Gross
Charge-Offs as
a % of Period
End Outstanding
Principal
Amount.........
Gross Charge-Offs
as a % of Average
Outstanding
Principal
Amount.........
Recoveries(4)...
Net
Charge-Offs(5).
Net Charge-Offs
as a % of Period
End Outstanding
Principal
Amount.........
Net Charge-Offs
as a % of Average
Outstanding
Principal
Amount.........
- ------------------------
(1) Number of loans as of period end.
(2) Averages for 1993, 1994 and 1995 were computed by taking a simple average
of monthly average outstanding principal amounts for each period presented
and averages for 1991 and 1992 were computed by taking a simple average of
month end outstanding principal amounts for each period presented.
(3) Amount charged off is remaining principal balance less proceeds from sale
of repossessed vehicles.
(4) Recoveries generally include amounts received with respect to loans
previously charged off, except for proceeds realized in connection with
the sale of the financed vehicles.
(5) Net charge-offs mean gross charge-offs minus recoveries of loans
previously charged off.
(6) As of _______, approximately ___% of the aggregate principal balance of
Motor Vehicle Loans in the portfolio presented were Chase Maryland Loans.
S-16
CHASE USA
Information regarding the Seller and the Servicer is set forth under
"Chase USA (New York) and Chase USA (Delaware)" in the Prospectus. At
__________, _____, Chase USA's total assets were approximately $___ billion,
total liabilities were approximately $____ billion and total stockholders'
equity was approximately $____ billion.
USE OF PROCEEDS
The net proceeds to be received by the Seller from the sale of Securities,
estimated to be approximately $___________ after making the Reserve Account
Initial Deposit, will be added to its general funds.
GENERAL PARTNER
[_______________] is a wholly-owned subsidiary of the Seller formed for
the limited purpose of purchasing a portion of the Certificates issued by the
Trust and asset-backed certificates issued by other trusts formed by the Seller,
acting as the general partner of the Trust and such other trusts for federal
income tax purposes and engaging in incidental activities. The General Partner
is a limited purpose corporation whose certificate of incorporation contains
limitations on the nature of the General Partner's business and restrictions on
the General Partner's ability to commence a voluntary case or proceeding under
any insolvency or bankruptcy law without the prior unanimous vote of its
directors.
WEIGHTED AVERAGE LIFE OF THE SECURITIES
Information regarding certain maturity and prepayment considerations with
respect to the Securities is set forth under "Weighted Average Life of
Securities" in the Prospectus. No principal payments will be made on the Class
A-2 Notes until all Class A-1 Notes have been paid in full. In addition, no
principal payments on the Certificates will be made until all of the Notes have
been paid in full. See "Description of the Notes--Payments of Principal" and
"Description of the Certificates--Distributions of Principal Payments" herein.
As the rate of payment of principal of each class of Notes and the Certificates
depends primarily on the rate of payment (including prepayments) of the
principal balance of the Receivables, final payment of any class of the Notes
and the final distribution in respect of the Certificates could occur
significantly earlier than their respective Final Scheduled Payment Dates or the
Final Scheduled Certificate Distribution Date. Subject to the conditions set
forth herein under the heading "Description of the Transfer and Servicing
Agreements--Servicing Procedures," the Servicer may reschedule the Due Date of
any scheduled payment to a date more than 30 days from the original Due Date.
Any such deferrals will have the effect of increasing the weighted average life
of the Notes and Certificates. However, the Servicer will not be permitted to
grant any such deferral or extension if, as a result, the final scheduled
payment on a Receivable would fall after the [Final Scheduled Certificate
Distribution Date], unless the Servicer purchases such Receivable.
Securityholders will bear the risk of being able to reinvest principal payments
on the Securities at yields at least equal to the yields on their respective
Securities. If an Event of Default has occurred and the maturity of the Notes
has been accelerated the Certificateholders will not be entitled to receive any
distributions of interest or principal until the Notes have been paid in full.
Chase Auto Finance maintains certain records of the historical prepayment
experience of the Chase Auto Finance Portfolio. The Seller believes that such
records are not adequate to provide meaningful information with respect to the
Receivables. In any event, no assurance can be given that prepayments on the
Receivables would conform to any historical experience, and no prediction can be
made as to the actual prepayment experience to be expected with respect to the
Receivables.
[Prepayments on motor vehicle receivables can be measured relative to a
prepayment standard or model. The model used in this Prospectus Supplement, the
Absolute Prepayment Model ("ABS"), represents an assumed rate of prepayment each
month relative to the original number of receivables in a pool of receivables.
ABS further assumes that all the receivables are the same size and amortize at
the same rate and that each receivable in each
S-17
month of its life will either be paid as scheduled or be prepaid in full. For
example, in a pool of receivables originally containing 10,000 receivables, a 1%
ABS rate means that 100 receivables prepay each month. ABS does not purport to
be an historical description of prepayment experience or a prediction of the
anticipated rate of prepayment of any pool of receivables, including the
Receivables.]
[The table captioned "Percent of Initial Note Principal Balance or Initial
Certificate Balance at Various ABS Percentages" (the "ABS Table") has been
prepared on the basis of the characteristics of the Receivables. The ABS Table
assumes that (i) the Receivables prepay in full at the specified constant
percentage of ABS monthly, with no defaults, losses or repurchases, (ii) each
scheduled monthly payment on the Receivables is made on the last day of each
month and each month has 30 days, (iii) payments on the Notes and distributions
on the Certificates are made on each Distribution Date (and each such date is
assumed to be the __th day of each applicable month), (iv) the balance in the
Reserve Account on each Distribution Date is equal to the Specified Reserve
Account Balance, and (v) the Servicer does not exercise its option to purchase
the Receivables. The pool has an assumed cutoff date of the Cutoff Date. The ABS
Table indicates the projected weighted average life of each class of Notes and
the Certificates and sets forth the percent of the initial principal amount of
each class of Notes and the percent of the initial Certificate Balance that is
projected to be outstanding after each of the Distribution Dates shown at
various constant ABS percentages.]
[The ABS Table also assumes that the Receivables have been aggregated into
four hypothetical pools with all of the Receivables within each such pool having
the following characteristics and that the level scheduled monthly payment for
each of the four pools (which is based on its aggregate principal balance, APR,
original term to maturity and remaining term to maturity as of the Cutoff Date)
will be such that each pool will be fully amortized by the end of its remaining
term to maturity.
Original Term Remaining Term
Aggregate to Maturity to Maturity
Principal Balance APR (in Months) (in Months)
----------------- --- ----------- -----------
Pool
- ----
1................. $
2.................
3.................
4................. __________
$ ]
==========
[The actual characteristics and performance of the Receivables will differ
from the assumptions used in constructing the ABS Table. 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 very unlikely that the Receivables will prepay at a constant
level of ABS until maturity or that all of the Receivables will prepay at the
same level of ABS. Moreover, the diverse terms of Receivables within each of the
four hypothetical pools could produce slower or faster principal distributions
than indicated in the ABS Table at the various constant percentages of ABS
specified, even if the original and remaining terms to maturity of the
Receivables are as assumed. Any difference between such assumptions and the
actual characteristics and performance of the Receivables, or actual prepayment
experience, will affect the percentages of initial balances outstanding over
time and the weighted average lives of each class of Notes and the
Certificates.]
S-18
[Percent of Initial Note Principal Balance or Initial Certificate Balance at
Various ABS Percentages
Class A-1 Notes Class A-2 Notes Certificates
--------------------------- --------------------------- --------------------------
% % % % % % % % % % % %
----- ---- ---- ---- ---- ---- ---- ----- ---- ---- ---- ----
Closing Date.....
[Distribution Date]
Weighed Average Life
(years)(1).......
- ---------------
(1) The weighted average life of a Class A-1 Note or Class A-2 Note is
determined by (i) multiplying the amount of each principal payment of such
Note by the number of years from the date of the issuance of such Note to
the related Distribution Date, (ii) adding the results and (iii) dividing
the sum by the related initial principal amount of such Note.
The ABS Table has been prepared based on the assumptions described above
(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.]
DESCRIPTION OF THE NOTES
General
The Notes will be issued pursuant to the terms of the Indenture, a form of
which has been filed as an exhibit to the Registration Statement. A copy of the
Indenture will be filed with the Commission following the issuance of the
Securities. The following, as well as other pertinent information included
elsewhere in this Prospectus Supplement and in the Prospectus, summarizes the
material terms of the Notes and the Indenture. The summary does not purport to
be complete and is subject to, and is qualified in its entirety by reference to,
all the provisions of the Notes and the Indenture. The following summary
supplements the description of the general terms and provisions of the Notes of
any given series and the related Indenture set forth in the Prospectus, to which
description reference is hereby made. _________________, a ____________ banking
corporation with its corporate trust offices located at
_______________________________, will be the Indenture Trustee under the
Indenture. [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 the Bank and its affiliates.]
Payments of Interest
Each class of the Notes will constitute Fixed Rate Securities as such term
is defined under "Certain Information Regarding the Securities--Fixed Rate
Securities" in the Prospectus. Interest on the principal balances of each class
of Notes will accrue at its respective per annum Interest Rates and will be
payable to the Noteholders monthly on each Payment Date, commencing ____, 199_.
Interest on the outstanding principal amount of the Notes will accrue at the
applicable Interest Rate for the applicable Interest Accrual Period and shall be
calculated on the basis of a 360-day year of twelve 30-day months. Interest
payments on the Notes will generally be derived from the Total Distribution
Amount remaining after the payment of the Servicing Fee and the Administration
Fee [and the reimbursement of Servicer Advances] and from the Reserve Account.
See "Description of the Transfer and Servicing Agreements--Distributions" and
"--Subordination of Certificateholders; Reserve Account" herein.
Interest payments to all classes of Noteholders will have the same
priority. Under certain circumstances, the amount available for interest
payments could be less than the amount of interest payable on the Notes on any
Payment Date, in which case each class of Noteholders will receive their ratable
share (based upon the aggregate
S-19
amount of interest due to such class of Noteholders) of the aggregate amount
available to be distributed in respect of interest on the Notes.
Payments of Principal
Principal payments will be made to the Noteholders on each Payment Date in
an amount generally equal to the Principal Distribution Amount. Principal
payments on the Notes will generally be derived from the Total Distribution
Amount and the amount, if any, in the Reserve Account remaining after
[reimbursement of Servicer Advances and] the payment of the Servicing Fee, the
Administration Fee and the Noteholder's Interest Distributable Amount.
On each Deposit Date, the Indenture Trustee shall determine the amount in
the Collection Account allocable to interest and the amount allocable to
principal.
On each Payment Date, principal payments on the Notes will be applied in
the following order of priority: (i) to the principal balance of the Class A-1
Notes until the principal balance of the Class A-1 Notes is reduced to zero; and
(ii) to the principal balance of the Class A-2 Notes until the principal balance
of the Class A-2 Notes is reduced to zero. The principal balance of the Class
A-1 Notes, to the extent not previously paid, will be due on the Class A-1 Final
Scheduled Distribution Date and the principal balance of the Class A-2 Notes, to
the extent not previously paid, will be due on the Class A-2 Final Scheduled
Distribution Date. The actual date on which the aggregate outstanding principal
amount of either class of Notes is paid may be earlier than the respective Final
Scheduled Payment Dates set forth above based on a variety of factors, including
those described under "Weighted Average Life of the Securities" herein and in
the Prospectus.
Optional Redemption
On any Distribution Date after the Class A-1 Notes have been paid in full,
the Class A-2 Notes will be redeemed in whole, but not in part, if the Servicer
exercises its option to purchase the Receivables. The Servicer may purchase the
Receivables after the last day of a Collection Period as to which the Pool
Balance shall have declined to 5% or less of the Initial Pool Balance, as
described in the Prospectus under "Description of the Transfer and Servicing
Agreements--Termination." The redemption price will be equal to the unpaid
principal amount of the Class A-2 Notes plus accrued and unpaid interest
thereon.
DESCRIPTION OF THE CERTIFICATES
General
The Certificates will be issued pursuant to the terms of the Trust
Agreement, a form of which has been filed as an exhibit to the Registration
Statement. A copy of the Trust Agreement will be filed with the Commission
following the issuance of the Securities. The following, as well as other
pertinent information included elsewhere in this Prospectus Supplement and in
the Prospectus, summarizes the material terms of the Certificates and the Trust
Agreement. The summary does not purport to be complete and is subject to, and
qualified in its entirety by reference to, all the provisions of the
Certificates and the Trust Agreement. The following summary supplements the
description of the general terms and provisions of the Certificates of any given
series and the related Trust Agreement set forth in the Prospectus, to which
description reference is hereby made.
Purchasers of Certificates and their assignees will be deemed to represent
that the beneficial owners of such Certificates are not Foreign Investors and
that no assets of a Plan were used to acquire the Certificates. See "Certain
Federal Income Tax Consequences" herein and "ERISA Considerations" herein and in
the Prospectus.
S-20
Distribution of Interest Income
On each Distribution Date, commencing _________, 199__, the
Certificateholders will be entitled to distributions in an amount equal to the
amount of interest that would accrue on the Certificate Balance at the Pass
Through Rate. The Certificates will constitute Fixed Rate Securities, as such
term is defined under "Certain Information Regarding the Securities--Fixed Rate
Securities" in the Prospectus. Interest in respect of a Distribution Date will
accrue during the related Interest Accrual Period and shall be calculated on the
basis of a 360-day year of twelve 30-day months. Interest distributions due for
any Distribution Date but not distributed on such Distribution Date will be due
on the next Distribution Date increased by an amount equal to interest on such
amount at the Pass Through Rate (to the extent lawful). [Interest distributions
with respect to the Certificates will generally be funded from the portion of
the Total Distribution Amount and from the funds in the Reserve Account
remaining after [reimbursement of Servicer Advances and] the distribution of the
Servicing Fee, the Administration Fee and the Noteholders' Interest
Distributable Amount.] See "Description of the Transfer and Servicing
Agreement-Distributions" and "-Subordination of the Certificates; Reserve
Account" herein.
Payment of interest on the Certificates is subordinated to payment of
interest on the Notes. If an Event of Default shall occur and the Notes are
accelerated, or upon the occurrence of an Insolvency Event with respect to the
General Partner, distribution of all amounts on the Certificates will be
subordinated in priority of payment to payment of principal of the Notes.
Distributions of Principal Payments
Certificateholders will be entitled to distributions of principal on each
Distribution Date, commencing with the Distribution Date on which the Notes are
paid in full, in an amount generally equal to the Principal Distribution Amount
(less, on the Distribution Date on which the Notes are paid in full, the portion
thereof payable on the Notes). Distributions with respect to principal payments
will generally be funded from the portion of the Total Distribution Amount and
funds in the Reserve Account remaining after [reimbursement of Servicer Advances
and] the distribution of the Servicing Fee, the Administration Fee, the
Noteholders' Distributable Amount (on the Distribution Date on which the Notes
are paid in full) and the Certificateholders' Interest Distributable Amount.
Notwithstanding the foregoing, if an Event of Default has occurred and the Notes
have been accelerated, or upon the occurrence of an Insolvency Event with
respect to the General Partner, the Certificateholders will not be entitled to
receive any distributions of interest or principal until the Notes have been
paid in full. See "Description of the Transfer and Servicing
Agreements-Distributions" and "-Reserve Account" herein.
On and after any Distribution Date on which the Notes have been paid in
full, funds in the Reserve Account will be applied to reduce the Certificate
Balance to zero if, after giving effect to all distributions to the Servicer,
the Administrator, the Noteholders and the Certificateholders on such
Distribution Date, the amount on deposit in the Reserve Account would be equal
to or greater than the Certificate Balance. See "Description of the
Certificates--Distributions of Principal Payments."
Optional Prepayment
If the Servicer exercises its option to purchase the Receivables after the
last day of a Collection Period on which the Pool Balance declines to 5% or less
of the Initial Pool Balance, Certificateholders will receive an amount in
respect of the Certificates equal to the outstanding Certificate Balance
together with accrued interest at the Pass Through Rate, which distribution
shall effect early retirement of the Certificates. See "Description of the
Transfer and Servicing Agreements-Termination" in the Prospectus.
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DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following, as well as other information included elsewhere in this
Prospectus Supplement and in the Prospectus, summarizes the material terms of
the Sale and Servicing Agreement, the Trust Agreement and the Administration
Agreement (collectively, the "Transfer and Servicing Agreements"). Forms of the
Transfer and Servicing Agreements have been filed as exhibits to the
Registration Statement. A copy of the Sale and Servicing Agreement will be filed
with the Commission following the issuance of the Securities. The summary does
not purport to be complete and is subject to, and qualified in its entirety by
reference to, all the provisions of the Transfer and Servicing Agreements. The
following summary supplements the description of the general terms and
provisions of the Transfer and Servicing Agreements set forth in the Prospectus,
to which description reference is hereby made.
Accounts
The Servicer will establish: the Collection Account and the Reserve
Account in the name of the Indenture Trustee on behalf of the Noteholders and
the Certificateholders; the Note Distribution Account in the name of the
Indenture Trustee on behalf of the Noteholders; and the Certificate Distribution
Account in the name of the Owner Trustee on behalf of the Certificateholders.
Each of such accounts will be a "Trust Account" as described under "Description
of the Transfer and Servicing Agreements-Accounts" in the Prospectus. Each such
Trust Account will be established initially with the trust department of Chase.
Chase, in its capacity as the initial paying agent (the "Paying Agent"), will
have the revocable right to withdraw funds from each such Trust Account (other
than the Reserve Account) for the purpose of making distributions to
Securityholders in the manner provided in the Transfer and Servicing Agreements.
[Advances
The Servicer may, in its sole discretion, make an Advance with respect to
each Actuarial Receivable in the Receivables Pool (other than a Defaulted
Receivable) equal to the excess, if any, of (x) the payment due on such
Actuarial Receivable during the related Collection Period, over (y) the payment
actually received by the Servicer with respect to such Receivable from the
Obligor or from the payment of the Purchase Amount during or with respect to
such Collection Period. The Servicer may elect not to make any Advance with
respect to a Receivable to the extent that the Servicer, in its sole discretion,
determines that such Advance is not recoverable from subsequent payments on such
Receivable.
[To the extent that the Servicer makes an Advance with respect to any
prior Distribution Date which remains unreimbursed on any Distribution Date, the
Servicer shall be entitled to reimbursement from the Reserve Account to the
extent of funds therein.]
The Servicer will deposit all Advances with respect to any Distribution
Date into the Collection Account on the related Deposit Date.]
Servicing Compensation and Payment of Expenses
The Servicer will be entitled to receive the Servicing Fee for each
Collection Period. The "Servicing Fee Rate" with respect to the Servicing Fee
for the Servicer will be ___% per annum, and the Servicing Fee for any
Distribution Date shall equal an amount equal to the sum of (i) the product of
the Servicing Fee Rate divided by 12 and the Pool Balance as of the related
Settlement Date and (ii) any Late Fees paid by the Obligors during the related
Collection Period. In addition, [except under certain circumstances] the
Servicing Fee will include Investment Earnings on amounts on deposit in each
Trust Account. "Late Fees" include late charges, credit related extension fees
or other administrative fees or similar charges allowed by applicable law with
respect to the Receivables.
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The amount of the Servicing Fee (including the portion thereof
attributable to Late Fees) was determined in light of the duties of the Servicer
under the Transfer and Servicing Agreements as well as with a view toward
providing the Servicer with a reasonable profit. The Servicing Fee (including
such Late Fees) is comparable to fees that would be paid to parties unaffiliated
with the Bank. See "Description of the Transfer and Servicing
Agreements-Servicing Compensation and Payment of Expenses" and "--Net Deposits"
in the Prospectus.
Servicing Procedures
The Servicer will service the Receivables and will make reasonable efforts
to collect all payments due with respect to the Receivables and, in a manner
consistent with the Sale and Servicing Agreement and with the terms of the
Receivables, will follow such collection and servicing procedures as it follows
with respect to comparable new or used automobile receivables that it services
for itself or others and that are consistent with prudent industry standards.
Except as otherwise specified in the Sale and Servicing Agreement, no extensions
of, or other modifications to, the Receivables will be made by the Servicer if
such modifications would have a material adverse effect on the interests of the
Securityholders. In addition, among other things, the Agreement will provide
that the Servicer may not change the amount of (except with respect to a
prepayment of a scheduled payment that does not result in a deferral of any
other scheduled payment), or reschedule the Due Date of, any scheduled payment
to a date more than 30 days from the original Due Date, decrease the Contract
Rate of, or extend any Receivable beyond the Final Scheduled Certificate
Distribution Date.
In the event that the Servicer fails to comply with the foregoing terms of
the Sale and Servicing Agreement, it will be required to purchase the affected
Receivable for the Purchase Amount as of the last day of the Collection Period
on which it became aware or receives written notice from the Trustee of such
failure. The purchase obligation will constitute the sole remedy available to
the Securityholders or the Trustee for any such uncured breach.
The Bank will offer certain obligors or classes of obligors on an annual
basis a one month noncredit related extension of a regularly scheduled payment
otherwise due under a Receivable. The Sale and Servicing Agreement establishes
criteria governing such extensions.
See "Description of the Transfer and Servicing Agreements-Servicing
Procedures" in the Prospectus.
Distributions
Deposits to Collection Account. On or before each Distribution Date, the
Servicer will cause all collections and other amounts constituting the Total
Distribution Amount to be deposited in the Collection Account together with
amounts withdrawn by the Trustee from the Reserve Account and deposited in the
Collection Account [and the amount of any Advance to be deposited into the
Collection Account.]
The "Total Distribution Amount" for a Distribution Date shall be the sum
of the aggregate collections (including any Liquidation Proceeds, any Purchase
Amounts paid by the Seller and the Servicer and any amounts received from
Dealers with respect to Receivables) received in respect of the Receivables
during the related Collection Period [, all Advances made by the Servicer with
respect to such Distribution Date] and, under certain circumstances, Investment
Earnings on the Trust Accounts during such Collection Period. The Total
Distribution Amount on any Distribution Date shall exclude all payments and
proceeds (including any Liquidation Proceeds and any amounts received from
Dealers with respect to Receivables) of (i) any Receivables the Purchase Amount
of which has been included in the Total Distribution Amount in a prior
Collection Period, (ii) any Defaulted Receivable after and to the extent of the
reassignment of such Defaulted Receivable by the Trust to the Seller and (iii)
any Late Fees.
The "Principal Distribution Amount" for a Distribution Date shall be the
sum of the following amounts, without duplication, with respect to the preceding
Collection Period: (i) that portion of all collections received during such
Collection Period and (including any Liquidation Proceeds and any amounts
received from Dealers with respect
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to Receivables) allocable to principal; (ii) the principal balance of each
Receivable that became a Defaulted Receivable during the related Collection
Period (except to the extent included in (iii) below); and (iii) to the extent
attributable to principal, the Purchase Amount received with respect to each
Receivable repurchased by the Seller or purchased by the Servicer under an
obligation which arose during the related Collection Period (except to the
extent included in (i) above).
Deposits to the Distribution Accounts. On each Distribution Date, the
Servicer shall instruct the Trustee or the Paying Agent to make the following
deposits and distributions, to the extent of the amount then on deposit in the
Collection Account, in the following order of priority (except under the limited
circumstances provided herein):
[(i) to the Servicer, to the extent of the Total Distribution
Amount, the Servicing Fee and all unpaid Servicing Fees from prior
Collection Periods, to the extent such amounts are not deducted from the
Servicer's remittance to the Collection Account;
(ii) to the Administrator, to the extent of the Total Distribution
Amount (as so allocated), the Administration Fee and all unpaid
Administration Fees from prior Collection Periods, to the extent such
amounts are not deducted from the Servicer's remittance to the Collection
Account;
(iii) to the Note Distribution Account, the Noteholders' Interest
Distributable Amount;
(iv) to the Certificate Distribution Account, the
Certificateholders' Interest Distributable Amount (unless the Notes have
been accelerated as described herein);
(v) to the Note Distribution Account, the Noteholders' Principal
Distributable Amount;
(vi) to the Certificate Distribution Account, the
Certificateholders' Principal Distributable Amount; and
(vii) to the Reserve Account.
On each Deposit Date (other than the first Deposit Date), the Servicer
will provide the Trustee and the Indenture Trustee with certain information with
respect to the Collection Period related to the prior Distribution Date,
including the amount of aggregate collections on the Receivables, the aggregate
amount of Receivables which became Defaulted Receivables and the aggregate
Purchase Amount of Receivables to be repurchased by the Seller or to be
purchased by the Servicer.
For purposes hereof, the following terms shall have the following
meanings:
"Certificate Balance" of the Certificates shall be an amount equal
to $_________ (approximately ___% of the Initial Pool Balance) as of the
Closing Date and, thereafter, shall be an amount equal to such initial
Certificate Balance, reduced by all amounts allocable to principal
previously distributed to Certificateholders. The Certificate Balance
shall also be reduced on any Distribution Date by the excess, if any, of
(i) the sum of (A) the Certificate Balance and (B) the outstanding
principal amount of the Notes (in each case after giving effect to amounts
in respect of principal to be deposited in the Certificate Distribution
Account and the Note Distribution Account on such Distribution Date), over
(ii) the Pool Balance as of the close of business on the last day of the
preceding Collection Period. Thereafter, the Certificate Balance shall be
increased to the extent that any portion of the Total Distribution Amount
is available to pay the existing Certificateholders' Principal Carryover
Shortfall, but not by more than the aggregate reductions in the
Certificate Balance set forth in the preceding sentence.
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"Certificateholders' Distributable Amount" means, with respect to
any Distribution Date, the sum of the Certificateholders' Principal
Distributable Amount and the Certificateholders' Interest Distributable
Amount.
"Certificateholders' Interest Carryover Shortfall" means, with
respect to any Distribution Date, the excess of the Certificateholders'
Interest Distributable Amount for the preceding Distribution Date, over
the amount in respect of interest that is actually deposited in the
Certificate Distribution Account on such preceding Distribution Date, plus
interest on such excess, to the extent permitted by law, at the Pass
Through Rate for the related Interest Accrual Period.
"Certificateholders' Interest Distributable Amount" means, with
respect to any Distribution Date, the sum of the Certificateholders'
Monthly Interest Distributable Amount for such Distribution Date and the
Certificateholders' Interest Carryover Shortfall for such Distributable
Date.
"Certificateholders' Monthly Interest Distributable Amount" means,
with respect to any Distribution Date, one month's interest (or, in the
case of the first Distribution Date, interest accrued from and including
the Closing Date to but excluding such Distribution Date) at the Pass
Through Rate on the Certificate Balance on the immediately preceding
Distribution Date, after giving effect to all payments of principal to the
Certificateholders allocable to the reduction of the Certificate Balance
made on or prior to such Distribution Date (or, in the case of the First
Distribution Date, on the Closing Date).
"Certificateholders' Monthly Principal Distributable Amount" means,
with respect to any Distribution Date prior to the Distribution Date on
which the Notes are paid in full, zero; and with respect to any
Distribution Date commencing on the Distribution Date on which the Notes
are paid in full, the Principal Distribution Amount (less, on the
Distribution Date on which the Notes are paid in full, the portion thereof
payable on the Notes).
"Certificateholders' Principal Carryover Shortfall" means, as of the
close of any Distribution Date, the excess of the Certificateholders'
Principal Distributable Amount over the amount in respect of principal
that is actually deposited in the Certificate Distribution Account.
"Certificateholders' Principal Distributable Amount" means, with
respect to any Distribution Date, the sum of the Certificateholders'
Monthly Principal Distributable Amount for such Distribution Date and the
Certificateholders' Principal Carryover Shortfall as of the close of the
preceding Distribution Date; provided, however, that the
Certificateholders' Principal Distributable Amount shall not exceed the
Certificate Balance. In addition, on the Final Scheduled Certificate
Distribution Date, the principal required to be distributed to
Certificateholders will include the lesser of (a) any payments of
principal due and remaining unpaid on each Receivable in the Trust as of
the Final Scheduled Maturity Date, or (b) the amount that is necessary
(after giving effect to the other amounts to be deposited in the
Certificate Distribution Account on such Distribution Date and allocable
to principal) to reduce the Certificate Balance to zero. In addition, on
any Distribution Date which, after giving effect to all distributions to
the Servicer, the Noteholders and the Certificateholders on such
Distribution Date, (i) the outstanding principal balance of the Notes is
zero and (ii) the amount on deposit in the Reserve Account is equal to or
greater than the Certificate Balance, the Certificateholders' Principal
Distributable Amount shall include an amount equal to such Certificate
Balance.
"Liquidation Proceeds" means with respect to any Receivable (i)
insurance proceeds, (ii) the monies collected during a Collection Period
from whatever source on a Defaulted Receivable and (iii) proceeds of a
Financed Vehicle sold after repossession, in each case, net of any
liquidation expenses and payments required by law to be remitted to the
Obligor.
"Noteholders' Distributable Amount" means, with respect to any
Distribution Date, the sum of the Noteholders' Principal Distributable
Amount and the Noteholders' Interest Distributable Amount.
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"Noteholders' Interest Carryover Shortfall" means, with respect to
any Distribution Date, the excess of the Noteholders' Interest
Distributable Amount for the preceding Distribution Date, over the amount
in respect of interest that is actually deposited in the Note Distribution
Account on such preceding Distribution Date, plus interest on the amount
of interest due but not paid to Noteholders on the preceding Distribution
Date, to the extent permitted by law, at the respective Interest Rates
borne by each class of the Notes for the related Interest Accrual Period.
"Noteholders' Interest Distributable Amount" means, with respect to
any Distribution Date, the sum of the Noteholders' Monthly Interest
Distributable Amount for such Distribution Date and the Noteholders'
Interest Carryover Shortfall for such Distribution Date.
"Noteholders' Monthly Interest Distributable Amount" means, with
respect to any Distribution Date, in the case of each class of Notes, one
month's interest (or, in the case of the first Distribution Date, interest
accrued from and including the Closing Date to but excluding such
Distribution Date) at the respective Interest Rate for such class on the
outstanding principal balance of the Notes of such class on such
Distribution Date (or, in the case of the first Distribution Date, on the
Closing Date), after giving effect to all payments of principal to the
Noteholders of such class, if any, on or prior to such Distribution Date.
"Noteholders' Monthly Principal Distributable Amount" means, with
respect to any Distribution Date, the Principal Distribution Amount.
"Noteholders' Principal Carryover Shortfall" means, as of the close
of any Distribution Date, the excess of the Noteholders' Principal
Distributable Amount over the amount in respect of principal that is
actually deposited in the Note Distribution Account.
"Noteholders' Principal Distributable Amount" means, with respect to
any Distribution Date, the sum of the Noteholders' Monthly Principal
Distributable Amount with respect to such Distribution Date and the
Noteholders' Principal Carryover Shortfall as of the close of the
preceding Distribution Date; provided, however, that the Noteholders'
Principal Distributable Amount shall not exceed the outstanding principal
balance of the Notes; and provided, further, that (i) the Noteholders'
Principal Distributable Amount on the Class A-1 Final Scheduled
Distribution Date shall not be less than the amount that is necessary
(after giving effect to other amounts to be deposited in the Note
Distribution Account on such Distribution Date and allocable to principal)
to reduce the outstanding principal balance of the Class A-1 Notes to
zero; and (ii) the Noteholders' Principal Distributable Amount on the
Class A-2 Final Scheduled Distribution Date shall not be less than the
amount that is necessary (after giving effect to other amounts to be
deposited in the Note Distribution Account on such Distribution Date and
allocable to principal) to reduce the outstanding principal balance of the
Class A-2 Notes to zero.
Notwithstanding the foregoing, if an Event of Default has occurred and the
Notes have been accelerated or, upon the occurrence of an Insolvency Event with
respect to the General Partner, the Certificateholders will not be entitled to
receive any distributions of interest or principal until the Notes have been
paid in full.
Subordination of Certificateholders; Reserve Account
The rights of the Certificateholders to receive distributions with respect
to the Receivables generally will be subordinated to the rights of the
Noteholders in the event of defaults and delinquencies on the Receivables as
provided in the Sale and Servicing Agreement. The protection afforded to the
Noteholders through subordination will be effected both by the preferential
right of the Noteholders to receive current distributions with respect to the
Receivables and by the establishment of the Reserve Account. The Reserve Account
will be created with a deposit initially by the Seller on the Closing Date and
will be augmented on each Distribution Date by the deposit therein of the Total
Distribution Amount remaining after [reimbursement of any Servicer Advances and]
the payment of the Servicing Fee, the Administration Fee, the deposit of the
Noteholders' Interest Distributable Amount and the
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Noteholders' Principal Distributable Amount in the Note Distribution Account,
and the deposit of the Certificateholders' Distributable Amount in the
Certificate Distribution Account, in each case as described above under
"--Distributions." Excess amounts on deposit in the Reserve Account will be
released on each Distribution Date to the Seller and the General Partner in
accordance with their respective interests therein to the extent that the amount
on deposit in the Reserve Account (after giving effect to withdrawals made on
such Distribution Date) exceeds the Specified Reserve Account Balance on such
Distribution Date.
"Specified Reserve Account Balance," with respect to any Distribution
Date, will be equal to the greater of (a) ___% of the Pool Balance as of the
close of business on the last day of the preceding Collection Period and (b)
____% (or such greater percentage or amount as may be set forth in the Sale and
Servicing Agreement); provided, however, that the amount in clause (a) with
respect to a Distribution Date (referred to herein as the "Current Distribution
Date") shall be equal to the amount calculated for such clause (a) for the
Distribution Date immediately preceding such Current Distribution Date if any of
the following events occur: (i) the aggregate of the Losses realized from the
Cut-off Date through the end of the Collection Period preceding such Current
Distribution Date exceeds the amount equal to ____% of the Initial Pool Balance;
(ii) the sum of (x) 12 times the Aggregate Net Losses realized during the
Collection Period immediately preceding such Current Distribution Date plus (y)
the aggregate Principal Balance as of the last day of the Collection Period
immediately preceding such Current Distribution Date of all Receivables which
have not yet been liquidated as to which the Financed Vehicles securing such
Receivables has been repossessed exceeds the amount equal to ____% of the Pool
Balance at the beginning of such Collection Period; or (iii) the aggregate
amount of scheduled payments that are delinquent by more than 60 days as of the
end of the Collection Period immediately preceding such Current Distribution
Date exceeds an amount equal to ____% of the Pool Balance as of the end of such
Collection Period; provided, further, that the Specified Reserve Account Balance
shall not exceed the sum of the outstanding aggregate principal amount of the
Notes and the Certificate Balance, and that upon payment of all the interest and
principal due on the Notes and the Certificates, the Specified Reserve Account
Balance will be zero.
If the amount on deposit in the Reserve Account prior to the ________ 199_
Distribution Date (or following the payment of the Notes in full) is greater
than the Specified Reserve Account Balance for such Distribution Date, the
Servicer shall instruct the Indenture Trustee to distribute the amount of the
excess to the Seller and the General Partner in accordance with their respective
interests therein; provided, however, that if, after giving effect to all
payments made on the Notes and Certificates on such Distribution Date, the Pool
Balance as of the end of the preceding Collection Period is less than the sum of
the outstanding principal amount of the Notes and the Certificate Balance, such
excess amount shall not be distributed to the Seller and the General Partner and
shall be retained in the Reserve Account available for application in accordance
with the Sale and Servicing Agreement. Upon the Final Scheduled Certificate
Distribution Date or the date of the optional purchase of the Receivables by the
Servicer (but only after payment of all interest and principal of the Notes and
Certificates), the Servicer shall instruct the Indenture Trustee to distribute
the Reserve Account balance to the Seller and the General Partner in accordance
with their respective interests therein. Upon any distribution to the Seller and
the General Partner of amounts from the Reserve Account, neither the Noteholders
nor the Certificateholders will have any rights in, or claims to, such amounts.
Funds will be withdrawn from the amount on deposit in the Reserve Account
to the extent that the Total Distribution Amount (after [the reimbursement of
Servicer Advances and] the payment of the Servicing Fee and the Administration
Fee) with respect to any Collection Period is less than the Noteholders'
Distributable Amount, and funds in the amount of such deficiency will be
deposited in the Note Distribution Account. In addition, funds will be withdrawn
from amounts on deposit in the Reserve Account to the extent that the portion of
the Total Distribution Amount remaining after [the reimbursement of Servicer
Advances and] the payment of the Servicing Fee and the Administration Fee and
the deposit of the Noteholders' Distributable Amount in the Note Distribution
Account is less than the Certificateholders' Distributable Amount, and funds in
the amount of such deficiency will be deposited in the Certificate Distribution
Account.
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If on any Distribution Date the entire Noteholders' Distributable Amount
for such Distribution Date (after giving effect to any amounts withdrawn from
the Reserve Account) is not deposited in the Note Distribution Account, the
Certificateholders will not receive any distributions.
After the payment in full, or the provision for such payment, of (i) all
accrued and unpaid interest on the Securities and (ii) the outstanding principal
balance of the Securities, any funds remaining on deposit in the Reserve
Account, subject to certain limitations, will be paid to the Seller and the
General Partner in accordance with their respective interests therein.
The subordination of the Certificates and the Reserve Account are intended
to enhance the likelihood of receipt by Noteholders of the full amount of
principal and interest due them and to decrease the likelihood that the
Noteholders will experience losses. In addition, the Reserve Account is intended
to enhance the likelihood of receipt by Certificateholders of the full amount of
principal and interest due them and to decrease the likelihood that the
Certificateholders will experience losses. However, in certain circumstances,
the Reserve Account could be depleted. If the amount required to be withdrawn
from the Reserve Account to cover shortfalls in collections on the Receivables
exceeds the amount of available cash in the Reserve Account, Noteholders or
Certificateholders could incur losses or a temporary shortfall in the amounts
distributed to the Noteholders or the Certificateholders could result, which
could, in turn, increase the average life of the Notes or the Certificates.
[LEGAL INVESTMENT
The Class A-1 Notes will be eligible securities for purchase by money
market funds under paragraph (a)(5) of Rule 2a-7 under the Investment Company
Act of 1940, as amended.]
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of certain United States ("U.S.")
federal income tax consequences relevant to the purchase, ownership and
disposition of the Notes and the Certificates by an investor who purchases the
Notes or the Certificates pursuant to their original issuance. This summary is
based upon the Internal Revenue Code of 1986, as amended (the "Code"), the
Treasury regulations promulgated thereunder, administrative rulings or
pronouncements and judicial decisions, all as in effect on the date hereof and
all of which are subject to change, possibly retroactively. The following
discussion does not deal with all aspects of U.S. income taxation, nor does it
address U.S. federal income tax consequences that may be relevant to certain
types of investors, such as banks, insurance companies, dealers in securities,
tax-exempt organizations or persons whose functional currency is not the U.S.
dollar, who may be subject to special treatment under the under the Code. In
addition, the following discussion does not address the tax consequences of an
investment in the Notes or the Certificates under state and local tax laws or
foreign tax laws. Accordingly, investors should consult their own tax advisors
to determine the federal, state, local, and other tax consequences that may be
relevant to their purchase, ownership and disposition of the Notes or the
Certificates based upon their particular facts and circumstances. Prospective
investors should note that no rulings have been or will be sought from the
Internal Revenue Service ("IRS") with respect to any of the U.S. federal income
tax consequences discussed herein and opinions of counsel are not binding on the
IRS or the courts. Thus, no assurance can be given that the IRS will not take
positions contrary to those described below. The opinions of Simpson Thacher &
Bartlett, special counsel to the Seller ("Federal Tax Counsel"), described
herein will be based upon certain representations and assumptions, including,
but not limited to, the assumption that all relevant parties will comply with
the terms of the Trust Agreement and related documents.
