[LOGO] CHASE
PROSPECTUS SUPPLEMENT
(To Prospectus dated September 9, 1996)
$1,524,147,107.71
CHASE MANHATTAN AUTO GRANTOR TRUST 1996-B
$1,478,422,107.71 6.61% AUTOMOBILE LOAN PASS-THROUGH CERTIFICATES, CLASS A
$45,725,000.00 6.76% AUTOMOBILE LOAN PASS-THROUGH CERTIFICATES, CLASS B
CHASE MANHATTAN BANK USA, N.A.
SELLER AND SERVICER
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The Chase Manhattan Auto Grantor Trust 1996-B (the 'TRUST') will be formed
pursuant to a Pooling and Servicing Agreement, to
be dated as of September 1, 1996, among Chase Manhattan Bank USA, N.A., in its
capacities as seller (the 'SELLER') and as servicer (the 'SERVICER') and Norwest
Bank Minnesota, National Association, as Trustee. The Trust will issue
$1,478,422,107.71 aggregate principal amount of 6.61% Asset Backed Certificates,
Class A (the 'CLASS A CERTIFICATES') and $45,725,000.00 aggregate principal
amount of 6.76% 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 97% undivided
ownership interest in the Trust, and the Class B Certificates will evidence in
the aggregate an approximate 3% 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 at the
applicable Pass-Through Rate, generally will be distributed to the
Certificateholders on the 15th day of each month (or, if such 15th day is not a
Business Day, the next following Business Day), beginning
(continued on the following page)
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There currently is no secondary market for the Certificates and there is no
assurance that one will develop.
The Underwriters expect, but are not obligated, to make a market in the
Certificates. There is no assurance that any such market will develop or
continue.
THE CERTIFICATES REPRESENT BENEFICIAL 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-5 AND IN THE ACCOMPANYING PROSPECTUS.
Price to Underwriting Proceeds to
Public (1) Discount the Seller (1)(2)
Per Class A
Certificate.......... 99.9765625% 0.175% 99.8015625%
Per Class B
Certificate.......... 99.9765625% 0.350% 99.6265625%
Total................... $1,523,789,885.73 $2,747,276.19 $1,521,042,609.54
(1) Plus accrued interest from September 15, 1996, if any.
(2) Before deduction of expenses estimated at $1,062,000.
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This Prospectus Supplement 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 prices at
the time of sale.
The Certificates are being offered by the Underwriters, subject to prior
sale, when, as and if issued to and accepted by the Underwriters, subject to
approval of certain legal matters by counsel for the Underwriters. The
Underwriters reserve 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
September 18, 1996 (the 'CLOSING DATE'), through the facilities of The
Depository Trust Company ('DTC'), Cedel Bank, societe anonyme ('CEDEL') or the
Euroclear System ('EUROCLEAR'), in each case against payment therefor in
immediately available funds.
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Underwriters of the Class A Certificates
CHASE SECURITIES INC.
BANC ONE CAPITAL CORPORATION
BEAR, STEARNS & CO. INC.
MERRILL LYNCH & CO.
MORGAN STANLEY & CO.
INCORPORATED
Underwriter of the Class B Certificates
CHASE SECURITIES INC.
The date of this Prospectus Supplement is September 10, 1996
(continued from previous page)
October 15, 1996. The Trust property will include a pool of simple interest
retail installment sales contracts and purchase money loans secured by new and
used automobiles and light-duty trucks, certain monies received thereunder on or
after September 1, 1996 (the 'CUTOFF DATE'), security interests in the vehicles
financed thereby, amounts on deposit in certain accounts maintained by the
Trustee for the benefit of Certificateholders and proceeds from claims on
certain insurance policies, all as more fully described herein. The final
scheduled Distribution Date of the Certificates will be the September 2002
Distribution Date (the 'FINAL SCHEDULED DISTRIBUTION DATE').
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.
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 UNDERWRITERS 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
Underwriters 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.
ii
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 1996-B (the
'TRUST').
SELLER.................. Chase Manhattan Bank USA, N.A. ('CHASE USA (NEW
YORK)'), a national banking association having its
chief executive office in Jericho, New York and a
wholly-owned subsidiary of The Chase Manhattan
Corporation (in such capacity, the 'SELLER' or
individually, the 'BANK').