This summary is intended as an explanatory discussion of the possible
effects of the classification of the Trust as a partnership for federal income
tax purposes or investors generally and related tax matters affecting investors
generally, but does not purport to furnish information in the level of detail or
with the attention to the investor's specific tax circumstances that would be
provided by an investors own tax adviser. Accordingly, each
S-28
investor is advised to consult its own advisers with regard to the tax
consequences to it of investing in the Notes and the Certificates. An opinion of
Federal Tax Counsel will be filed as an Exhibit to a Form 8-K filed in
conjunction with the establishment of the Trust and the issuance of the
Securities.
For purposes of the following discussion, except as otherwise provided
herein, the terms "Noteholder" and "Certificateholder" refer, respectively, to
the beneficial owner of a Note or Certificate. In addition, the discussion below
assumes that Noteholders and Certificateholders will hold their Notes and
Certificates as "capital assets" (generally, property held for investment)
within the meaning of Section 1221 of the Code.
Trust Treated as Partnership
Tax Characterization of the Trust. In the opinion of Federal Tax Counsel,
the Trust will not be classified as an association (or publicly traded
partnership) taxable as a corporation. This opinion is based on, among other
things, Federal Tax Counsel's conclusions that (i) the Trust does not have
certain characteristics necessary for a business trust to be classified as an
association taxable as a corporation and (ii) the nature of the Trust's income
exempts it from the rule that certain publicly traded partnerships are taxable
as corporations.
The Seller and the Certificateholders, by their purchase of Certificates,
will agree to treat the Trust as a partnership for all U.S. tax purposes with
the assets of such partnership being the assets held by the Trust, the partners
of the partnership being the General Partner, the Certificateholders and the
Seller, and the Notes being debt of the partnership. However, the proper
characterization of the arrangement involving the Trust, the Certificateholders,
the Noteholders and the Seller is not clear.
A variety of alternative characterizations are possible. For example,
because the Certificates have certain features characteristic of debt, the
Certificates might be considered debt of the Seller or the Trust. Any such
characterization generally would not result in materially adverse tax
consequences as compared to the tax consequences that will result from treating
the Certificates as equity interests in a partnership which are described below
under the caption "Tax Consequences to Certificateholders". The following
discussion assumes that (i) the Trust will be classified as a partnership and
(ii) the Certificates will represent equity interests in such partnership, for
U.S. federal income tax purposes.
If the Trust were characterized as a corporation, however, the Trust would
be subject to corporate income tax on its taxable income. The Trust's taxable
income would include all its income on the Receivables, possibly reduced by its
interest expense on the Notes. Any such corporate income tax could materially
reduce the amount of cash available to the Trust to make payments of principal
and interest on the Notes and distributions with respect to the Certificates,
and Certificateholders could be liable for any such tax that is unpaid by the
Trust.
Tax Consequences to Noteholders
Treatment of the Notes as Indebtedness. The Trust and the Noteholders, by
their purchase of the Notes, agree to treat the Notes as debt for all U.S. tax
purposes. In the opinion of Federal Tax Counsel, the Notes will be characterized
as debt for U.S. federal income tax purposes. The discussion below assumes this
characterization of the Notes is correct.
Interest Income on the Notes. The Notes will not be considered to have
been issued with original issued discount ("OID") in excess of the statutorily
defined de minimis amount (i.e., 1/4% of the principal amount of a Note
multiplied by its weighted average to maturity). Consequently, the stated
interest thereon will be taxable to a Noteholder as ordinary interest income at
the time it is received or accrued in accordance with such Noteholder's method
of tax accounting. Under the applicable Treasury regulations, a holder of a Note
issued with a de minimis amount of OID must include such OID in income, on a pro
rata basis, as principal payments are made on the Note. A purchaser who buys a
Note for more or less than its principal amount generally will be subject,
respectively, to the premium amortization or market discount rules of the Code.
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Sale or Other Disposition. If a Noteholder sells or otherwise disposes of
a Note in a taxable transaction, the former Noteholder will recognize gain or
loss in an amount equal to the difference between the amount realized on such
sale or other disposition and the former Noteholder's adjusted tax basis in the
Note. The adjusted tax basis of a Note to a particular Noteholder generally will
equal the holder's cost therefor increased by any market discount previously
included in income by such Noteholder and decreased by the amount of bond
premium (if any) previously amortized and the amount of any payments, other than
payments of stated interest, previously received by such Noteholder with respect
to such Note. Any such gain or loss will be capital gain or loss if the Note was
held as a capital asset, except to the extent such gain represents accrued
interest or accrued market discount not previously included in income. Capital
losses generally may be used only to offset capital gains.
Foreign Noteholders. For purposes of this discussion, the term "Foreign
Investor" means any person other than (i) a citizen or resident of the United
States, (ii) a corporation, partnership or other entity organized in or under
the laws of the United States or any political subdivision thereof or (iii) an
estate or trust the income of which is includible in gross income for U.S.
federal income tax purposes regardless of its source.
Under present U.S. federal income tax law, and subject to the discussion
below concerning backup withholding:
(a) no withholding of U.S. federal income tax will be required with
respect to the payment by the Trust of principal or interest on a Note
owned by a Foreign Investor, provided that the beneficial owner of the
Note (i) is not actually or constructively a "10 percent shareholder" of
the Trust (including a holder of 10% or more of such Trust's outstanding
Certificates) or the General Partner, (ii) is not a "controlled foreign
corporation" with respect to which the Trust or the General Partner is a
"related person" within the meaning of the Code and (iii) satisfies the
statement requirement (described generally below) set forth in Section
871(h) and Section 881(c) of the Code and the regulations thereunder; and
(b) no withholding of United States federal income tax will be
required with respect to any gain realized by a Foreign Investor upon the
sale, exchange or retirement of a Note provided that, in the case of any
gain representing accrued interest, the conditions described in (a) above
are satisfied.
To satisfy the requirement referred to in (a)(iii) above, the beneficial
owner of such Note, or a financial institution holding the Note on behalf of
such owner, must provide, in accordance with specified procedures, the U.S.
entity that would otherwise be required to withhold U.S. taxes with a statement
to the effect that the beneficial owner is not a U.S. person. Pursuant to
current temporary Treasury regulations, these requirements will be met if (i)
the beneficial owner provides his name and address, and certifies, under
penalties of perjury that he, she or it is not a "U.S. person" (which
certification may be made on an IRS Form W-8 or successor form), or (ii) a
financial institution or securities clearing organization holding the Note on
behalf of such beneficial owner certifies, under penalties of perjury, that such
statement has been received by it and furnishes the U.S. entity otherwise
required to withhold U.S. taxes with a copy thereof.
If a Foreign Investor cannot satisfy the requirements of the "portfolio
interest" exception described in (a) above, payments of premium, if any, and
interest (including OID) made to a Foreign Investor with respect to a Note will
be subject to a 30% U.S. withholding tax unless the beneficial owner of the Note
provides the U.S. entity otherwise required to withhold U.S. taxes with a
properly executed (i) IRS Form 1001 (or successor form) claiming an exemption
from withholding under the benefit of a tax treaty or (ii) IRS Form 4224 (or
successor form) stating that the interest paid on the Note is not subject to
U.S. withholding tax because such interest income is effectively connected with
the beneficial owner's conduct of a trade or business in the United States.
If a Foreign Investor is engaged in a trade or business in the United
States and premium, if any, or interest on the Note is effectively connected
with the conduct of such trade or business, the Foreign Investor, although
exempt from the U.S. withholding tax discussed above, will be subject to U.S.
federal income tax on such premium, if any, and interest on a net income basis
in the same manner as if it were a U.S. person. In addition,
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if such Foreign Investor is a foreign corporation, it may be subject to a branch
profits tax equal to 30% of its effectively connected earnings and profits for
the taxable year, subject to adjustments. For this purpose, such premium, if
any, and interest on Note will be included in such foreign corporation's
effectively connected earnings and profits.
Any gain or income realized by a Foreign Investor upon the sale, exchange
or retirement of a Note generally will not be subject to U.S. federal income tax
unless (i) such gain or income is effectively connected with a trade or business
conducted by the Foreign Investor in the United States and (ii) in the case of a
Foreign Investor who is an individual, such individual is present in the United
States for 183 days or more in the taxable year of such sale, exchange or
retirement, and certain other conditions are met.
Information Reporting and Backup Withholding. In general, information
reporting requirements will apply to certain payment of principal, interest and
premium, if any, paid on the Notes and to the proceeds from the sale of a Note
paid to U.S. persons, other than certain exempt recipients (such as
corporations). A 31% U.S. backup withholding tax will apply to such payments if
the U.S. person fails to provide a taxpayer identification number or
certification of foreign or other exempt status or fails to report in full
dividend and interest income.
No information reporting or backup withholding will be required with
respect to payments made by the Trust to a Foreign Investor if a statement
described in (a)(iii) above under the caption "Foreign Noteholders" has been
received by the U.S. entity otherwise required to withhold U.S. taxes and such
entity does not have actual knowledge that the beneficial owner is a U.S.
person.
In addition, backup withholding and information reporting will not apply
if payments of principal, interest and premium (if any) on a Note are paid or
collected by a foreign office of a custodian, nominee or other foreign agent on
behalf of the beneficial owner of such Note, or if a foreign office of a broker
(as defined in applicable Treasury regulations) pays the proceeds from the sale
of a Note to the owner thereof. If, however, such nominee, custodian, agent or
broker is, for U.S. federal income tax purposes, a U.S. person, a controlled
foreign corporation or a foreign person that derives 50% or more of its gross
income for certain periods from the conduct of a trade or business in the United
States, such payments will not be subject to backup withholding but will be
subject to information reporting, unless (i) such custodian, nominee, agent or
broker has documentary evidence in its records that the beneficial owner is not
a U.S. person and certain other conditions are met or (ii) the beneficial owner
otherwise establishes an exemption. Temporary Treasury regulations provide that
the Treasury is considering whether backup withholding will apply with respect
to such payments of principal, interest or the proceeds from a sale that are not
subject to backup withholding under the current regulations. Under proposed
Treasury regulations, not currently in effect, backup withholding will not apply
to such payments absent actual knowledge that the payee is a U.S. person.
Payments of principal, interest and premium (if any) on a Note paid to the
beneficial owner of a Note by a United States office of a custodian, nominee or
agent, or the payment by the United States office of a broker of the proceeds
from the sale of a Note, will be subject to both backup withholding and
information reporting unless the beneficial owner (i) provides the statement
referred to in (a)(iii) above and the payor does not have actual knowledge that
the beneficial owner is a U.S. person or (ii) otherwise establishes an
exemption.
Any amounts withheld under the backup withholding rules will be allowed as
a refund or a credit against such holder's U.S. federal income tax liability
provided the required information is furnished to the IRS.
Possible Alternative Classification of the Notes. If, contrary to the
opinion of Federal Tax Counsel, the IRS successfully asserted that one or more
of the Notes did not represent debt for U.S. federal income tax purposes, the
Notes might be treated as equity interests in the Trust. Treatment of the Notes
as equity interests in the Trust could have adverse tax consequences to certain
Noteholders. For example, income to Foreign Investors generally would be subject
to U.S. tax and U.S. tax return filing and withholding requirements and
Noteholders who are individuals might be subject to certain limitations on their
ability to deduct their allocable share of the Trust's expenses. See "Tax
Consequences to Certificateholders" below.
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Tax Consequences to Certificateholders
Treatment of the Trust as a Partnership. As discussed above under the
caption "Tax Characterization of the Trust", the following discussion assumes
that (i) the Trust will be treated as a partnership (other than a publicly
traded partnership) and (ii) the Certificates represent equity interests in such
partnership, for U.S. federal income tax purposes.
Partnership Taxation. As a partnership, the Trust will not be subject to
U.S. federal income tax. Rather, each Certificateholder will be required to
separately take into account such Certificateholder's allocable share of the
Trust's income, gains, losses, deductions and credits. The Trust's income will
consist primarily of interest and finance charges earned on the Receivables
(including appropriate adjustments for market discount, OID and bond premium)
and any gain realized upon the collection or disposition of Receivables. The
Trust's deductions will consist primarily of interest accruing with respect to
the Notes, servicing and other fees, and losses or deductions realized upon the
collection or disposition of Receivables.
The tax items of a partnership are allocable to the partners in accordance
with the Code, the relevant Treasury regulations promulgated thereunder and the
partnership agreement (here, the Trust Agreement and related documents).
However, inasmuch as the Trust's payment of the Pass-Through Rate on the
Certificates is payable to the Certificateholders without regard to the income
of the Trust, the Trust's payment of such amounts to Certificateholders should
be treated (and the Trust intends to so treat such payments) as "guaranteed
payments" within the meaning of Section 707(c) of the Code, and not as a
distributive share of the Trust's income. Such guaranteed payments will be
considered ordinary income to a Certificateholder but may not be considered
interest income for U.S. federal income tax purposes.
In the event that such tax treatment is not respected, the Trust Agreement
provides that the Certificateholders will be allocated gross income of the Trust
for each calendar month equal to the sum of (i) the amount of interest that
accrues on the Certificates for such calendar month, (ii) an amount equivalent
to interest that accrues during such period on amounts previously due on the
Certificates but not yet distributed, and (iii) any gross income of the Trust
attributable to discount on the Receivables that corresponds to any excess of
the principal amount of the Certificates over their initial issue price. All
remaining income of the Trust will be allocated to the General Partner and the
Seller. All deductions and losses also will be allocated to the General Partner
and the Seller.
Based on the economic arrangement of the parties, such allocations should
be respected for U.S. federal income tax purposes. However, no assurance can be
given that the IRS would not require the Trust to allocate a greater amount of
income to the Certificateholders. Moreover, even under the foregoing method of
allocation, Certificateholders may be allocated income equal to the entire Pass
Through Rate plus the other items described above, even though the Trust may not
have sufficient cash to make current cash distributions with respect to such
income. Thus, cash method Certificateholders will be required effectively to
report income from the Certificates on an accrual basis and all
Certificateholders will be liable for the U.S. federal income taxes due on their
allocable share of the Trust's income even if they have not received any cash
distributions from the Trust with respect to such income. In addition, because
tax allocations and tax reporting will be done on a uniform basis for all
Certificateholders, Certificateholders purchasing Certificates at different
times and at different prices may be required to recognize an amount of taxable
income that is greater or less than the amount reported to them by the Trust.
See "Allocations between Transferors and Transferees" below.
The Trust intends to make all tax calculations relating to income and
allocations to Certificateholders on an aggregate basis. If the IRS were to
require that such calculations be made separately for each Receivable, the Trust
might be required to incur additional expense but it is believed that there
would not be a material adverse effect on Certificateholders.
Discount and Premium. It is anticipated that the Receivables held by the
Trust will not have been issued with OID. Therefore, the Trust should not have
to accrue any OID income. However, the purchase price
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paid by the Trust for the Receivables may be greater or less than the remaining
principal balance of the Receivables at the time of purchase. If so, the
Receivables will have been acquired at a premium or discount, as the case may
be. (As indicated above, the Trust will make this calculation on an aggregate
basis, but might be required to recompute it on a Receivable-by-Receivable
basis.)
If the Trust acquires the Receivables at a market discount or premium, the
Trust will elect to include any such discount in income currently as it accrues
over the life of the Receivables or to offset any such premium against interest
income on the Receivables. As indicated above, a portion of such market discount
income or premium deduction may be allocated to Certificateholders.
Section 708 Termination. Under Section 708 of the Code, the Trust will be
deemed to terminate for U.S. federal income tax purposes if 50% or more of the
capital and profits interests in the Trust are sold or exchanged within a
12-month period. If such a termination occurs, the Trust will be considered to
distribute its assets to the partners, who would then be treated as
recontributing those assets to the Trust, as a new partnership. The Trust will
not comply with certain technical requirements that might apply when such a
constructive termination occurs. As a result, the Trust may be subject to
certain tax penalties and may incur additional expenses if it is required to
comply with those requirements. Furthermore, the Trust might not be able to
comply due to lack of data.
Under recently proposed regulations that are not yet effective, a
constructive termination of the Trust under Section 708 of the Code would no
longer result in a deemed distribution. Instead, upon such a constructive
termination, the Trust would be considered to have transferred all of its assets
and liabilities to a new Trust and then to immediately liquidate and distribute
the interests in the new Trust to the continuing Certificateholders.
Disposition of Certificates. Generally, a Certificateholder will recognize
capital gain or loss on a sale or other taxable disposition of Certificates in
an amount equal to the difference between the amount realized by the
Certificateholder on such sale or disposition and the Certificateholder's tax
basis in such Certificates. A Certificateholder's tax basis in a Certificate
generally will equal the Certificateholder's cost therefor increased by the
Certificateholder's allocable share of Trust income and decreased by any
distributions received with respect to such Certificate. In addition, both the
tax basis in the Certificates and the amount realized on a sale of a Certificate
would include the Certificateholder's allocable share of the Notes and other
liabilities of the Trust. A Certificateholder acquiring Certificates at
different prices may be required to maintain a single aggregate adjusted tax
basis in such Certificates, and, upon sale or other disposition of some of the
Certificates, allocate a portion of such aggregate tax basis to the Certificates
sold (rather than maintaining a separate tax basis in each Certificate for
purposes of computing gain or loss on a sale of that Certificate).
Any gain on the sale of a Certificate attributable to the
Certificateholder's share of unrecognized accrued market discount on the
Receivables generally would be treated as ordinary income to the
Certificateholder and would give rise to special tax reporting requirements. The
Trust does not expect to have any other assets that would give rise to such
special reporting requirements. Thus, to avoid those special reporting
requirements, the Trust will elect to include market discount in income as it
accrues.
If a Certificateholder is required to recognize an aggregate amount of
income (not including income attributable to disallowed itemized deductions
described above) over the life of the Certificates that exceeds the aggregate
cash distributions with respect thereto, such excess generally will give rise to
a capital loss upon the retirement of the Certificates. The deductibility of
capital losses is subject to limitations.
Allocations Between Transferors and Transferees. In general, the Trust's
taxable income and losses will be determined monthly and the tax items 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, an investor purchasing Certificates
may be allocated tax items (which will affect its tax liability and tax basis)
attributable to periods before the actual transaction.
S-33
The use of such a monthly convention may not be permitted by existing
regulations. If a monthly convention is not allowed (or only applies to
transfers of less than all of the partner's interest), taxable income or losses
of the Trust might be reallocated among the Certificateholders. The Trustee is
authorized to revise the Trust's method of allocation between transferors and
transferees to conform to a method permitted by future regulations.
Section 754 Election. In the event that a Certificateholder sells its
Certificates at a profit (or loss), the purchasing Certificateholder will have a
higher (or lower) tax basis in the Certificates than the selling
Certificateholder had. The tax basis of the Trust's assets will not be adjusted
to reflect that higher (or lower) basis unless the Trust were to file an
election under Section 754 of the Code. In order to avoid the administrative
complexities that would be involved in keeping accurate accounting records, as
well as potentially onerous information reporting requirements, the Trust will
not make such an election. As a result, Certificateholders might be allocated a
greater or lesser amount of Trust income than would be appropriate based on
their own purchase price for Certificates.
Administrative Matters. The Trustee will be required to keep complete and
accurate books for the Trust. Such books will be maintained for financial
reporting and tax purposes on an accrual basis and the fiscal year of the Trust
will be the calendar year. The Trustee will file a partnership information
return (IRS Form 1065) with the IRS for each taxable year of the Trust and will
report each Certificateholder's allocable share of items of Trust income and
expense to holders and the IRS on Schedule K-1. The Trust will provide the
Schedule K-1 information to nominees that fail to provide the Trust with the
information statement described below and such nominees will be required to
forward such information to the beneficial owners of the Certificates.
Generally, Certificateholders must file tax returns that are consistent with the
information return filed by the Trust or be subject to penalties unless the
Certificateholder notifies the IRS of all such inconsistencies.
Under Section 6031 of the Code, any person that holds Certificates as a
nominee at any time during a calendar year is required to furnish the Trust with
a statement containing certain information on the nominee, the beneficial owners
and the Certificates so held. Such information includes (i) the name, address
and taxpayer identification number of the nominee and (ii) as to each beneficial
owner (x) the name, address and identification number of such person, (y)
whether such person is a United States person, a tax-exempt entity or a foreign
government, an international organization, or any wholly owned agency or
instrumentality of either of the foregoing, and (z) certain information on
Certificates that were held, bought or sold on behalf of such person throughout
the year. In addition, brokers and financial institutions that hold Certificates
through a nominee are required to furnish directly to the Trust information as
to themselves and their ownership of Certificates. A clearing agency registered
under Section 17A of the Exchange Act is not required to furnish any such
information statement to the Trust. The information referred to above for any
calendar year must be furnished to the Trust on or before the following January
31. Nominees, brokers and financial institutions that fail to provide the Trust
with the information described above may be subject to penalties.
The General Partner will be designated as the tax matters partner in the
related Trust Agreement and, as such, will be responsible for representing the
Certificateholders in any dispute with the IRS. The Code provides for
administrative examination of a partnership as if the partnership were a
separate and distinct taxpayer. Generally, the statute of limitations for
partnership items does not expire before three years after the date on which the
partnership information return is filed. Any adverse determination following an
audit of the return of the Trust by the appropriate taxing authorities could
result in an adjustment of the returns of the Certificateholders, and, under
certain circumstances, a Certificateholder may be precluded from separately
litigating a proposed adjustment to the items of the Trust. An adjustment could
result in an audit of a Certificateholder's U.S. federal income tax returns and,
consequently, to adjustments of items not related to the Certificateholder's
allocable share of the income and losses of the Trust.
Tax Consequences to Foreign Certificateholders. The Certificates may not
be acquired by or for the account of an individual or entity that is not a U.S.
person as defined in Section 7701(a)(30) of the Code, and any transfer of a
Certificate to a person that is not a U.S. person shall be void. In addition,
under Section 1446
S-34
of the Code, a partnership that is engaged is a U.S. trade or business must
withhold U.S. federal income taxes on its income that is "effectively connected"
with the conduct of such trade or business to the extent such income is
allocable to a Foreign Investor. It is not clear whether the Trust would be
considered to be engaged in a U.S. trade or business for U.S. federal income tax
purposes. Accordingly, in order to protect the Trust from the potential adverse
consequences Foreign Investors will be subject to U.S. withholding tax on that
portion of the Trust's income that is allocable to such Foreign Investors, as if
such income were effectively connected to a U.S. trade or business, at a rate of
[35%] for Foreign Investors that are taxable as corporations and [39.6%] for all
other Foreign Investors. In determining a Certificateholder's withholding
status, the U.S. entity otherwise required to withhold U.S. taxes may rely on
IRS Form W-8, an IRS Form W-9 or a Certificateholder's certification of
nonforeign status signed under penalties of perjury.
Consequently, each Foreign Investor will be required to file a U.S. income
tax return on its share of the Trust's income. In addition, each Foreign
Investor must obtain a U.S. taxpayer identification number from the IRS and
submit that number to the U.S. entity otherwise required to withhold U.S. taxes
on Form W-8 in order to ensure appropriate crediting of taxes withheld. A
Foreign Investor generally would be entitled to file with the IRS a claim for
refund with respect to such withheld taxes, taking the position that no taxes
were due because the Trust was not engaged in a U.S. trade or business. However,
interest payments made (or accrued) to a Foreign Investor may not be considered
"portfolio interest" and, consequently, such payments may be subject to U.S.
withholding tax at a rate of 30 percent, unless reduced, or eliminated, pursuant
to an applicable U.S. tax treaty. In such case, a Foreign Investor would only be
entitled to claim a refund for that portion of the taxes in excess of the taxes
that should have been withheld with respect to such payments.
Backup Withholding. Distributions made on the Certificates and proceeds
from the sale of the Certificates generally will be subject to the 31% U.S.
backup withholding tax if the Certificateholder fails to comply with certain
identification procedures or otherwise fails to establish an exemption.
CERTAIN STATE TAX CONSEQUENCES
The above discussion does not address the tax treatment of the Trust, the
Notes, the Certificates, Noteholders or Certificateholders under any state tax
laws. Prospective investors are urged to consult with their own tax advisors
regarding the state tax treatment of the Trust as well as any state tax
consequences to them of purchasing, holding and disposing of Notes or
Certificates.
ERISA CONSIDERATIONS
The Notes
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and Section 4975 of the Code, impose certain requirements on employee benefit
plans and certain other plans and arrangements, including individual retirement
accounts and annuities, Keogh plans and certain collective investment funds or
insurance company general or separate accounts in which such plans, accounts or
arrangements are invested, that are subject to the fiduciary responsibility
provisions of ERISA and/or Section 4975 of the Code (collectively, "Plans"), and
on persons who are fiduciaries with respect to Plans, in connection with the
investment of "plan assets" of any Plan ("Plan Assets"). ERISA generally imposes
on Plan fiduciaries certain general fiduciary requirements, including those of
investment prudence and diversification and the requirement that a Plan's
investments be made in accordance with the documents governing the Plan.
Generally, any person who has discretionary authority or control respecting the
management or disposition of Plan Assets, and any person who provides investment
advice with respect to such assets for a fee, is a fiduciary with respect to
such Plan Assets.
Subject to the considerations described below, the Notes are eligible for
purchase with Plan Assets of any Plan.
S-35
ERISA and Section 4975 of the Code prohibit a broad range of transactions
involving Plan Assets and persons ("Parties in Interest" under ERISA and
"Disqualified Persons" under the Code) who have certain specified relationships
to a Plan or its Plan Assets, unless a statutory or administrative exemption is
available. Parties in Interest or Disqualified Persons that participate in a
prohibited transaction may be subject to a penalty imposed under ERISA and/or an
excise tax imposed pursuant to Section 4975 of the Code, unless a statutory or
administrative exemption is available. These prohibited transactions generally
are set forth in Section 406 of ERISA and Section 4975 of the Code.
Any fiduciary or other Plan investor considering whether to purchase the
Notes with Plan Assets of any Plan should determine whether such purchase is
consistent with its fiduciary duties and whether such purchase would constitute
or result in a non-exempt prohibited transaction under ERISA and/or Section 4975
of the Code because any of the Seller, the Servicer, the Indenture Trustee, the
Owner Trustee, any Certificateholder or any other parties may be deemed to be
benefiting from the issuance of the Notes and are Parties in Interest or
Disqualified Persons with respect to the investing Plan. Any fiduciary or other
Plan investor considering whether to purchase the Notes should consult with its
counsel regarding the applicability of the fiduciary responsibility and
prohibited transaction provisions of ERISA and Section 4975 of the Code to such
investment and the availability of any prohibited transaction exemption, e.g.,
DOL Prohibited Transaction Exemptions 96-23 (relating to transactions determined
by "in-house asset managers"), 95-60 (relating to transactions involving
insurance company general accounts), 91-38 (relating to transactions involving
bank collective investment funds), 90-1 (relating to transactions involving
insurance company pooled separate accounts) and 84-14 (relating to transactions
determined by independent "qualified professional asset managers"). A purchaser
of the Notes should be aware, however, that even if the conditions specified in
one or more of those exemptions are met, the scope of the exemptive relief
provided by the exemption might not cover all acts which might be construed as
prohibited transactions.
In addition, under U.S. Department of Labor Regulation Section 2510.3-101
(the "Plan Asset Regulation"), the purchase with Plan Assets of equity interests
in the Trust could, in certain circumstances, cause the Receivables and other
assets of the Trust to be deemed Plan Assets of the investing Plan which, in
turn, would subject the Trust and its assets to the fiduciary responsibility
provisions of ERISA and the prohibited transaction provisions of ERISA and
Section 4975 of the Code. Nevertheless, because the Notes (a) should be treated
as indebtedness under local law and debt, rather than equity, for tax purposes
(see "Certain Federal Income Tax Considerations--Tax Consequences to Holders of
the Notes--Treatment of the Notes as Indebtedness" in the Prospectus), and (b)
should not be deemed to have any "substantial equity features," purchases of the
Notes with Plan Assets should not be treated as equity investments and,
therefore, the Receivables and other assets included as assets of the Trust
should not be deemed to be Plan Assets of the investing Plans. Those conclusions
are based, in part, upon the traditional debt features of the Notes, including
the reasonable expectation of purchasers of Notes that the Notes (which are
highly rated by the Rating Agencies) will be repaid when due, as well as the
absence of conversion rights, warrants and other typical equity features. Before
purchasing the Notes, a fiduciary or other Plan investor should itself confirm
that the Notes constitute indebtedness, and have no substantial equity features,
for purposes of the Plan Asset Regulation.
The Notes may not be purchased with Plan Assets of any Plan if any of the
Seller, the Servicer, the Indenture Trustee, the Owner Trustee or any of their
respective affiliates (a) has investment or administrative discretion with
respect to the Plan Assets used to effect such purchase; (b) has authority or
responsibility to give, or regularly gives, investment advice with respect to
such Plan Assets, for a fee and pursuant to an agreement or understanding that
such advice (1) will serve as a primary basis for investment decisions with
respect to such Plan Assets, and (2) will be based on the particular investment
needs of such Plan; or (c) is an employer maintaining or contributing to such
Plan. Each Purchaser shall be deemed to represent that its purchase of a Note or
any interest therein does not violate the foregoing limitation.
S-36
The Certificates
Because purchases of the Certificates are equity investments, the
Certificates may not be purchased by, on behalf of or with the Plan Assets of
any Plan. In addition, each purchaser of the Certificates will be deemed to have
represented that it is neither a Plan nor purchasing the Certificates on behalf
of or with Plan Assets of a Plan. The foregoing restrictions shall not apply to
acquisitions of Certificates with assets at the general account of an insurance
company, to the extent permitted under Section 401(c) of ERISA.
Any fiduciary or other Plan investor considering whether to purchase any
Securities on behalf of or with Plan Assets of any Plan should consult with its
counsel and refer to this Prospectus Supplement and the Prospectus for guidance
regarding the ERISA Considerations applicable to the Securities offered hereby.
For further information see "ERISA Considerations" in the Prospectus.
UNDERWRITING
Subject to the terms and conditions set forth in an Underwriting Agreement
(the "Note Underwriting Agreement"), the Seller has agreed to sell to the
underwriters named below (the "Note Underwriters"), and each of the Note
Underwriters has severally agreed to purchase, the principal amount of Notes set
forth opposite its name below:
Principal Amount of Principal Amount of
Note Underwriters Class A-1 Notes Class A-2 Notes
- ----------------- ------------------- -------------------
[________________]............
[________________]............
------------------- -------------------
Total....................... $ $
=================== ===================
In the Note Underwriting Agreement, the several Note Underwriters have
agreed, subject to the terms and conditions therein, to purchase all the Notes
offered hereby if any of such Notes are purchased. The Seller has been advised
by the Note Underwriters that they propose initially to offer the Class A-1
Notes and the Class A-2 Notes to the public at the prices set forth herein, and
to certain dealers at such price less a concession not in excess of ____% of the
principal amount of the Class A-1 Notes and ____% of the principal amount of the
Class A-2 Notes. The Note Underwriters may allow and such dealers may reallow a
concession not in excess of ____% of the principal amount of the Class A-1 Notes
and ____% of the principal amount of the Class A-2 Notes to certain other
dealers. After the initial public offering, such prices and such concessions may
be changed.
Subject to the terms and conditions set forth in an underwriting agreement
(the "Certificate Underwriting Agreement" and, together with the Note
Underwriting Agreement, the "Underwriting Agreements"), the Seller has agreed to
sell to the underwriters named below (the "Certificate Underwriters" and,
together with the Note Underwriters, the "Underwriters"), and each of the
Certificate Underwriters has severally agreed to purchase, the principal amount
of the Certificates set forth opposite its name below.
Principal Amount of
Certificate Underwriters Certificates
- ------------------------ ------------------
[________________]........................................ $
[________________]........................................
---------------
Total................................................... $
===============
In the Certificate Underwriting Agreement, the several Certificate
Underwriters have agreed, subject to the terms and conditions therein, to
purchase all of the Certificates offered hereby if any of such Certificates are
purchased. The Seller has been advised by the Certificate Underwriters that they
propose initially to offer the Certificates to the public at the price set forth
herein, and to certain dealers at such price less a concession not in excess of
____% of the principal amount of the Certificates. The Certificate Underwriters
may allow and such
S-37
dealers may reallow a concession not in excess of ____% of the principal amount
of the Certificates to certain other dealers. After the initial public offering,
such prices and such concessions may be changed.
The Indenture Trustee and the Owner Trustee (on behalf of the Trust) may,
from time to time, invest the funds in the Trust Accounts in Permitted
Investments acquired from the Underwriters.
The Seller will indemnify the Underwriters against certain liabilities,
including liabilities under the Securities Act of 1933, as amended, or
contribute to payments the Underwriters may be required to make in respect
thereof.
LEGAL MATTERS
Certain legal matters relating to the issuance of the Securities will be
passed upon for the Seller by Simpson Thacher & Bartlett (a partnership that
includes professional corporations), New York, New York and certain other legal
matters will be passed upon for the Seller by ___________________, Esq., a
____________ of the Bank, and for the Underwriter by Orrick, Herrington &
Sutcliffe, New York, New York. From time to time Simpson Thacher & Bartlett and
Orrick, Herrington & Sutcliffe will provide legal services to the Seller and its
affiliates.
S-38
ANNEX X
GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Chase Manhattan
Auto Trust 199_-_ Class A-1 ___% Asset Backed Notes, Class A-2 ___% Asset Backed
Notes (the "Global Notes") and ___% Asset Backed Certificates (the "Global
Certificates," and together with the Global Notes, the "Global Securities") to
be issued will be available only in book-entry form. Investors in the Global
Securities may hold such Global Securities through any of the Depository Trust
Company ("DTC"), CEDEL or Euroclear. The Global Securities will be tradeable as
home market instruments in both the European and U.S. domestic markets. Initial
settlement and all secondary trades will settle in same-day funds.
Secondary market trading between investors holding Global Securities
through CEDEL and Euroclear will be conducted in the ordinary way in accordance
with their normal rules and operating procedures and in accordance with
conventional eurobond practice (i.e., seven calendar day settlement).
Secondary market trading between investors holding Global Securities
through DTC will be conducted according to the rules and procedures applicable
to U.S. corporate debt obligations.
Secondary cross-market trading between CEDEL or Euroclear and DTC
Participants holding Global Securities will be effected on a
delivery-against-payment basis through the respective Depositaries of CEDEL and
Euroclear (in such capacity) and as DTC Participants.
Non-U.S. holders (as described below) of Global Securities will be subject
to U.S. withholding taxes unless such holders meet certain requirements and
deliver appropriate U.S. tax documents to the securities clearing corporation
organizations or their participants.
Initial Settlement
All Global Securities will be held in book-entry form by DTC in the name
of Cede & Co. as nominee or DTC. Investors' interests in the Global Securities
will be represented through financial institutions acting on their behalf as
direct and indirect Participants in DTC. As a result, CEDEL and Euroclear will
hold positions on behalf of their participants through their respective
Depositaries, which in turn will hold such positions in accounts as DTC
Participants.
Investors electing to hold their Global Securities through DTC will follow
the settlement practice applicable to U.S. corporate debt obligations. Investor
securities custody accounts will be credited with the holdings against payment
in same-day funds on the settlement date.
Investors electing to hold their Global Securities through CEDEL or
Euroclear accounts will follow the settlement procedures applicable to
conventional eurobonds, except that there will be no temporary global security
and no "lock-up" or restricted period. Global Securities will be credited to the
securities custody accounts on the settlement date against payment in same-day
funds.
Secondary Market Trading
Since the purchaser determines the place of delivery, it is important to
establish at the time of the trade where both the purchaser's and seller's
accounts are located to ensure that settlement can be made on the desired value
date.
Trading between DTC Participants. Secondary market trading between DTC
Participants will be settled using the procedures applicable to U.S. corporate
debt obligations in same-day funds.
S-39
Trading between CEDEL and/or Euroclear Participants. Secondary market
trading between CEDEL Participants or Euroclear Participants will be settled
using the procedures applicable to conventional eurobonds in same-day funds.
Trading between DTC seller and CEDEL or Euroclear purchaser. When Global
Securities are to be transferred from the account of a DTC Participant to the
account of a CEDEL Participant or a Euroclear Participant, the purchaser will
send instructions to CEDEL, or Euroclear through a CEDEL Participant or
Euroclear Participant at least one business day prior to settlement. CEDEL or
Euroclear will instruct the respective Depositary to receive the Global
Securities against payment. Payment will include interest accrued on the Global
Securities from and including the last coupon payment date to and excluding the
settlement date. Payment will then be made by the respective Depositary to the
DTC Participant's account against delivery of the Global Securities. After
settlement has been completed, the Global Securities will be credited to the
respective clearing system and by the clearing system, in accordance with its
usual procedures, to the CEDEL Participant's or Euroclear Participant's account.
The Global Securities credit will appear the next day (European time) and the
cash debit will be backed-valued to, and the interest on the Global Securities
will accrue from, the value date (which would be the preceding day when
settlement occurred in New York). If settlement is not completed on the intended
value date (i.e., the trade fails), the CEDEL or Euroclear cash debit will be
valued instead as of the actual settlement date.
CEDEL Participants and Euroclear Participants will need to make available
to the respective clearing systems the funds necessary to process same-day funds
settlement. The most direct means of doing so is to preposition funds for
settlement, either from cash on hand or existing lines of credit, as they would
for any settlement occurring within CEDEL or Euroclear. Under this approach,
they may take on credit exposure to CEDEL or Euroclear until the Global
Securities are credited to their accounts one day later.
As an alternative, if CEDEL or Euroclear has extended a line of credit to
them, CEDEL Participants or Euroclear Participants can elect not to preposition
funds and allow that credit line to be drawn upon the finance settlement. Under
this procedure, CEDEL Participants or Euroclear Participants purchasing Global
Securities would incur overdraft charges for one day, assuming they cleared the
overdraft when the Global Securities were credited to their accounts. However,
interest on the Global Securities would accrue from the value date. Therefore,
in many cases the investment income on the Global Securities earned during the
one-day period may substantially reduce or offset the amount of such overdraft
charges, although this result will depend on each CEDEL Participant's or
Euroclear Participant's particular cost of funds.
Since the settlement is taking place during New York business hours, DTC
Participants can employ their usual procedures for sending Global Securities to
the respective Depositary for the benefit of CEDEL Participants or Euroclear
Participants. The sale proceeds will be available to the DTC seller on the
settlement date. Thus, to the DTC Participant a cross-market transaction will
settle no differently than a trade between two DTC Participants.
Trading between CEDEL or Euroclear seller and DTC purchaser. Due to time
zone differences in their favor, CEDEL Participants and Euroclear Participants
may employ their customary procedures for transactions in which Global
Securities are to be transferred by the respective clearing system, through the
respective Depositary, to a DTC Participant. The seller will send instructions
to CEDEL or Euroclear through a CEDEL Participant or Euroclear Participant at
least one business day prior to settlement. In these cases, CEDEL or Euroclear
will instruct the respective Depositary, as appropriate, to deliver the bonds to
the DTC Participant's account against payment. Payment will include interest
accrued on the Global Securities from and including the last coupon payment date
to and excluding the settlement date. The payment will then be reflected in the
account of the CEDEL Participant or Euroclear Participant the following day, and
receipt of the cash proceeds in the CEDEL Participant's or Euroclear
Participant's account would be back-valued to the value date (which would be the
preceding day, when settlement occurred in New York). Should the CEDEL
Participant or Euroclear Participant have a line of credit with its respective
clearing system and elect to be in debit in anticipation of receipt of the sale
proceeds in its account, the back-valuation will extinguish any overdraft
charges incurred over that one-day period. If settlement is not completed on the
intended value date (i.e., the trade fails), receipt of the cash proceeds in the
CEDEL Participant's or Euroclear Participant's account would instead be valued
as of the actual settlement date.
S-40
Finally, day traders that use CEDEL or Euroclear and that purchase Global
Securities from DTC Participants for delivery to CEDEL Participants or Euroclear
Participants should note that these trades would automatically fail on the sale
side unless affirmative action were taken. At least three techniques should be
readily available to eliminate this potential problem:
(a) borrowing through CEDEL or Euroclear for one day (until the
purchase side of the day trade is reflected in their CEDEL or Euroclear
accounts) in accordance with the clearing system's custom procedures;
(b) borrowing the Global Securities in the U.S. from a DTC
Participant no later than one day prior to settlement, which would give
the Global Securities sufficient time to be reflected in their CEDEL
Euroclear account in order to settle the sale side of the trade; or
(c) staggering the value dates for the buy and sell sides of the
trade so that the value date for the purchase from the DTC Participant is
at least one day prior to the value date for the sale to the CEDEL
Participant or Euroclear Participant.
Certain U.S. Federal Income Tax Documentation Requirements
Global Notes
A beneficial owner of Global Notes holding securities through CEDEL or
Euroclear (or through DTC if the holder has an address outside the U.S.) will be
subject to the 30% U.S. withholding tax that generally applies to payments of
interest (including original issue discount) on registered debt issued by U.S.
Persons, unless (i) each clearing system, bank or other financial institution
that holds customers' securities in the ordinary course of its trade or business
in the chain of intermediaries between such beneficial owner and the U.S. entity
required to withhold tax complies with applicable certification requirements and
(ii) such beneficial owner takes one of the following steps to obtain an
exemption or reduced tax rate:
Exemption for non-U.S. Persons (Form W-8). Beneficial owners of the Notes
that are non-U.S. Persons can obtain a complete exemption from the withholding
tax by filing a signed Form W-8 (Certificate of Foreign Status). If the
information shown on Form W-8 changes, a new Form W-8 must be filed within 30
days of such change.
Exemption for non-U.S. Persons with effectively connected income (Form
4224). A non-U.S. Person, including a non-U.S. corporation or bank with a U.S.
branch, for which the interest income is effectively connected with its conduct
of a trade or business in the United States, can obtain an exemption from the
withholding tax by filing Form 4224 (Exemption from Withholding of Tax on Income
Effectively Connected with the Conduct of a Trade or Business in the United
States).
Exemption or reduced rate for non-U.S. Persons resident in treaty
countries (Form 1001). Non-U.S. Persons that are beneficial owners of Notes and
who reside in a country that has a tax treaty with the United States can obtain
an exemption or reduced tax rate (depending on the treaty terms) by filing Form
1001 (Ownership, Exemption of Reduced Rate Certificate). If the treaty provides
only for a reduced rate, withholding tax will be imposed at that rate unless the
filer alternatively files Form W-8. Form 1001 may be filed by such beneficial
owner or his agent.
Exemption for U.S. Persons (Form W-9). U.S. Persons can obtain a complete
exemption from the withholding tax by filing Form W-9 (Payer's Request for
Taxpayer Identification Number and Certification).
U.S. Federal Income Tax Reporting Procedure. The beneficial owner of a
Global Security or, in the case of a Form 1001 or a Form 4224 filer, his agent,
files by submitting the appropriate form to the person through
S-41
whom it holds (the clearing agency, in the case of persons holding directly on
the books of the clearing agency). Form W-8 and Form 1001 are effective for
three calendar years and Form 4224 is effective for one calendar year.
The term "U.S. Person" means (i) a citizen or resident of the United
States, (ii) a corporation or partnership organized in or under the laws of the
United States or any political subdivision thereof or (iii) an estate or trust
the income of which is includible in gross income for United States tax
purposes, regardless of its source. This summary does not deal with all aspects
of U.S. Federal income tax withholding that may be relevant to foreign holders
of the Global Notes. Investors are advised to consult their own tax advisors for
specific tax advice concerning their holding and disposing of the Global Notes.
Global Certificates
A beneficial owner of Global Certificates holding such Certificates
through [CEDEL or Euroclear (or] through DTC if such holder has an address
outside of the U.S. [)] will be subject to U.S. holding tax at a rate of 35% in
the case of corporations and at a rate of 39.6% in the case of all other
persons, unless (i) each clearing system, bank or other financial institutions
that hold customers' securities in the ordinary course of its business in the
chain of intermediaries between such beneficial owner and the U.S. entity
required to withhold tax complies with applicable certification requirements and
(ii) such beneficial owner certifies that it is a U.S. Person on an IRS Form
W-8, IRS Form W-9 or other written certification of such beneficial owner's
non-foreign status signed under penalties of perjury.
Miscellaneous
No dealer, salesperson or other individual has been authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this Prospectus in connection with this offer made
by this Prospectus and, if given or made, such information or representations
must not be relied upon as having been authorized by Seller, the Servicer or the
Underwriters. Neither the delivery of this Prospectus nor any sale made
hereunder shall under any circumstance create an implication that there has been
no change in the affairs of the Seller, the Servicer or the Receivables since
the date thereof. This Prospectus does not constitute an offer or solicitation
by anyone in any state in which such offer or solicitation is not authorized or
in which the person making such offer or solicitation is not qualified to do so
or to anyone to whom it is unlawful to make such offer or solicitation.
S-42
INDEX OF TERMS
ABS.......................................................................S-17
ABS Table.................................................................S-18
Administration Agreement...................................................S-8
Administration Fee.........................................................S-8
Administrator..............................................................S-8
Advance..............................................................S-6, S-22
Business Day...............................................................S-3
Certificate Balance.......................................................S-24
Certificate Underwriters..................................................S-37
Certificate Underwriting Agreement........................................S-37
Certificateholders.........................................................S-5
Certificateholders' Distributable Amount..................................S-25
Certificateholders' Interest Carryover Shortfall..........................S-25
Certificateholders' Interest Distributable Amount.........................S-25
Certificateholders' Monthly Interest Distributable Amount.................S-25
Certificateholders' Monthly Principal Distributable Amount................S-25
Certificateholders' Principal Carryover Shortfall.........................S-25
Certificateholders' Principal Distributable Amount........................S-25
Certificates............................................................i, S-1
Chase......................................................................S-6
Chase Manhattan Bank USA, N.A. ............................................S-1
Chase USA (New York) ......................................................S-1
Class A-1 Final Scheduled Payment Date.....................................S-4
Class A-1 Notes.........................................................i, S-1
Class A-2 Final Scheduled Payment Date.....................................S-4
Class A-2 Notes.........................................................i, S-1
Closing Date.................................................................i
Collection Account.........................................................S-7
Collection Period..........................................................S-4
Contract Rate.............................................................S-12
Cutoff Date ...............................................................S-2
Definitive Certificates....................................................S-2
Definitive Notes...........................................................S-1
Deposit Date...............................................................S-6
Disqualified Persons......................................................S-36
Distribution Date......................................................ii, S-3
ERISA.....................................................................S-35
FDIC.........................................................................i
Final Scheduled Certificate Distribution Date..............................S-6
Final Scheduled Maturity Date..............................................S-3
Final Scheduled Payment Date...............................................S-4
Financed Vehicles..........................................................S-3
General Partner............................................................S-2
Indenture..................................................................S-1
Indenture Trustee..........................................................S-1
Initial Pool Balance.......................................................S-3
Interest Accrual Period....................................................S-4
Interest Rates.............................................................S-4
Issuer.....................................................................S-1
Liquidation Proceeds......................................................S-25
Note Underwriters.........................................................S-37
Note Underwriting Agreement...............................................S-37
S-43
Noteholders ...............................................................S-3
Noteholders' Distributable Amount.........................................S-25
Noteholders' Interest Carryover Shortfall.................................S-26
Noteholders' Interest Distributable Amount................................S-26
Noteholders' Monthly Interest Distributable Amount........................S-26
Noteholders' Monthly Principal Distributable Amount.......................S-26
Noteholders' Principal Carryover Shortfall................................S-26
Noteholders' Principal Distributable Amount...............................S-26
Notes...................................................................i, S-1
Owner Trustee..............................................................S-1
Parties in Interest.......................................................S-36
Pass Through Rate..........................................................S-5
Paying Agent..............................................................S-22
Payment Date...........................................................ii, S-3
Plan Asset Regulation.....................................................S-36
Plan Assets...............................................................S-35
Plans.....................................................................S-35
Pool Balance...............................................................S-3
Principal Distribution Amount.............................................S-23
Rating Agencies...........................................................S-10
Receivables ................................................................ii
Receivables Pool..........................................................S-11
Record Date ...............................................................S-3
Reserve Account............................................................S-6
Reserve Account Initial Deposit............................................S-6
Sale and Servicing Agreement...............................................S-3
Securities.............................................................ii, S-1
Securityholders............................................................S-5
Seller.......................................................................i
Servicer...............................................................ii, S-1
Servicing Fee Rate........................................................S-22
Settlement Date............................................................S-8
Specified Reserve Account Balance.........................................S-27
Total Distribution Amount.................................................S-23
Transfer and Servicing Agreements.........................................S-22
Trust...................................................................i, S-1
Trust Account.............................................................S-22
Trust Agreement............................................................S-1
Underwriters..............................................................S-37
Underwriting Agreements...................................................S-37
S-44
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION, DATED AUGUST 28, 1996
PROSPECTUS
Chase Manhattan Auto Trusts
Asset Backed Notes
Asset Backed Certificates
CHASE MANHATTAN BANK USA, N.A.
Seller and Servicer
The Asset Backed Notes (the "Notes") and the Asset Backed Certificates (the
"Certificates" and, together with the Notes, the "Securities") described herein
may be sold from time to time in one or more series, in amounts, at prices and
on terms to be determined at the time of sale and to be set forth in a
supplement to this Prospectus (a "Prospectus Supplement"). Each series of
Securities, which may include one or more classes of Notes and/or one or more
classes of Certificates, will be issued by a trust to be formed on or before the
issuance date for that series (each, a "Trust"). Each Trust will be formed
pursuant to either a Trust Agreement to be entered into among Chase Manhattan
Bank USA, N.A. ("Chase USA (New York)"), a national banking association
headquartered in New York, or Chase Manhattan Bank USA, N.A. ("Chase USA
(Delaware)"), a national banking association headquartered in Delaware (each in
such capacity, the "Seller") and the general partner and the owner trustee
specified in the related Prospectus Supplement or a Pooling and Servicing
Agreement to be entered into among the trustee specified in the related
Prospectus Supplement, the Seller and Chase USA (New York) or Chase USA
(Delaware), as Servicer (each in such capacity, the "Servicer"). The Seller and
the Servicer with respect to any Trust will be Chase USA (New York) until the
Chase USA merger is consummated; following the Chase USA merger, Chase USA
(Delaware), the surviving bank, will be the Seller and the Servicer. If a series
of Securities includes Notes, such Notes of a series will be issued and secured
pursuant to an Indenture between the related Trust and the indenture trustee
specified in the related Prospectus Supplement and will represent indebtedness
of the related Trust. The Certificates of a series will represent fractional
undivided interests in the related Trust. The related Prospectus Supplement will
specify which class or classes of Notes, if any, and which class or classes of
Certificates, if any, of the related series are being offered thereby.
The property of each Trust will include a pool of retail installment sales
contracts and purchase money loans secured by new or used automobiles or
light-duty trucks, certain monies due or received thereunder on and after the
applicable Cutoff Date set forth in the related Prospectus Supplement, security
interests in the vehicles financed thereby, proceeds from claims on certain
insurance policies and certain other property, all as described herein and in
the related Prospectus Supplement. In addition, if so specified in the related
Prospectus Supplement, the property of a Trust will include monies on deposit in
a trust account (the "Pre-Funding Account") which will be used to purchase
additional retail installment sales contracts and purchase money loans and
related property from the Seller from time to time during the period (the
"Funding Period") specified in the related Prospectus Supplement.
(continued on the following page)
------------------------
ANY NOTES OF A SERIES REPRESENT OBLIGATIONS OF, AND THE CERTIFICATES OF A SERIES
REPRESENT BENEFICIAL INTERESTS IN, THE RELATED TRUST ONLY AND DO NOT REPRESENT
OBLIGATIONS OF OR INTERESTS IN THE CHASE MANHATTAN BANK, CHASE MANHATTAN BANK
USA, N.A. OR ANY AFFILIATES THEREOF. NO NOTE OR CERTIFICATE OF ANY SERIES IS A
DEPOSIT AND NO SUCH NOTE OR CERTIFICATE IS INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION (THE "FDIC"). THE RECEIVABLES ARE NOT INSURED OR
GUARANTEED BY THE FDIC OR ANY OTHER GOVERNMENTAL AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospective investors should consider, among other things, the information set
forth under the heading "Risk Factors" in this Prospectus commencing on page 16
herein and in the Prospectus Supplement.
Retain this Prospectus for future reference. This Prospectus may not be used to
consummate sales of securities offered hereby unless accompanied by a Prospectus
Supplement.
The date of this Prospectus is _________ __, 199_.
(continued from previous page)
Except as otherwise provided in the related Prospectus Supplement, each class of
Securities of any series will represent the right to receive a specified amount
of payments of principal and interest on the related Receivables, at the rates,
on the dates and in the manner described herein and in the related Prospectus
Supplement. If a series includes multiple classes of securities, the rights of
one or more classes of Securities to receive payments may be senior or
subordinate to the rights of one or more of the other classes of such series.
Distributions on Certificates of a class or series may be subordinated in
priority to payments due on any Certificates of the same Series or any related
Notes to the extent described herein and in the related Prospectus Supplement. A
series may include one or more classes of Notes and/or Certificates which differ
as to the timing and priority of payment, interest rate or amount of
distributions in respect of principal or interest or both. A series may include
one or more classes of Notes or Certificates entitled to distributions in
respect of principal with disproportionate, nominal or no interest
distributions, or to interest distributions, with disproportionate, nominal or
no distribution in respect of principal. The rate of payment in respect of
principal of any class of Notes and distributions in respect of the Certificate
Balance (as defined herein) of the Certificates of any class will depend on the
priority of payment of such class and the rate and timing of payments (including
prepayments, defaults, liquidations and repurchases of Receivables) on the
related Receivables. A rate of payment lower than that anticipated may affect
the weighted average life of each class of Securities in the manner described
herein and in the related Prospectus Supplement.
Each series or classes of Securities offered hereby will be rated in one of the
four highest rating categories by at least one nationally recognized statistical
rating organization.
2
AVAILABLE INFORMATION
The Sellers have filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (together with all amendments and
exhibits thereto, referred to herein as the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
Notes and the Certificates offered pursuant to this Prospectus. For further
information, reference is made to the Registration Statement, any amendments
thereof, and the exhibits thereto and any reports and other documents
incorporated herein by reference as described below under "Incorporation of
Certain Documents by Reference," which may be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549; and at the Commission's regional offices at Northwestern
Atrium Center, 500 West Madison Street, 14th Floor, Chicago, Illinois 60661 and
Seven World Trade Center, New York, New York 10048. Copies of the Registration
Statement may be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Servicer, on behalf of each Trust, will also file or cause to be filed with the
Commission such periodic reports as are required under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the rules and regulations of
the Commission thereunder. In addition, the Commission maintains a public access
site on the Internet through the World Wide Web at which site reports,
information statements and other information, including all electronic filings,
regarding the Sellers may be viewed. The Internet address of such World Wide Web
site is http:/www.sec.gov.
REPORTS TO SECURITYHOLDERS
Unless otherwise provided in the related Prospectus Supplement, unless and until
Definitive Securities are issued, unaudited monthly and annual reports
containing information concerning each Trust and prepared by the Servicer will
be sent on behalf of each Trust only to Cede & Co. ("Cede"), as the nominee of
The Depository Trust Company ("DTC"), and registered holder of the Securities.
See "Certain Information Regarding the Securities--Book-Entry Registration,"
"--Definitive Securities" and "--Reports to Securityholders." Such reports will
not constitute financial statements prepared in accordance with United States
generally accepted accounting principles or that have been examined and reported
upon by, with an opinion expressed by, an independent public or certified public
accountant. Neither Seller intends to send any of its financial reports to
Securityholders or to the owners of beneficial interests in the Securities.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed by the Servicer with the Commission, on behalf of each
Trust, pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act,
subsequent to the date of this Prospectus and prior to the termination of the
offering of the Securities shall be deemed to be incorporated by reference in
this Prospectus and to be part hereof. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any subsequently filed document
which also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Chase Manhattan Bank, an affiliate of the Servicer, will provide without
charge to each person to whom a copy of this Prospectus is delivered, on the
written or oral request of any such person, a copy of any or all of the
documents incorporated herein or in any related Prospectus Supplement by
reference, except the exhibits to such documents (unless such exhibits are
specifically incorporated by reference in such documents). Requests for such
copies should be directed to the Servicer, Attention: Investor Relations.
Telephone requests for such copies should be directed to the Servicer at (212)
270-6000.
3
TABLE OF CONTENTS
Page
SUMMARY OF PROSPECTUS...................................................... 6
RISK FACTORS............................................................... 17
Trust's Relationship to the Seller, the Servicer and their Affiliates 18
Subordination; Limited Assets........................................ 19
Maturity and Prepayment Considerations............................... 19
Risk of Commingling.................................................. 20
Risk Associated with Subsequent Receivables and Pre-Funding Account.. 21
Rights of Noteholders and Certificateholders......................... 21
THE TRUSTS................................................................. 21
THE RECEIVABLES POOLS...................................................... 22
General.............................................................. 22
Delinquency and Loan Loss Information................................ 24
Origination and Servicing of Motor Vehicle Loans..................... 25
Underwriting of Motor Vehicle Loans.................................. 26
Insurance and Collection Procedures.................................. 27
WEIGHTED AVERAGE LIFE OF THE SECURITIES.................................... 29
POOL FACTORS AND TRADING INFORMATION....................................... 30
USE OF PROCEEDS............................................................ 31
CHASE USA (NEW YORK) AND CHASE USA (DELAWARE).............................. 31
DESCRIPTION OF THE NOTES................................................... 32
General.............................................................. 32
Principal and Interest on the Notes.................................. 32
The Indenture........................................................ 34
Certain Covenants.................................................... 36
The Indenture Trustee................................................ 37
DESCRIPTION OF THE CERTIFICATES............................................ 37
General.............................................................. 37
Distributions of Principal and Interest.............................. 37
The Trustee.......................................................... 38
CERTAIN INFORMATION REGARDING THE SECURITIES............................... 39
Fixed Rate Securities................................................ 39
Floating Rate Securities............................................. 39
Indexed Securities................................................... 40
Book-Entry Registration.............................................. 40
Definitive Securities................................................ 44
List of Securityholders.............................................. 44
Reports to Securityholders........................................... 45
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS....................... 47
Sale and Assignment of Receivables................................... 47
Accounts............................................................. 49
4
Servicing Procedures................................................. 51
Collections.......................................................... 51
Servicing Compensation and Payment of Expenses....................... 52
Advances............................................................. 52
Distributions........................................................ 52
Credit and Cash Flow Enhancement..................................... 53
Net Deposits......................................................... 54
Statements to Trustees and Trust..................................... 55
Evidence as to Compliance............................................ 55
Certain Matters Regarding the Servicer............................... 55
Events Of Servicing Termination...................................... 57
Rights Upon Event of Servicing Termination........................... 57
Waiver of Past Defaults.............................................. 58
Amendment............................................................ 58
Insolvency Event..................................................... 59
Payment of Notes..................................................... 60
General Partner Liability............................................ 60
Termination.......................................................... 60
Administration Agreement............................................. 61
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES................................... 61
General.............................................................. 61
Security Interests In The Financed Vehicles.......................... 62
Enforcement Of Security Interests In Vehicles........................ 63
Other Matters........................................................ 64
Repurchase Obligation................................................ 65
ERISA CONSIDERATIONS....................................................... 65
PLAN OF DISTRIBUTION....................................................... 66
RATINGS.................................................................... 67
LEGAL MATTERS.............................................................. 67
INDEX OF TERMS............................................................. 68
5
SUMMARY OF PROSPECTUS
The following Summary of Prospectus is qualified in its entirety by
reference to the detailed information appearing elsewhere in this Prospectus and
by reference to the information with respect to the Securities of any series
contained in the related Prospectus Supplement to be prepared and delivered in
connection with the offering of such Securities. Certain capitalized terms used
in this summary are defined elsewhere in this Prospectus on the pages indicated
in the "Index of Terms."
Issuer........................ The issuer (the "Issuer") with respect to
each series of Securities, shall be the
Trust to be formed pursuant to either a
Trust Agreement (as amended and supplemented
from time to time, a "Trust Agreement")
among the Owner Trustee for such Trust, the
General Partner and the Seller, or a Pooling
and Servicing Agreement (as amended and
supplemented from time to time, the "Pooling
and Servicing Agreement") among the Trustee
for such Trust, the Seller and the Servicer.
Chase Auto Finance............ Chase Manhattan Bank USA, N.A., a national
banking association headquartered in New
York which is a wholly-owned subsidiary of
The Chase Manhattan Corporation (the
"Corporation"), together with its
affiliates, is currently engaged in the
automotive financing and servicing business
and currently originates Motor Vehicle
Loans. In July 1996 The Chase Manhattan
Bank, N.A. ("Chase N.A.") and Chemical Bank,
both wholly-owned subsidiaries of the
Corporation, merged (the "Merger"), with
Chemical Bank continuing as the surviving
corporation under the name "The Chase
Manhattan Bank" ("Chase"). In connection
with the Merger, Chase N.A.'s existing
portfolio of Motor Vehicle Loans was
transferred to Chase USA (New York).
It is expected that Chase USA (New York) and
Chase Manhattan Bank USA, N.A., a national
banking association headquartered in
Delaware which is also a wholly-owned
subsidiary of the Corporation, will merge
with Chase USA (Delaware) continuing as the
surviving entity (the "Chase USA Merger").
The Chase USA Merger is expected to be
completed in December 1996. After the Chase
USA Merger, Chase USA (Delaware) will
originate the Motor Vehicle Loans.
As used in this Prospectus and in any
Prospectus Supplement, the term "Chase Auto
Finance" will be deemed to refer to the
automotive financing and servicing business
of Chase, its predecessors and its
affiliates, and such term will not include
(unless otherwise specified) the automotive
financing and servicing business of Chemical
Bank prior to the Merger, and the term
6
"Originating Bank" shall be deemed to
refer to Chase N.A., Chase USA (New York)
or Chase USA (Delaware) in its capacity as
originator of the Motor Vehicle Loans.
Seller........................ Prior to the Chase USA Merger, Chase USA
(New York) and, upon and after the Chase USA
Merger, Chase USA (Delaware). When used
herein or in any Prospectus Supplement, the
terms "Seller" and "Bank" shall be deemed to
refer to Chase USA (New York), prior to the
Chase USA Merger, and Chase USA (Delaware)
upon and after the Chase USA Merger, in such
capacity or individually, respectively. See
"Chase USA (New York) and Chase USA
(Delaware)" herein.
Servicer...................... Prior to the Chase USA Merger, Chase USA
(New York), and upon and after the Chase USA
Merger, Chase USA (Delaware). When used
herein or in any Prospectus Supplement, the
term "Servicer" shall be deemed to refer to
Chase USA (New York), prior to the Chase USA
Merger, and Chase USA (Delaware) after the
Chase USA Merger, in such capacity.
Trustee....................... The entity named as "Trustee" in the related
Prospectus Supplement, which shall include
the "Owner Trustee" with respect to the
Certificates issued pursuant to a Trust
Agreement and the "Trustee" with respect to
Certificates issued pursuant to a Pooling
and Servicing Agreement.
Indenture Trustee............. With respect to Notes issued by a Trust
pursuant to an Indenture, the entity named
as Indenture Trustee in the related
Prospectus Supplement.
Denominations................. Each class of Securities of a series will be
issued in the minimum denominations set
forth in the related Prospectus Supplement.
Each Security will represent a percentage
interest (a "Percentage Interest") in the
Securities of the related class determined
by dividing the original dollar amount (or
Notional Principal Amount, in the case of
Securities entitled to interest only and
assigned a Notional Principal Amount)
represented by such Security by the original
aggregate principal balance of such class
(or original aggregate Notional Principal
Amount, if applicable).
Registration of Securities.... Each or any class of Securities of a series
may be issued in definitive form or may
initially be represented by one or more
certificates ("Book-Entry Securities")
registered in the name of Cede, the nominee
of DTC, and available only in the form of
book-entries on the records of DTC,
7
participating members thereof
("Participants") and other entities, such as
banks, brokers, dealers and trust companies,
that clear through or maintain custodial
relationships with a Participant, either
directly or indirectly ("Indirect
Participants"). Securities representing
Book-Entry Securities will be issued in
definitive form only under the limited
circumstances described herein and in the
related Prospectus Supplement. With respect
to the Book-Entry Securities, all references
herein to "holders" or "Securityholders"
shall reflect the rights of owners of the
Book-Entry Securities as they may indirectly
exercise such rights through DTC and
Participants (including CEDEL and
Euroclear), except as otherwise specified
herein. See "Certain Information Regarding
the Securities-Book-Entry Registration" and
"--Definitive Securities" herein.
The Notes..................... A series of Securities may include one or
more classes of Notes, which will be issued
pursuant to an Indenture between the related
Trust and the Indenture Trustee (as amended
and supplemented from time to time, an
"Indenture"). The related Prospectus
Supplement will specify which class or
classes, if any, of Notes of the related
series are being offered thereby.
Unless otherwise specified in the related
Prospectus Supplement, each class of Notes
will have a stated principal amount and will
bear interest at a specified rate or rates
(with respect to each class of Notes, the
"Interest Rate"). Each class of Notes may
have a different Interest Rate, which may be
a fixed, variable or adjustable Interest
Rate, or any combination of the foregoing.
The related Prospectus Supplement will
specify the Interest Rate for each class of
Notes, or the method for determining the
Interest Rate.
With respect to a series that includes two
or more classes of Notes, each class may
differ as to the timing and priority of
payments, seniority, Interest Rate or amount
of payments of principal or interest, and
payments of principal or interest in respect
of any such class or classes may or may not
be made upon the occurrence of specified
events or on the basis of collections from
designated portions of the related
Receivables Pool.
In addition, a series may include one or
more classes of Notes ("Strip Notes")
entitled to (i) principal payments with
disproportionate, nominal or no interest
payments or (ii) interest payments with
disproportionate, nominal or no principal
payments.
8
If the Servicer exercises its option to
purchase the Receivables of a Trust (or, if
not, and to the extent provided in the
related Prospectus Supplement, if
satisfactory bids for the purchase of such
Receivables are received), in the manner and
on the respective terms and conditions
described herein under "Description of the
Transfer and Servicing
Agreements--Termination," the outstanding
Notes will be redeemed as set forth in the
related Prospectus Supplement. In addition,
if the related Prospectus Supplement
provides that the property of a Trust will
include a Pre-Funding Account, one or more
classes of the outstanding Notes will be
subject to partial redemption on or
immediately following the end of the related
Funding Period in an amount and manner
specified in the related Prospectus
Supplement. In the event of such partial
redemption, the Noteholders may be entitled
to receive a prepayment premium from the
related Trust, in the amount and to the
extent provided in the related Prospectus
Supplement.
The Certificates.............. A series may include one or more classes of
Certificates and may or may not include any
Notes. The related Prospectus Supplement
will specify which class or classes, if any,
of the Certificates are being offered
thereby.
Unless otherwise specified in the related
Prospectus Supplement, each class of
Certificates will have a stated Certificate
Balance specified in the related Prospectus
Supplement (the "Certificate Balance") and
will accrue interest on such Certificate
Balance at a specified rate (with respect to
each class of Certificates, the "Pass
Through Rate"). Each class of Certificates
may have a different Pass Through Rate,
which may be a fixed, variable or adjustable
Pass Through Rate, or any combination of the
foregoing. The related Prospectus Supplement
will specify the Pass Through Rate for each
class of Certificates or the method for
determining the Pass Through Rate.
With respect to a series that includes two
or more classes of Certificates, each class
may differ as to timing and priority of
distributions, seniority, allocations or
losses, Pass Through Rate or amount of
distributions in respect of principal or
interest and distributions in respect of
principal or interest in respect of any such
class or classes may or may not be made upon
the occurrence of specified events or on the
basis of collections from designated
portions of the Receivables Pool.
9
In addition, a series may include one or
more classes of Certificates ("Strip
Certificates") entitled to (i) distributions
in respect of principal with
disproportionate, nominal or no interest
distributions or (ii) interest distributions
with disproportionate, nominal or no
distributions in respect of principal.
If a series of Securities includes classes
of Notes, distributions in respect of the
Certificates may be subordinated in priority
of payment to payments on the Notes to the
extent specified in the related Prospectus
Supplement.
If the Servicer exercises its option to
purchase the Receivables of a Trust (or, if
not, and if and to the extent provided in
the related Prospectus Supplement,
satisfactory bids for the purchase of such
Receivables are received), in the manner and
on the respective terms and conditions
described herein under "Description of the
Transfer and Servicing
Agreements--Termination," Certificateholders
will receive as a prepayment an amount in
respect of the Certificates as specified in
the related Prospectus Supplement. In
addition, if the related Prospectus
Supplement provides that the property of a
Trust will include a Pre-Funding Account,
Certificateholders may receive a partial
prepayment of principal on or immediately
following the end of the related Funding
Period in an amount and manner specified in
the related Prospectus Supplement. In the
event of such partial prepayment, the
Certificateholders may be entitled to
receive a prepayment premium from the
related Trust, in the amount and to the
extent provided in the related Prospectus
Supplement.
The Securities of a series may include one
or more classes of Certificates and may or
may not include one or more classes of
Notes.
The Trust Property............ The property of each Trust will include a
pool of Motor Vehicle Loans, including
rights to receive certain monies due or
received thereunder on or after the related
Cutoff Date, security interests in the
vehicles financed thereby (the "Financed
Vehicles"), amounts on deposit in certain
accounts and the proceeds thereof and any
proceeds from claims on certain related
insurance policies, as described herein and
in the related Prospectus Supplement. On or
before the Closing Date specified in the
related Prospectus Supplement with respect
to a Trust, the Seller will, if so
10
specified in such Prospectus Supplement,
sell or transfer Motor Vehicle Loans
(the "Initial Receivables") having
an aggregate principal balance specified
in the related Prospectus Supplement as
of the date specified therein to such
Trust pursuant to either a Sale and
Servicing Agreement among the Seller, the
Servicer and such Trust (as amended and
supplemented from time to time, the "Sale
and Servicing Agreement") or, if such Trust
is not issuing Notes, the related Pooling
and Servicing Agreement. The property of
each Trust will also include amounts on
deposit in certain trust accounts, including
any Collection Account, Cash Collateral
Account, Pre-Funding Account, Reserve
Account, Yield Supplement Account, Payahead
Account and any other account identified in
the related Prospectus Supplement.
To the extent provided in the related
Prospectus Supplement, from time to time
during the funding period specified in the
related Prospectus Supplement (the "Funding
Period"), the Seller will be obligated
(subject only to the availability thereof)
to sell, and the related Trust will be
obligated to purchase (subject to the
satisfaction of certain conditions described
in the applicable Sale and Servicing
Agreement or Pooling and Servicing
Agreement), additional Motor Vehicle Loans
(the "Subsequent Receivables") and the
related property having an aggregate
principal balance approximately equal to the
amount (the "Pre-Funding Amount") on deposit
in the related account (the "Pre-Funding
Account") on the related Closing Date.
The Motor Vehicle Loans are motor vehicle
retail installment sales contracts relating
to new or used automobiles and light-duty
trucks purchased from Dealers who regularly
originate and sell such contracts to the
Originating Banks pursuant to Assignments.
Motor Vehicle Loans also include purchase
money loans secured by financed vehicles
made by the Originating Banks directly or
pursuant to arrangements with Dealers in
accordance with approved Dealer agreements.
The Receivables in any given Receivables
Pool will be selected from the Motor Vehicle
Loans owned or to be owned by the Seller
based on the criteria set forth in the
related Sale and Servicing Agreement or
Pooling and Servicing Agreement, as
applicable, and described herein and in the
related Prospectus Supplement.
11
Credit and Cash
Flow Enhancement.............. If and to the extent specified in the
related Prospectus Supplement, credit
enhancement with respect to a Trust or any
class or classes of Securities may include
any one or more of the following:
subordination of one or more other classes
of Securities, a Cash Collateral Guaranty
secured by a Cash Collateral Account, a
Reserve Account, Yield Supplement Agreements
or Accounts, over-collateralization, letters
of credit, credit or liquidity facilities,
surety bonds, guaranteed investment
contracts, swaps or other interest rate
protection agreements, repurchase
obligations, other agreements with respect
to third party payments or other support,
cash deposits or other arrangements. The
amount of any credit enhancement may be
limited or have exclusions from coverage and
may decline over time or under certain
circumstances, all as specified in the
related Prospectus Supplement. See
"Description of the Transfer and Servicing
Agreements--Credit and Cash Flow
Enhancement" herein.
Cash Collateral Guaranty. If specified in
the related Prospectus Supplement with
respect to any Trust classified as a grantor
trust, the related Trustee will have the
right to demand payments under a Cash
Collateral Guaranty under certain
circumstances as described herein and in the
related Prospectus Supplement. Each Cash
Collateral Guaranty will be secured by a
Cash Collateral Account, which will be held
in the name of a Cash Collateral Trustee, as
specified in the related Prospectus
Supplement. The related Prospectus
Supplement will specify whether the Cash
Collateral Account will be funded on the
date of issuance of the related series of
Securities solely from the proceeds of a
loan to be made by a cash collateral
depositor (the "Cash Collateral Depositor")
pursuant to a Loan Agreement, from a deposit
by the Seller, or by a combination thereof.
To the extent specified in the related
Prospectus Supplement, funds in the related
Cash Collateral Account will thereafter be
supplemented by the deposit of amounts
remaining on any Distribution Date after
making all other distributions required on
such date. Amounts drawn under the Cash
Collateral Guaranty will be available to
cover shortfalls in amounts due to the
holders of those classes of Securities
specified in the related Prospectus
Supplement in the manner and under the
circumstances specified therein. The related
Prospectus Supplement will also specify to
whom and the manner and circumstances under
which amounts on deposit in the Cash
Collateral Account (after giving effect to
all required distributions to be made by the
related Trust) in excess of
12
the Required Cash Collateral Amount (as
defined in the related Prospectus
Supplement) will be distributed.
Reserve Account. If specified in the related
Prospectus Supplement with respect to any
Trust not classified as a grantor trust, a
Reserve Account will be funded on the date
of issuance of the related series of
Securities, and if the related series has a
Funding Period, will also be funded on each
Subsequent Transfer Date. The related
Prospectus Supplement will specify whether
the Reserve Account will be funded solely
from the proceeds of a loan or loans to be
made by a Cash Collateral Depositor pursuant
to a Loan Agreement, from a deposit or
deposits by the Seller, or by a combination
thereof. To the extent specified in the
related Prospectus Supplement, funds in the
related Reserve Account will thereafter be
supplemented by the deposit of amounts
remaining on any Distribution Date or
Payment Date after making all other
distributions required on such date. Amounts
in a Reserve Account will be available to
cover shortfalls in amounts due to the
holders of those classes of Securities
specified in the related Prospectus
Supplement in the manner and under the
circumstances specified therein. The related
Prospectus Supplement will also specify to
whom and the manner and circumstances under
which amounts on deposit in the related
Reserve Account (after giving effect to all
required distributions to be made by the
related Trust) in excess of the Specified
Reserve Account Balance (as defined in the
related Prospectus Supplement) will be
distributed.
Demands under a Cash Collateral Guaranty
will be funded solely from amounts, if any,
on deposit in the related Cash Collateral
Account. If the amount deposited in such
Cash Collateral Account or in any Reserve
Account is reduced to zero, the related
Securityholders will bear directly the
credit and other risks associated with
ownership of the related Receivables.
Yield Supplement Account; Yield Supplement
Agreement. If specified in the related
Prospectus Supplement, the Seller, the
General Partner or a third party will enter
into a yield supplement agreement (as
amended and supplemented from time to time,
a "Yield Supplement Agreement") and/or
establish a yield supplement account (a
"Yield Supplement Account") with the related
Indenture Trustee or related Trustee for the
benefit of the holders of the related
Securities. A Yield Supplement Agreement or
a Yield Supplement Account will be designed
to provide payments to the
13
Securityholders in respect of Receivables
the Contract Rate of which is less
than the Required Rate (as such term
is defined in the related Prospectus
Supplement, the "Required Rate"). A
Yield Supplement Account may be an asset
of the obligor under the related Yield
Supplement Agreement holding funds to secure
the obligation of such obligor to make
payments under such Yield Supplement
Agreement or, in the case of a Trust that is
not classified as a grantor trust, may be an
asset of the Trust from which cash may
periodically be withdrawn to provide
payments to the Securityholders.
Transfer and
Servicing Agreements.......... With respect to each Trust, the Seller will
assign to such Trust, without recourse, the
Seller's entire interest in the related
Receivables pursuant to a Sale and Servicing
Agreement or a Pooling and Servicing
Agreement. The rights and benefits of any
Trust under a Sale and Servicing Agreement
will be assigned to the related Indenture
Trustee as collateral for the Notes of the
related series. The Servicer will agree with
respect to each Trust to be responsible for
servicing, managing, maintaining custody of
and making collections on the Receivables.