SERVICER................ Chase USA (New York) (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 $1,524,147,107.71. The
Certificates will represent fractional undivided
interests in the Trust.
The Certificates will consist of $1,478,422,107.71
aggregate principal amount of 6.61% Automobile Loan
Pass-Through Certificates, Class A, and $45,725,000.00
aggregate principal amount of 6.76% Automobile Loan
Pass-Through Certificates, Class B. The Trust property
will include the Receivables, all monies received
thereunder on or after the Cutoff Date (other than the
Retained Yield), security interests in the Financed
Vehicles, amounts as from time to time may be held in
the Collection Account and the Distribution Accounts,
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 Norwest Bank Minnesota,
National Association, as trustee (the 'TRUSTEE') and as
collateral agent (the 'COLLATERAL AGENT'). The Retained
Yield and the Reserve Account, and any amounts therein,
will not be property of the Trust, but will be pledged
to and held by the Collateral Agent, as secured party.
The Class A Certificates will evidence in the aggregate
an approximate 97% undivided ownership interest (the
'CLASS A PERCENTAGE') in the Trust, and the Class B
Certificates will evidence in the aggregate an
approximate 3% 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--Denomination and Registration of
Certificates' herein and 'Description of the
Certificates-- General' in the Prospectus.
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
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herein. See 'Certain Information Regarding the
Securities--Book-Entry Registration' and '--Definitive
Securities' in the Prospectus.
CLASS A PASS-THROUGH
RATE.................. 6.61% per annum (the 'CLASS A PASS-THROUGH RATE'),
calculated on the basis of a 360-day year comprised of
twelve 30-day months.
CLASS B PASS-THROUGH
RATE.................. 6.76% per annum (the 'CLASS B PASS-THROUGH RATE,' and,
together with the Class A Pass-Through Rate, each a
'PASS-THROUGH RATE'), calculated on the basis of a
360-day year comprised of twelve 30-day months.
DISTRIBUTION DATE....... The 15th day of each month (or, if such 15th day is not
a day on which the Trustee and banks located in New
York, New York and Minneapolis, Minnesota are open for
the purpose of conducting a commercial banking business
(a 'BUSINESS DAY'), the next following Business Day)
commencing October 15, 1996.
INTEREST................ On each Distribution Date, interest will be distributed
at the Class A Pass-Through Rate on the Class A
Certificate Balance and at the Class B Pass-Through
Rate on the Class B Certificate Balance, in each case
as of the immediately preceding Distribution Date
(after giving effect to all distributions on such
preceding Distribution Date) to the holders of record
of the Class A Certificates (the 'CLASS A
CERTIFICATEHOLDERS') and the Class B Certificates (the
'CLASS B CERTIFICATEHOLDERS' and, together with the
Class A Certificateholders, the 'CERTIFICATEHOLDERS')
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') to the extent that
there are available funds therefor as described herein.
The rights of Class B Certificateholders to receive
payments of interest will be subordinated to the rights
of the Class A Certificateholders to receive payments
of interest to the extent described herein.
PRINCIPAL............... On each Distribution Date, 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 pro rata to the Class A Certificateholders and
to the Class B Certificateholders of record on the
preceding Record Date to the extent that there are
available funds therefor as described herein. See '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
$1,478,422,107.71 and $45,725,000.00, respectively,
and, in each case, will thereafter equal the initial
Class A Certificate Balance or the 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
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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
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 funds on deposit in
the Reserve Account. See 'Pooling and Servicing
Agreement--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 instead be deposited in the Reserve Account to
be applied pursuant to the Agreement. See 'Pooling and
Servicing Agreement--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.
RESERVE ACCOUNT......... A reserve account (the 'RESERVE ACCOUNT') will be
established by the Seller and maintained by the
Collateral Agent with an initial deposit of cash or
certain investments having an aggregate value of
$30,482,942 (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
Servicer and deposits to the Distribution Accounts have
been made will be deposited into the Reserve Account.