Unless otherwise provided in the related
Prospectus Supplement, the Seller will be
obligated to repurchase any Receivable if
(a) such Receivable does not meet any of the
criteria set forth in the related Sale and
Servicing Agreement or Pooling and Servicing
Agreement, as applicable, and (b) such
failure materially and adversely affects the
interests of the holders of the related
series of Securities in such Receivable,
unless the Seller has cured the failure to
meet the related criterion following the
discovery by or notice to the Seller of such
failure. See "Description of the Transfer
and Servicing Agreements--Sale and
Assignment of Receivables" herein.
Unless otherwise provided and to the extent
set forth in the related Prospectus
Supplement, the Servicer will be entitled to
receive a fee for servicing the Receivables
of each Trust equal to a specified
percentage of the aggregate principal
balance of the related Receivables Pool plus
any Late Fees collected from Obligors during
the related Collection Period. In addition,
to the extent set forth in the related
Prospectus Supplement, the Servicing Fee
will also include investment earnings on
amounts on deposit in the Trust Accounts.
See "Description of the Transfer and
Servicing Agreements--Servicing Compensation
and
14
Payment of Expenses" herein and the
corresponding section in the related
Prospectus Supplement.
Advances...................... If the Pooling and Servicing Agreement or
Sale and Servicing Agreement, as applicable,
related to any series provides that the
Servicer may or is required to make advances
with respect to due and unpaid amounts with
respect to the Receivables, the related
Prospectus Supplement shall specify the
terms and conditions pursuant to which such
Advances may or are required to be made.
Tax Status.................... Unless the Prospectus Supplement specifies
that the related Trust will be classified as
a grantor trust and, except as otherwise
provided in such Prospectus Supplement, upon
the issuance of the related series of
Securities, Simpson Thacher & Bartlett,
special counsel to the Seller ("Federal Tax
Counsel"), will deliver an opinion to the
effect that, for federal income tax
purposes: (i) any Notes of such series will
be treated as debt and (ii) such Trust will
not be characterized as an association (or a
publicly traded partnership) taxable as a
corporation. Alternative characterizations
of such Trust and such Certificates are
possible, but would not result in materially
adverse tax consequences to
Certificateholders.
If the Prospectus Supplement specifies that
the related Trust will be classified as a
grantor trust and except as otherwise
provided in such Prospectus Supplement, upon
the issuance of the related series of
Certificates, Federal Tax Counsel will
deliver an opinion to the effect that such
Trust will be treated as a grantor trust for
federal income tax purposes and not as an
association (or other entity) taxable as a
corporation.
Each such opinion of Federal Tax Counsel
referred to in the preceding two paragraphs
will be filed with the Commission as an
Exhibit to a Current Report filed on Form
8-K.
Investors should consult their own tax
advisors to determine the federal, state,
local and other tax consequences of the
purchase, ownership and disposition of
Securities of any series. See "Certain
Federal Income Tax Consequences" and
"Certain State Tax Consequences" in the
related Prospectus Supplement.
ERISA Considerations.......... A fiduciary of any employee benefit plan or
other retirement arrangement subject to
ERISA or Section 4975
15
of the Code should carefully review
with its legal advisors whether
the purchase or holding of any class
of Securities could give rise to a
transaction prohibited or not otherwise
permissible under ERISA or the Code. Certain
classes of Securities may not be acquired
by any employee benefit plan or
other retirement arrangement subject
to ERISA, as specified in the related
Prospectus Supplement. See "ERISA
Considerations" herein and in the related
Prospectus Supplement.
Ratings of the Securities..... Each Prospectus Supplement will specify the
ratings upon which the issuance of each
series of Securities will be conditioned.
See "Ratings" herein.
16
RISK FACTORS
Certain Legal Aspects
In connection with each sale of Receivables to a Trust, the Seller will
assign its security interest in each individual Financed Vehicle to such Trust.
However, due to administrative burden and expense, neither the Seller nor the
related Trustee will amend the certificates of title to the Financed Vehicles to
identify the Trust or any related Indenture Trustee as the new secured party. In
addition, with respect to any security interests in Financed Vehicles acquired
by Chase N.A. from an affiliated entity, by Chase USA (New York) in connection
with the Merger or by Chase USA (Delaware) as successor-in-interest to Chase USA
(New York) or any related Indenture Trustee the related certificates of title to
such Financed Vehicles will not be amended to identify the Seller as new secured
party before assignment to any Trust. In most states, such assignment is an
effective conveyance of such security interest without amendment of any lien
noted on the related certificates of title, and the new secured party succeeds
to the Originating Bank's rights as the secured party as against creditors of
the Obligor. In certain states, in the absence of such amendment and delivery,
the Seller, the related Trust and/or any related Indenture Trustee may not have
a perfected security interest in the related Financed Vehicle. Unless otherwise
specified in the related Prospectus Supplement, the Seller will be obligated to
repurchase any Receivable sold to a Trust as to which the Seller has represented
that it has a first perfected security interest in the Financed Vehicle securing
such Receivable, if a breach of such representation shall materially adversely
affect the interest of the related Securityholders in such Receivable and if a
breach of such representation shall not have been cured. If such Trust does not
have a perfected security interest in a Financed Vehicle, the only recourse of
such Trust vis-a-vis third parties would be against the related Obligor on an
unsecured basis or against the Seller pursuant to its repurchase obligation.
If a Trust does not have a perfected security interest in a Financed
Vehicle, its ability to realize on such Financed Vehicle in the event of a
default may be adversely affected. To the extent the security interest is
perfected, such Trust will have a prior claim over subsequent purchasers of such
Financed Vehicles and holders of subsequently perfected security interests.
However, under the laws of many states, certain possessory liens for repairs and
storage, as well as certain rights in favor of federal and state governmental
authorities arising from the use of a motor vehicle in connection with illegal
activities, may take priority even over a perfected security interest. Certain
federal tax liens may have priority over the lien of a secured party. In
addition, through fraud or negligence, a Trust could lose the priority of its
security interest or its security interest in a Financed Vehicle. Neither the
Seller nor the Servicer will have an obligation to repurchase a Receivable as to
which any of the aforementioned occurrences result in such Trust's losing the
priority of its security interest or its security interest in such Financed
Vehicle after the date such security interest was conveyed to such Trust (other
than through fraud or negligence of the Seller or the Servicer).
The Seller intends that each transfer of Receivables by it to a Trust
under a Sale and Servicing Agreement or a Pooling and Servicing Agreement
constitutes a sale. In the event that the Seller were to become insolvent, the
Federal Deposit Insurance Act ("FDIA"), as amended by the Financial Institutions
Reform, Recovery and Enforcement Act of 1989 ("FIRREA"), sets forth certain
powers that the FDIC may exercise if it were appointed receiver of such Seller.
To the extent that the Seller has granted a security interest in the Receivables
to a Trust and that interest was validly perfected before the Seller's
insolvency and was not taken in contemplation of insolvency or with the intent
to hinder, delay or defraud the Seller or its creditors, that security interest
would not be subject to avoidance by the FDIC as receiver of the Seller.
Positions taken by the FDIC staff prior to the passage of FIRREA do not suggest
that the FDIC, if appointed receiver of the Seller, would interfere with the
timely transfer to the Trust of payments collected on the related Receivables.
If, however, the FDIC were to assert a contrary position, or were
17
to require the Trustee to establish its rights to those payments by submitting
to and completing the administrative claims procedure established under the
FDIA, or the conservator or receiver were to request a stay of proceedings with
respect to the Seller as provided under the FDIA, delays in payments on the
related Securities and possible reductions in the amount of those payments could
occur.
With respect to any Trust issuing Notes, if an Insolvency Event occurs
with respect to the party identified as the general partner of such Trust in the
related Prospectus Supplement (the "General Partner"), the Owner Trustee for
such Trust will promptly sell the assets of such Trust (other than any Trust
Accounts) in a commercially reasonable manner and on commercially reasonable
terms, unless the holders of Notes of each class issued by such Trust
representing more than 50% of the aggregate principal balance of such Notes
(other than the General Partner), the holders of Certificates issued by such
Trust representing more than 50% of the aggregate Certificate Balance for such
Trust (other than the General Partner) and the holders of interests in any
Reserve Account or other enhancement account (other than the General Partner)
having interests with a value in excess of 50% of all interests in such
enhancement account held by such persons direct otherwise. In addition, if an
Event of Default occurs, the Indenture Trustee or the holders of not less than a
majority of the aggregate principal amount of all the Notes may declare the
principal of the Notes to be immediately due and payable, and, if the Notes have
been accelerated, the Indenture Trustee may institute or be required to
institute proceedings to collect amounts due or exercise its remedies as a
secured party (including foreclosure or sale of the Receivables).
The proceeds from any such sale will be treated as collections on the
Receivables and deposited in the Collection Account of such Trust. If the
proceeds from the sale of the trust assets and any amounts on deposit in any
related Trust Account and any amounts available from any credit enhancement are
not sufficient to pay any Notes and the Certificates of the related series in
full, the amount of principal returned to Noteholders and Certificateholders
will be reduced and some or all of such Noteholders and Certificateholders will
incur a loss. Because neither interest nor principal is distributed to
Certificateholders upon a sale of the Receivables following an Event of Default
and acceleration of the Notes under the Indenture or following an Insolvency
Event with respect to the General Partner until all the Notes have been paid in
full, the interests of Noteholders and the Certificateholders may conflict, and
the exercise by the Indenture Trustee of its right to sell the Receivables or
exercise other remedies under the Indenture and applicable law may cause the
Certificateholders to suffer a loss of all or part of their investment. See
"Description of the Notes--The Indenture--Events of Default; Rights upon Event
of Default" and "Description of the Transfer and Servicing
Agreements--Insolvency Event" herein.
Trust's Relationship to the Seller, the Servicer and their Affiliates
None of the Seller, the Servicer or their affiliates is generally
obligated to make any payments in respect of any Notes, the Certificates or the
Receivables of a given Trust.
However, in connection with the sale of Receivables by the Seller to a
given Trust, the Seller will make representations and warranties with respect to
the characteristics of such Receivables and, in certain circumstances, the
Seller may be required to repurchase Receivables with respect to which such
representations and warranties have been breached. See "Description of the
Transfer and Servicing Agreements--Sale and Assignment of Receivables" herein.
In addition, under certain circumstances, the Servicer may be required to
purchase Receivables. See "Description of the Transfer and Servicing
Agreements--Servicing Procedures" herein. Moreover, if the Bank were to cease
acting as the Servicer, delays in processing payments on the Receivables and
information in respect thereof could occur and result in delays in payments to
the Securityholders.
18
Subordination; Limited Assets
To the extent specified in the related Prospectus Supplement,
distributions of interest and principal on one or more classes of Certificates
of a series may be subordinated in priority of payment to interest and principal
due on the Notes, if any, of such series or one or more other classes of
Certificates of such series. Moreover, each Trust will not have, nor is it
permitted or expected to have, any significant assets or sources of funds other
than the Receivables and, to the extent provided in the related Prospectus
Supplement, a Pre-Funding Account, a Reserve Account, a Cash Collateral
Guaranty, a Yield Supplement Agreement, a Yield Supplement Account and any other
credit enhancement. The Notes of any series will represent obligations solely
of, and the Certificates of any series will represent interests solely in, the
related Trust and neither the Notes nor the Certificates of any series will be
insured or guaranteed by the Seller, the Servicer, any Trustee, any Indenture
Trustee, any of their affiliates or any other person or entity. Consequently,
holders of the Securities of any series must rely for repayment upon payments on
the related Receivables and, if and to the extent available, amounts available
under the Cash Collateral Guaranty (if any), the Yield Supplement Agreement (if
any), amounts on deposit in the Pre-Funding Account (if any), the Yield
Supplement Account (if any) and the Reserve Account (if any) and any other
credit enhancement, all as specified in the related Prospect Supplement.
If the protection provided to any Noteholders of a given series by the
subordination of the related Certificates, if any, and by any Reserve Account,
Cash Collateral Guaranty, Yield Supplement Agreement, Yield Supplement Account
or other credit enhancement for such series or the protection provided to
Certificateholders by any such Reserve Account, Cash Collateral Guaranty, Yield
Supplement Agreement, Yield Supplement Account or other credit enhancement is
insufficient, such Securityholders would have to look principally to the
Obligors on the related Receivables and the proceeds from the repossession and
sale of Financed Vehicles that secure Defaulted Receivables. In such event,
certain factors, such as the applicable Trust not having perfected security
interests in the Financed Vehicles in all states, may affect the Servicer's
ability to repossess and sell the collateral securing the Receivables, and thus
may reduce the proceeds to be distributed to the holders of the Securities of
such series. See "Description of the Transfer and Servicing
Agreements--Distributions," "--Credit and Cash Flow Enhancement" and "Certain
Legal Aspects of the Receivables" herein.
Maturity and Prepayment Considerations
The weighted average life of the Notes, if any, and the Certificates of
any series will generally be influenced by the rate at which the principal
balances of the related Receivables are paid, which payment may be in the form
of scheduled amortization or prepayments. The Receivables are prepayable by the
Obligors at any time. If a Prospectus Supplement provides that the property of
the related Trust will include a Pre-Funding Account, the related Securities
will be subject to partial redemption on or immediately following the end of the
Funding Period in an amount and in the manner specified in the related
Prospectus Supplement. If provided in any Prospectus Supplement, prepayments may
also result from demands under any Cash Collateral Guaranty, Reserve Account or
other enhancement related to such series with respect to Defaulted Receivables.
See "Description of the Transfer and Servicing Agreements--Sale and Assignment
of Receivables." Any reinvestment risks resulting from a faster or slower
incidence of prepayment of Receivables held by a given Trust will be borne
entirely by the Securityholders of the related series of Securities. See also
"Description of the Transfer and Servicing Agreements--Termination" regarding
the Servicer's option to purchase the Receivables of a given Receivables Pool
and "--Insolvency Event" regarding the sale of the Receivables owned by a Trust
that issues Notes if an Insolvency Event with respect to the General Partner
occurs.
19
In addition, Chase Auto Finance may, on a case-by-case basis, permit
extensions with respect to the Due Dates of payments on Motor Vehicle Loans in
accordance with its normal and customary servicing practices and procedures. See
"Pooling and Servicing Agreement--Servicing Procedures" or "Description of the
Transfer and Servicing Agreements--Servicing Procedures" in the related
Prospectus Supplement. Any such deferrals or extensions may increase the
weighted average life of the related Securities. However, the Servicer will not
be permitted to grant any such deferral or extension if as a result the final
scheduled payment on a Receivable would fall after the Final Scheduled
Distribution Date or Final Scheduled Maturity Date, as applicable , unless the
Servicer repurchases the affected Receivable.
Risk of Commingling
With respect to each Trust, the Servicer will deposit all payments on the
related Receivables (from whatever source) and all proceeds of such Receivables
collected during each Collection Period into the Collection Account of such
Trust. For so long as the Seller is the Servicer and the Seller satisfies
certain requirements for making deposits less frequently than daily, the
Servicer will not be required to deposit such amounts in the Collection Account
of such Trust until on or before the related Deposit Date. Pending deposit into
such Collection Account, collections may be invested by the Servicer at its own
risk and for its own benefit and will not be segregated from funds of the
Servicer. If the Servicer were unable to remit such funds, the applicable
Securityholders might incur a loss. To the extent set forth in the related
Prospectus Supplement, the Servicer may, in order to satisfy the requirements
referred to herein, obtain a letter of credit or other security for the benefit
of the related Trust to secure timely remittances of collections on the related
Receivables and payment of the aggregate Purchase Amount with respect to
Receivables purchased by the Servicer.
Risk Associated with Subsequent Receivables and the Pre-Funding Account
If so specified in the related Prospectus Supplement, the Seller will be
obligated to sell, and the related Trust will be obligated to purchase,
Subsequent Receivables from time to time during the Funding Period specified in
the related Prospectus Supplement. The ability of the Seller to generate
Subsequent Receivables to be conveyed to such Trust will affect the amount on
deposit in the related Pre-Funding Account which is not applied to the
conveyance of Subsequent Receivables during the Funding Period. Amounts on
deposit in any Pre-Funding Account may be invested only in Permitted
Investments. Subsequent Receivables may be originated by the Dealers at a later
date using credit criteria different from those which were applied to any
Initial Receivables and may be of a different credit quality and seasoning. In
addition, following the transfer of Subsequent Receivables to the applicable
Trust, the characteristics of the entire pool of Receivables included in such
Trust may vary from those of the Initial Receivables transferred to such Trust.
As a result, it is possible that the credit quality of the Receivables in a
Trust, as a whole, may decline as a result of the inclusion of Subsequent
Receivables and may result in a higher rate of payment to the applicable
Securityholders as a result of an increased level of defaults on such
Receivables. Securityholders will bear all reinvestment risk associated with a
higher than expected rate of payment on the Securities. In addition, a higher
than expected rate of payment may result in a reduction in the yield to maturity
of any class of Securities to which such payments are distributed. To the extent
that amounts on deposit in the Pre-Funding Account have not been fully applied
to the conveyance of Subsequent Receivables to a Trust by the end of the Funding
Period and such amount exceeds the applicable amount described in the related
Prospectus Supplement, the holders of Securities issued by the related Trust
will receive, on the Distribution Date or Payment Date on or immediately
following the last day of the applicable Funding Period, a prepayment of
principal in an amount equal to the amount remaining in the Pre-Funding Account
following the purchase of any Subsequent Receivables on or immediately preceding
such Distribution Date or Payment Date. It is anticipated that the principal
20
balance of Subsequent Receivables sold to a Trust will not be exactly
equal to the amount on deposit in the Pre-Funding Account, and that
therefore there will be at least a nominal amount of principal prepaid
to the holders of the Securities issued by such Trust. Holders of Securities
issued by such Trust will bear the reinvestment risk associated with any such
distribution of amounts on deposit in the Pre-Funding Account after the
termination of the applicable Funding Period. Any such distribution will have
the effect of a prepayment on the related Receivables and may result in a
reduction in the yield to maturity of any class of Securities to which such
amounts are distributed.
Rights of Noteholders and Certificateholders
In general, with respect to any Trust issuing Notes, the holders of
Certificates issued by such Trust may direct the related Trustee in the
administration of the Trust. However, because the Trust will pledge the Trust
property to the Indenture Trustee to secure the payment of the Notes issued by
such Trust, including in such pledge the rights of the Trust under the related
Sale and Servicing Agreement, the related Indenture Trustee and not the
Certificateholders will have the power to direct the Trust to take certain
actions in connection with the administration of the Trust property until the
Notes have been paid in full and the lien of the Indenture has been released. In
addition, the Certificateholders will not be allowed to direct the related
Trustee to take any action which conflicts with the provisions of any of the
related Transfer and Servicing Agreements. Each Indenture will specifically
prohibit the related Trustee from taking any action which would impair the
related Indenture Trustee's security interest in the related Trust property and
will require the related Trustee to obtain the consent of the related Indenture
Trustee or the holders of not less than a majority of the aggregate principal
amount of the Notes issued by such Trust before modifying, amending,
supplementing, waiving or terminating any related Transfer and Servicing
Agreement or any provision of any related Transfer and Servicing Agreement.
Therefore, until a series of Notes have been paid in full, the ability to direct
the related Trust with respect to certain actions permitted to be taken under
the related Transfer and Servicing Agreements rests with the related Indenture
Trustee and the Noteholders instead of the Certificateholders.
THE TRUSTS
With respect to each series of Securities, the Seller will establish a
separate Trust pursuant to a Trust Agreement or a Pooling and Servicing
Agreement, as applicable, for the purpose of conducting the activities described
herein and in the related Prospectus Supplement. The property of each Trust will
include (i) a pool (a "Receivables Pool") of Motor Vehicle Loans and all
payments due or received thereunder (the "Receivables") from the related
obligors (the "Obligors") on and after the related Cutoff Date specified in the
related Prospectus Supplement (a "Cutoff Date"), (ii) such amounts as from time
to time may be held in separate trust accounts established and maintained
pursuant to the related Sale and Servicing Agreement or Pooling and Servicing
Agreement and the proceeds of such accounts, as described herein and in the
related Prospectus Supplement; (iii) security interests in the Financed
Vehicles; (iv) the rights to proceeds as a result of the Seller's exercise of
its recourse rights against Dealers (as described herein under "The Receivables
Pools--Origination and Servicing of the Motor Vehicle Loans"); (v) an assignment
of the rights of the Seller to receive proceeds from claims on theft and
physical damage, credit life and credit disability insurance policies covering
the Financed Vehicles or the Obligors, as the case may be, to the extent that
such insurance policies relate to the Receivables; (vi) the rights with respect
to any Financed Vehicle that has been repossessed by the Servicer on behalf of
the related Trust; and (vii) any and all proceeds of the foregoing. To the
extent specified in the related Prospectus Supplement, a Pre-Funding Account,
Cash Collateral Guaranty, Cash Collateral Account, Reserve Account, Yield
Supplement Agreement, Yield Supplement Account or other form of credit
enhancement may be a part
21
of the property of any given Trust or may not be included in the property
of the Trust but be held by another trust or a trustee for the benefit of
holders of the related Securities.
On or before the related Closing Date, the Seller will sell the Initial
Receivables of the related Receivables Pool to the related Trust to the extent,
if any, specified in the related Prospectus Supplement. To the extent so
provided in the related Prospectus Supplement, Subsequent Receivables will be
conveyed to the related Trust as frequently as daily during the Funding Period.
Any Subsequent Receivables so conveyed will also be assets of the related Trust,
subject to the prior rights of the related Indenture Trustee and the
Noteholders, if any, therein.
The principal offices of each Trust and related Trustee will be specified
in the related Prospectus Supplement.
THE RECEIVABLES POOLS
General
As described herein, Chase USA (New York), together with its affiliates,
is currently engaged in the automotive financing and servicing business. In
connection with the Merger, Chase N.A.'s portfolio of Motor Vehicle Loans was
transferred to Chase USA (New York), and following the Chase USA Merger, Chase
USA (New York)'s portfolio of Motor Vehicle Loans will be owned by Chase USA
(Delaware). As used in this Prospectus and in any Prospectus Supplement, the
term "Chase Auto Finance" will be deemed to refer to the automotive financing
and servicing business of Chase, its predecessors and its affiliates, and such
term shall not include (unless otherwise specified) the automotive financing and
servicing business of Chemical Bank prior to the Merger, and the term
"Originating Bank" shall be deemed to refer to Chase N.A., Chase USA (New York)
and Chase USA (Delaware) in its capacity as originator of the Motor Vehicle
Loans.
The Receivables to be held by each Trust will be selected from the
portfolio of Motor Vehicle Loans owned by the Seller for inclusion in a
Receivables Pool. Selection will be based upon several criteria, including that,
unless otherwise provided in the related Prospectus Supplement, each Receivable
(i) was acquired from or made through a Dealer located in the United States,
(ii) is secured by a Financed Vehicle that, as of the related Cutoff Date, that
had not be repossessed without reinstatement, (iii) has not been identified on
the computer files of the Seller as relating to an Obligor who was in a
bankruptcy proceeding as of the related Cutoff Date, (iv) (if not a Final
Payment Receivable) provides for fully amortizing level scheduled monthly
payments (except for the last payment, which may be different from the level
payments) and for accrual of interest at a fixed rate (the "Contract Rate")
according to the simple interest or actuarial method, (v) is a Actuarial
Receivable or a Simple Interest Receivable (either of which may be a Final
Payment Receivable), (vi) had not been paid more than three months in advance as
of the related Cutoff Date, (vii) is secured by a Financed Vehicle that was not
insured by force placed insurance, nor on which Chase Auto Finance had purchased
coverage commonly known as vendor's single interest and non-filing insurance and
(viii) satisfies the other criteria, if any, set forth in the related Prospectus
Supplement. The Seller will not use any selection procedures that it believes to
be materially adverse to the Securityholders of any series in selecting the
related Receivables.
"Simple Interest Receivables" provide for the allocation of payments made
thereunder to principal and interest in accordance with the "simple interest"
method. As payments are received under a Simple Interest Receivable, the finance
charges accrued to date are paid first, the unpaid amount financed (to the
extent of the remaining monthly scheduled payment) is paid second and the
remaining payment is applied to the unpaid late charges. Accordingly, if an
Obligor pays the fixed monthly installment in advance of the date on which a
payment is due (the "Due Date"), the portion of the payment allocable to finance
charges for the period since the preceding payment will be less than it would be
if the payment were made
22
on the Due Date, and the portion of the payment allocable to reduce the amount
financed will be correspondingly greater. Conversely, if the Obligor pays the
fixed monthly installment after its Due Date, the portion of the payment
allocable to finance charges for the period since the last payment will be
greater than it would be if the payment were made on the Due Date, and the
portion of the payment allocable to reduce the amount financed will be
correspondingly smaller. When necessary, an adjustment is made at the maturity
of the loan to the scheduled final payment to reflect the larger or smaller, as
the case may be, allocations of payments to the amount financed under a Simple
Interest Receivable as a result of early or late payments, as the case may be.
"Actuarial Receivables" provide for amortization of the loan over a series
of fixed level payment monthly installments. Each monthly installment, including
the monthly installment representing the final payment on the Receivable,
consists of an amount of interest equal to 1/12th of the annual contract rate of
interest on the loan multiplied by the unpaid principal balance of the loan, and
an amount of principal equal to the remainder of the monthly payment.
"Final Payment Receivables" are either Actuarial Receivables or Simple
Interest Receivables which provide for a final scheduled payment which is
greater than the scheduled monthly payments. A Final Payment Receivable provides
for amortization of the loan over a series of fixed level payment monthly
installments like an Actuarial Receivable or a Simple Interest Receivable, but
also requires a final scheduled payment due after payment of such monthly
installments which may be satisfied by (i) payment in full in cash of such
amount, (ii) transfer of the financed vehicle to the Seller provided certain
conditions are satisfied or (iii) refinancing the final scheduled payment in
accordance with certain conditions. With respect to any Final Payment
Receivables included in a Trust, only the principal and interest payments due
prior to the final scheduled payments and not the final scheduled payment will
be included in such Trust; the final scheduled payment will be retained by the
Seller. However, in the case of a Trust that is not classified as a grantor
trust, the Seller will have the option to transfer the final scheduled payments
with respect to the related Final Payment Receivables retained by the Seller to
such Trust and to cause such Trust to issue certificates representing interests
in such final scheduled payments or indebtedness secured by such final scheduled
payments.
All of the Receivables will be prepayable at any time without penalty to
the Obligor and will contain due on sale provisions. If a Simple Interest
Receivable is prepaid, the obligor is required to pay interest only to the date
of prepayment, rather than receive a rebate. If an Actuarial Receivable is
prepaid in full, with minor variations based upon state law, the Actuarial
Receivable requires that the rebate be calculated on the basis of a constant
interest rate.
In the case of the liquidation of a Receivable or repossession of a
Financed Vehicle, amounts recovered will be applied in accordance with Chase
Auto Finance's normal and customary servicing practices and procedures. Chase
Auto Finance reserves the right to change its policy with respect to the
application of amounts recovered from a liquidated Receivable or a repossessed
Financed Vehicle.
Information with respect to each Receivables Pool will be set forth in the
related Prospectus Supplement, including, to the extent appropriate, the
composition of the Receivables, the distribution by annual contract rate of
interest and by the states of origination of the Receivables, the portion of
such Receivables Pool consisting of Actuarial Receivables and of Simple Interest
Receivables (and the portion thereof consisting of Final Payment Receivables)
and the portion of such Receivables Pool secured by new vehicles and by used
vehicles.
If the related Prospectus Supplement provides for a Pre-Funding Account,
each Subsequent Receivable of the related Trust must satisfy the eligibility
criteria specified in the related Pooling and
23
Servicing Agreement or Sale and Servicing Agreement at the time of its addition.
However, except for such criteria, there will be no required characteristics of
such Subsequent Receivables. Therefore, following the transfer of Subsequent
Receivables to the related Trust, the characteristics of the entire related
Receivables Pool included in such Trust may vary from those of the Initial
Receivables.
Subsequent Receivables may be originated by the Dealers at a later date
using credit criteria different from those which were applied to any Initial
Receivables and may be of a different credit quality and seasoning. In addition,
following the transfer of Subsequent Receivables to the applicable Trust, the
characteristics of the entire pool of Receivables included in such Trust may
vary from those of the Initial Receivables transferred to such Trust. See "Risk
Factors--Risks Associated with Subsequent Receivables and the Pre-Funding
Account." If the Prospectus Supplement provides for a Pre-Funding Account, the
Prospectus Supplement will also describe the effects including Subsequent
Receivables may have on the Receivables Pool included in the related Trust. If a
Trust includes Subsequent Receivables, regular periodic reports regarding the
Subsequent Receivables will be included under Item 5 in each Current Report
filed by or on behalf of such Trust on Form 8-K with the Commission pursuant to
the Exchange Act.
Delinquency and Loan Loss Information
Certain information concerning the delinquencies, loan losses and
recoveries for the portfolio of indirect motor vehicle retail installment sales
contracts and purchase money loans ("Motor Vehicle Loans") owned or serviced by
Chase Auto Finance (the "Chase Auto Finance Portfolio") as of the dates and for
the periods set forth in the related Prospectus Supplement will be set forth
therein. There can be no assurance that the delinquency and net loss experience
on any Receivables Pool will be comparable to prior experience or to such
information.
Pursuant to a merger, as of January 1, 1993, Chase N.A. commenced
servicing Motor Vehicle Loans originated by Chase N.A.'s affiliate, Chase
Lincoln First Bank, National Association ("Chase Lincoln Bank"). The Motor
Vehicle Loans included in a Trust will not include loans originated by Chase
Lincoln Bank (collectively, "Chase Lincoln Loans") but the delinquency and loan
loss experience with respect to the Chase Auto Finance Portfolio (the "Portfolio
Experience") presented in the related Prospectus Supplement will include data
with respect to Chase Lincoln Loans. The Seller believes, however, that the
delinquency and loan loss experience of the Chase Lincoln Loans will not be
materially different from the Portfolio Experience set forth in the related
Prospectus Supplement.
From February 1993 through April 1995, Chase N.A. or Chase N.A.'s
affiliates serviced Motor Vehicle Loans for The Chase Manhattan Bank of
Connecticut, National Association ("Chase Connecticut Bank"), which loans
(collectively, "Chase Connecticut Loans") were originated using materially the
same Dealer Agreements, underwriting criteria and servicing standards as those
for Chase Auto Finance's Motor Vehicle Loans. As of May 1, 1995, Chase
Connecticut Bank was merged into Chase N.A. The Motor Vehicle Loans included in
a Trust will not include Chase Connecticut Loans, but the Portfolio Experience
presented in the related Prospectus Supplement will include data with respect to
Chase Connecticut Loans for December 31, 1993 and thereafter. The Seller
believes, however, that the delinquency and loan loss experience for Chase
Connecticut Loans will not be materially different from the Portfolio Experience
set forth in the related Prospectus Supplement.
On December 1, 1995, Chase N.A. purchased substantially the entire Motor
Vehicle Loan portfolio originated by its affiliate, The Chase Manhattan Private
Bank (Florida), National Association ("Chase Florida Bank"). The purchase
involved approximately 41,000 loans originated principally through Dealers
located in Florida ("Chase Florida Loans"), with such loans having an aggregate
outstanding principal balance at the time of purchase of approximately $400
million. The Motor Vehicle Loans included in a
24
Trust will not include Chase Florida Loans but the Portfolio Experience
presented in the related Prospectus Supplement will include data with respect to
Chase Florida Loans. Chase Florida Loans were originated using materially the
same Dealer Agreements, underwriting criteria and servicing standards as those
for Chase Auto Finance's Motor Vehicle Loans. The Seller believes that the
delinquency and loan loss experience for Chase Florida Loans will not be
materially different from the Portfolio Experience set forth in the related
Prospectus Supplement.
In September 1995, Chase N.A. purchased substantially all outstanding
Motor Vehicle Loans originated by The Chase Manhattan Bank of Maryland ("Chase
Maryland Loans"). Although the Motor Vehicle Loans included in a Trust will not
include Chase Maryland Loans, the Portfolio Experience presented in the related
Prospectus Supplement for the period commencing October 1, 1995 will include
data with respect to Chase Maryland Loans. The Seller believes that the
delinquency and loan loss experience for Chase Auto Finance's entire portfolio
of Motor Vehicle Loans for any period presented in a Prospectus Supplement
without inclusion of any Chase Maryland Loans would not be materially different
from the Portfolio Experience set forth in such Prospectus Supplement.
To the extent specified in the related Prospectus Supplement, the Motor
Vehicle Loans included in a Trust may include loans made directly by the
Originating Banks to Obligors without involvement of Dealers. However, the
Portfolio Experience will not include delinquency and loan loss experience for
such direct Motor Vehicle Loans. The Seller believes that the delinquency and
loan loss experience for such direct Motor Vehicle Loans will not be materially
different from the Portfolio Experience set forth in the related Prospectus
Supplement.
Origination and Servicing of Motor Vehicle Loans
The Originating Bank purchases motor vehicle retail installment sales
contracts relating to new or used automobiles from automobile dealers
("Dealers") who regularly originate and sell such contracts to the Originating
Bank pursuant to the terms of approved Dealer agreements and Assignments, and
the Originating Bank also makes purchase money loans secured by financed
vehicles directly or pursuant to arrangements with Dealers in accordance with
approved Dealer agreements. Dealer agreements and Assignments related to motor
vehicle retail installment sales contracts, and Dealer agreements related to
purchase money loans are collectively referred to herein as "Dealer Agreements."
The Originating Bank purchases such contracts from Dealers pursuant to
Assignments. Dealer Agreements are entered into with Dealers based upon a
financial review of each Dealer, and in some cases, the reputation and prior
experience of Chase Auto Finance with such Dealer and its key management.
Generally, Dealers who sell new financed vehicles are franchised by the
manufacturer of the financed vehicles.
The Originating Bank currently makes or purchases Motor Vehicle Loans
involving Dealers throughout the United States, except Alaska. Each Dealer makes
representations and warranties to the Originating Bank with respect to the Motor
Vehicle Loans, the obligors on the Motor Vehicle Loans and the security
interests in the financed vehicles relating thereto, which representations and
warranties typically include, among others, that (i) to the best of the Dealer's
knowledge, (a) no statements made or furnished to Chase Auto Finance by the
obligor, the Dealer or any other person are untrue or incomplete, (b) the
obligor has not financed any down payment for the financed vehicle, (c) the
obligor is a bona fide applicant having legal capacity to contract for a Motor
Vehicle Loan, (d) the signature of the obligor on all documents is genuine and
(e) the amount stated in the Motor Vehicle Loan to be due will in fact be due
and payable at the time or times provided therein free of any claims, defenses,
setoffs or counterclaims; (ii) the Dealer has verified the obligor's
identification; (iii) the Dealer had indefeasible title to the financed vehicle
immediately prior to the purchase by the obligor, and had the right and
authority to sell the vehicle to the obligor, free and clear of all liens and
encumbrances; (iv) the Dealer will secure and perfect for the
25
Originating Bank a security interest in the financed vehicle free and clear of
any liens or encumbrances; and (v) the description of the financed vehicle in
the Motor Vehicle Loan is true and complete and the financed vehicle will be or
has been duly delivered to and accepted without revocation by the obligor.
Generally, these representations and warranties do not relate to the
creditworthiness of the obligors or the collectibility of the Motor Vehicle
Loans. Upon breach of any representation or warranty made by a Dealer, the
Originating Bank has a right of recourse against such Dealer to require it to
purchase or repurchase such Motor Vehicle Loan. Generally, in determining
whether to exercise any right of recourse, Chase Auto Finance considers the
prior performance of the Dealer and other business and commercial factors. The
Servicer will be obligated to enforce such rights with respect to Dealer
Agreements relating to the Motor Vehicle Loans in accordance with Chase Auto
Finance's customary practices, and the right to any proceeds received upon such
enforcement will be conveyed to the related Trust under the related Pooling and
Servicing Agreement or Sale and Servicing Agreement, as applicable. The Seller
will make no representations as to the financial condition of such Dealers to
which the Seller may have recourse, and there can be no assurance as to the
ability of any such Dealer to perform its obligations under a Dealer Agreement.
The Servicer will service all of the Motor Vehicle Loans consistent with
Chase Auto Finance's servicing policies and practices. The servicing functions
performed by the Servicer or any of its affiliates on a predominantly
centralized basis will include the payment of Motor Vehicle Loan proceeds to
Dealers, customer service, document file keeping, computerized account record
keeping, vehicle titles processing and automated collections. Some servicing
functions are regionalized and are and will be performed by support offices
called Dealer Service Centers ("DSCs") located in Garden City, New York
(Northeast Region), Syracuse, New York (North Central Region), Tampa, Florida
(Southeast Region), Dallas, Texas (Central Region) and San Diego, California
(Western Region). The servicing functions performed by the DSCs include certain
aspects of Dealer liaison, Dealer sales, credit underwriting, documentation
reviews and collections as well as other such services. The servicing policies
and practices of Chase Auto Finance may change over time in accordance with the
Bank's business judgment.
Underwriting of Motor Vehicle Loans
Each applicant for a Motor Vehicle Loan is evaluated individually by the
appropriate DSC based on uniform underwriting standards developed by Chase Auto
Finance. These underwriting standards are intended to assess the applicant's
ability to repay such Motor Vehicle Loan and the adequacy of the financed
vehicle as collateral, based upon a review of the information contained in a
loan application form that generally lists the applicant's income, deposit
accounts, liabilities, credit history, employment history and a description of
the financed vehicle intended to secure the Motor Vehicle Loan. Among the
criteria considered in evaluating the individual applications are (i) stability
of the obligor with specific regard to the obligor's length of residence in the
area, occupation, length of employment and whether the obligor rents or owns his
or her home; (ii) the obligor's payment history based on information known
directly by Chase Auto Finance or as provided by various credit reporting
agencies with respect to present and past debt; (iii) a debt service to gross
monthly income ratio test; (iv) a loan to value ratio test taking into account
the age, type and market value of the financed vehicle; and (v) a credit bureau
score.
The amount advanced under any Motor Vehicle Loan generally will not exceed
(i) for a new financed vehicle, the manufacturer's suggested retail price or
(ii) for a used financed vehicle, 110% of the "average trade" value stated in
the most recently published National Automobile Dealers Association Used Car
Price Guide plus taxes and title and license fees on the financed vehicle.
However, the maximum amount advanced for Motor Vehicle Loans is often less than
such amounts depending on a number of factors, including the length of the Motor
Vehicle Loan term and the model and year of the financed vehicle. These
adjustments are made to insure that the financed vehicle constitutes adequate
collateral to
26
secure the Motor Vehicle Loan. In addition, whether a financed vehicle is new or
used, Chase Auto Finance will also finance credit life/accident/health insurance
and service warranties under a Motor Vehicle Loan. Chase Auto Finance's general
policy has been to reject applications for Motor Vehicle Loans whose applicants'
debt service to gross monthly income ratios exceed 40%.
Since July 1988, an empirically based credit scoring process has been used
by Chase Auto Finance to objectively index the applicant's creditworthiness.