On each Distribution Date, any amounts on deposit in
the Reserve Account in excess of the Specified Reserve
Account Balance (as defined below) will be paid to the
Seller.
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 Advances previously made and not
reimbursed ('OUTSTANDING ADVANCES') as provided in the
Agreement and (ii) to the extent (x) the sum of the
amounts required to be distributed to the Servicer and
Certificateholders on the related Distribution Date
exceeds the sum of Available Interest and Available
Principal for such Distribution Date. See 'The
Certificates--Reserve Account' herein. If the amount in
the Reserve Account is reduced to zero and, in the case
of the Class A Certificateholders, if the subordination
of the Class B Certificates is insufficent,
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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.
SPECIFIED RESERVE
ACCOUNT BALANCE....... On any Distribution Date, the specified reserve account
balance (the 'SPECIFIED RESERVE ACCOUNT BALANCE') will
equal 3.25% (5.25% under certain circumstances
described herein) of the Pool Balance as of the related
Settlement Date, but in any event not less than the
lesser of (i) $11,431,103 and (ii) the sum of (A) such
Pool Balance and (B) an amount sufficient to pay
interest on such Pool Balance through the Final
Scheduled Distribution Date at a rate equal to the sum
of (x) the weighted average of the Class A Pass-Through
Rate and the Class B Pass-Through Rate (based on their
respective Certificate balances) plus (y) the Servicing
Fee Rate. The Specified Reserve Account Balance may be
reduced to a lesser amount as determined by the Seller,
provided that such reduction does not adversely affect
the rating of any class of Certificates by a Rating
Agency.
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 at a purchase price equal to the aggregate
of the Purchase Amounts of the then outstanding
Receivables. See 'Description of the Transfer and
Servicing Agreements-- Termination' in the Prospectus.
TRUSTEE................. Norwest Bank Minnesota, National Association (the
'TRUSTEE'). The Trustee's Corporate Trust Office is
located at Sixth Street and Marquette Avenue,
Minneapolis, Minnesota 55479-0069, telephone (617)
667-1117. The Bank and its affiliates may have normal
banking relationships with the Trustee and its
affiliates.
COLLATERAL AGENT........ Norwest Bank Minnesota, National Association (the
'COLLATERAL AGENT').
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.
RATING.................. It is a condition of issuance of the Certificates that
the Class A Certificates be rated 'AAA,' or its
equivalent, by at least two nationally recognized
statistical rating organizations (each a 'RATING
AGENCY'), and that the Class B Certificates be rated at
least in the 'A' category, or its equivalent, by at
least two Rating Agencies.
There can be no assurance that any rating will not be
lowered or withdrawn if, in the sole judgment of the
related 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.
Because the Class B Certificates are subordinated to
the Class A Certificates, the Class B Certificates may
not be acquired by, on behalf of, or with, Plan Assets
of any Plan. The foregoing restriction shall not apply
to acquisitions of the Class B Certificates with assets
of the general account of an insurance company, to the
extent permitted under Section 401(c) of ERISA.
See 'ERISA Considerations' herein and in the
Prospectus.
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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 Class A Certificates or the
Class B Certificates. The Underwriters currently intend to make a market in the
Certificates offered hereby, but they are 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 Class A Certificates
or Class B Certificates, as the case may be.
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 Receivables' in the Prospectus.
SUBORDINATION; LIMITED ASSETS
The Trust does 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 from the Reserve Account. The
Certificates represent interests solely in the Trust. Consequently,
Certificateholders must rely for repayment upon payments on the Receivables and,
if and to the extent available, amounts on deposit in the Reserve Account.
However, the amounts deposited in the Reserve Account are limited in amount and
the amount required to be maintained on deposit therein will be reduced as the
Pool Balance declines. If the amount on deposit in the Reserve 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 the Bank,
any of its affiliates, the Servicer, the Trustee or any other person or entity.
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. However, distributions of interest on the Class B
Certificates, to the extent of collections on the Receivables allocable to
interest and the amounts on deposit in the Reserve Account available after the
payment of interest on the Class A Certificates has been made, will not be
subordinated to the payment of principal on the Class A Certificates. See 'The
Certificates--Distributions on Certificates' herein.
RATINGS OF THE CERTIFICATES
It is a condition to the issuance of the Certificates that the Class A
Certificates be rated 'AAA,' or its equivalent, by at least two Rating Agencies,
and that the Class B Certificates be rated at least in the 'A' category, or its
equivalent, by at least two Rating Agencies. 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.
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FEDERAL INCOME TAXATION; EFFECT OF SUBORDINATION ON CLASS B CERTIFICATEHOLDERS
It is expected that, for U.S. 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 U.S. federal income tax purposes as
if they had (i) received as distributions their full share of such receipts,
(ii) paid over to the Class A Certificateholders an amount equal to such
Shortfall Amount, and (iii) retained the right to reimbursement of such amounts
to the extent of future collections otherwise available for deposit in the
Reserve Account.
Under this analysis, (i) 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, (ii) 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 amounts will not be
available from any source to reimburse such loss), and (iii) 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 received thereunder on or after the Cutoff Date
(other than 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
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 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'); (iv) 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 (v) the rights with respect to any Financed Vehicle that
has been repossessed by the Servicer, on behalf of the Trustee. The Retained
Yield and the Reserve Account, and any amounts therein, will not be property of
the Trust, but will be pledged to and held by the Collateral Agent, as secured
party for the benefit of the Certificateholders.
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 charges with respect to the Trust. Inasmuch as the Trust has no
operating history, it is not possible to predict the
S-6
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 Pools--General':
(a) have a remaining maturity, as of the Cutoff Date, of at least 6
months and not more than 66 months;
(b) are secured by either new Financed Vehicles that had an original
maturity of at least 12 months and not more than 84 months, or used
Financed Vehicles that had an original maturity of at least 12 months and
not more than 60 months;
(c) are fully-amortizing fixed rate simple interest 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 7.75% and not more than 20.00%, 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 $2,000 and not greater than $75,000;
(f) have no payment that is delinquent for more than 30 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 Alabama 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 April 1, 1996, which were
segregated and held for sale by the Seller. The Seller believes that such
selection procedures are not materially adverse to Certificateholders.
Approximately 48.64% of the aggregate principal balance of the Receivables, as
of the Cutoff Date, were secured by new Financed Vehicles and approximately
51.36% of the aggregate principal balance of the Receivables, as of the Cutoff
Date, were secured by used Financed Vehicles. All of the Receivables were Simple
Interest Receivables. None of the Receivables were originated by Chase Auto
Finance directly with Obligors or are Final Payment Receivables. 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 Pools--General' in the Prospectus for a
description of how prepayments made under Simple Interest Receivables are
allocated.
The composition of the Receivables, distribution by Contract Rate 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.
S-7
COMPOSITION OF THE RECEIVABLES
NEW FINANCED VEHICLES USED FINANCED VEHICLES TOTAL
--------------------- ---------------------- -----------------
Aggregate Principal Balance....... $741,385,436.98 $ 782,761,670.73 $1,524,147,107.71
Number of Receivables............. 41,975 55,680 97,655
Average Principal Balance......... $ 17,662.55 $ 14,058.22 $ 15,607.47
Average Original Balance.......... $ 18,274.27 $ 14,542.60 $ 16,146.58
Weighted Average Contract Rate.... 8.75% 9.73% 9.25%
Contract Rate (Range)............. 7.75% to 19.88% 7.75% to 20.00% 7.75% to 20.00%
Weighted Average Original Term.... 56.84 55.29 56.05
Original Term (Range)............. 12 to 68 months 12 to 60 months 12 to 68 months
Weighted Average Remaining Term... 54.69 53.13 53.89
Remaining Term (Range)............ 8 to 66 months 7 to 60 months 7 to 66 months