This scoring process was created using historical information from the data base
of Motor Vehicle Loans owned and serviced by Chase Auto Finance. Through credit
scoring, Chase Auto Finance evaluates credit profiles in order to satisfactorily
quantify credit risk. The credit scoring process entails the use of statistics
to correlate common characteristics with credit risk. The credit scoring process
used by Chase Auto Finance will be periodically reviewed to ensure its validity.
In addition to Chase Auto Finance's scoring process, since July 1992, Chase Auto
Finance has used consumer reporting agency scores to assist in the underwriting
process. In February 1993, Chase Auto Finance implemented an automated approval
and declination process for certain applications based on selection criteria
that was statistically derived from the data base of Motor Vehicle Loans owned
and serviced by Chase Auto Finance. Except for the applications that are
automatically approved or denied, each application is reviewed by a credit
analyst. Except for the applications that are automatically approved or denied,
Chase Auto Finance's scoring process and consumer reporting agency scores are
intended to provide a basis for lending decisions, but are not meant to
supersede the judgment of the credit analyst. Motor Vehicle Loan approval at
variance with standard credit guidelines has occurred, both before and after
implementation of the credit scoring process, but generally has required
concurrent approval of a second, designated senior credit analyst or credit
manager. Motor Vehicle Loans that do not comply with all of Chase Auto Finance's
guidelines must have strong compensating factors that indicate a high ability of
the applicant to repay the loan. Generally, if a Motor Vehicle Loan is approved
it is because the obligor has made a down payment and the amount financed is
lower than the maximum amount permitted by Chase Auto Finance's guidelines.
Detailed analysis of Chase Auto Finance's portfolio is performed to
evaluate the effectiveness of the credit guidelines and scoring process. If
external economic factors, credit delinquencies or credit losses change, credit
guidelines are adjusted to maintain a level of asset quality deemed acceptable
by Chase Auto Finance's management. Each day, the credit manager and credit
supervisors of each DSC review a computer selected group of Motor Vehicle Loans
to ensure that credit analysts are following Chase Auto Finance's established
policies and procedures. Chase Auto Finance randomly reviews, on a quarterly
basis, the quality of the Motor Vehicle Loans and conducts quality audits to
ensure compliance with established policies and procedures. The credit
underwriting standards of Chase Auto Finance may change over time in accordance
with the Bank's business judgment.
Insurance and Collection Procedures
Each Motor Vehicle Loan requires the obligor to obtain fire, theft and
collision insurance or comprehensive and collision insurance with respect to the
financed vehicle. The Dealer Agreements include a representation and warranty
that each financed vehicle has such insurance at the time of origination of the
Motor Vehicle Loan. If an obligor fails to maintain the required insurance,
Chase Auto Finance may, but is not obligated to, purchase limited collision and
comprehensive insurance (force placed insurance) to protect the interests of
Chase Auto Finance and the obligor and to charge the obligor for the cost of
such insurance.
Chase Auto Finance previously purchased force placed insurance, but
stopped this practice in August 1993, and no force placed insurance coverage is
currently in effect on any of Chase Auto Finance's Motor Vehicle Loans. No Trust
will include any Motor Vehicle Loans on which force placed insurance
27
was ever purchased for the related financed vehicle, nor will any such Trust
include any Motor Vehicle Loans with coverage commonly known as vendor's single
interest and non-filing insurance. Unless otherwise specified in the related
Prospectus Supplement, there will be no third party insurance of any kind
covering this risk for any of the Motor Vehicle Loans included in any Trust. In
addition, neither the Seller, the Originating Bank nor the Servicer, as
applicable, independently verifies or will verify whether obligors obtain or
maintain the required insurance either at or after the origination of a Motor
Vehicle Loan. Chase Auto Finance monitors its loss experience with respect to
financed vehicles that are not properly insured.
The Bank reserves the right to change its policies with respect to
insurance on financed vehicles in accordance with its business judgment.
As a result of a New York statutory change, for Motor Vehicle Loans
originated through New York dealers on and after approximately June 30, 1995,
Chase Auto Finance agreed not to obligate the related Obligor for the so-called
"GAP amount" in the event there is a total loss of the vehicle caused by its
theft, confiscation or physical damage. The "GAP amount" that the obligor will
not be obligated to pay is the difference between the amount owed on the Motor
Vehicle Loan as of the date of the total loss and the sum of (1) any unpaid
monthly payments, unpaid late fees and other unpaid amounts due prior to the
date of the total loss, plus (2) the vehicle's actual cash value as of the date
of the total loss. If the obligor has maintained the insurance required under
the Motor Vehicle Loan, the vehicle's actual cash value shall have the same
meaning as under the insurance policy (inclusive of the deductible, which the
Motor Vehicle Loan specifies may be no higher than $500). If the obligor has not
maintained the insurance required under the Motor Vehicle Loan, the vehicle's
actual cash value shall mean the trade-in value of the vehicle in the National
Automobile Dealer's Association Official Used Car Guide (Eastern Edition) as of
the date of the total loss. Chase Auto Finance will not maintain third party
insurance of any kind against this risk, and Chase Auto Finance does not yet
have any data on its historical loss experience on this risk.
Collection activities with respect to delinquent Motor Vehicle Loans will
be performed by the Servicer or its affiliates consistent with Chase Auto
Finance's servicing policies and practices. Collection activities include prompt
investigation and evaluation of the causes of any delinquency. An obligor is
deemed current if an amount equal to no more than 10% of a scheduled monthly
payment remains unpaid.
An automated collection system is utilized to assist in collection
efforts. The automated collection system provides relevant obligor information
(for example, current addresses, phone numbers and loan information), records of
all contacts with obligors and, in some cases, automated dialing. The system
also records an obligor's promise to pay and allows supervisor review of
collection personnel activity, permits supervisors to modify priorities as to
which obligors should be contacted and provides extensive reports concerning
Motor Vehicle Loan delinquencies. Under current practices, contact, by mail
and/or telephone, is initiated with an obligor whose Motor Vehicle Loan has
become 13 days delinquent. In the event that such contact fails to result in a
payment sufficient to bring scheduled payments current under the Motor Vehicle
Loan, personal telephone contact with the obligor is attempted on or after the
20th day of delinquency. Generally, after a Motor Vehicle Loan continues to be
delinquent for 90 days, repossession procedures will have been implemented.
However, if (i) a Motor Vehicle Loan is deemed uncollectible, (ii) the financed
vehicle is deemed by collection personnel to be in danger of being damaged,
destroyed or made unavailable for repossession, or (iii) the obligor voluntarily
surrenders the financed vehicle, a repossession may occur without regard to
length or existence of payment delinquency. Repossessions are generally
conducted by third parties who are engaged in the business of repossessing
vehicles for secured parties. After repossession, the obligor generally has an
additional 10 to 30 days to redeem the financed vehicle before the financed
vehicle is resold. Upon repossession and sale of the financed vehicle, any
deficiency remaining will be pursued to the extent deemed practical and to the
extent permitted by law.
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Losses may occur in connection with delinquent Motor Vehicle Loans and can
arise in several ways, including the inability to locate the financed vehicle or
the obligor, or because of a discharge of the obligor in a bankruptcy
proceeding. Generally, losses on Motor Vehicle Loans are recognized, as
applicable, (a) during the calendar month in which a financed vehicle was or is
liquidated by Chase Auto Finance, if the liquidation takes place at or before
the calendar month in which more than 10% of a scheduled payment of the related
Motor Vehicle Loan becomes 150 days delinquent, (b) during the calendar month in
which more than 10% of a scheduled payment of a Motor Vehicle Loan becomes 150
days delinquent if Chase Auto Finance was or is not in possession of the related
financed vehicle by the end of such calendar month, (c) during the calendar
month in which a financed motor vehicle was or is liquidated by Chase Auto
Finance, if Chase Auto Finance came or comes into possession of the related
financed vehicle by the end of the calendar month in which more than 10% of a
scheduled payment on the related Motor Vehicle Loan becomes 150 days delinquent,
(d) such earlier time as Chase Auto Finance deems a Motor Vehicle Loan
uncollectible, or (e) at such other times or in such a manner as Chase Auto
Finance believed or believes is appropriate in accordance with its normal and
customary servicing practices and procedures; provided that such loss
recognition cannot be later than the calendar month in which more than 10% of a
scheduled payment on a Motor Vehicle Loan becomes 240 days delinquent. The loss
recognition and collection policies and practices of Chase Auto Finance may
change over time in accordance with the Bank's business judgment.
Chase Auto Finance may, on a case-by-case basis, permit extensions with
respect to the Due Dates of payments on Motor Vehicle Loans in accordance with
its normal and customary servicing practices and procedures, as will be
described more fully in the related Prospectus Supplement.
WEIGHTED AVERAGE LIFE OF THE SECURITIES
The weighted average life of the Notes, if any, and the Certificates of
any series will generally be influenced by the rate at which the principal
balances of the related Receivables are paid, which payment may be in the form
of scheduled amortization or prepayments. (For this purpose, the term
"prepayments" includes prepayments in full, partial prepayments, liquidations
due to default, as well as receipts of proceeds from theft and physical damage,
credit life and credit disability insurance policies covering the Financed
Vehicles and amounts received in connection with certain other Receivables
repurchased by the Seller or purchased by the Servicer for administrative
reasons). The Receivables are prepayable by the Obligors at any time. If a
Prospectus Supplement provides that the property of the related Trust will
include a Pre-Funding Account, the related Securities will be subject to partial
redemption on or immediately following the end of the Funding Period in an
amount and in the manner specified in the related Prospectus Supplement. If
provided in any Prospectus Supplement, prepayments may also result from demands
under any Cash Collateral Guaranty or from any Reserve Account or other
enhancement related to such series with respect to Defaulted Receivables.
The rate of prepayments on the Receivables may be influenced by a variety
of economic, social and other factors, including the fact that an Obligor may
not sell or transfer the Financed Vehicle securing a Receivable without the
Seller's consent. The rate of prepayment of the Motor Vehicle Loans in any
Receivables Pool may also be influenced by programs offered by lenders
(including the Bank and its affiliates) that solicit or make available credit
that may be used by Obligors to prepay Motor Vehicle Loans. Such credit includes
but is not limited to home equity lines of credit, consumer installment credit
and credit cards offered by lenders (including the Bank and its affiliates). The
Bank and its affiliates may, in the ordinary course of business, offer general
or targeted solicitations for such extensions of credit, and such solicitations
may be sent, to Obligors. In addition, each Sale and Servicing Agreement and
Pooling and Servicing Agreement will provide a covenant that the Servicer may
refinance an existing Motor Vehicle Loan for an Obligor, so long as the proceeds
of such refinanced loan would be used to prepay such existing
29
Motor Vehicle Loan in full and any such refinanced loan is evidenced by a new
promissory note. Any such loan thus created by a refinancing would not be the
property of the related Trust. See "Description of the Transfer and Servicing
Agreements--Termination" herein regarding the Servicer's option to purchase the
Receivables from a given Trust and "--Insolvency Event" herein regarding the
sale of Receivables owned by a Trust issuing Notes if an Insolvency Event with
respect to the General Partner occurs.
In light of the above considerations, there can be no assurance as to the
amount of principal payments to be made on the Securities of a given series on
each Payment Date or Distribution Date, as applicable, since such amount will
depend, in part, on the amount of principal collected on the related Receivables
Pool during the applicable Collection Period. Any reinvestment risks resulting
from a faster or slower incidence of prepayment of Receivables will be borne
entirely by the Securityholders of a given series. The related Prospectus
Supplement may set forth certain additional information with respect to the
maturity and prepayment considerations applicable to the particular Receivables
Pool and the related series of Securities.
Chase Auto Finance maintains certain records of the historical prepayment
experience of its portfolio of Motor Vehicle Loans. The Seller believes that
such records are not adequate to provide meaningful information with respect to
the Receivables. In any event, no assurance can be given that prepayments on the
Receivables would conform to any historical experience, and no prediction can be
made as to the actual prepayment experience to be expected with respect to the
Receivables.
In addition, under certain limited circumstances, extensions on a
Receivable may be granted. See the related Prospectus Supplement for a
description of the terms and conditions in accordance with which the Receivables
in a particular Trust may be modified. Any such deferrals or extensions may
increase the weighted average life of the related Securities.
POOL FACTORS AND TRADING INFORMATION
The "Note Pool Factor" for each class of Notes, if any, will be an
eight-digit decimal which the Servicer will compute prior to each distribution
with respect to such class of Notes expressing the remaining outstanding
principal balance of such class of Notes, as of the applicable Payment Date
(after giving effect to payments to be made on such Payment Date), as a fraction
of the initial outstanding principal balance of such class of Notes. The
"Certificate Pool Factor" for each class of Certificates will be an eight-digit
decimal which the Servicer will compute prior to each distribution with respect
to such class of Certificates expressing the remaining Certificate Balance of
such class of Certificates, as of the applicable Distribution Date or Payment
Date (after giving effect to distributions to be made on such Distribution Date
or Payment Date), as a fraction of the initial Certificate Balance of such class
of Certificates. Each Note Pool Factor and each Certificate Pool Factor will be
1.00000000 as of the related Cutoff Date for such series of Securities and
thereafter will decline to reflect reductions in the outstanding principal
balance of the applicable class of Notes, or the reduction of the Certificate
Balance of the applicable class of Certificates, as the case may be. A
Noteholder's portion of the aggregate outstanding principal balance of the
related class of Notes is the product of (i) the original denomination of such
Noteholder's Note and (ii) the applicable Note Pool Factor. A
Certificateholder's portion of the aggregate outstanding Certificate Balance for
the related class of Certificates is the product of (a) the original
denomination of such Certificateholder's Certificate and (b) the applicable
Certificate Pool Factor.
Securityholders will receive monthly reports concerning payments received
on the Receivables, the Pool Balance (as such term is defined in the related
Prospectus Supplement, the "Pool Balance"), each Certificate Pool Factor or Note
Pool Factor, as applicable, in each case related to such Trust, and various
30
other items of information specified in the related Prospectus Supplement. In
addition, Securityholders of record during any calendar year will be furnished
information for tax reporting purposes not later than the latest date permitted
by law. See "Certain Information Regarding the Securities--Reports to
Securityholders" herein.
USE OF PROCEEDS
Unless the related Prospectus Supplement provides for other applications,
the net proceeds from the sale of the Securities of a given series (after making
the initial deposit into the related Reserve Account, Yield Supplement Account
or Cash Collateral Account, if any, or the deposit of the Pre-Funded Amount into
the related Pre-Funding Account, if any) will be added to the Seller's general
funds.
CHASE USA (NEW YORK) AND CHASE USA (DELAWARE)
On March 31, 1996, The Chase Manhattan Corporation merged with and into
Chemical Banking Corporation. Thereafter, Chemical Banking Corporation, as the
surviving corporation of the merger, changed its name to "The Chase Manhattan
Corporation." The Corporation is the largest banking institution in the United
States of America, with over $300 billion in assets and $20 billion in
stockholders' equity. In July 1996, Chemical Bank and Chase N.A. merged, with
Chemical Bank continuing as the surviving corporation under the name "The Chase
Manhattan Bank." Following the Merger, the principal banking subsidiary of the
Corporation is The Chase Manhattan Bank. In connection with the Merger, Chase
N.A.'s existing portfolio of Motor Vehicle Loans was transferred to Chase USA
(New York). Chase USA (New York) is currently the originator of the Motor
Vehicle Loans.
Chase USA (New York), a wholly-owned subsidiary of the Corporation, is a
national banking association and a member of the Federal Reserve System. It is
subject to the primary supervision of the Office of the Comptroller of the
Currency. Its deposits are insured by the FDIC. Chase USA (New York) is engaged
in a general consumer banking business. The principal executive office of Chase
USA (New York) is located at 200 Jericho Quadrangle, Jericho, New York 11759
(telephone (516) 935-9935.
Chase USA (Delaware), a wholly-owned subsidiary of the Corporation, is a
national banking association and a member of the Federal Reserve System. Chase
USA (Delaware) was formed in 1982 as a Delaware banking corporation and is
headquartered in Wilmington, Delaware. On August 19, 1996, Chase USA (Delaware)
was reconstituted as a national banking association and as such is subject to
the supervision of the Office of the Comptroller of the Currency. Its deposits
are insured by the FDIC. Chase USA (Delaware) acquired, effective June 1, 1996,
the credit card business of Chemical Bank, an affiliate of Chase USA (Delaware).
Chase USA (Delaware)'s activities are primarily related to credit card lending
and other forms of unsecured consumer lending. Chase USA (Delaware) also takes
deposits and offers associated financial services for consumers. The principal
executive office of Chase USA (Delaware) is located at 802 Delaware Avenue,
Wilmington, Delaware 19801 (telephone (302) 575-5000).
It is expected that Chase USA (New York) and Chase USA (Delaware) will
merge, with Chase USA (Delaware) continuing as the surviving entity. The Chase
USA Merger is expected to be completed in December 1996. After the Chase USA
Merger, Chase USA (Delaware) will originate the Motor Vehicle Loans.
31
DESCRIPTION OF THE NOTES
General
With respect to each Trust that issues Notes, one or more classes of Notes
of the related series will be issued pursuant to the terms of an Indenture, a
form of which has been filed as an exhibit to the Registration Statement of
which this Prospectus forms a part. The following, as well as other pertinent
information included elsewhere in this Prospectus and in the related Prospectus
Supplement, describes the material terms of the Notes of any series, but does
not purport to be complete and is subject to, and is qualified in its entirety
by reference to, the provisions of such Notes and the related Indenture.
Unless otherwise specified in the related Prospectus Supplement, each
class of Notes will initially be represented by one or more Notes, in each case
registered in the name of a nominee of DTC (together with any successor
depository selected by the Trust (the "Depository"), except as set forth below.
Principal and Interest on the Notes
The timing and priority of payment, seniority, Interest Rate and amount of
or method of determining payments of principal and interest on each class of
Notes of a given series will be described in the related Prospectus Supplement.
The right of holders of any class of Notes to receive payments of principal and
interest may be senior or subordinate to the rights of holders of any other
class or classes of Notes of such series, as described in the related Prospectus
Supplement. Unless otherwise provided in the related Prospectus Supplement,
payments of interest on the Notes of such series will be made prior to payments
of principal thereon. To the extent provided in the related Prospectus
Supplement, a series may include one or more classes of Strip Notes entitled to
(i) principal payments with disproportionate, nominal or no interest payments or
(ii) interest payments with disproportionate, nominal or no principal payments.
Each class of Notes may have a different Interest Rate, which may be a fixed,
variable or adjustable Interest Rate (and which may be zero for certain classes
of Strip Notes), or any combination of the foregoing. The related Prospectus
Supplement will specify the Interest Rate for each class of Notes of a given
series or the method for determining such Interest Rate. See also "Certain
Information Regarding the Securities--Fixed Rate Securities" and "--Floating
Rate Securities" herein. One or more classes of Notes of a series may be
redeemable in whole or in part under the circumstances specified in the related
Prospectus Supplement, including at the end of any applicable Funding Period or
as a result of the Servicer's exercise of its option to purchase the related
Receivables Pool.
To the extent specified in the related Prospectus Supplement, one or more
classes of the related series of Notes may have fixed principal payment
schedules. Noteholders of such Notes would be entitled to receive as payments of
principal on any given Payment Date the applicable amounts set forth on such
schedule with respect to such Notes, in the manner and to the extent set forth
in the related Prospectus Supplement.
Unless the related Prospectus Supplement specifies that Notes of different
classes within a series will have different priorities, payments to Noteholders
of all classes within a series in respect of interest will have the same
priority. Under certain circumstances, the amount available for such payments
could be less than the amount of interest payable on the Notes on any of the
dates specified for payments in the related Prospectus Supplement (each, a
"Payment Date," which may be the same date as each Distribution Date with
respect to the Certificates of such series as specified in the related
Prospectus Supplement), in which case each class of Noteholders will receive its
ratable share (based upon the aggregate amount of interest due to each such
class of Noteholders) of the aggregate amount available to be distributed in
respect
32
of interest on the Notes of such series. See "Description of the Transfer and
Servicing Agreements--Distributions" and "--Credit and Cash Flow Enhancement"
herein.
In the case of a series of Notes which includes two or more classes of
Notes, the sequential order and priority of payment in respect of principal and
interest of each such class, and any schedule or formula or other provisions
applicable to the determination thereof, will be set forth in the related
Prospectus Supplement. Payments in respect of principal and interest of any
class of Notes will be made on a pro rata basis among all the Noteholders of
such class.
To the extent specified in the related Prospectus Supplement, one or more
classes of the related series of Notes may be entitled to receive principal
payments prior to the receipt of principal payments by other classes of the
related series. If so provided in the related Prospectus Supplement, such class
or classes of Notes may have a final scheduled Payment Date of less than 397
days from the date of the related Prospectus Supplement and such class or
classes may have received a short-term rating by a Rating Agency that is in one
of the two highest short-term rating categories. The failure to pay such a class
of Notes on or prior to the related final Payment Date would constitute an Event
of Default under the related Indenture.
To the extent specified in the related Prospectus Supplement, one or more
classes of the related series of Notes may be designed to receive principal
payments using a predetermined principal balance schedule (a "planned balance")
derived by assuming two constant prepayment rates for the related Receivables
Pool. The related Prospectus Supplement will set forth a schedule of the planned
balance of such a class of Notes for each Payment Date. Holders of such a class
of Notes will be entitled to receive principal payments in respect of a Payment
Date only to the extent necessary to reduce the principal balance of such Notes
to the amount set forth as the planned balance for such Payment Date.
To the extent specified in the related Prospectus Supplement, one or more
classes of the related series of Notes may be designed to receive principal
payments using a predetermined principal balance schedule (a "targeted balance")
derived by assuming one constant prepayment rate for the related Receivables
Pool. The related Prospectus Supplement will set forth a schedule of the
targeted balance of such a class of Notes for each Payment Date. Holders of such
a class of Notes will be entitled to receive principal payments in respect of a
Payment Date only to the extent necessary to reduce the principal balance of
such Notes to the amount set forth as the targeted balance for such Payment
Date.
To the extent specified in the related Prospectus Supplement, one or more
classes of the related series of Notes may be designed to receive principal
payments on a Payment Date only if principal payments have been made on a
specified planned amortization class of Notes or targeted amortization class of
Notes, and to receive any excess payments over the amount required to reduce the
principal amount of the planned amortization class or targeted amortization
class to the planned or targeted balance for such Payment Date.
If the Servicer exercises its option to purchase the Receivables of a
Trust in the manner and on the respective terms and conditions described under
"Description of the Transfer and Servicing Agreements--Termination" herein, the
related outstanding Notes will be prepaid as set forth in the related Prospectus
Supplement. In addition, if the related Prospectus Supplement provides that the
property of a Trust will include a Pre-Funding Account, the related outstanding
Notes may be subject to partial prepayment on or immediately following the end
of the related Funding Period in an amount and manner specified in the related
Prospectus Supplement. In the event of such partial prepayment, the Noteholders
of the related series may be entitled to receive a prepayment premium, in the
amount and to the extent provided in the related Prospectus Supplement.
33
The Indenture
Modification of Indenture. With respect to each Trust that has issued
Notes pursuant to an Indenture, such Trust and the related Indenture Trust may,
with the consent of the holders of a majority of the outstanding Notes of the
related series, execute a supplemental indenture to add provisions to, change in
any manner or eliminate any provisions of, the related Indenture, or modify
(except as provided below) in any manner the rights of the related Noteholders.
Unless otherwise specified in the related Prospectus Supplement with
respect to a series of Notes, without the consent of the holder of each such
outstanding Note affected thereby, no supplemental indenture will: (i) change
the date of payment of any installment of principal of or interest on any such
Note or reduce the principal amount thereof, the Interest Rate specified thereon
or the redemption price with respect thereto or change any place of payment
where, or the coin or currency in which, any such Note or any interest thereon
is payable; (ii) impair the right to institute suit for the enforcement of
certain provisions of the related Indenture regarding payment; (iii) reduce the
percentage of the aggregate amount of the outstanding Notes of such series, the
consent of the holders of which is required (a) for any such supplemental
indenture or (b) for any waiver of compliance with certain provisions of the
related Indenture or of certain defaults thereunder and their consequences as
provided for in such Indenture; (iv) modify or alter the provisions of the
related Indenture regarding the voting of Notes held by the related Trust, any
other obligor on such Notes, the Seller or an affiliate of any of them; (v)
reduce the percentage of the aggregate outstanding amount of such Notes required
to direct the related Indenture Trustee to sell or liquidate the Receivables,
the consent of the holders of which is required if the proceeds of such sale or
liquidation would be insufficient to pay the principal amount and accrued but
unpaid interest on the outstanding Notes of such series; (vi) decrease the
percentage of the aggregate principal amount of such Notes required to amend the
sections of the related Indenture that specify the applicable percentage of
aggregate principal amount of the Notes of such series necessary to amend such
Indenture or certain other related agreements; (vii) modify any provisions of
the Indenture in such a manner as to affect the calculation of the amount of any
payment of interest or principal due on any Note on any Payment Date (including
the calculation of any of the individual components of such calculation); or
(viii) permit the creation of any lien ranking prior to or on a parity with the
lien of the related Indenture with respect to any of the collateral for such
Notes or, except as otherwise permitted or contemplated in such Indenture,
terminate the lien of such Indenture on any such collateral or deprive the
holder of any such Note of the security afforded by the lien of such Indenture.
Unless otherwise provided in the related Prospectus Supplement, the
related Trust and the related Indenture Trustee may also enter into supplemental
indentures, without obtaining the consent of the Noteholders of the related
series, for the purpose of, among other things, adding any provisions to or
changing in any manner or eliminating any of the provisions of the related
Indenture or of modifying in any manner the rights of such Noteholders; provided
that such action will not materially and adversely affect the interest of any
such Noteholder.
Events of Default; Rights Upon Event of Default. With respect to the Notes
of a given series, unless otherwise specified in the related Prospectus
Supplement, "Events of Default" under the related Indenture will consist of: (i)
a default in the payment of any interest on any such Note for a period of 5
days; (ii) a default in the payment of the principal of or any installment of
the principal of any such Note when the same becomes due and payable; (iii) a
default in the observance or performance of any covenant or agreement of the
related Trust made in the related Indenture which default materially and
adversely affects the rights of the related Noteholders, and which default
continues for a period of 30 days after written notice thereof is given to such
Trust by the related Indenture Trustee or to such Trust and such Indenture
Trustee by the holders of at least 25% in principal amount of such Notes then
outstanding (or
34
for such longer period, not in excess of 90 days, as may be reasonably necessary
to remedy such default; provided that such default is capable of remedy within
90 days or less); or (iv) certain events of bankruptcy, insolvency, receivership
or liquidation of the related Trust. However, the amount of principal required
to be paid to Noteholders of such series under the related Indenture will
generally be limited to amounts available to be deposited in the related Note
Distribution Account. Therefore, unless otherwise specified in the related
Prospectus Supplement, the failure to pay principal on a class of Notes on any
Payment Date generally will not result in the occurrence of an Event of Default
until the final scheduled Payment Date for such class of Notes.
If an Event of Default should occur and be continuing with respect to the
Notes of any series, the related Indenture Trustee or holders of a majority in
principal amount of such Notes then outstanding may declare the principal of
such Notes to be immediately due and payable. Unless otherwise specified in the
related Prospectus Supplement, such declaration may, under certain
circumstances, be rescinded by the holders of a majority in principal amount of
such Notes then outstanding.
If the Notes of any series are due and payable following an Event of
Default with respect thereto, the related Indenture Trustee may institute
proceedings to collect amounts due or foreclose on the related Trust property,
exercise remedies as a secured party, sell the related Receivables or elect to
have the related Trust maintain possession of such Receivables and continue to
apply collections on such Receivables as if there had been no declaration of
acceleration. Unless otherwise specified in the related Prospectus Supplement,
however, the related Indenture Trustee is prohibited from selling the related
Receivables following an Event of Default, unless (i) the holders of all such
outstanding Notes consent to such sale, (ii) the proceeds of such sale are
sufficient to pay in full the principal and the accrued interest on such
outstanding Notes at the date of such sale, or (iii) there has been an Event of
Default arising from a failure to make a required payment of principal or
interest on any Notes, and such Indenture Trustee determines that the proceeds
of Receivables would not be sufficient on an ongoing basis to make all payments
on such Notes as such payments would have become due if such obligations had not
been declared due and payable, and such Indenture Trustee obtains the consent of
the holders of sixty-six and two-thirds percent of the aggregate outstanding
amount of such Notes.
If an Event of Default occurs and is continuing with respect to a series
of Notes, the related Indenture Trustee will be under no obligation to exercise
any of the rights or powers under the related Indenture at the request or
direction of any of the holders of such Notes, if such Indenture Trustee
reasonably believes it will not be adequately indemnified against the costs,
expenses and liabilities which might be incurred by it in complying with such
request. Subject to the provisions for indemnification and certain limitations
contained in the related Indenture, the holders of a majority in principal
amount of the outstanding Notes of a given series will have the right to direct
the time, method and place of conducting any proceeding or any remedy available
to the related Indenture Trustee, and the holders of a majority in principal
amount of such Notes then outstanding may, in certain cases, waive any default
with respect thereto, except a default in the payment of principal or interest
or a default in respect of a covenant or provision of such Indenture that cannot
be modified without the waiver or consent of all the holders of such outstanding
Notes.
Unless and to the extent the related Prospectus Supplement specifies other
circumstances in which a holder of a Note of a series will have the right to
institute the proceedings described below, no holder of such a Note will have
the right to institute any proceeding with respect to the related Indenture
unless (i) such holder has previously given written notice to the related
Indenture Trustee of a continuing Event of Default, (ii) the holders of not less
than 25% in principal amount of the outstanding Notes of such series have made
written request to such Indenture Trustee to institute such proceeding in its
own name as Indenture Trustee, (iii) such holder or holders have offered such
Indenture Trustee indemnity reasonably
35
satisfactory to it against the costs, expenses and liabilities to be incurred in
complying with such request, (iv) such Indenture Trustee has for 60 days after
receipt of such notice, request and offer of indemnity failed to institute such
proceeding, and (v) no direction inconsistent with such written request has been
given to such Indenture Trustee during such 60-day period by the holders of a
majority in principal amount of such outstanding Notes.
In addition, each Indenture Trustee and the related Noteholders, by
accepting the related Notes, will covenant that they will not at any time
institute against the related Trust any bankruptcy, reorganization or other
proceeding under any federal or state bankruptcy or similar law.
With respect to any Trust, neither the related Indenture Trustee nor the
related Owner Trustee in its individual capacity, nor any holder of a
Certificate representing an ownership interest in such Trust nor any of their
respective owners, beneficiaries, agents, officers, directors, employees,
affiliates, successors or assigns will, in the absence of an express agreement
to the contrary, be personally liable for the payment of the principal of or
interest on the related Notes or for the agreements of such Trust contained in
the related Indenture.
Certain Covenants
Each Indenture will provide that the related Trust may not consolidate
with or merge into any other entity, unless (i) the entity formed by or
surviving such consolidation or merger is organized under the laws of the United
States, any state or the District of Columbia, (ii) such entity expressly
assumes such Trust's obligation to make due and punctual payments of principal
and interest on the Notes of the related series and the performance or
observance of every agreement and covenant of such Trust under the Indenture,
(iii) no Event of Default with respect to such series shall have occurred and be
continuing immediately after such merger or consolidation, (iv) such Trust has
been advised that the rating of the Notes or the Certificates of such series
then in effect would not be downgraded or withdrawn by the related Rating
Agencies as a result of such merger or consolidation, (v) such action as was
necessary to maintain the lien and security interest created by such Indenture
shall have been taken, and (vi) such Trust has received an opinion of counsel to
the effect that such consolidation or merger would have no material adverse tax
consequence to such Trust or to any related Noteholder or Certificateholder.
Each Trust will not, among other things, (i) except as expressly permitted
by the related Indenture, Transfer and Servicing Agreements or certain related
documents with respect to such Trust (collectively, the "Related Documents"),
sell, transfer, exchange or otherwise dispose of any of the properties or assets
of such Trust, (ii) claim any credit on or make any deduction from the principal
or interest payable in respect of the Notes of the related series (other than
amounts withheld under the Code or applicable state law) or assert any claim
against any present or former holder of such Notes because of the payment of
taxes levied or assessed upon such Trust, (iii) permit the validity or
effectiveness of the related Indenture to be impaired or permit any person to be
released from any covenants or obligations with respect to such Notes under such
Indenture except as may be expressly permitted thereby, (iv) permit any lien,
charge, excise, claim, security interest, mortgage or other encumbrance to be
created on or extend to or otherwise arise upon or burden the assets of such
Trust or any party thereof, or any interest therein or the proceeds thereof, or
(v) permit any lien of such Indenture not to constitute a valid first priority
security interest in such Trust (other than with respect to any such tax,
mechanics' or other lien).
No Trust may engage in any activity other than as specified in the related
Prospectus Supplement. No Trust will incur, assume or guarantee any indebtedness
other than indebtedness incurred pursuant to the related Notes and the related
Indenture, pursuant to any Advances made to it by the Servicer or otherwise in
accordance with the Related Documents.
36
Annual Compliance Statement. Each Trust will be required to file annually
with the related Indenture Trustee a written statement as to the fulfillment of
its obligations under the Indenture.
Indenture Trustee's Annual Report. The Indenture Trustee for each Trust
will be required to mail each year to all related Noteholders a brief report
relating to its eligibility and qualification to continue as Indenture Trustee
under the related Indenture, any amounts advanced by it under the related
Indenture, the amount, interest rate and maturity date of certain indebtedness
owing by such Trust to the related Indenture Trustee in its individual capacity,
the property and funds physically held by such Indenture Trustee as such and any
action taken by it that materially affects the related Notes and that has not
been previously reported.
Satisfaction and Discharge of Indenture. An Indenture will be discharged
with respect to the related Notes upon the delivery to the related Indenture
Trustee for cancellation of all such Notes or, with certain limitations, upon
deposit with such Indenture Trustee of funds sufficient for the payment in full
of all such Notes.
The Indenture Trustee
The Indenture Trustee for a series of Notes will be specified in the
related Prospectus Supplement. The Indenture Trustee for any series may resign
at any time, in which event the Administrator of the related Trust will be
obligated to appoint a successor indenture trustee for such series. The
Administrator of the related Trust may also remove any such Indenture Trustee if
such Indenture Trustee ceases to be eligible to continue as such under the
related Indenture or if such Indenture Trustee becomes insolvent. In such
circumstances, the Administrator of the related Trust will be obligated to
appoint a successor trustee for the related series of Notes. Any resignation or
removal of the Indenture Trustee and appointment of a successor indenture
trustee for any series of Notes will not become effective until acceptance of
the appointment by the successor indenture trustee for such series.
DESCRIPTION OF THE CERTIFICATES
General
With respect to each Trust, one or more classes of Certificates of the
related series will be issued pursuant to the terms of a Trust Agreement or a
Pooling and Servicing Agreement, a form of each of which has been filed as an
exhibit to the Registration Statement of which this Prospectus forms a part. The
following, as well as other pertinent information included elsewhere in this
Prospectus and in the related Prospectus Supplement, describes the material
terms of the Certificates of any series, but does not purport to be complete and
is subject to, and is qualified in its entirety by reference to, the provisions
of such Certificates and the related Trust Agreement or Pooling and Servicing
Agreement, as applicable.
The related Prospectus Supplement will specify whether each class of
Certificates of the related series will initially be represented by one or more
Certificates, in each case registered in the name of Depository or its nominee
(except as set forth below) or will be issued in fully registered, certificated
form.
Distributions of Principal and Interest
The timing and priority of distributions, seniority, allocations of
losses, Pass Through Rate and amount of or method of determining distributions
with respect to principal and interest of each class of Certificates with
respect to any series will be described in the related Prospectus Supplement.
Distributions
37
of interest on such Certificates will be made on the dates specified in the
related Prospectus Supplement (each, a "Distribution Date," which may be the
same date as each Payment Date with respect to the Notes of such series, if any,
specified in the related Prospectus Supplement) and will be made prior to
distributions with respect to principal of such Certificates. To the extent
provided in the related Prospectus Supplement, a series may include one or more
classes of Strip Certificates entitled to (i) distributions in respect of
principal with disproportionate, nominal or no interest distributions, or (ii)
interest distributions with disproportionate, nominal or no distributions in
respect of principal. Each class of Certificates may have a different Pass
Through Rate, which may be a fixed, variable or adjustable Pass Through Rate
(and which may be zero for certain classes of Strip Certificates) or any
combination of the foregoing. The related Prospectus Supplement will specify the
Pass Through Rate for each class of Certificates of a given series or the method
for determining such Pass Through Rate. See also "Certain Information Regarding
the Securities--Fixed Rate Securities" and "--Floating Rate Securities" herein.
Unless otherwise provided in the related Prospectus Supplement, distributions in
respect of the Certificates of a given series that are issued with Notes will be
subordinate to payments in respect of such Notes as more fully described in the
related Prospectus Supplement. Distributions in respect of interest on and
principal of any class of Certificates will be made on a pro rata basis among
all the Certificateholders of such class.
In the case of a series of Certificates that includes two or more classes
of Certificates, the timing, sequential order, priority of payment or amount of
distributions in respect of interest and principal on each such class, and any
schedule or formula or other provisions applicable to the determination thereof,
shall be as set forth in the related Prospectus Supplement.
If the Servicer exercises its option to purchase the Receivables of a
Trust in the manner and on the respective terms and conditions described under
"Description of the Transfer and Servicing Agreements--Termination" herein,
related Certificateholders will receive as prepayment an amount in respect of
such Certificates as specified in the related Prospectus Supplement. In
addition, if the related Prospectus Supplement provides that the property of a
Trust will include a Pre-Funding Account, related Certificateholders may receive
a partial prepayment of principal on or immediately following the end of the
Funding Period in an amount and manner specified in the related Prospectus
Supplement. In the event of such partial prepayment, the Certificateholders may
be entitled to receive a prepayment premium, in the amount and to the extent
provided in the related Prospectus Supplement.
The Trustee
The Trustee for each Trust will be specified in the related Prospectus
Supplement. The Trustee's liability in connection with the issuance and sale of
the related Securities is limited solely to the express obligations of such
Trustee set forth in the related Trust Agreement and the Sale and Servicing
Agreement or the related Pooling and Servicing Agreement, as applicable. The
Trustee under each Trust Agreement or Pooling and Servicing Agreement, as
applicable, will perform administrative functions, including, if specified in
the related Prospectus Supplement, making distributions from the related
Certificate Distribution Account. A Trustee may resign at any time by giving
written notice thereof to the Servicer under the related Pooling and Servicing
Agreement or the Administrator under the related Trust Agreement, in which event
the Servicer or the Administrator, as the case may be, or its successor, will be
obligated to appoint a successor trustee. The Servicer or the Administrator may
also remove the Trustee if such Trustee ceases to be eligible to continue as
Trustee under the related Pooling and Servicing Agreement or Trust Agreement, as
applicable, becomes legally unable to act or if such Trustee becomes insolvent.