DISTRIBUTION BY CONTRACT RATE OF THE RECEIVABLES
PERCENT OF
NUMBER OF AGGREGATE
CONTRACT RATE RANGE RECEIVABLES PRINCIPAL BALANCE POOL BALANCE(1)
- ---------------------- ----------- ----------------- ----------------
7.75 to below 8.0%.... 14,157 $ 237,684,096.68 15.59%
8.0 to below 8.5%..... 12,667 212,748,178.58 13.96
8.5 to below 9.0%..... 22,327 372,645,845.83 24.45
9.0 to below 9.5%..... 8,605 136,241,115.44 8.94
9.5 to below 10.0%.... 15,405 236,158,457.86 15.49
10.0 to below 10.5%... 5,536 79,653,957.27 5.23
10.5 to below 11.0%... 8,114 114,293,579.66 7.50
11.0 to below 11.5%... 2,541 33,761,088.87 2.22
11.5 to below 12.0%... 3,383 43,151,533.73 2.83
12.0 to below 12.5%... 1,129 13,142,502.67 0.86
12.5 to below 13.0%... 1,714 20,523,456.14 1.35
13.0 to below 13.5%... 449 4,860,724.84 0.32
13.5 to below 14.0%... 673 7,903,606.88 0.52
14.0 to below 14.5%... 171 1,949,782.67 0.13
14.5 to below 15.0%... 309 3,700,090.42 0.24
15.0 to below 15.5%... 86 906,734.76 0.06
15.5 to below 16.0%... 130 1,618,637.85 0.11
16.0 to below 16.5%... 36 410,430.22 0.03
16.5 to below 17.0%... 72 907,434.76 0.06
17.0 to below 17.5%... 15 178,842.89 0.01
17.5 to below 18.0%... 61 817,695.82 0.05
18.0 to below 18.5%... 50 587,175.26 0.04
18.5 to below 19.0%... 11 128,598.03 0.01
19.0 to below 19.5%... 3 25,365.21 0.00
19.5 to below 20.0%... 9 127,238.49 0.01
20.0 to below 21.0%... 2 20,937.08 0.00
----------- ----------------- -------
Total(1).............. 97,655 $1,524,147,107.71 100.00%
----------- ----------------- -------
----------- ----------------- -------
- ------------------
(1) Dollar amounts and percentages do not add to the total or to 100.00%,
respectively, due to rounding.
S-8
GEOGRAPHIC DISTRIBUTION OF THE RECEIVABLES(1)
PERCENT OF
NUMBER OF AGGREGATE
STATE RECEIVABLES PRINCIPAL BALANCE POOL BALANCE(2)
- ----------------------- ----------- ----------------- ----------------
Arkansas............... 2,511 $ 38,120,967.91 2.50%
Arizona................ 2,650 42,957,363.95 2.82
California............. 5,552 110,877,857.14 7.27
Colorado............... 658 10,704,304.17 0.70
Connecticut............ 3,452 47,829,592.97 3.14
Delaware............... 1,213 17,363,254.23 1.14
District of Columbia... 6 82,314.08 0.01
Florida................ 7,414 113,349,860.41 7.44
Georgia................ 3,283 54,827,970.29 3.60
Hawaii................. 73 1,111,896.01 0.07
Idaho.................. 57 911,059.32 0.06
Illinois............... 1,518 25,905,116.90 1.70
Indiana................ 647 9,546,254.60 0.63
Iowa................... 1,095 14,722,780.92 0.97
Kansas................. 133 1,913,869.47 0.13
Kentucky............... 388 6,068,769.72 0.40
Louisiana.............. 1,392 22,678,898.45 1.49
Maine.................. 190 2,829,299.15 0.19
Maryland............... 2,129 32,250,616.35 2.12
Massachusetts.......... 2,910 41,344,609.40 2.71
Michigan............... 3,141 48,600,377.34 3.19
Minnesota.............. 156 2,655,178.46 0.17
Mississippi............ 1,030 16,249,975.31 1.07
Missouri............... 3,056 46,716,103.89 3.07
Montana................ 9 127,302.71 0.01
Nebraska............... 355 5,048,425.92 0.33
Nevada................. 834 12,895,827.74 0.85
New Hampshire.......... 382 5,012,636.91 0.33
New Jersey............. 4,202 67,278,295.34 4.41
New Mexico............. 745 11,314,012.47 0.74
New York............... 12,414 172,724,711.41 11.33
North Carolina......... 5,006 77,676,439.18 5.10
Ohio................... 1,584 23,674,549.00 1.55
Oklahoma............... 1,240 19,266,475.77 1.26
Oregon................. 815 12,343,187.42 0.81
Pennsylvania........... 4,220 61,166,554.00 4.01
Rhode Island........... 295 4,151,731.57 0.27
South Carolina......... 1,047 16,036,536.34 1.05
South Dakota........... 130 1,876,259.61 0.12
Tennessee.............. 1,089 18,756,128.69 1.23
Texas.................. 15,429 256,058,390.64 16.80
Utah................... 23 424,512.95 0.03
Vermont................ 312 3,783,791.98 0.25
Virginia............... 2,247 34,916,808.49 2.29
Washington............. 469 7,773,815.76 0.51
West Virginia.......... 92 1,287,903.45 0.08
Wisconsin.............. 62 934,519.92 0.06
----------- ----------------- ----------------
Total.................. 97,655 $1,524,147,107.71 100.00%
----------- ----------------- ----------------
----------- ----------------- ----------------
(Footnotes on next page)
S-9
(Footnotes from previous page)
- ------------------
(1) Based on location of the Dealer from which the Motor Vehicle Loan was
acquired or through which it was made.