In such circumstances, the Servicer or the Administrator will be obligated to
appoint a successor trustee. Any resignation or removal of a Trustee and
appointment of a successor trustee will not become effective until acceptance of
the appointment by the successor trustee.
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Each Trust Agreement and Administration Agreement will provide that the
Administrator will pay the related Trustee's fees. Each Pooling and Servicing
Agreement will provide that the Servicer will pay the related Trustee's fees.
Each Trust Agreement and Administration Agreement and Pooling and Servicing
Agreement will further provide that the related Trustee will be entitled to
indemnification by the Administrator and the Servicer, respectively, and will be
held harmless against, any loss, liability or expenses incurred by the Trustee
not resulting from such Trustee's over willful misfeasance, bad faith or
negligence and not incurred by reason of a breach of any of its representations
or warranties set forth in the related Trust Agreement or Pooling and Servicing
Agreement, as applicable. If the Administrator or Servicer shall not provide
such indemnification, the Servicer may be indemnified from the related Trust,
provided, that no indemnification shall be paid from the Trust on any
Distribution Date or Payment Date, as applicable,
until the Securityholders and the Servicer have been paid all amounts otherwise
due and the amount on deposit in any enhancement account shall equal its
required amount.
CERTAIN INFORMATION REGARDING THE SECURITIES
Fixed Rate Securities
Each class of Securities (other than certain classes of Strip Notes or
Strip Certificates) may bear interest at a fixed rate per annum ("Fixed Rate
Securities") or at a variable or adjustable rate per annum ("Floating Rate
Securities"), as more fully described below and in the related Prospectus
Supplement. Each class of Fixed Rate Securities will bear interest at the
applicable per annum Interest Rate or Pass Through Rate, as the case may be,
specified in the related Prospectus Supplement. Unless otherwise set forth in
the related Prospectus Supplement, interest on each class of Fixed Rate
Securities will be computed on the basis of a 360-day year of twelve 30-day
months. See "Description of the Notes--Principal and Interest on the Notes" and
"Description of the Certificates--Distributions of Principal and Interest"
herein.
Floating Rate Securities
Each class of Floating Rate Securities will bear interest for each related
Interest Reset Period (as such term is defined in the related Prospectus
Supplement with respect to a class of Floating Rate Securities, an "Interest
Reset Period") at a rate per annum determined by reference to an interest rate
basis (the "Base Rate"), plus or minus the Spread, if any, or multiplied by the
Spread Multiplier, if any, in each case as specified in the related Prospectus
Supplement. The "Spread" is the number of basis points (one basis point equals
one one-hundredth of a percentage point) that may be specified in the related
Prospectus Supplement as being applicable to such class, and the "Spread
Multiplier" is the percentage that may be specified in the related Prospectus
Supplement as being applicable to such class.
The related Prospectus Supplement will designate a Base Rate for a given
Floating Rate Security based on the London interbank offered rate ("LIBOR"),
commercial paper rates, Federal funds rates, U.S. Government treasury securities
rates, negotiable certificates of deposit rates or another rate as set forth in
such Prospectus Supplement.
As specified in the related Prospectus Supplement, Floating Rate
Securities of a given class may also have either or both of the following (in
each case expressed as a rate per annum): (i) a maximum limitation, or ceiling,
on the rate at which interest may accrue during any interest period and (ii) a
minimum limitation, or floor, on the rate at which interest may accrue during
any interest period. In addition to any maximum interest rate that may be
applicable to any class of Floating Rate Securities, the interest rate
applicable to any class of Floating Rate Securities will in no event be higher
than the maximum rate permitted by applicable law, as the same may be modified
by United States law of general application.
Each Trust with respect to which a class of Floating Rate Securities will
be issued will appoint, and enter into agreements with, a calculation agent
(each a "Calculation Agent") to calculate interest rates on each such class of
Floating Rate Securities issued with respect thereto. The related Prospectus
Supplement will set forth the identity of the Calculation Agent for each such
class of Floating Rate Securities of a given series, which may be either the
Trustee or any Indenture Trustee with respect to such series. All determinations
of interest by the Calculation Agent shall, in the absence of manifest error, be
conclusive for all purposes and binding on the holders of Floating Rate
Securities of a given class. Unless otherwise specified in the related
Prospectus Supplement, all percentages resulting from any calculation of the
rate of interest on a Floating Rate Security will be rounded, if necessary, to
the nearest 1/100,000 of 1% (.0000001), with five one-millionths of a percentage
point rounded upward.
39
Indexed Securities
To the extent so specified in any Prospectus Supplement, any class of
Securities of a given series may consist of Securities ("Indexed Securities") in
which the principal amount payable at the final scheduled Payment Date or
Distribution Date, as the case may be, for such class (the "Indexed Principal
Amount") is determined by reference to a measure (the "Index") which will be
related to (i) the difference in the rate of exchange between United States
dollars and a currency or composite currency (the "Indexed Currency") specified
in the related Prospectus Supplement (such Indexed Securities, "Currency Indexed
Securities"); (ii) the difference in the price of a specified commodity (the
"Indexed Commodity") on specified dates (such Indexed Securities, "Commodity
Indexed Securities"); or (iii) the difference in the level of a specified stock
index (the "Stock Index"), which may be based on U.S. or foreign stocks, on
specified dates (such Indexed Securities, "Stock Indexed Securities"); or (iv)
such other objective price or economic measures as are described in the related
Prospectus Supplement. The manner of determining the Indexed Principal Amount of
an Indexed Security and historical and other information concerning the Indexed
Currency, the Indexed Commodity, the Stock Index or other price or economic
measures used in such determination will be set forth in the related Prospectus
Supplement, together with information concerning tax consequences to the holders
of such Indexed Securities.
If the determination of the Indexed Principal Amount of an Indexed
Security is based on an Index calculated or announced by a third party and such
third party either suspends the calculation or announcement of such Index or
changes the basis upon which such Index is calculated (other than changes
consistent with policies in effect at the time such Indexed Security was issued
and permitted changes described in the related Prospectus Supplement), then such
Index shall be calculated for purposes of such Indexed Security by an
independent calculation agent named in the related Prospectus Supplement on the
same basis, and subject to the same conditions and controls, as applied to the
original third party. If for any reason such Index cannot be calculated on the
same basis and subject to the same conditions and controls as applied to the
original third party, then the Indexed Principal Amount of such Indexed Security
shall be calculated in the manner set forth in the related Prospectus
Supplement. Any determination of such independent calculation agent shall in the
absence of manifest error be binding on all parties.
Unless otherwise specified in the related Prospectus Supplement, interest
on an Indexed Security will be payable based on the amount designated in the
related Prospectus Supplement as the "Face Amount" of such Indexed Security. The
related Prospectus Supplement will describe whether principal amount of the
related Indexed Security, if any, that would be payable upon redemption or
repayment prior to the applicable final scheduled Payment Date or Distribution
Date, as the case may be, will be the Face Amount of such Indexed Security, the
Indexed Principal Amount of such Indexed Security at the time of redemption or
repayment or another amount described in such Prospectus Supplement.
Book-Entry Registration
Securityholders may hold their Securities through DTC (in the United
States) or CEDEL or Euroclear (in Europe), which in turn hold through DTC, if
they are participants of such systems, or indirectly through organizations that
are participants in such systems.
The Seller has been informed by DTC that DTC's nominee will be Cede,
unless another nominee is specified in the related Prospectus Supplement.
Accordingly, such nominee is expected to be the holder of record of any
Book-Entry Securities of any class or series. Unless and until Definitive
Securities are issued under the limited circumstances described herein or in the
related Prospectus Supplement, no Securityholder will be entitled to receive a
physical certificate representing its interest in such Security. All references
herein and in the related Prospectus Supplement to actions by Securityholders
refer to actions
40
taken by DTC upon instructions from its Participants and all references herein
and in the related Prospectus Supplement to distributions, notices, reports and
statements to Securityholders of Book-Entry Securities refer to distributions,
notices, reports and statements to DTC or its nominee, as the registered holder
of the applicable Securities, for distribution to Securityholders in accordance
with DTC's procedures with respect thereto. See "--Definitive Securities"
herein.
CEDEL and Euroclear will hold omnibus positions on behalf of the CEDEL
Participants and the Euroclear Participants, respectively, through customers'
securities accounts in CEDEL's and Euroclear's names on the books of their
respective depositaries (collectively, the "Depositaries") which in turn will
hold such positions in customers' securities accounts in the Depositaries' names
on the books of DTC.
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New York Uniform Commercial Code and a
"clearing agency" registered pursuant to the provisions of Section 17A of the
Exchange Act. DTC was created to hold securities for its Participants and
facilitate the clearance and settlement of securities transactions between
Participants through electronic book-entry changes in accounts of its
Participants, thereby eliminating the need for physical movement of
certificates. Participants include securities brokers and dealers (who may
include an underwriter with respect to any series), banks, trust companies and
clearing corporations and may include certain other organizations, including
CEDEL and Euroclear. Indirect access to the DTC system also is available to
Indirect Participants such as banks, brokers, dealers and trust companies that
clear through or maintain a custodial relationship with a Participant, either
directly or indirectly.
Transfers between Participants will occur in accordance with DTC rules.
Transfers between CEDEL Participants and Euroclear Participants will occur in
the ordinary way in accordance with their applicable rules and operating
procedures.
Cross-market transfers between persons holding directly or indirectly
through DTC in the United States, on the one hand, and directly or indirectly
through CEDEL Participants or Euroclear Participants (each as defined herein),
on the other, will be effected in DTC in accordance with DTC rules on behalf of
the relevant European international clearing system by its Depositary; however,
such cross-market transactions will require delivery of instructions to the
relevant European international clearing system by the counterparty in such
system in accordance with its rules and procedures and within its established
deadlines (European time). The relevant European international clearing system
will, if the transaction meets its settlement requirements, deliver instructions
to its Depositary to take action to effect final settlement on its behalf by
delivering or receiving securities in DTC, and making or receiving payment in
accordance with normal procedures for same-day funds settlement applicable to
DTC. CEDEL Participants and Euroclear Participants may not deliver instructions
directly to the Depositaries.
Because of time-zone differences, credits or securities in CEDEL or
Euroclear as a result of a transaction with a Participant will be made during
the subsequent securities settlement processing, dated the business day
following the DTC settlement date, and such credits or any transactions in such
securities settled during such processing will be reported to the relevant CEDEL
Participant or Euroclear Participant on such business day. Cash received in
CEDEL or Euroclear as a result of sales of securities by or through a CEDEL
Participant or Euroclear Participant to a 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.
A "Securityholder," as used herein, shall mean a holder of a beneficial
interest in a Book-Entry Security. Unless otherwise provided in the related
Prospectus Supplement, Securityholders that are not
41
Participants or Indirect Participants but desire to purchase, sell or otherwise
transfer ownership of, or other interest in, Securities may do so only through
Participants and Indirect Participants. In addition, Securityholders will
receive all distributions of principal of and interest on Securities from the
related Trustee or Indenture Trustee, as applicable (the "Applicable Trustee"),
through the Participants, who in turn will receive them from DTC. Under a
book-entry format, Securityholders may experience some delay in their receipt of
payments, since such payments will be forwarded by the Applicable Trustee to
Cede, as nominee for DTC. DTC will forward such payments to its Participants
which thereafter will forward them to Indirect Participants or Securityholders.
It is anticipated that the only "Noteholder" and "Certificateholder" will be
Cede, as nominee of DTC. Securityholders will not be recognized by the Trustee
as Noteholders ("Noteholders") or Certificateholders ("Certificateholders"), as
such term is used in the related Pooling and Servicing Agreement or Trust
Agreement and Indenture, as applicable, and Securityholders will only be
permitted to exercise the rights of Securityholders indirectly through DTC,
CEDEL or Euroclear and their respective participants or organizations.
Under the rules, regulations and procedures creating and affecting DTC and
its operations (the "Rules"), DTC is required to make book-entry transfers of
Securities among Participants on whose behalf it acts with respect to the
Securities and to receive and transmit distributions of principal of, and
interest on, the Securities. Participants and Indirect Participants with which
Securityholders have accounts with respect to the Securities similarly are
required to make book-entry transfers and receive and transmit such payments on
behalf of their respective Securityholders. Accordingly, although
Securityholders will not physically possess Securities, the Rules provide a
mechanism by which Participants will receive payments and will be able to
transfer their interests.
Because DTC can only act on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a
Securityholder to pledge Securities to persons or entities that do not
participate in the DTC system, or to otherwise act with respect to such
Securities, may be limited due to the lack of physical certificates for such
Securities.
DTC has advised the Seller that it will take any action permitted to be
taken by a Noteholder under the related Indenture or a Certificateholder under
the related Trust Agreement or Pooling and Servicing Agreement, as applicable,
only at the direction of one or more Participants to whose accounts with DTC the
applicable Notes or Certificates are credited. DTC has advised the Seller that
it will take any actions permitted to be taken by a Noteholder under the related
Indenture or a Certificateholder under the related Trust Agreement or Pooling
and Servicing Agreement, as applicable, only at the direction of one or more
Participants to whose accounts with DTC the applicable Notes or Certificates are
credited. DTC may take conflicting actions with respect to other undivided
interests to the extent that such actions are taken on behalf of Participants
whose holdings include such undivided interests.
CEDEL Bank, societe anonyme ("CEDEL") is incorporated under the laws of
Luxembourg as a professional depository. CEDEL holds securities for its
participating organizations ("CEDEL Participants") and facilitates the clearance
and settlement of securities transactions between CEDEL Participants through
electronic book-entry changes in accounts of CEDEL Participants, thereby
eliminating the need for physical movement of certificates. Transactions may be
settled by CEDEL in any of 28 currencies, including United States dollars. CEDEL
provides to its CEDEL Participants, among other things, services for
safekeeping, administration, clearance and settlement of internationally traded
securities and securities lending and borrowing. CEDEL interfaces with domestic
markets in several countries. As a professional depository, CEDEL is subject to
regulations by the Luxembourg Monetary Institute. CEDEL Participants are
recognized financial institutions around the world, including underwriters,
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations and may include an underwriter of any series.
Indirect access to CEDEL is also available to others, such as banks, brokers,
42
dealers and trust companies that clear through or maintain a custodial
relationship with a CEDEL Participant, either directly or indirectly.
The Euroclear System (the "Euroclear System") was created in 1968 to hold
securities for participants of the Euroclear System ("Euroclear Participants")
and to clear and settle transactions between Euroclear Participants through
simultaneous electronic book-entry delivery against payment, thereby eliminating
the need for physical movement of certificates and any risk from lack of
simultaneous transfers of securities and cash. Transactions may now be settled
in any of 27 currencies, including United States dollars. The Euroclear System
includes various other services, including securities lending and borrowing and
interfaces with domestic markets in several countries generally similar to the
arrangement for cross-market transfers with DTC described above. The Euroclear
System is operated by Morgan Guaranty Trust Company of New York, Brussels,
Belgium office (the "Euroclear Operator" or "Euroclear"), under contract with
Euroclear Clearance System, S.C., a Belgian cooperative corporation (the
"Cooperative"). All operations are conducted by the Euroclear Operator, and all
Euroclear securities clearance accounts and Euroclear cash accounts are accounts
with the Euroclear Operator, not the Cooperative. The Cooperative establishes
policy for the Euroclear System on behalf of Euroclear Participants. Euroclear
Participants include banks (including central banks), securities brokers and
dealers and other professional financial intermediaries and may include an
underwriter of any series. Indirect access to the Euroclear System is also
available to other firms that clear through or 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 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 and applicable Belgian
law (collectively, the "Terms and Conditions"). The Terms and Conditions govern
transfers of securities and cash within the Euroclear System, withdrawal of
securities and cash from the Euroclear System, and receipts of payments with
respect to securities in the Euroclear System. All securities in the Euroclear
System are held on a fungible basis without attribution of specific certificates
to specific securities clearance accounts. The Euroclear Operator acts under the
Terms and Conditions only on behalf of Euroclear Participants and has no record
of or relationship with persons holding through Euroclear Participants.
Distributions with respect to Securities held through CEDEL or Euroclear
will be credited to the cash accounts of CEDEL Participants or Euroclear
Participants in accordance with the relevant system's rules and procedures, to
the extent received by its Depositary. Such distributions will be subject to tax
reporting in accordance with relevant United States tax laws and regulations.
CEDEL or the Euroclear Operator, as the case may be, will take any other action
permitted to be taken by a Securityholder under the related Indenture (if any),
Trust Agreement or Pooling and Servicing Agreement, as applicable, on behalf of
a CEDEL Participant or a 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 Certificates 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.
43
Except as required by law, no Trustee will have any liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests of the Securities of any series held by DTC, CEDEL or
Euroclear or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
Definitive Securities
Unless otherwise specified in the related Prospectus Supplement, the
Notes, if any, and the Certificates (other than any Certificates held by the
General Partner) of a given series issued in book-entry form will be issued in
fully registered, certificated form ("Definitive Notes" and "Definitive
Certificates," respectively, and collectively referred to herein as "Definitive
Securities") to Noteholders or Certificateholders or their respective nominees
rather than to the Depository or its nominee, only if (i) the Servicer advises
the applicable Trustee in writing that the Depository is no longer willing or
able to discharge properly its responsibilities as depository with respect to
such Securities and such Trustee is unable to locate a qualified successor, (ii)
the Servicer at its option, elects to terminate the book-entry system through
the Depository or (iii) after the occurrence of an Event of Default or an Event
of Servicing Termination with respect to such Securities, holders representing
at least a majority of the outstanding principal amount of the related Notes or
the Certificates, as applicable, of such series advise the Depositary through
Participants in writing (with instructions to notify the applicable Trustee in
writing) that the continuation of a book-entry system through the Depository (or
a successor thereto) with respect to such Notes or Certificates is no longer in
the best interest of the holders of such Securities.
Upon the occurrence of any event described in the immediately preceding
paragraph, the Depository will be required to notify all applicable
Securityholders of a given series through Participants of the availability of
Definitive Securities. Upon surrender by the Depository of the definitive
certificates representing the corresponding Securities and receipt of
instructions for re-registration, the appropriate Trustee will reissue such
Securities as Definitive Securities to such Securityholders.
Distributions of principal with respect to, and interest on, such
Definitive Securities will thereafter be made in accordance with the procedures
set forth in the related Indenture, Trust Agreement or Pooling and Servicing
Agreement, as applicable, directly to holders of Definitive Securities in whose
names the Definitive Securities were registered at the close of business on the
applicable record date specified for such Securities in the related Prospectus
Supplement. Such distributions will be made by check mailed to the address of
such holder as it appears on the register maintained by the related Trustee or
Indenture Trustee, as applicable. The final payment on any such Definitive
Security (whether a Definitive Security or the Securities registered in the name
of Cede representing the Securities), however, will be made only upon
presentation and surrender of such Definitive Security at the office or agency
specified in the notice of final distribution to the applicable Securityholders.
Definitive Securities will be transferable and exchangeable at the offices
of the related transfer agent and registrar for such series, which, unless
otherwise specified in the related Prospectus Supplement, shall initially be
Chase (in such capacity, the "Transfer Agent and Registrar"). No service charge
will be imposed for any registration of transfer or exchange, but the Applicable
Trustee may require payment of a sum sufficient to cover any tax or other
governmental charge imposed in connection therewith.
List of Securityholders
Three or more holders of the Notes of any series (each of whom has owned a
Note for at least six months) may, by written request to the related Indenture
Trustee, obtain access to the list of all Noteholders of such series maintained
by such Indenture Trustee for the purpose of communicating with other
44
Noteholders of such series with respect to their rights under such Indenture or
such Notes. Such Indenture Trustee may elect not to afford the requesting
Noteholders access to the list of such Noteholders if it agrees to mail the
desired communication or proxy, on behalf and at the expense of the requesting
Noteholders, to all Noteholders of record. Unless Definitive Notes have been
issued, the only "Noteholder" appearing on the list maintained by the related
Indenture Trustee will be Cede, as nominee for DTC. In such circumstances, any
beneficial owner of a Note wishing to communicate with other beneficial owners
of Notes will not be able to identify those beneficial owners through the
Indenture Trustee and instead will have to attempt to identify them through DTC
and its Participants or such other means as such beneficial owner may find
available.
Three or more Certificateholders of any series or one or more
Certificateholders evidencing not less than 25% of the Certificate Balance of
such series may, by written request to the applicable related Trustee or
Certificate Registrar, obtain access to the list of all Certificateholders of
such series for the purpose of communicating with such Certificateholders with
respect to their rights under the related Trust Agreement or Pooling and
Servicing Agreement, as applicable, or under such Certificates. Unless
Definitive Certificates have been issued, the only "Certificateholder" appearing
on the list maintained by the related Trustee will be Cede, as nominee for DTC.
In such circumstances, any beneficial owner of a Certificate wishing to
communicate with other beneficial owners of Certificates will not be able to
identify those beneficial owners through the related Trustee and instead will
have to attempt to identify them through DTC and its Participants or such other
means as such beneficial owner may find available.
Reports to Securityholders
With respect to each series of Securities, on each Payment Date or
Distribution Date, as applicable, the Paying Agent will include with each
distribution to each Noteholder (if any) and Certificateholder a statement
prepared by the Servicer. With respect to each series of Securities, each such
statement to be delivered to Noteholders will include (to the extent
applicable), among other things, the following information (and any other
information so specified in the related Prospectus Supplement) as to the Notes
of such series with respect to such Payment Date or the period since the
previous Payment Date, as applicable, and each such statement to be delivered to
Certificateholders will include (to the extent applicable) the following
information (and any other information so specified in the related Prospectus
Supplement) as to the Certificates of such series with respect to such
Distribution Date or the period since the previous Distribution Date, as
applicable:
(i) the amount of the distribution allocable to principal with
respect to each class of such Notes and to the Certificate Balance of each
class of such Certificates and the derivation of such amounts;
(ii) the amount of the distribution allocable to interest on or with
respect to each class of Notes and Certificates of such series;
(iii) amount of the Servicing Fee paid to the Servicer in respect of
the related Collection Period;
(iv) the amount of the Administration Fee paid to the Administrator
in respect of the related Collection Period;
(v) the aggregate unreimbursed Advances as of the last day of the
preceding Collection Period and the change in such amount from the
previous Collection Period;
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(vi) the Pool Balance as of the close of business on the last day of
the preceding Collection Period;
(vii) the aggregate outstanding principal balance and the Note Pool
Factor for each class of such Notes, and the Certificate Balance and the
Certificate Pool Factor for each class of such Certificates, in each case
after giving effect to all payments reported under clause (i) above on
such date;
(viii) the Interest Rate or Pass Through Rate for the next period
with respect to any class of Notes or Certificates of such series with
variable or adjustable rates;
(ix) the amount of the aggregate realized losses, if any, for the
preceding Collection Period;
(x) the Noteholders' Interest Carryover Shortfall, the Noteholders'
Principal Carryover Shortfall, the Certificateholders' Interest Carryover
Shortfall and the Certificateholders' Principal Carryover Shortfall (each
as defined in the related Prospectus Supplement), if any, in each case as
applicable to each class of Securities and the change in such amounts from
the preceding statement;
(xi) the aggregate Purchase Amounts with respect to the Receivables,
if any, that were repurchased by the Seller or purchased by the Servicer
in such Collection Period;
(xii) the balance of the Reserve Account (if any) or any other
enhancement account, as of such date, after giving effect to changes
therein on such date, the Specified Reserve Account Balance on such date
(as defined in the related Prospectus Supplement) or any other required
enhancement account balance on such date, and the components of
calculating any such required balance;
(xiii) the balance of the Cash Collateral Account, if any, the
Available Cash Collateral Amount (and such amount expressed as a
percentage of the related Pool Balance) and the related Required Cash
Collateral Amount (each as defined in the related Prospectus Supplement);
(xiv) for each such date during the Funding Period, if any, the
remaining Pre-Funded Amount;
(xv) for the first such date that is on or immediately following the
end of the Funding Period, if any, the amount of any remaining Pre-Funded
Amount that has not been used to fund the purchase of Subsequent
Receivables and is being passed through as payments of principal on the
Securities of such series.
Each amount set forth pursuant to subclauses (i), (ii), (iii) and (iv)
with respect to the Notes or the Certificates of any series will be expressed as
a dollar amount per $1,000 of the initial principal balance of such Notes or the
initial Certificate Balance of such Certificates, as applicable.
Unless otherwise specified in the related Prospectus Supplement, the
statements for each Collection Period will be delivered to DTC for further
distribution to Securityholders in accordance with DTC procedures. See "Certain
Information Regarding the Securities--Book-Entry Registration" herein. The
Servicer, on behalf of each Trust, will file with the Commission such periodic
reports with respect to each Trust as required under the Exchange Act and the
rules and regulations of the Commission thereunder.
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Within the prescribed period of time for tax reporting purposes after the
end of each calendar year during the term of each Trust, the Trustee or the
Paying Agent will furnish to each person who at any time during such calendar
year has been a Noteholder or Certificateholder with respect to such Trust and
received any payment thereon a statement containing certain information for the
purposes of such Securityholder's preparation of federal income tax returns. See
"Certain Federal Income Tax Consequences" in the related Prospectus Supplement.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain terms of (i) each Sale and
Servicing Agreement (or in the case of a Trust not issuing Notes, each Pooling
and Servicing Agreement) pursuant to which each Trust will acquire Receivables
from the Seller and the Servicer will agree to service such Receivables; (ii)
each Trust Agreement (or, in the case of a trust not issuing Notes, each Pooling
and Servicing Agreement) pursuant to which each Trust will be created and the
related series of Certificates will be issued and (iii) each Administration
Agreement pursuant to which Chase will undertake certain administrative duties
with respect to each Trust that issues Notes (collectively, the "Transfer and
Servicing Agreements"). Forms of the Transfer and Servicing Agreements have been
filed as exhibits to the Registration Statement of which this Prospectus forms a
part. The following summary, as well as other pertinent information included
elsewhere in this Prospectus and in the related Prospectus Supplement, describes
the material terms of the Transfer and Servicing Agreements related to any
series. This summary does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, the provisions of such Transfer and
Servicing Agreements.
Sale and Assignment of Receivables
On or before the closing date specified with respect to any given Trust in
the related Prospectus Supplement (the "Closing Date"), the Seller will transfer
and assign in consideration of the receipt of the related Securities, without
recourse, to the related Trust pursuant to a Sale and Servicing Agreement or to
the related Trustee pursuant to a Pooling and Servicing Agreement, as
applicable, its entire interest in the Initial Receivables, if any, certain
related property and the proceeds thereof of the related Receivables Pool,
including, among other things, its security interests in the related Financed
Vehicles. Each such Receivable will be identified in a schedule appearing as an
exhibit to such Sale and Servicing Agreement or Pooling and Servicing Agreement
(a "Schedule of Receivables"). The Seller will sell the Certificates (other than
those Certificates it is selling to the General Partner) and (if applicable) the
Notes to the respective underwriters set forth in the Prospectus Supplement. See
"Plan of Distribution." To the extent specified in the related Prospectus
Supplement, a portion of the net proceeds received from the sale of the
Securities of a given series will be applied to the deposit of the Pre-Funded
Amount into the Pre-Funding Account and/or to the initial deposit into a Reserve
Account, the Cash Collateral Account or the Yield Supplement Account, if any.
The related Prospectus Supplement for each Trust will specify whether, and the
terms, conditions and manner under which, Subsequent Receivables will be sold by
the Seller to the related Trust from time to time during any Funding Period on
each date specified as a transfer date in the related Prospectus Supplement
(each, a "Subsequent Transfer Date").
Each Sale and Servicing Agreement or Pooling and Servicing Agreement, as
applicable, will set forth criteria that must be satisfied by each Receivable.
Unless the related Prospectus Supplement specifies that certain of the criteria
set forth below are not required to be satisfied, the criteria will include,
among others, the following: (a) each Receivable (i) has been originated in the
form of a credit sales transaction by a Dealer, or a purchase money loan
transaction through a Dealer, located in one of the states of the United States
(including the District of Columbia), for the retail financing of a Financed
Vehicle and, if
47
a retail installment sales contract, was purchased by the Seller or an affiliate
of the Seller from a Dealer and it has been validly assigned by such Dealer to
the Seller or such affiliate in accordance with its terms, (ii) contains
customary and enforceable provisions such that the rights and remedies of the
holder thereof shall be adequate for realization against the collateral or the
benefits of the security and (iii) (if not a Final Payment Receivable) provides
for fully amortizing level scheduled monthly payments (provided that the last
payment may be different from the level scheduled payment) and for accrual of
interest at a fixed rate according to the simple interest or actuarial method;
(b) each Receivable and each sale of the related Financed Vehicle complies in
all material respects with all requirements of applicable federal, state and
local laws and regulations thereunder, including usury laws, the Federal
Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit
Reporting Act, the Federal Trade Commission Act, the Magnuson-Moss Warranty Act,
Federal Reserve Board Regulations B and Z, state adaptations of the National
Consumer Act and of the Uniform Consumer Credit Code and any other consumer
credit, equal opportunity and disclosure laws applicable to such Receivable and
the sale thereof; (c) each Receivable constitutes the legal, valid and binding
payment obligation in writing of the Obligor, enforceable by the holder thereof
in all material respects in accordance with its terms, subject, as to
enforcement, to applicable bankruptcy, insolvency, reorganization, liquidation
and other similar laws and equitable principles relating to or affecting the
enforcement of creditors' rights; (d) subject to certain limited exceptions
specified in the Sale and Servicing Agreement or Pooling and Servicing
Agreement, as applicable, immediately prior to the sale and assignment thereof
to the Trustee, each Receivable was secured by a validly perfected first
priority security interest in the Financed Vehicle in favor of the Seller as
secured party, which security interest is assignable and has been so assigned by
the Seller to the related Trust; (e) as of the related Cutoff Date, the Seller
had no knowledge either of any facts which would give rise to any right of
rescission, setoff, counterclaim, or defense, or of the same being asserted or
threatened, with respect to any Receivable; (f) as of the related Cutoff Date,
the Seller had no knowledge of any liens or claims that have been filed,
including liens for work, labor, materials or unpaid taxes relating to a
Financed Vehicle, that would be liens prior to, or equal or coordinate with, the
lien granted by the Receivable; (g) except for payment defaults continuing for a
period of not more than 30 days as of the related Cutoff Date, (i) the Seller
has no knowledge that a default, breach, violation, or event permitting
acceleration under the terms of any Receivable exists, (ii) the Seller has no
knowledge that a continuing condition that with notice or lapse of time would
constitute a default, breach, violation or event permitting acceleration under
the terms of any Receivable exists and (iii) the Seller has not waived any of
the foregoing; (h) each Receivable requires that the Obligor thereunder obtain
theft and physical damage insurance covering the Financed Vehicle; and (i) each
Receivable satisfies the other criteria specified above under "The Receivables
Pool" and each other criterion set forth in the related Prospectus Supplement.
Unless otherwise provided in the related Prospectus Supplement, as of the
last day of the month following the date (or, if the Seller elects, the last day
of the month including such date) on which the Seller discovers or receives
written notice from the related Trustee or any Indenture Trustee that a
Receivable does not meet any of the criteria set forth in the related Sale and
Servicing Agreement or Pooling and Servicing Agreement, as applicable, and such
failure materially and adversely affects the interests of the related
Securityholders in such Receivable, the Seller, unless it has cured the failed
criterion, will repurchase such Receivable from the related Trust at a price
equal to the unpaid principal balance owed by the Obligor thereof plus interest
thereon at the respective contract rate of interest through the last day of the
month of repurchase (the "Purchase Amount"). The repurchase obligation will
constitute the sole remedy available to the Certificateholders or the Trustee
and any Noteholders or Indenture Trustee in respect of such Trust for the
failure of a Receivable to meet any of the criteria set forth in the related
Sale and Servicing Agreement or Pooling and Servicing Agreement, as applicable.
Pursuant to each Sale and Servicing Agreement or Pooling and Servicing
Agreement, as applicable, to assure uniform quality in servicing the Receivables
and to reduce administrative costs, the related Trustee
48
or any Indenture Trustee will appoint the Servicer as initial custodian.
Receivables will not be stamped or otherwise marked to reflect the transfer of
the Receivables to a Trust and will not be segregated from the other Motor
Vehicle Loans owned or serviced by the Servicer. The Obligors under the
Receivables will not be notified of the transfer of the Receivables to a Trust,
but the Seller's accounting records and computer systems will reflect the sale
and assignment of the Receivables to such Trust. See "Certain Legal Aspects of
the Receivables" herein.
Accounts
With respect to each Trust that issues Notes, the Servicer will establish
and maintain one or more accounts, in the name of the Indenture Trustee on
behalf of the related Noteholders and Certificateholders, into which all
payments made on or with respect to the related Receivables will be deposited
(the "Collection Account"). The Servicer will also establish and maintain with
such Indenture Trustee an account, in the name of such Indenture Trustee on
behalf of such Noteholders, into which, to the extent and in the manner
described in the related Prospectus Supplement, amounts released from the
Collection Account and any Pre-Funding Account, Cash Collateral Account, Yield
Supplement Account, Reserve Account or other credit or cash flow enhancement for
payment to such Noteholders will be deposited and from which all distributions
to such Noteholders will be made (the "Note Distribution Account"). The Servicer
will establish and maintain with the related Trustee an account, in the name of
such Trustee on behalf of such Certificateholders, into which amounts released
from the Collection Account and any Pre-Funding Account, Cash Collateral
Account, Yield Supplement Account, Reserve Account or other credit or cash flow
enhancement for distribution to such Certificateholders will be deposited and
from which all distributions to such Certificateholders will be made (the
"Certificate Distribution Account"). With respect to each Trust that does not
issue Notes, the Servicer will also establish and maintain the Collection
Account and any other Trust Account in the name of the related Trustee on behalf
of the related Certificateholders.
If so provided in the related Prospectus Supplement, the Servicer will
establish and maintain for the related Trust an additional account (the
"Payahead Account"), in the name of the related Indenture Trustee or Trustee,
into which, to the extent required by the related Sale and Servicing Agreement
or Pooling and Servicing Agreement, early payments by or on behalf of Obligors
on Actuarial Receivables which do not constitute scheduled payments, full
prepayments, nor certain partial prepayments that result in a reduction of the
Obligor's periodic payment below the scheduled payment as of the applicable
Cutoff Date ("Payaheads") will be deposited until such time as the payment falls
due. Until such time as payments are transferred from the Payahead Account to
the Collection Account, they will not constitute collected interest or collected
principal and will not be available for distribution to the related Noteholders
or Certificateholders. The Payahead Account will initially be maintained with
the related Indenture Trustee or Trustee. So long as the Seller is the Servicer
and provided that (i) there exists no Event of Servicing Termination and (ii)
each other condition to holding Payaheads as may be required by the related Sale
and Servicing Agreement or Pooling and Servicing Agreement is satisfied,
Payaheads may be retained by the Servicer until the applicable Payment Date or
Distribution Date.
Any other accounts to be established with respect to a Trust, including
any Pre-Funding Account, Cash Collateral Account, Yield Supplement Account or
Reserve Account will be described in the related Prospectus Supplement.
For any series of Securities, the Collection Account, the Note
Distribution Account, the Certificate Distribution Account and any Pre-Funding
Account, Cash Collateral Account, Reserve Account, Yield Supplement Account,
Payahead Account and other accounts identified as such in the related Prospectus
Supplement are collectively referred to herein as the "Trust Accounts."
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The Trust Accounts will be maintained as Eligible Deposit Accounts. An
"Eligible Deposit Account" for any series shall be either (a) a separately
identifiable deposit account established in the deposit taking department of a
Qualified Institution or (b) a segregated identifiable trust account established
in the trust department of a Qualified Trust Institution. A "Qualified
Institution" shall be a depository institution (including Chase USA (New York),
Chase USA (Delaware) or Chase) organized under the laws of the United States or
any state thereof or incorporated under the laws of a foreign jurisdiction with
a branch or agency located in the United States or any state thereof and subject
to supervision and examination by federal or state banking authorities, having a
short-term certificate of deposit rating and a long-term unsecured debt rating
confirmed by each Rating Agency as being consistent with the ratings of the
related Securities and, in the case of any such institution (including Chase USA
(New York), Chase USA (Delaware) or Chase) organized under the laws of the
United States, the deposits of which are insured by the FDIC. A "Qualified Trust
Institution" shall be an institution organized under the laws of the United
States or any state thereof or incorporated under the laws of a foreign
jurisdiction with a branch or agency located in the United States and subject to
supervision and examination by federal or state banking authorities with the
authority to act under such laws as a trustee or in any other fiduciary
capacity, having not less than $1 billion in assets under fiduciary management
and a long-term deposit rating confirmed by each Rating Agency as being
consistent with the ratings of the related Securities. Unless the related
Prospectus Supplement specifies that a Trust Account will be established with
another institution, each Trust Account will be established initially with the
trust department of Chase. Should Chase or any depositary of a Trust Account
cease to be a Qualified Institution or Qualified Trust Institution, such Trust
Account shall be moved to a Qualified Institution or Qualified Trust
Institution, provided that such Trust Account may remain at such depositary if
each Trustee receives written confirmation from each related Rating Agency to
the effect that the ratings of the related Securities will not be adversely
affected.
If so provided in the related Prospectus Supplement, funds in the Trust
Accounts will be invested as provided in the related Sale and Servicing
Agreement or Pooling and Servicing Agreement, as applicable, in Permitted
Investments. "Permitted Investments" are generally limited to investments
confirmed by the related Rating Agencies as being consistent with the rating of
the related Securities. Permitted Investments may include Securities issued by
the Seller or its affiliates or trusts originated by the Seller or its
affiliates, and may also include certain money market mutual funds for which
Chase or any of its affiliates serves as an investment advisor, administrator,
shareholder servicing agent and/or custodian or subcustodian (for which it
collects fees and expenses). Except as described below or in the related
Prospectus Supplement, Permitted Investments are limited to obligations or
securities that mature on or before the "Business Day" (as defined in the
related Prospectus Supplement) preceding the next Distribution Date or Payment
Date for such series (each such preceding day, a "Deposit Date"). However, to
the extent set forth in the related Prospectus Supplement and consistent with
the ratings of the related Securities, funds in any Cash Collateral Account,
Reserve Account or Yield Supplement Account may be invested in securities that
will not mature prior to the next Deposit Date with respect to such Certificates
or Notes and will not be sold to meet any shortfalls. Thus, the amount of cash
in any Cash Collateral Account, Reserve Account or Yield Supplement Account at
any time, for example, may be less than the balance of the Cash Collateral
Account, Reserve Account or Yield Supplement Account. If the amount required to
be withdrawn from any Cash Collateral Account, Reserve Account or Yield
Supplement Account to cover shortfalls in collections on the related Receivables
(as provided in the related Prospectus Supplement) exceeds the amount of cash in
such Cash Collateral Account, Reserve Account or Yield Supplement Account, a
temporary shortfall in the amounts distributed to the related Noteholders of
Certificateholders could result, which could, in turn, increase the average life
of the Notes or the Certificates of such series. Except as otherwise specified
in the related Prospectus Supplement, investment earnings on funds deposited in
the Trust Accounts, net of losses and investment expenses (collectively,
"Investment Earnings"), shall be paid to the Servicer as additional servicing
compensation.
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Chase, in its capacity as the initial paying agent (the "Paying Agent")
under each related Sale and Servicing Agreement and Indenture or Pooling and
Servicing Agreement, as applicable, will have the revocable right to withdraw
funds from a Trust Account for the purpose of making distributions to
Noteholders and Certificateholders in the manner provided therein.
Servicing Procedures
The Servicer will service the Receivables in each Receivables Pool and
will make reasonable efforts to collect all payments due with respect to such
Receivables and, in a manner consistent with the related Sale and Servicing
Agreement or Pooling and Servicing Agreement, as applicable, and with the terms
of the Receivables, will follow such collection and servicing procedures as it
follows with respect to comparable new or used automobile receivables that it
services for itself or others and that are consistent with prudent industry
standards. The related Prospectus Supplement, Pooling and Servicing Agreement
and Sale and Servicing Agreement, as applicable, will set forth the terms and
conditions in accordance with which any Receivable may be modified, which terms
will be set forth in the related Prospectus Supplement. Some of such
arrangements may result in the Servicer purchasing the Receivable for the
Purchase Amount, while others may result in the Servicer making Advances. Any
such required purchase or extension will constitute the sole remedy available to
the Noteholders, Certificateholders or any related Trustee for any such uncured
breach.
Each Sale and Servicing Agreement and Pooling and Servicing Agreement, as
applicable, will provide that the Servicer, on behalf of the related Trust,
shall use reasonable efforts, consistent with its customary servicing
procedures, to repossess or otherwise take possession of the Financed Vehicle
securing any Receivable with respect to which the Servicer shall have
determined, during any Collection Period, that eventual payment in full of the
amount financed (including accrued interest thereon) is unlikely (each such
Receivable, a "Defaulted Receivable"); provided that no Receivable will become a
Defaulted Receivable any later than the calendar month in which more than 10% of
a scheduled payment of the Motor Vehicle Loan becomes 240 days delinquent. See
"The Receivables Pools--Insurance and Collection Procedures" herein. The
Servicer shall follow such customary and usual practices and procedures as it
shall deem necessary or advisable in its servicing of new or used automobile
receivables, which may include reasonable efforts to realize upon any recourse
to Dealers, consigning the Financed Vehicle to a Dealer for resale and selling
the Financed Vehicle at public or private sale. See "Certain Legal Aspects of
the Receivables" herein. The proceeds of any such realization will be deposited
in the related Collection Account.
Collections
With respect to each Trust, the Servicer will deposit all payments on the
related Receivables (from whatever source) and all proceeds of such Receivables
collected during each collection period specified in the related Prospectus
Supplement (each, a "Collection Period") into the related Collection Account on
a daily basis within forty-eight hours of receipt. However, at any time that and
for so long as (i) the Seller is also the Servicer, and (ii) each other
condition to making deposits less frequently than daily as may be confirmed by
the related Rating Agencies or any enhancement provider or as set forth in the
related Prospectus Supplement is satisfied, the Servicer will not be required to
deposit such amounts into the Collection Account until on or before the Deposit
Date preceding the related Distribution Date or Payment Date. Pending deposit
into the Collection Account, collections may be invested by the Servicer at its
own risk and for its own benefit and will not be segregated from its own funds.
If the Servicer were unable to remit such funds, Securityholders might incur a
loss. To the extent set forth in the related Prospectus Supplement, the Servicer
may, in order to satisfy the requirements described above, obtain letters of
credit or other security for the benefit of the related Trust to secure timely
remittances of collections on the
51
related Receivables and payment of the aggregate Purchase Amount with respect to
Receivables purchased by the Servicer.
Servicing Compensation and Payment of Expenses
Unless otherwise specified in the related Prospectus Supplement with
respect to any Trust, the Servicer will be entitled to receive the Servicing Fee
for each Collection Period in an amount equal to the sum of (i) the product of
the specified percentage per annum (as set forth in the related Prospectus
Supplement, the "Servicing Fee Rate") divided by 12 and the Pool Balance as of
the last day of the Collection Period immediately preceding the related
Collection Period and (ii) unless otherwise specified in the related Prospectus
Supplement with respect to any Trust, any Late Fees collected during the related
Collection Period (collectively, the "Servicing Fee"). The Servicing Fee will
also include Investment Earnings to the extent set forth in the related
Prospectus Supplement. The Servicing Fee (together with any portion of the
Servicing Fee that remains unpaid from prior Distribution Dates or Payments
Dates) will be paid solely to the extent of amounts allocable thereto as
specified in the related Prospectus Supplement. The Servicer will be entitled to
reimbursement from each Trust for certain liabilities.
"Late Fees" shall mean, collectively, any late charges, credit-related
extension fees, non-credit related extension fees or other administrative fees
or similar charges allowed by applicable law with respect to the related
Receivables.
The Servicing Fee will compensate the Servicer for performing the
functions of a third party servicer of motor vehicle receivables as an agent for
the Noteholders and Certificateholders, including collecting and posting all
payments and responding to inquiries of Obligors, investigating delinquencies,
reporting tax information to Obligors, advancing costs of disposition of
defaults. The Servicing Fee also will compensate the Servicer for administering
the particular Receivables Pool, accounting for collections and furnishing
monthly and annual statements to the related Trustee with respect to
distributions. The Servicing Fee also will also compensate the Servicer for
certain taxes, accounting fees, outside auditor fees, the fees of the Paying
Agent, the Transfer Agent, the Registrar and the Trustee and its counsel, data
processing costs and other costs incurred in connection with administering the
applicable Receivables Pool.
Advances
The Prospectus Supplement may provide that the Servicer may, in its sole
discretion, make a payment (an "Advance") with respect to each delinquent
Receivable in the related Receivables Pool in an amount described in such
Prospectus Supplement. The Servicer may elect not to make any Advance with
respect to a Receivable under the circumstances described in the related
Prospectus Supplement. The Servicer will be entitled to be reimbursed for
outstanding Advances in the manner described in the related Prospectus
Supplement. The Servicer will deposit all Advances with respect to any Payment
Date or Distribution Date, as applicable, on the related Deposit Date.
Distributions
With respect to each series of Securities, beginning on the Payment Date
or Distribution Date, as applicable, specified in the related Prospectus
Supplement, distributions of principal and interest (or, where applicable, of
principal or interest only) on each class of such Securities entitled thereto
will be made by the applicable related Trustee or Paying Agent to the
Noteholders and the Certificateholders of such series. The timing, calculation,
allocation, order, source, priorities of and requirements for all payments to
each class of Noteholders and all distributions to each class of
Certificateholders of such series will be set forth in the related Prospectus
Supplement.
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With respect to each Trust, on each Payment Date and Distribution Date, as
applicable, collections on the related Receivables will be transferred from the
Collection Account directly to the Note Distribution Account, if any, and the
Certificate Distribution Account, if any, for distribution to Noteholders, if
any, and Certificateholders to the extent provided in the related Prospectus
Supplement. Credit enhancement, such as a Cash Collateral Account, Reserve
Account or Yield Supplement Account, will be available to cover any shortfalls
in the amount available for distribution on such date to the extent specified in
the related Prospectus Supplement. As more fully described in the related
Prospectus Supplement, and unless otherwise specified therein, distributions in
respect of principal of a class of Securities of a given series will be
subordinate to distributions in respect of interest on such class, and
distributions in respect of one or more classes of Certificates of such series
may be subordinate to payments in respect of Notes, if any, of such series or
other classes of Certificates of such series.
Credit and Cash Flow Enhancement
The amounts and types of credit and cash flow enhancement arrangements, if
any, and the provider thereof, if applicable, with respect to each class of
Securities of a given series will be set forth in the related Prospectus
Supplement. If and to the extent provided in the related Prospectus Supplement,
credit and cash flow enhancement may be in the form of subordination of one or
more classes of Securities, a Cash Collateral Guaranty supported by a Cash
Collateral Account, a Reserve Account, a Yield Supplement Agreement, a Yield
Supplement Account, over-collateralization, letters of credit, credit or
liquidity facilities, surety bonds, guaranteed investment contracts, swaps or
other interest rate protection agreements, repurchase obligations, other
agreements with respect to third party payments or other support, cash deposits
or such other arrangements as may be described in the related Prospectus
Supplement or any combination of two or more of the foregoing. If specified in
the related Prospectus Supplement, credit or cash flow enhancement for a class
of Securities may cover one or more other classes of Securities of the same
series, and credit or cash flow enhancement for a series of Securities may cover
one or more other series of Securities.
The presence of a Cash Collateral Guaranty, a Yield Supplement Agreement,
a Reserve Account, a Yield Supplement Account and other forms of credit
enhancement for the benefit of any class or series of Securities is intended to
enhance the likelihood of receipt by the Securityholders of such class or series
of the full amount of principal and interest due thereon and to decrease the
likelihood that such Securityholders will experience losses. Unless otherwise
specified in the related Prospectus Supplement, the credit enhancement for a
class or series of Securities will not provide protection against all risks of
loss and will not guarantee repayment of the entire principal balance and
interest thereon. If losses occur that exceed the amount covered by any credit
enhancement or that are not covered by any form of credit enhancement,
Securityholders of any class or series will bear their allocable share of
deficiencies, as described in the related Prospectus Supplement. In addition, if
a form of credit enhancement covers more than one series of Securities,
Securityholders of any such series will be subject to the risk that such credit
enhancement will be exhausted by the claims of Securityholders of other series.
The Seller may replace or reduce the credit enhancement for any class of
Securities with another form of credit enhancement without the consent of the
related Securityholders, provided the related Rating Agencies confirm in writing
that such substitution or reduction will not result in the reduction,
qualification or withdrawal of the rating of such class of Securities or any
class of Securities of the related Series.
Reserve Account. If provided in the related Prospectus Supplement,
pursuant to the related Sale and Servicing Agreement, the Seller will establish
for a series or class of Securities an account, as specified in the related
Prospectus Supplement (the "Reserve Account"), which will be maintained in the
name of the related Indenture Trustee. Unless otherwise provided in the related
Prospectus Supplement, the Reserve
53
Account will be included in the property of the related Trust. The Reserve
Account will be funded by an initial deposit on the Closing Date, and if the
related Series has a Funding Period, will also be funded on each Subsequent
Transfer Date. The related Prospectus Supplement will specify whether the
Reserve Account will be funded solely from the proceeds of a loan or loans to be
made by a cash collateral depositor (a "Cash Collateral Depositor") pursuant to
a loan agreement (each a "Loan Agreement"), from a deposit or deposits by the
Seller, or by a combination thereof. As described in the related Prospectus
Supplement, the amount on deposit in the Reserve Account will be increased on
each Payment Date up to the Specified Reserve Account Balance (as defined in the
related Prospectus Supplement) by the deposit therein of the amount of
collections on the related Receivables remaining on each such Payment Date after
the payment of all other required payments and distributions on such date. The
related Prospectus Supplement will describe the circumstances and manner under
which distributions may be made out of the related Reserve Account, either to
holders of the Securities covered thereby, to the Seller or to a third-party
specified therein.
Cash Collateral Guaranty. If provided in the related Prospectus Supplement
with respect to a Trust classified as a grantor trust, the related Trustee will
have the right to demand payments under a Cash Collateral Guaranty (the "Cash
Collateral Guaranty") under the circumstances described therein. Each Cash
Collateral Guaranty will be secured by an account (each, a "Cash Collateral
Account"), which will be held in the name of a cash collateral trustee (the
"Cash Collateral Trustee"), as specified in the related Prospectus Supplement.
The related Prospectus Supplement will specify whether the Cash Collateral
Account will be funded on the date of the issuance of the related series of
Securities from the proceeds of a loan to be made by a Cash Collateral Depositor
pursuant to a Loan Agreement, from a deposit by the Seller or by a combination
thereof. To the extent specified in the related Prospectus Supplement, funds in
the related Cash Collateral Account will thereafter be supplemented by the
deposit of amounts remaining on any Distribution Date after making all other
distributions required on such date. Each Cash Collateral Guaranty will not be a
recourse obligation of the related Cash Collateral Depositor, any Cash
Collateral Trustee, any related Trustee, the Bank, as Seller or as Servicer, and
will be secured solely with amounts, if any, on deposit in the related Cash
Collateral Account. Unless otherwise specified in the related Prospectus
Supplement, such Cash Collateral Account and any amounts therein will not be the
property of any Trust, but will be held in accordance with the related Cash
Collateral Trust Agreement as further described therein. The related Prospectus
Supplement will describe the circumstances and manner under which distributions
may be made out of any Cash Collateral Account, either to the holders of the
Securities covered thereby, to the Seller, to the Cash Collateral Depositor or
to a third party specified therein.
Yield Supplement Account; Yield Supplement Agreement. If so provided in
the related Prospectus Supplement, the Seller, the General Partner or a third
party will enter into a Yield Supplement Agreement and/or establish a Yield
Supplement Account with the related Indenture Trustee or related Trustee for the
benefit of the holders of the related Securities. A Yield Supplement Agreement
or a Yield Supplement Account will be designed to provide payments to the
Securityholders in respect of Receivables the Contract Rate of which is less
than the Required Rate. A Yield Supplement Account may be an asset of the
obligor under the Yield Supplement Agreement holding funds to secure the
obligation of such obligor to make payments under such Yield Supplement
Agreement or, in the case of a Trust that is not classified as a grantor trust,
may be an asset of the Trust from which cash may periodically be withdrawn to
provide payments to the Securityholders.
Net Deposits
As an administrative convenience, the Seller, so long as it is Servicer
and is permitted to make deposits to the Collection Account on a monthly basis,
will be permitted to deposit the collections, aggregate Advances and Purchase
Amounts for any Trust for or with respect to the related Collection
54
Period net of distributions to be made to the Servicer or the Seller for such
Trust with respect to such Collection Period (remitting amounts to the Seller
directly). With respect to any Trust that issues both Certificates and Notes, if
the related Payment Dates do not coincide with Distribution Dates, all
distributions, deposits or other remittances made on a Payment Date will be
treated as having been distributed, deposited or remitted on the Distribution
Date for the applicable Collection Period for purposes of determining other
amounts required to be distributed, deposited or otherwise remitted on such
Distribution Date.
Statements to Trustees and Trust
Prior to each Distribution Date with respect to each series of Securities,
the Servicer will provide to the related Trustee and any Indenture Trustee a
statement setting forth substantially the same information for such date and the
related Collection Period as is required to be provided in the periodic reports
provided to Noteholders and Certificateholders of such series described herein
under "Certain Information Regarding the Securities--Reports to
Securityholders."
Evidence as to Compliance
Each Sale and Servicing Agreement or Pooling and Servicing Agreement, as
applicable, will provide that a firm of independent public accountants will
annually furnish to the related Trustee and any Indenture Trustee a statement as
to compliance by the Servicer during the preceding twelve months (or, in the
case of the first such certificate, from the applicable Closing Date) with
certain standards relating to the servicing of the applicable Receivables, or as
to the effectiveness of its processing and reporting procedures and certain
other matters.
Each Sale and Servicing Agreement or Pooling and Servicing Agreement, as
applicable, will also provide for delivery to the related firm of independent
public accountants referred to in the immediately preceding paragraph,
substantially simultaneously with the delivery or such accountants' statement
referred to above, of a certificate signed by an officer of the Servicer stating
that the Servicer has fulfilled its obligations in all material respects under
such Sale and Servicing Agreement or Pooling and Servicing Agreement, as
applicable, 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.
Copies of such statements and certificates may be obtained by
Securityholders by a request in writing addressed to the Servicer.
Certain Matters Regarding the Servicer
Each Sale and Servicing Agreement or Pooling and Servicing Agreement, as
applicable, will provide that the Servicer may not resign from its obligations
and duties as Servicer thereunder, except (i) upon determination that the
Servicer's performance of such duties is no longer permissible under applicable
law or (ii) in the event of the appointment of a successor servicer, upon
notification by each Rating Agency then rating any of the related Securities
that the rating then assigned to any such Securities will not be reduced or
withdrawn. Such resignation will not become effective until the related Trustee
(which shall not be obligated to act as successor servicer if the Servicer has
resigned for a reason other than that the performance of its duties are no
longer permissible under applicable laws), Indenture Trustee (if any) or a
successor servicer has assumed the Servicer's servicing responsibilities and
obligations under such Sale and Servicing Agreement or Pooling and Servicing
Agreement, as applicable.
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Each Sale and Servicing Agreement or Pooling and Servicing Agreement, as
applicable, will also provide that, except in connection with a merger or
consolidation (including the Chase USA Merger), neither the Seller nor the
Servicer may transfer or assign all, or a portion of, its rights, obligations
and duties under any Sale and Servicing Agreement or Pooling and Servicing
Agreement, unless (i) (A) such transfer or assignment will not result in a
reduction or withdrawal by each Rating Agency then rating any of the related
Securities of the rating then assigned to any such Securities and (B) the
Indenture Trustee (if any) and the related Trustee have consented to such
transfer or assignment or (ii) the Indenture Trustee (if any), the related
Trustee and holders of Securities evidencing not less than 51% of the voting
interests thereof consent thereto. Any transfer of assignment with respect to
the Servicer of all of its rights, obligations and duties will not become
effective until a successor servicer has assumed the Servicer's rights,
obligations and duties under the related Sale and Servicing Agreement and
Pooling and Servicing Agreement, as applicable.
Each Sale and Servicing Agreement or Pooling and Servicing Agreement, as
applicable, will also provide that so long as the Bank (or its successor or
assign) or the Trustee is the Servicer, in the ordinary course of its business,
the Servicer will have the right to delegate any of its duties under the related
Sale and Servicing Agreement and Pooling and Servicing Agreement to a third
party. Any compensation payable to such third party will be paid by the Servicer
from its own funds, and none of the related Trust, Trustee (if not the
Servicer), Indenture Trustee (if any) or Securityholders will be liable for such
compensation. Notwithstanding any delegation of duties by the Servicer, the
Servicer will not be relieved of its liability and responsibility with respect
to such duties.
Each Sale and Servicing Agreement or Pooling and Servicing Agreement, as
applicable, will further provide that neither the Servicer nor any of its
directors, officers, employees, and agents shall be under any liability to the
related Trust, Trustee, Indenture Trustee (if any) or Securityholders for taking
any action or for refraining from taking any action pursuant to the related Sale
and Servicing Agreement or Pooling and Servicing Agreement; provided, however,
that neither the Servicer nor any such person will be protected against any
liability that would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties thereunder. Each Sale and Servicing
Agreement or Pooling and Servicing Agreement, as applicable, will further
provide that the Servicer, and its directors, officers, employees and agents are
entitled to indemnification by the related Trust for, and will be held harmless
against, any loss, liability or expense incurred in connection with any legal
action relating to their performance of servicing duties under the related Sale
and Servicing Agreement or Pooling and Servicing Agreement that is not otherwise
indemnified, other than (i) any loss or liability otherwise reimbursable
thereunder and (ii) any loss, liability, or expense incurred by reason of
willful misconduct, negligence or bad faith in performance of their duties
thereunder or by reason of their reckless disregard of obligations and duties
thereunder; provided, however, that such indemnification will be paid on a
Payment Date or Distribution Date only from amounts in excess of the amount
required to be maintained on deposit in the related enhancement account, or if
there is no such enhancement account, only after all payments or deposits
required under the related Sale and Servicing Agreement and Pooling and
Servicing Agreement for the benefit of Holders of Securities and the Servicer
have been made. In addition, each Sale and Servicing Agreement or Pooling and
Servicing Agreement, as applicable, will provide that the Servicer is under no
obligation to appear in, prosecute or defend any legal action that is not
incidental to the Servicer's servicing responsibilities under the related Sale
and Servicing Agreement or Pooling and Servicing Agreement and that, in its
opinion, may cause it to incur any expense or liability. The Servicer may,
however, undertake any reasonable action that it may deem necessary or desirable
in respect of such Sale and Servicing Agreement or Pooling and Servicing
Agreement and the rights and duties of the parties thereto and the interests of
the related Securityholders thereunder. In such event, the legal expenses and
costs of such action and any liability resulting therefrom will be expenses,
costs and liabilities of the related Trust and the Servicer will be entitled to
be reimbursed
56
therefor out of the related enhancement account Collection Account; provided,
however, that such reimbursement will be paid on a Payment Date or Distribution
Date only from amounts in excess of the amount required to be maintained on
deposit in the related enhancement account, or if there is no such enhancement
account, only after all payments required under the related Sale and Servicing
Agreement (for the benefit of Holders of Securities or the Servicer) and Pooling
and Servicing Agreement have been made.
Events Of Servicing Termination
Except as otherwise provided in the related Prospectus Supplement, "Events
of Servicing Termination" under each Sale and Servicing Agreement or Pooling and
Servicing Agreement, as applicable, will consist of (i) any failure by the
Servicer to deliver to the related Trustee or any Indenture Trustee the
Servicer's certificate for the related Collection Period or any failure by the
Servicer to deliver to the related Trustee or any Indenture Trustee for deposit
in any Trust Account or the Certificate Distribution Account any proceeds or
payments required to be delivered under the terms of such Securities or the
related Sale and Servicing Agreement or Pooling and Servicing Agreement (or, in
the case of a payment or deposit to be made not later than the Deposit Date, the
failure to make such payment or deposit on such Deposit Date), which failure
continues unremedied for five Business Days after discovery by the Servicer or
upon receipt of written notice to the Servicer by the related Trustee or any
Indenture Trustee or to the related Trustee or any Indenture Trustee and the
Servicer by holders of the related Notes evidencing not less than 25% of the
voting interests thereof (so long as Notes are outstanding) or, if no Notes are
outstanding, Certificates of the related series evidencing not less than 25% of
the voting interests thereof; (ii) any failure by the Servicer to duly observe
or perform in any material respect any other covenant or agreement of the
Servicer set forth in the related Sale and Servicing Agreement or Pooling and
Servicing Agreement or Indenture, which failure materially and adversely affects
the rights of the related Trust or the Securityholders (which determination
shall be made without regard to whether funds are available to the
Securityholders pursuant to any related enhancement) and which continues
unremedied for 60 days after the date of written notice of such failure to the
Servicer by the related Trustee or any Indenture Trustee or to the related
Trustee or any Indenture Trustee and the Servicer by holders of the related
Notes (so long as Notes are outstanding) evidencing not less than 25% of the
voting interests thereof or, if Notes are outstanding, Certificates of the
related series evidencing not less than a majority of the voting interests
thereof; (iii) the entry of a decree or order by a court or agency or
supervisory authority having jurisdiction in the premises for the appointment of
a conservator, receiver or liquidator for the Servicer in any insolvency,
readjustment of debt, marshalling of assets and liabilities, or similar
proceedings, or for the winding up or liquidation of its affairs, and the
continuance of any such decree or order is unstayed and effective for 60
consecutive days; or (iv) the consent by the Servicer to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities, or similar proceedings of or relating to
the Servicer or of or relating to substantially all of its property, or the
Servicer admits in writing its inability to pay its debts generally as they
become due, files a petition to take advantage of any applicable insolvency or
reorganization statute, makes an assignment for the benefit of its creditors, or
voluntarily suspends payment of its obligations. The holders of Securities
evidencing not less than a majority of the voting interests thereof may, with
the written consent of any provider of enhancement specified in the related
Prospectus Supplement, waive certain defaults by the Servicer in the performance
of its obligations.
Rights Upon Event of Servicing Termination
In the case of any Trust that has issued Notes, unless otherwise provided
in the related Prospectus Supplement, as long as an Event of Servicing
Termination under a Sale and Servicing Agreement remains unremedied, the related
Indenture Trustee or holders of Notes of the related series evidencing not less
than 50% of the principal amount of such Notes then outstanding (or, if the
Notes have been paid in full and
57
the Indenture has been discharged in accordance with its terms, by the related
Trustee or holders of Certificates evidencing not less than 50% of the voting
interests thereof) may terminate all the rights and obligations of the Servicer
under such Sale and Servicing Agreement, whereupon such Indenture Trustee or a
successor servicer appointed by such Indenture Trustee will succeed to all the
responsibilities, duties and liabilities of the Servicer under such Sale and
Servicing Agreement and will be entitled to similar compensation arrangements.
In the case of any Trust that has not issued Notes, unless otherwise provided in
the related Prospectus Supplement, as long as an Event of Servicing Termination
under the related Sale and Servicing Agreement or Pooling and Servicing
Agreement, as applicable, remains unremedied, the related Trustee or holders of
Certificates of the related series evidencing not less than 50% of the voting
interests thereof, by notice given in writing to the Servicer (and to the
related Trustee if given by Certificateholders), may terminate all the rights
and obligations of the Servicer under such Sale and Servicing Agreement or
Pooling and Servicing Agreement, whereupon such Trustee or a successor servicer
appointed by such Trustee will succeed to all the rights, duties and liabilities
of the Servicer under such Sale and Servicing Agreement or Pooling and Servicing
Agreement and will be entitled to similar compensation arrangements. In the
event that such Indenture Trustee or Trustee is unwilling or unable to so act,
it may appoint, or petition a court of competent jurisdiction for the
appointment of, a successor Servicer to act as successor to the outgoing
Servicer. Such Indenture Trustee or Trustee may make such arrangements for
compensation to be paid, which in no event may be greater than the Servicing Fee
paid to the Servicer under such Sale and Servicing Agreement or Pooling and
Servicing Agreement.
Waiver of Past Defaults
With respect to each Trust that has issued Notes, unless otherwise
provided in the related Prospectus Supplement, the holders of Notes evidencing
at least a majority in principal amount of the then outstanding Notes of the
related series (or the holders of the Certificates of such series evidencing not
less than a majority of the outstanding Certificate Balance, in the case of any
Event of Servicing Termination that does not adversely affect the related
Indenture Trustee or such Noteholders) may, on behalf of all such Noteholders
and Certificateholders, waive any default by the Servicer in the performance of
its obligations under the related Sale and Servicing Agreement and its
consequences, except an Event of Servicing Termination in making any required
deposits to or payments from any of the Trust Accounts in accordance with such
Sale and Servicing Agreement. Therefore, the Noteholders of any series have the
ability, as limited above, to waive defaults by the Servicer which could
materially and adversely affect the related Certificateholders. With respect to
each Trust that has not issued Notes, holders of Certificates of such series
evidencing not less than a majority of the outstanding Certificate Balance may,
on behalf of all such Certificateholders, with the consent of the provider of
any enhancement, waive any default by the Servicer in the performance of its
obligations under the related Sale and Servicing Agreement or Pooling and
Servicing Agreement, except an Event of Servicing Termination in making any
required deposits to or payments from the related Trust Accounts in accordance
with such Sale and Servicing Agreement or Pooling and Servicing Agreement. No
such waiver will impair such Noteholders' or Certificateholders' rights with
respect to subsequent defaults.
Amendment
Unless otherwise provided in the related Prospectus Supplement, each of
the Transfer and Servicing Agreements may be amended by the parties thereto,
without prior notice to the related Noteholders (if any) or Certificateholders
but with prior consent of the related Trustee and notice to any related Rating
Agencies (i) to cure any ambiguity, to correct or supplement any provision
therein or in the related Securities which may be inconsistent with any other
provision therein, to evidence a succession to the Servicer or the Seller
pursuant to the related Transfer and Servicing Agreement, or add any other
provisions with respect to matters or questions arising under such Transfer and
Servicing Agreement that are not inconsistent with
58
the provisions of such Transfer and Servicing Agreement; provided, however, that
such action will not, on the basis of an officer's certificate reasonably
acceptable to the related Trustee and any Indenture Trustee, materially and
adversely affect the interests of the related Trust or any related
Securityholders or (ii) to effect a transfer or assignment of the Trust's or the
Servicer's rights, obligations and duties under such Transfer and Servicing
Agreement. Unless otherwise specified in the related Prospectus Supplement, the
Transfer and Servicing Agreements may also be amended by the Seller, the
Servicer, the related Trustee and any related Indenture Trustee with the consent
of the holders of Notes evidencing at least a majority in principal amount of
then outstanding Notes, if any, of the related series and the holders of the
Certificates of such series evidencing at least a majority of the Certificate
Balance of such Certificates then outstanding, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
such Transfer and Servicing Agreements or of modifying in any manner the rights
of such Noteholders or Certificateholders; provided, however, that no such
amendment may (i) increase or reduce in any manner the amount of, or accelerate
or delay the timing of, collections of payments on the related Receivables or
distributions that are required to be made for the benefit of such Noteholders
or Certificateholders or (ii) reduce the aforesaid percentage of the Notes or
Certificates of such series which 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.
Insolvency Event
With respect to any Trust that issues Notes, under the related Trust
Agreement, if the General Partner indicates its insolvency pursuant to
bankruptcy, readjustment, receivership, conservatorship, insolvency, marshalling
of assets and liabilities or similar proceedings, if the General Partner is
unable to pay its obligations as they become due, or if certain events of
bankruptcy, receivership, insolvency or similar proceedings occur with respect
to the General Partner (each an "Insolvency Event"), to the extent permitted by
applicable law, the related Receivables shall be liquidated and the related
Trust will be terminated 90 days after the date of such Insolvency Event,
unless, before the end of such 90-day period, the related Owner Trustee shall
have received written instructions from (i) the Certificateholders (other than
the General Partner) of Certificates of such series representing not less than a
majority of the Certificate Balance of such Certificates, (ii) the Noteholders
(other than the General Partner) of each class of such series representing not
less than a majority of the principal amount of such class of Notes, and (iii)
holders of interests in any Reserve Account, Cash Collateral Account or other
enhancement account (other than the General Partner) having interests with a
value in excess of 50% of all interests in such enhancement account held by such
persons, in each case to the effect that each such party disapproves of the
liquidation of such Receivables and the termination of such Trust. Promptly
after the occurrence of any Insolvency Event with respect to the General
Partner, notice thereof is required to be given to all Noteholders and
Certificateholders of the related series; provided, however, that any failure to
give such required notice will not prevent or delay termination of the related
Trust. Upon termination of any Trust (which shall constitute an Event of Default
under the related Indenture), the related Owner Trustee shall promptly sell the
assets of the related Trust (other than the Trust Accounts) in a commercially
reasonably manner and on commercially reasonable terms. The net proceeds from
any such sale, disposition or liquidation of the Receivables of such Trust will
be applied by the related Indenture Trustee first to pay the related Notes in
full and second to pay the related Certificates in full. With respect to any
Trust, if the proceeds from the liquidation of the related Receivables and
amounts on deposit in any enhancement account, the Note Distribution Account and
the Certificate Distribution Account are not sufficient to pay the Notes and the
Certificates of the related series in full, the amount of principal returned to
Noteholders and Certificateholders thereof will be reduced and some or all of
such Noteholders and Certificateholders will incur a loss.
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Each Trust Agreement will provide that the related Owner Trustee does not
have the power to commence a voluntary proceeding in bankruptcy relating to the
related Trust without the unanimous prior approval of all Certificateholders
unless such Owner Trustee reasonably believes that such Trust is insolvent.
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 Owner
Trustee will succeed to all the rights of the Indenture Trustee, and the
Certificateholders of such series will succeed to all the rights of the
Noteholders of such series under the related Sale and Servicing Agreement,
except as otherwise provided therein.
General Partner Liability
With respect to any Trust that issues Notes, under the related Trust
Agreement, the General Partner will agree to be liable directly to an injured
party for the entire amount of losses, claims, damages or liabilities (other
than those incurred by a Noteholder or a Certificateholder in the capacity of an
investor with respect to such Trust) arising out of or based on the arrangement
created by such Trust Agreement as though such arrangement created a partnership
under the Delaware Revised Uniform Limited Partnership Act in which the General
Partner were a general partner.
Termination
With respect to each Trust, the obligations of the Servicer, the Seller,
the related Trustee and any related Indenture Trustee, if any, pursuant to the
Transfer and Servicing Agreements will terminate upon the earlier of (i) the
Distribution Date or Payment Date next succeeding the month that is six months
after the maturity or other liquidation of the last related Receivable and the
disposition of any amounts received upon liquidation of any property remaining
in the related Trust and (ii) the payment to Noteholders, if any, and
Certificateholders of the related series of all amounts required to be paid to
them pursuant to the Transfer and Servicing Agreements.
Unless otherwise provided in the related Prospectus Supplement, in order
to avoid excessive administrative expense, the Servicer will be permitted at its
option to purchase from each Trust, as of the last day of any applicable
Collection Period, if the then outstanding Pool Balance with respect to the
Receivables held by such Trust is 5% or less of the initial Pool Balance (as
defined in the related Prospectus Supplement, the "Initial Pool Balance"), all
the remaining related Receivables at a price equal to the aggregate of the
Purchase Amounts thereof as the end of such Collection Period.
As more fully described in the related Prospectus Supplement, any
outstanding Notes of the related series will be redeemed concurrently with
either of the purchase events specified above and the subsequent distribution to
the related Certificateholders of all amounts required to be distributed to them
pursuant to the applicable Trust Agreement or Pooling and Servicing Agreement
will effect early retirement of the Certificates of such series.
The related Trustee and any related Indenture Trustee will give written
notice of termination to each Securityholder of the related series of record,
which notice will specify the Distribution Date and/or Payment Date upon which
such Securityholders may surrender their Securities to the related Trustee or
the Transfer Agent and Registrar, as the case may be, for final payment. The
final distribution to any Securityholder will be made only upon surrender and
cancellation of such holder's Security (whether a Definitive Security or the
Securities registered in the name of Cede representing the Securities) at the
office
60
or agency of the related Trustee or the Transfer Agent and Registrar, as the
case may be, specified in the notice of termination.
With respect to any Trust issuing Notes, subject to applicable law and
after the Indenture Trustee has taken certain measures to notify Noteholders,
any money held by the Indenture Trustee or any Paying Agent in trust for payment
on the Notes which remain unclaimed for two years shall, upon request of such
Trust, be paid to such Trust. Following any such payment, the Trustee and any
Paying Agent shall no longer be liable to any Noteholder with respect to such
unclaimed amount, and any claim with respect to such amount shall be an
unsecured claim against such Trust. If, within 18 months after the first notice
of final payment on the Certificates, there remain Certificates which have not
been surrendered for cancellation, the related Trustee may take appropriate
steps to notify the applicable Certificateholders (the cost thereof paid out of
the unclaimed amounts). Subject to applicable law, any funds that then remain
shall be paid to the Seller.
Any amounts remaining in a Trust not issuing Notes, after the related
Trustee has taken certain measures to locate a Certificateholder and such
measures have failed, will, under certain circumstances, be distributed to the
United Way or a similar charitable organization located or operating in the New
York metropolitan area as specified by the Servicer; provided, however, that
such funds will, under certain circumstances, be distributed by the Paying Agent
to the United Way no later than three years after the final Distribution Date
specified in such Trustee's written notice of termination to the
Certificateholders.
Administration Agreement
With respect to any Trust that issues Notes, Chase, in its capacity as
administrator (the "Administrator"), will enter into an agreement (as amended
and supplemented from time to time, the "Administration Agreement") with each
Trust and the related Indenture Trustee pursuant to which the Administrator will
agree, to the extent provided in such Administration Agreement, to provide the
notices and to perform on behalf of the related Trust certain other
administrative obligations required by the related Indenture. As compensation
for the performance of the Administrator's obligations under the Administration
Agreement and as reimbursement for its expenses related thereto, the
Administrator will be entitled to a monthly administration fee in an amount to
be set forth in the related Prospectus Supplement (the "Administration Fee").
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
General
The Receivables are "chattel paper" as defined in the Uniform Commercial
Code in effect in the State of New York (the "UCC"). Pursuant to the UCC, the
sale of chattel paper is treated in a manner similar to a security interest in
chattel paper. In order to protect each Trust's ownership or security interest
in its Receivables, the Seller will file UCC-1 financing statements with the
appropriate governmental authorities in the States of New York and/or Delaware
to give notice of such Trust's and any related Indenture Trustee's ownership of
and security interest in the Receivables and their proceeds. Under each Sale and
Servicing Agreement and Pooling and Servicing Agreement, the Seller will be
obligated to maintain the perfection of each Trust's and any related Indenture
Trustee's interest in the Receivables. It should be noted, however, that a
purchaser of chattel paper who gives new value and takes possession of it in the
ordinary course of such purchaser's business has priority over a security
interest, including an ownership interest, in the chattel paper that is
perfected by filing UCC-1 financing statements, and not by
61
possession of such chattel paper by the original secured party, if such
purchaser acts in good faith without knowledge that the related chattel paper is
subject to a security interest, including an ownership interest. Any such
purchaser would not be deemed to have such knowledge because there are UCC
filings and would not learn of the sale of or security interest in the
Receivables from a review of the Receivables since they would not be marked to
show such sale, although Chase Auto Finance's master computer records will
indicate such sale.
Security Interests In The Financed Vehicles
Security interests in vehicles registered in most states may be perfected
by a notation of the secured party's lien on, or possession of, the certificate
of title for such vehicle, depending on state law. Since around December 1994,
Chase Auto Finance has participated in California's electronic titles program,
and since that time California liens have been noted electronically rather than
on paper certificates. Chase Auto Finance's practice is to obtain a
representation and warranty from each Dealer to the effect that the Originating
Bank has been designated as the sole lien holder on the certificate of title. In
the event the Dealer fails, due to clerical errors or for any other reason, to
effect such notation of the Originating Bank's interest in a Financed Vehicle,
the Originating Bank would not have a perfected first priority security interest
in such Financed Vehicle. In this event the only recourse of the Originating
Bank, the Seller or the Servicer vis-a-vis third parties would be against the
Obligor on an unsecured basis or against a Dealer pursuant to its repurchase
obligation. However, the Seller believes that the Originating Bank has obtained
a perfected first priority security interest by notation or possession with
respect to virtually all of the Financed Vehicles. For Motor Vehicle Loans
originated prior to the Merger, such liens will remain noted in name of "The
Chase Manhattan Bank (National Association)" for administrative convenience.
However, because all of the existing Motor Vehicle Loans were transferred to
Chase USA (New York) in connection with the Merger (and upon and after the Chase
USA Merger, Chase USA (Delaware) will succeed to all of the rights and
obligations of Chase USA (New York)) with respect to such Motor Vehicle Loans
and any Motor Vehicle Loans originated by Chase USA (New York)), the Seller
believes that not amending such liens in the name of the Seller will not
materially adversely affect the security interest of the Seller in the related
Financed Vehicles.
Pursuant to the terms of each Sale and Servicing Agreement or Pooling and
Servicing Agreement, as applicable, the Seller will assign its security interest
in the individual Financed Vehicles to each Trust, and if applicable, such Trust
will assign each such security interest to the related Indenture Trustee.