(2) Dollar amounts and percentages do not add to the total or to 100.00%,
respectively, due to rounding.
DELINQUENCY AND LOAN LOSS INFORMATION
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, 1995, 1994,
1993, 1992 and 1991 and for each of the six month periods ended June 30, 1996
and June 30, 1995. 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 types 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
(such as the Receivables), 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 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' in the Prospectus 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 below.
S-10
DELINQUENCY EXPERIENCE
AS OF JUNE 30,
-------------------------------------------
1996(5) 1995
-------------------- --------------------
NUMBER NUMBER
DOLLARS OF DOLLARS OF
(000'S) LOANS (000'S) LOANS
---------- ------- ---------- -------
Outstanding Principal
Amount.................... $9,152,724 772,909 $6,400,822 544,350
---------- ------- ---------- -------
---------- ------- ---------- -------
Delinquencies($)(1)(2)
30-59 Days................ $ 85,999 7,638 $ 48,493 4,548
60-89 Days................ 18,187 1,614 10,241 1,023
90 Days or More........... 10,322 934 4,998 467
---------- ------- ---------- -------
TOTAL Delinquencies......... $ 114,508 10,186 $ 63,732 6,038
Repossession Inventory(3)... 7,898 499 3,421 208
---------- ------- ---------- -------
TOTAL Delinquencies &
Repossession Inventory.... $ 122,406 10,685 $ 67,153 6,246
---------- ------- ---------- -------
---------- ------- ---------- -------
Delinquencies(%)(1)(2)(4)
30-59 Days................ 0.94% 0.76%
60-89 Days................ 0.20% 0.16%
90 Days or More........... 0.11% 0.08%
---------- ----------
TOTAL Delinquencies......... 1.25% 1.00%
Repossession Inventory...... 0.09% 0.05%
---------- ----------
TOTAL Delinquencies &
Repossession Inventory.... 1.34% 1.05%
---------- ----------
---------- ----------
AS OF DECEMBER 31,
-----------------------------------------------------------------
1995 1994 1993
------------------- -------------------- --------------------
NUMBER NUMBER NUMBER
DOLLARS OF DOLLARS OF DOLLARS OF
(000'S) LOANS (000'S) LOANS (000'S) LOANS
---------- ------- ---------- ------- ---------- -------
Outstanding Principal
Amount.................... $7,451,714 628,009 $6,028,312 516,621 $4,540,693 378,857
---------- ------- ---------- ------- ---------- -------
---------- ------- ---------- ------- ---------- -------
Delinquencies($)(1)(2)
30-59 Days................ $ 78,499 7,054 $ 52,963 5,704 $ 41,294 3,761
60-89 Days................ 15,866 1,513 9,740 1,202 9,311 1,049
90 Days or More........... 8,654 786 5,353 761 4,176 421
---------- ------- ---------- ------- ---------- -------
TOTAL Delinquencies......... $ 103,019 9,353 $ 68,056 7,667 $ 54,781 5,231
Repossession Inventory(3)... 7,290 443 2,444 273 3,232 335
---------- ------- ---------- ------- ---------- -------
TOTAL Delinquencies &
Repossession Inventory.... $ 110,309 9,796 $ 70,500 7,940 $ 58,013 5,566
---------- ------- ---------- ------- ---------- -------
---------- ------- ---------- ------- ---------- -------
Delinquencies(%)(1)(2)(4)
30-59 Days................ 1.05% 0.88% 0.91%
60-89 Days................ 0.21% 0.16% 0.21%