However, because of the administrative burden and expense, neither the Seller
nor the related Trustee will amend the certificates of title to identify the
related Trust or any related Indenture Trustee as the new secured party and,
accordingly, the Originating Banks will continue to be named as the secured
party on the certificates of title relating to the Financed Vehicles. In most
states, such assignment (and the assignment by Chase N.A. of its security
interest in the Financed Vehicles to Chase USA (New York) in connection with the
Merger) is an effective conveyance of such security interest without amendment
of any lien noted on the related certificates of title and the new secured party
succeeds to the Originating Bank's rights as the secured party as against
creditors of the Obligor. In certain states, in the absence of such amendment
and delivery, the Seller, the related Trust and/or any related Indenture Trustee
may not have a perfected security interest in the Financed Vehicle. In such
event or in the event that the Originating Bank did not have a perfected first
priority security interest in the Financed Vehicle, the only recourse of such
Trust vis-a-vis third parties would be against an Obligor on an unsecured basis
or against the Seller pursuant to its repurchase obligation. See "--Repurchase
Obligation" herein.
Except as described above, in the absence of fraud or forgery by a vehicle
owner or administrative error by state recording officials, the notation of the
lien of the Originating Bank on the certificate of title will be sufficient to
protect each Trust against the rights of subsequent purchasers of a Financed
Vehicle
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or subsequent lenders who take a security interest in the Financed Vehicle. If
there are any Financed Vehicles as to which the Originating Bank has failed to
perfect the security interest assigned to a Trust (i) such security interest
would be subordinate to, among others, holders of perfected security interests
and (ii) subsequent purchasers of such Financed Vehicles would take possession
free and clear of such security interest. There also exists a risk in not
identifying each Trust or any related Indenture Trustee as the new secured party
on the certificate of title that, through fraud or negligence, the security
interest of such Trust or Indenture Trustee could be released.
In the event that the owner of a Financed Vehicle moves to a state other
than the state in which such Financed Vehicle initially is registered, under the
laws of most states the perfected security interest in the Financed Vehicle will
continue for four months after such relocation and thereafter until the owner
re-registers the Financed Vehicle in such state. A majority of states generally
require surrender of a certificate of title to re-register a vehicle.
Accordingly, Chase Auto Finance must surrender possession if it holds the
certificate of title to such Financed Vehicle or, in the case of Financed
Vehicles originally registered in a state which provides for notation of lien
but not possession of the certificate of title by the holder of the security
interest in the related motor vehicle, Chase Auto Finance would receive notice
of surrender if the security interest in the Financed Vehicle is noted on the
certificate of title. Accordingly, Chase Auto Finance would have the opportunity
to re-perfect the security interest in the Financed Vehicle in the state of
relocation. In states that do not require a certificate of title for
registration of a motor vehicle, re-registration could defeat perfection. In the
ordinary course of servicing its portfolio of Motor Vehicle Loans, Chase Auto
Finance takes steps to effect such re-perfection upon receipt of notice of
re-registration or information from the Obligor as to relocation. Similarly,
when an Obligor under a Receivable sells a Financed Vehicle, Chase Auto Finance
must surrender possession of the certificate of title or will receive notice as
a result of its lien noted thereon and accordingly will have an opportunity to
require satisfaction of the related Receivable before release of the lien. Under
each Sale and Servicing Agreement and Pooling and Servicing Agreement, the
Servicer is obligated to take such steps, at the Servicer's expense, as are
necessary to maintain perfection of security interests in the Financed Vehicles.
Under the laws of many states, certain possessory liens for repairs
performed on a motor vehicle and storage, as well as certain rights in favor of
Federal and state governmental authorities arising from the use of a motor
vehicle in connection with illegal activities, may take priority even over a
perfected security interest. Certain U.S. federal tax liens may have priority
over the lien of a secured party. The Seller will represent in each Sale and
Servicing Agreement and Pooling and Servicing Agreement that it has no knowledge
of any such liens with respect to any Financed Vehicle. However, such liens
could arise at any time during the term of a Receivable. No notice will be given
to the Trustee in the event such a lien arises.
Enforcement Of Security Interests In Vehicles
The Servicer on behalf of each Trust and any Indenture Trustee may take
action to enforce its security interest by repossession and resale of the
Financed Vehicles securing the Receivables. The actual repossession may be
contracted out to third party contractors. Under the UCC and laws applicable in
most states, a creditor can repossess a motor vehicle securing a loan by
voluntary surrender, "self-help" repossession that is "peaceful" (i.e., without
breach of the peace) and, in the absence of voluntary surrender and the ability
to repossess without breach of the peace, by judicial process. The UCC and
consumer protection laws in most states place restrictions on repossession
sales, including requiring prior notice to the debtor and commercial
reasonableness in effecting such a sale. In the event of such repossession and
resale of a Financed Vehicle, the Trust would be entitled to be paid out of the
sale proceeds before such proceeds could be applied to the payment of the claims
of unsecured creditors or the holders of subsequently perfected security
interests or, thereafter, to the debtor.
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Under the UCC and laws applicable in most states, a creditor is entitled
to obtain a deficiency judgment from a debtor for any deficiency on repossession
and resale of the motor vehicle securing such debtor's loan. However, some
states impose prohibitions or limitations on deficiency judgments. In general, a
defaulting Obligor may not have sufficient assets to make the pursuit of a
deficiency worthwhile.
Certain other statutory provisions, including federal and state bankruptcy
and insolvency laws, and general equitable principles may limit or delay the
ability of a lender to repossess and resell collateral or enforce a deficiency
judgment.
Other Matters
The Seller intends that each transfer of Receivables by it to a Trust
under a Sale and Servicing Agreement or a Pooling and Servicing Agreement
constitutes a sale. In the event that the Seller were to become insolvent, the
FDIA, as amended by FIRREA, sets forth certain powers that the FDIC may exercise
if it were appointed receiver of the Seller. To the extent that the Seller has
granted a security interest in the Receivables to a Trust and that interest was
validly perfected before the Seller's insolvency and was not taken in
contemplation of insolvency or with the intent to hinder, delay or defraud the
Seller or its creditors, that security interest would not be subject to
avoidance by the FDIC as receiver of the Seller. Positions taken by the FDIC
staff prior to the passage of FIRREA do not suggest that the FDIC, if appointed
receiver of the Seller, would interfere with the timely transfer to such Trust
of payments collected on the related Receivables. If, however, the FDIC were to
assert a contrary position, or were to require the Trustee to establish its
rights to those payments by submitting to and completing the administrative
claims procedure established under the FDIA, or the conservator or receiver were
to request a stay of proceedings with respect to the Seller as provided under
the FDIA, delays in payments on the related Securities and possible reductions
in the amount of those payments could occur.
With respect to any Trust issuing Notes, if an Insolvency Event occurs
with respect to the General Partner, the Owner Trustee for such Trust will
promptly sell the assets of such Trust (other than any Trust Accounts) in a
commercially reasonable manner and on commercially reasonable terms, unless the
holders of Notes of each class issued by such Trust representing more than 50%
of the aggregate principal balance of such Notes (other than the General
Partner), the holders of Certificates issued by such Trust representing more
than 50% of the aggregate Certificate Balance for such Trust (other than the
General Partner) and the holders of interests in any Reserve Account or other
enhancement account (other than the General Partner) having interests with a
value in excess of 50% of all interests in such enhancement account held by such
persons direct otherwise. The proceeds from any such sale will be treated as
collections on the Receivables and deposited in the Collection Account of such
Trust. If the proceeds from the sale of the trust assets and any amounts on
deposit in any related Trust Account and any amounts available from any credit
enhancement are not sufficient to pay any Notes and the Certificates of the
related series in full, the amount of principal returned to Noteholders and
Certificateholders will be reduced and some or all of such Noteholders and
Certificateholders will incur a loss. See "Description of the Transfer and
Servicing Agreements--Insolvency Event" herein.
Numerous federal and state consumer protection laws may impose
requirements applicable to the origination and lending pursuant to the
contracts, including the Truth in Lending Act, the Fair Credit Reporting Act,
the Equal Credit Opportunity Act, the Magnuson-Moss Warranty Act and the Federal
Trade Commission Act.
The so-called "Holder-in-Due-Course" Rule of the Federal Trade Commission
(the "FTC Rule"), other state statutes or the common law in certain states have
the effect of subjecting a seller (and certain related lenders and their
assignees) in a consumer credit transaction and any assignee of the seller
(which
64
would include each Trust) to all claims and defenses that the obligor in the
transaction could assert against the seller of the goods. Liability of a
subsequent holder under the FTC Rule is limited to the amounts paid by the
obligor under the contract, and a subsequent holder of the contract may also be
unable to collect any balance remaining due thereunder from the obligor. The
Uniform Consumer Credit Code applicable in certain states contains provisions
which generally duplicate this rule.
Each Sale and Servicing Agreement and Pooling and Servicing Agreement will
set forth criteria that must be satisfied by each Receivable, and such criteria
will provide, among other things, that each Receivable complies with all
requirements of law in all material respects. Accordingly, if an Obligor has a
claim against a Trust for violation of any law and such claim materially and
adversely affects the related Securityholders' interest in a Receivable, such
violation would result in the failure to satisfy criterion in the related Sale
and Servicing Agreement or Pooling and Servicing Agreement and would create an
obligation of the Seller to repurchase the Receivable unless such failure is
cured.
Repurchase Obligation
Under each Sale and Servicing Agreement and Pooling and Servicing
Agreement, each Receivable must satisfy certain criteria, and such criteria
relate to, among other things, the validity, subsistence, perfection, and
priority of the security interest in each Financed Vehicle. Accordingly, if any
defect exists in the perfection of the security interest in any Financed Vehicle
and such defect materially and adversely affects the related Securityholders'
interest in the related Receivable, such defect would result in the failure to
satisfy a criterion in the related Sale and Servicing Agreement or Pooling and
Servicing Agreement and would create an obligation of the Seller to repurchase
such Receivable unless such failure criterion is cured.
ERISA CONSIDERATIONS
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"),
impose certain requirements on employee benefit plans and certain other plans
and arrangements, including individual retirement accounts and annuities, Keogh
plans and certain collective investment funds or insurance company general or
separate accounts in which such plans, accounts or arrangements are invested,
that are subject to the fiduciary responsibility provisions of ERISA and/or
Section 4975 of the Code (collectively, "Plans"), and on persons who are
fiduciaries with respect to Plans, in connection with the investment of "plan
assets" of any Plan ("Plan Assets"). ERISA generally imposes on Plan fiduciaries
certain general fiduciary requirements, including those of investment prudence
and diversification and the requirement that a Plan's investments be made in
accordance with the documents governing the Plan. Generally, any person who has
discretionary authority or control respecting the management or disposition of
Plan Assets, and any person who provides investment advice with respect to Plan
Assets for a fee, is a fiduciary with respect to such Plan Assets.
ERISA and Section 4975 of the Code prohibit a broad range of transactions
involving Plan Assets and persons ("Parties in Interest" under ERISA and
"Disqualified Persons" under the Code) who have certain specified relationships
to a Plan or its Plan Assets, unless a statutory or administrative exemption is
available. Parties in Interest or Disqualified Persons that participate in a
prohibited transaction may be subject to a penalty imposed under ERISA and/or an
excise tax imposed pursuant to Section 4975 of the Code, unless a statutory or
administrative exemption is available. These prohibited transactions generally
are set forth in Section 406 of ERISA and Section 4975 of the Code.
65
Any fiduciary or other Plan investor considering whether to purchase any
Securities on behalf of or with Plan Assets of any Plan should consult with its
counsel and refer to the related Prospectus Supplement for guidance regarding
the ERISA Considerations applicable to the Securities offered thereby.
Certain employee benefit plans, such as 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 the requirements of ERISA or Section 4975 of the
Code. Accordingly, assets of such plans may be invested in the Securities of any
series without regard to the ERISA considerations described herein, subject to
the provisions of other applicable federal and state law. However, any such plan
that is qualified and exempt from taxation under Sections 401(a) and 501(a) of
the Code is subject to the prohibited transaction rules set forth in Section 503
of the Code.
PLAN OF DISTRIBUTION
The Securities of each series may be sold to or through underwriters (the
"Underwriters") by a negotiated firm commitment underwriting and public
reoffering by the Underwriters or such other underwriting arrangement as may be
specified in the related Prospectus Supplement or may be placed either directly
or through agents. The Seller intends that the Securities will be offered
through such various methods from time to time and that offerings may be made
concurrently through more than one of such methods or that an offering of a
particular series of Securities may be made through a combination of such
methods.
Each Prospectus Supplement will either (i) set forth the price at which
each class of Securities being offered thereby will be offered to the public and
any concessions that may be offered to certain dealers participating in the
offering of such Securities, or (ii) specify that the related Securities are to
be resold by the Underwriters in negotiated transactions at varying prices to be
determined at the time of such sale. After the initial public offering of any
such Securities, such public offering prices and such concessions may be
changed.
Each Underwriting Agreement (as defined in the related Prospectus
Supplement) will provide that the Seller 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 funds in its Trust Accounts in
Eligible Investments acquired from such Underwriters or from the Seller or any
of its Affiliates.
Pursuant to each of the Underwriting Agreements with respect to a given
series of Securities, the closing of the sale of any class of Securities subject
to such Underwriting Agreement will be conditioned on the closing of the sale of
all other such classes of Securities of that series.
The place and time of delivery for the Securities of any series in respect
of which this Prospectus is delivered will be set forth in the related
Prospectus Supplement.
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RATINGS
Each Class of Securities of a series offered pursuant to this Prospectus
and a related Prospectus Supplement will be rated at its initial issuance in one
of the four highest categories by at least one nationally recognized statistical
rating organization (each, a "Rating Agency").
A securities rating addresses the likelihood of the receipt by the
Securityholders of scheduled interest and principal payments. The rating takes
into consideration the characteristics of the Receivables and the structural,
legal and tax aspects associated with the Securities. The ratings on the
Securities do not, however, constitute statements regarding the likelihood or
frequency of prepayments on the Receivables or the possibility that the
Securityholders might realize a lower than anticipated yield or that if there is
a rapid rate of principal payments, including prepayments, on the Receivables,
investors in Strip Notes or Strip Certificates could fail to recover their
initial investments.
A security rating is not a recommendation to buy, sell or hold Securities
and may be subject to revision or withdrawal at any time by the assigning Rating
Agency. No person is obligated to maintain the rating on any Security, and,
accordingly, there can be no assurance that the ratings assigned to a Security
upon initial issuance will not be lowered or withdrawn by a Rating Agency at any
time thereafter.
LEGAL MATTERS
Certain legal matters relating to the issuance of the Securities of any
series will be passed upon for the Seller by Simpson Thacher & Bartlett (a
partnership which includes professional corporations), New York, New York, and
such other counsel specified in the related Prospectus Supplement. Certain legal
matters will be passed upon for the Underwriters by Orrick, Herrington &
Sutcliffe, New York, New York. From time to time Simpson Thacher & Bartlett and
Orrick, Herrington & Sutcliffe may provide legal services to the Seller and its
affiliates.
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Page
INDEX OF TERMS
Actuarial Receivables.......................................................23
Administration Agreement....................................................61
Administration Fee..........................................................61
Administrator...............................................................61
Applicable Trustee..........................................................42
Advance.....................................................................52
Base Rate ..................................................................39
Book-Entry Securities........................................................7
Business Day................................................................50
Calculation Agent...........................................................39
Cash Collateral Account.....................................................54
Chase Collateral Depositor..................................................54
Cash Collateral Guaranty....................................................54
Cash Collateral Trustee.....................................................54
Cede ........................................................................7
CEDEL ......................................................................42
CEDEL Participants..........................................................42
Certificate Balance..........................................................9
Certificate Distribution Account............................................49
Certificate Pool Factor.....................................................30
Certificateholders..........................................................42
Certificates.................................................................1
Chase........................................................................6
Chase Auto Finance...........................................................6
Chase Connecticut Bank......................................................24
Chase Connecticut Loans.....................................................24
Chase Florida Bank..........................................................24
Chase Florida Loans.........................................................24
Chase Lincoln Bank..........................................................24
Chase Lincoln Loans.........................................................24
Chase Maryland Loans........................................................25
Chase N.A. ..................................................................6
Chase USA Merger.............................................................6
Chase USA (Delaware).........................................................1
Chase USA (New York).........................................................1
Closing Date................................................................47
Code........................................................................65
Collection Account..........................................................49
Collection Period...........................................................51
Commission .................................................................3
Commodity Indexed Securities................................................40
Contract Rate...............................................................22
Cooperative ................................................................43
Corporation .................................................................6
Currency Indexed Securities.................................................40
Cutoff Date ................................................................21
Dealer Agreements...........................................................25
Dealers ....................................................................25
Defaulted Receivable........................................................51
Definitive Certificates.....................................................44
Definitive Notes............................................................44
Definitive Securities.......................................................44
Deposit Date................................................................50
Depositaries................................................................41
68
Depository ................................................................32
Disqualified Persons........................................................65
Distribution Date...........................................................38
DSCs .......................................................................26
DTC .........................................................................7
Due Date ...................................................................22
Eligible Deposit Account....................................................50
ERISA ......................................................................65
Euroclear ..................................................................43
Euroclear Operator..........................................................43
Euroclear Participants......................................................43
Euroclear System............................................................43
Events of Default...........................................................34
Events of Servicing Termination.............................................57
Exchange Act.................................................................3
Face Amount ................................................................40
FDIA .......................................................................17
FDIC ........................................................................1
Federal Tax Counsel.........................................................15
Final Payment Receivables...................................................23
Financed Vehicles...........................................................10
FIRREA .....................................................................17
Fixed Rate Securities.......................................................39
Floating Rate Securities....................................................39
FTC Rule ...................................................................64
Funding Period...............................................................i
General Partner.............................................................18
Indenture ...................................................................8
Index ......................................................................40
Indexed Commodity...........................................................40
Indexed Currency............................................................40
Indexed Principal Amount....................................................40
Indexed Securities..........................................................40
Initial Pool Balance........................................................60
Initial Receivables.........................................................11
Insolvency Event............................................................59
Interest Rate................................................................8
Interest Reset Period.......................................................39
Investment Earnings.........................................................50
Issuer ......................................................................6
Late Fees...................................................................52
LIBOR ......................................................................39
Loan Agreement..............................................................54
Merger ......................................................................6
Motor Vehicle Loans.........................................................24
Note Distribution Account...................................................49
Note Pool Factor............................................................30
Noteholders ................................................................42
Notes .......................................................................1
Obligors ...................................................................21
Originating Bank.............................................................6
Owner Trustee................................................................7
Participants................................................................41
Parties in Interest.........................................................65
Pass Through Rate............................................................9
69
Payahead Account............................................................49
Payaheads ..................................................................49
Paying Agent................................................................51
Payment Date................................................................32
Percentage Interest..........................................................7
Permitted Investments.......................................................50
Plan Assets ................................................................65
Plans ......................................................................65
Pool Balance................................................................30
Pooling and Servicing Agreement..............................................6
Portfolio Experience........................................................24
Pre-Funding Account.........................................................11
Pre-Funding Amount..........................................................11
Precomputed Receivables.....................................................23
Prospectus Supplement........................................................1
Purchase Amount.............................................................48
Qualified Institution.......................................................50
Qualified Trust Institution.................................................50
Rating Agency...............................................................67
Receivables ................................................................21
Receivables Pool............................................................21
Registration Statement.......................................................3
Related Documents...........................................................36
Required Rate...............................................................14
Reserve Account.............................................................53
Rules ......................................................................42
Sale and Servicing Agreement................................................11
Schedule of Receivables.....................................................47
Securities ..................................................................1
Securities Act...............................................................3
Securityholder..............................................................41
Securityholders.............................................................42
Seller ......................................................................1
Servicer ....................................................................1
Servicing Fee...............................................................52
Servicing Fee Rate......................................................14, 52
Simple Interest Receivables.................................................22
Spread .....................................................................39
Spread Multiplier...........................................................39
Stock Index ................................................................40
Stock Indexed Securities....................................................40
Strip Certificates..........................................................10
Strip Notes .................................................................8
Subsequent Receivables......................................................11
Subsequent Transfer Date....................................................47
Terms and Conditions........................................................43
The Chase Manhattan Bank....................................................31
The Chase Manhattan Corporation.............................................31
Transfer Agent and Registrar................................................44
Transfer and Servicing Agreements...........................................47
Trust .......................................................................1
Trust Accounts..............................................................49
70
Trust Agreement..............................................................6
Trustee .....................................................................7
UCC ........................................................................61
Underwriters................................................................66
Yield Supplement Account....................................................13
Yield Supplement Agreement..................................................13
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 hereunder (other than underwriting discounts and commissions)
are estimated as follows:
Registration Fee.............................................. $ 1,724,138
Legal Fees and Expenses....................................... 135,000
Accounting Fees and Expenses.................................. 120,000
Blue Sky Fees and Expenses.................................... 30,000
Rating Agency Fees............................................ 510,000
Trustee's Fees and Expenses................................... 45,000
Printing...................................................... 90,000
Miscellaneous................................................. 45,862
-------------
Total ..................................................... $ 2,800,000
=============
Item 15. Indemnification of Directors and Officers.
In addition to the indemnification provisions set forth below,
directors and officers liability insurance policies presently exist that insure
directors and officers of Chase Manhattan Bank USA, N.A., a national banking
association having its principal executive offices in Jericho, New York ("Chase
USA (New York)") and Chase Manhattan Bank USA, N.A., a national banking
association having its principal executive offices in Wilmington, Delaware
("Chase USA (Delaware)"), their parent and certain of their subsidiaries. The
policies cover losses for which Chase USA (New York), Chase USA (Delaware),
their parent and certain of their subsidiaries shall be required or permitted
by law to indemnify directors and officers and which result from claims made
against such directors or officers based upon the commission of wrongful acts
in the performance of their duties. The policies also cover losses that the
directors or officers must pay as the result of claims brought against them
based upon the commission of wrongful acts in the performance of their duties
and for which they are not indemnified by Chase USA (New York), Chase USA
(Delaware), their parent or any of those subsidiaries. The losses covered by
the policies are subject to certain exclusions and do not include fines or
penalties imposed by law or other matters deemed uninsurable under the law.
The policies contain self-insured retention provisions.
Chase USA (New York).: Article Tenth of the Articles of Association
of Chase USA (New York) provides that any person (including the heirs,
executors and administrators of such person) may be indemnified or reimbursed
by Chase USA (New York) for reasonable expenses actually incurred in connection
with any action, suit or proceeding, civil or criminal, to which such person
shall be made a party by his/her being or having been a director, officer, or
employee of Chase USA (New York) or any firm, corporation or organization which
such person served in any such capacity at the request of Chase USA (New York);
provided, however, that no person shall be so indemnified or reimbursed
relative to any matter in such action, suit, or proceeding as to which such
person shall be finally adjudicated to have been guilty of or liable for gross
negligence, willful misconduct or criminal acts in the performance of his/her
duties to Chase USA (New York); and, provided, further, that no person shall be
so indemnified or reimbursed relative to any matter in such action, suit, or
proceeding which has been made the subject of a compromise settlement except
with the approval of a court of competent jurisdiction, or the holders
of record of a majority of the outstanding shares of Chase USA (New York), or
its Board of Directors, acting by vote of directors not parties to the same or
substantially the same action, suit, or proceeding, constituting a majority of
the whole number of directors. Article Tenth also provides that the foregoing
right of indemnification or reimbursement shall not be exclusive of other
rights to which such person, his/her heirs, executor, or administrators may be
entitled as a matter of law.
Article VII of the By-Laws of Chase USA (New York) provides that Chase
USA (New York) shall, to the fullest extent permitted by applicable law,
indemnify any person (including the heirs and legal representatives of any such
person) who was or is involved in any manner, or is threatened to be made so
involved, in any threatened, pending or completed investigation, claim, action,
suit or proceeding, whether civil, administrative or investigative (including,
without limitation, any action, suit or proceeding by or in the right of Chase
USA (New York) to procure a judgment in its favor)(a "proceeding") by reason of
the fact that such person is or was a director, officer, employee or agent of
Chase USA (New York), or is or was serving at the request of Chase USA (New
York) as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against all expenses
(including attorney's fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such
proceeding. Article VII provides that the foregoing indemnification shall be a
contract right and shall include the right to receive payment in advance of any
expenses incurred by such indemnified person in connection with such
proceeding, consistent with the provisions of applicable law as then in effect.
Article VII further provides that Chase USA (New York) may enter into
contracts with any director, officer, employee or agent of Chase USA (New York)
in furtherance of the provisions thereof and may create a trust fund, grant a
security interest or use other means (including, without limitation, a letter
of credit) to ensure the payment of such amounts as may be necessary to effect
indemnification under Article VII.
Article VII expressly provides that the right of indemnification and
advancement of expenses thereunder is not exclusive of any other rights to
which a person seeking indemnification may otherwise be entitled under any
statute, by-law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to actions in such person's official capacity and as to
action in another capacity while holding such office.
Chase USA (Delaware): Article TENTH of the Articles of Association of
Chase USA ("Chase USA (Delaware)") provide that any person who was or is made a
party or is threatened to be made a party to 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 she is or was
a director or officer of Chase USA (Delaware) or is or was serving at the
request of Chase USA (Delaware) as a director, officer, employee or agent of
another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to an employee benefit plan (an
"indemnitee"), whether the basis of such proceeding is alleged action in an
official capacity as a director, officer, employee or agent or in any other
capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by Chase USA (Delaware) to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits Chase USA (Delaware) to provide broader
indemnification rights than permitted prior thereto), against all expense,
liability and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties and amounts paid in settlement) reasonably incurred or
suffered by such indemnitee in connection therewith and such indemnification
shall continue as to an indemnitee who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the indemnitee's heirs,
executors and administrators; provided, however, that, except as
II-2
provided in the second following paragraph with respect to proceedings to
enforce rights to indemnification, Chase USA (Delaware) shall indemnify any
such indemnitee in connection with a proceeding (or part thereof) initiated by
such indemnitee only if such proceeding (or part thereof) was authorized by the
board of directors of Chase USA (Delaware).
The rights to indemnification described in the immediately preceding
paragraph shall include the right to be paid by Chase USA (Delaware) the
expenses incurred in defending any proceeding for which such right to
indemnification is applicable in advance of its final disposition (hereinafter
an "advancement of expenses"); provided, however, that, if the Delaware General
Corporation Law requires, an advancement of expenses incurred by an indemnitee
in his or her capacity as a director or officer (and not in any other capacity
in which service was or is rendered by such indemnitee, including, without
limitation, service to an employee benefit plan) shall be made only upon
delivery to Chase USA (Delaware) of an undertaking (hereinafter an
"undertaking"), by or on behalf of such indemnitee, to repay all amounts so
advanced if it shall ultimately be determined by final judicial decision from
which there is no further right to appeal (hereinafter a "final adjudication")
that such indemnitee is not entitled to be indemnified for such expenses under
such Article TENTH or otherwise.
The rights to indemnification and to the advancement of expenses
described in the two preceding paragraphs are contract rights. If a claim
under either of such paragraphs is not paid in full by Chase USA (Delaware)
within sixty days after a written claim has been received by Chase USA
(Delaware) (except in the case of a claim for an advancement of expenses, in
which case the applicable period shall be twenty days), the indemnitee may at
any time thereafter bring suit against Chase USA (Delaware) to recover the
unpaid amount of the claim. If successful in whole or in part in any such
suit, or in a suit brought by Chase USA (Delaware) to recover an advancement of
expenses pursuant to the terms of an undertaking, the indemnitee shall be
entitled to be paid also the expense of prosecuting or defending such suit. In
any suit brought by the indemnitee to enforce a right to indemnification under
such Article TENTH (but not in a suit brought by the indemnitee to enforce a
right to an advancement of expenses) it shall be a defense that, and in any
suit by Chase USA (Delaware) to recover an advancement of expenses pursuant to
the terms of an undertaking, Chase USA (Delaware) shall be entitled to recover
such expense upon a final adjudication that, the indemnitee has not met any
applicable standard for indemnification set forth in the Delaware General
Corporation Law. Neither the failure of Chase USA (Delaware) (including its
board of directors, independent legal counsel, or its stockholders) to have
made a determination prior to the commencement of such suit that
indemnification of the indemnitee is proper in the circumstances because the
indemnitee has met the applicable standard of conduct set forth in the Delaware
General Corporation Law, nor an actual determination by Chase USA (Delaware)
(including its board of directors, independent legal counsel, or its
stockholders) that the indemnitee has not met such applicable standard of
conduct, shall create a presumption that the indemnitee has not met such
applicable standard of conduct or, in the case of such a suit brought by the
indemnitee, be a defense to such suit. In any suit brought by the indemnitee to
enforce a right to indemnification or to an advancement of expenses under such
Article TENTH, or by Chase USA (Delaware) to recover an advancement of expenses
pursuant to the terms of an undertaking, the burden of proving that the
indemnitee is not entitled to be indemnified, or to such advancement of
expenses, under such Article TENTH or otherwise shall be on Chase USA
(Delaware).
Article TENTH of Chase USA (Delaware)'s Articles of Association also
provides that the foregoing right of indemnification or reimbursement shall not
be exclusive of other rights to which any person may be entitled under any
statute, Articles of Association, by-law, agreement, or vote of stockholders or
disinterested stockholders or otherwise. Section 145 of the Delaware General
Corporation Law provides that a Delaware corporation must indemnify a director
or officer who has defended
II-3
successfully, on the merits or otherwise, any proceeding against him or any
claim, matter or issue therein, for reasonable expenses actually incurred in
such defense.
Article 7 of the Business Corporation Law of the State of New York,
Sections 721 through 726, provides, under certain circumstances, for
indemnification of directors and officers of a corporation who are made or
threatened to be made, a party to an action or proceeding (other than one by or
in the right of a corporation to procure a judgment in its favor), whether
civil or criminal, by reason of their service as an officer or director of a
corporation against judgments, fines, amounts paid in settlement and reasonable
expenses, including attorneys' fees actually and necessarily incurred as a
result of such action or proceeding or any appeal therein. Article 7 of the
New York Business Corporation Law also provides that the statutory
indemnification provisions are nonexclusive, but prohibits indemnification if a
judgment or other final adjudication adverse to the director or officer of a
corporation establishes that the officer's or director's acts were committed in
bad faith or were the result of active and deliberate dishonesty and were
material to the cause of action so adjudicated, or that such director or
officer personally gained in fact a financial profit or other advantage to
which the officer or director was not legally entitled, or that would be
inconsistent with the laws of the jurisdiction of incorporation (in the case of
corporations formed under the laws of any jurisdiction other than New York),
the corporation's certificate of incorporation, by-laws, resolutions or other
proper corporate action or any court settlement.
Item 16. Exhibits.
(a) Exhibits:
1.1(A) -- Form of Underwriting Agreement (Certificates only).*
1.1(B) -- Form of Underwriting Agreement (Notes).*
1.1(C) -- Form of Underwriting Agreement (Certificates).*
3.1(A) -- Articles of Association of Chase USA (New York).*
3.1(B) -- Articles of Association of Chase USA (Delaware).*
3.2(A) -- By-laws of Chase USA (New York).*
3.2(B) -- By-laws of Chase USA (Delaware).*
4.1(A) -- Form of Pooling and Servicing Agreement (Certificates only).*
4.1(B) -- Form of Sale and Servicing Agreement (Notes and Certificates).*
4.2 -- Form of Indenture (Notes and Certificates).*
4.3(A) -- Form of Certificate of Trust (Notes and Certificates).*
4.3(B) -- Form of Trust Agreement (Notes and Certificates).*
4.3(C) -- Form of Amended and Restated Trust Agreement (Notes and Certificates).*
4.4 -- Form of Administration Agreeement (Notes and Certificates).*
5.1 -- Opinion of Simpson Thacher & Bartlett with respect to legality.*
8.1 -- Opinion of Simpson Thacher & Bartlett with respect to tax matters (included
as part of Exhibit 5.1).*
23.1 -- Consent of Simpson Thacher & Bartlett (included as part of Exhibit 5.1).*
23.2 -- Consent of Simpson Thacher & Bartlett (included as part of Exhibit 5.1).*
24.1 -- Powers of Attorney of directors and officers of the Registrant.***
----------
* Filed herewith.
** Previously filed.
*** Previously filed and filed herewith.
(b) Financial Statements:
** Previously filed.
Not applicable.
II-4
Item 17. Undertakings.
Each of the undersigned Registrants hereby undertakes:
(a) (1) To file, during any period in which offers or sales
are being made, 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 (the "Act");
(ii) to reflect in the prospectus any facts or
events arising after the effective date of
the Registration Statement (or the most
recent post-effective amendment thereof)
which, individually or in the aggregate,
represent a fundamental change in the
information set forth in the Registration
Statement. Notwithstanding the foregoing,
any increase or decrease in volume of
securities offered (if the total dollar
value of securities offered would not
exceed that which was registered) and any
deviation from the low or high and 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 20 percent
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 the Registration
Statement or any material change to such
information in the Registration Statement;
provided, however, that (a)(1)(i) and (a)(1)(ii) will not
apply if the information required to be included in a
post-effective amendment thereby is contained in periodic
reports filed with or furnished to the Securities and
Exchange Commission (the "Commission") by the Registrants
pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") that
are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability
under the Act, 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 hereof.
(3) To remove from the registration by means of a
post-effective amendment any of the securities being
registered that remain unsold at the termination of
the offering.
(b) That, for purposes of determining any liability under the
Act, each filing of a Registrant's annual report pursuant to
Section 13(a) or 15(d) of the Exchange Act (and, where
applicable, each filing of a employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) with
respect to any Trust that is incorporated by reference in the
Registration Statement shall be deemed to be a new
registration statement relating
II-5
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.
(c) To provide to the Underwriters at the closing specified in
the Underwriting Agreement certificates in such denominations
and registered in such names as required by the Underwriters
to permit prompt delivery to each purchaser.
(d) That, insofar as indemnification for liabilities arising
under the Act may be permitted to directors, offices and
controlling persons of a Registrant pursuant to the foregoing
provisions, or otherwise, the Registrants have been advised
that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in
the Act and is therefore unenforceable. In the event that a
claim for indemnification against such liabilities (other
than payment by a Registrant of expenses incurred or paid by
a director, officer or controlling person of such 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, such
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 Act and will be governed by the final adjudication of
such issue.
(e) (1) That, for purposes of determining any liability
under the Act, the information omitted from the form
of prospectus filed as part of this registration
statement in reliance upon Rule 430A and contained
in the form of prospectus filed by the Registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under
the Act shall be deemed to be part of the
registration statement as of the time it was
declared effective.
(2) That, for the purpose of determining any liability
under the Act, each post-effective amendment that
contains a form of prospectus shall be deemed to be
a new registration statement relating to the
securities offered therein, and the offering of such
securities at the time shall be deemed to be the
initial bona fide offering thereof.
(f) That the undersigned Registrants hereby undertake 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 of 1939, as amended (the "Trust Indenture
Act"), in accordance with the rules and regulations
prescribed by the Commission under Section 305(b)(2) of the
Trust Indenture Act.
II-6
SIGNATURES FOR CHASE USA (NEW YORK)
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly
caused this Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in New York, New York on
August 23, 1996.
CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION
By: /s/ Anthony Langan
------------------------------------------
Anthony Langan
Vice President
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Amendment No. 1 to Registration Statement has been signed on
June 28, 1996 by the following persons in the capacities indicated.
Signature Title
* Chairman and President (Chief
- ----------------------------------- Executive Officer)
Thomas Jacob
* Director
- -----------------------------------
Patricia Alberto
* Director
- -----------------------------------
Lois Deming
* Director
- -----------------------------------
Luke S. Hayden
* Director and Vice President
- ----------------------------------- (Chief Financial Officer
John J. Hehir, Jr. and Chief Accounting Officer)
Director
- -----------------------------------
William Hoefling
* Director
- -----------------------------------
Glenn Mouridy
* Director
- -----------------------------------
Kenneth Wohst
* Director
- -----------------------------------
Leonard Zych
* The undersigned, by signing his name hereto, does hereby sign this
Amendment No. 1 to Registration Statement on behalf of each of the
above-indicated directors and officers of the Registrant pursuant to powers of
attorney signed by such directors and officers.
/s/ Anthony Langan
-----------------------------------
Anthony Langan
Attorney-in-Fact
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly
caused this Amendment No. 1 to Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Wilmington, State of Delaware, on August 23, 1996.
CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION
as originator of the Trust Registrant
By: *
--------------------------------------------
Keith Schuck
Controller
* The undersigned, by signing his name hereto, does hereby sign this
Amendment No. 1 to Registration Statement on behalf of Keith Schuck as
Controller of the Registrant pursuant to a power of attorney signed by him.
By: /s/ Richard L. Craig
--------------------------------------------
Richard L. Craig
Attorney-in-Fact
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on June 28, 1996 by the following
persons in the capacities indicated.
Signature Title
* Chairman of the Board of Director
- -----------------------------------
Donald L. Boudreau
* President and Director
- -----------------------------------
Michael Barrett
* Director
- -----------------------------------
Charles Walsh
* Director
- -----------------------------------
Luke Hayden
* Director
- -----------------------------------
William Hoefling
* Director
- -----------------------------------
Micheal Urkowitz
Director
- -----------------------------------
John Hehir
Director
- -----------------------------------
Kevin Hurley
Director
- -----------------------------------
Thomas Jacob
* Chief Financial Officer
- ----------------------------------- Controller (Principal Accounting
Keith Schuck Officer)
* The undersigned, by signing his name hereto, does hereby sign this
Amendment No. 1 to Registration Statement on behalf of the
above-indicated directors and officers of the Registrant pursuant to
powers of attorney signed by such officers and directors.
By: /s/ Richard L. Craig
----------------------------------
Richard L. Craig
Attorney-in-Fact
INDEX TO EXHIBITS
Exhibit Sequentially
Number Exhibit Numbered Page
1.1(A) Form of Underwriting Agreement (Certificates only).*
1.1(B) Form of Underwriting Agreement (Notes).*
1.1(C) Form of Underwriting Agreement (Certificates).*
3.1(A) Articles of Association of Chase USA (New York).*
3.1(B) Articles of Association of Chase USA (Delaware).*
3.2(A) By-laws of Chase USA (New York).*
3.2(B) By-laws of Chase USA (Delaware).*
4.1(A) Form of Pooling and Servicing Agreement (Certificates only).*
4.1(B) Form of Sale and Servicing Agreement (Notes and Certificates).*
4.2 Form of Indenture (Notes and Certificates).*
4.3(A) Form of Certificate of Trust (Notes and Certificates).*
4.3(B) Form of Trust Agreement (Notes and Certificates).*
4.3(C) Form of Amended and Restated Trust Agreement (Notes and Certificates).*
4.4 Form of Administration Agreement (Notes and Certificates).*
5.1 Opinion of Simpson Thacher & Bartlett with respect to legality.*
8.1 Opinion of Simpson Thacher & Bartlett with respect to tax matters
(included as part of Exhibit 5.1).*
23.1 Consent of Simpson Thacher & Bartlett (included as part of Exhibit 5.1).*
23.2 Consent of Simpson Thacher & Bartlett (included as part of Exhibit 5.1).*
24.1 Powers of Attorney of directors and officers of the Registrant.***
__________
* Filed herewith.
** Previously Filed.
*** Prevously filed and filed herewith.