90 Days or More........... 0.12% 0.09% 0.09%
---------- ---------- ----------
TOTAL Delinquencies......... 1.38% 1.13% 1.21%
Repossession Inventory...... 0.10% 0.04% 0.07%
---------- ---------- ----------
TOTAL Delinquencies &
Repossession Inventory.... 1.48% 1.17% 1.28%
---------- ---------- ----------
---------- ---------- ----------
AS OF DECEMBER 31,
------------------------------------------
1992 1991
------------------- --------------------
NUMBER NUMBER
DOLLARS OF DOLLARS OF
(000'S) LOANS (000'S) LOANS
---------- ------- ---------- -------
Outstanding Principal
Amount.................... $3,007,240 233,877 $2,399,047 180,372
---------- ------- ---------- -------
---------- ------- ---------- -------
Delinquencies($)(1)(2)
30-59 Days................ $ 37,453 3,167 $ 31,728 2,535
60-89 Days................ 7,963 682 8,102 625
90 Days or More........... 4,484 376 4,639 360
---------- ------- ---------- -------
TOTAL Delinquencies......... $ 49,900 4,225 $ 44,469 3,520
Repossession Inventory(3)... 3,907 393 3,943 379
---------- ------- ---------- -------
TOTAL Delinquencies &
Repossession Inventory.... $ 53,807 4,618 $ 48,412 3,899
---------- ------- ---------- -------
---------- ------- ---------- -------
Delinquencies(%)(1)(2)(4)
30-59 Days................ 1.25% 1.32%
60-89 Days................ 0.26% 0.34%
90 Days or More........... 0.15% 0.19%
---------- ----------
TOTAL Delinquencies......... 1.66% 1.85%
Repossession Inventory...... 0.13% 0.16%
---------- ----------
TOTAL Delinquencies &
Repossession Inventory.... 1.79% 2.02%
---------- ----------
---------- ----------
- ------------------
(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 and June 30, 1996, the amounts 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) As of June 30, 1996, approximately 3.20% of the aggregate principal balance
of Motor Vehicle Loans in the portfolio presented were Chase Maryland Loans.
LOAN LOSS EXPERIENCE
(DOLLARS IN 000'S)
SIX MONTHS SIX MONTHS
ENDED ENDED
----------- ----------
JUNE 30, JUNE 30,
1996(6) 1995
----------- ----------
Number of Loans(1)........................... 772,909 544,350
Period End Outstanding Principal Amount...... $ 9,152,724 $6,400,822
Average Outstanding Principal Amount(2)...... $ 8,642,839 $5,944,485
Number of Repossessions...................... 1,578 834
Number of Gross Charge-Offs.................. 2,174 1,190
Gross Charge-Offs(3)......................... $ 13,901 $ 5,694
Gross Charge-Offs as a % of Period End
Outstanding Principal Amount(7)............ 0.30% 0.18%
Gross Charge-Offs as a % of Average
Outstanding Principal Amount(7)............ 0.32% 0.19%
Recoveries(4)................................ $ (4,054) $ (1,800)
Net Charge-Offs(5)........................... $ 9,847 $ 3,894
Net Charge-Offs as a % of Period End
Outstanding Principal Amount(7)............ 0.22% 0.12%
Net Charge-Offs as a % of Average Outstanding
Principal Amount(7)........................ 0.23% 0.13%
YEAR ENDED
----------------------------------------------------------------------------
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1994 1993 1992 1991
------------ ------------ ------------ ------------ ------------
Number of Loans(1)........................... 628,009 516,621 378,857 233,877 180,732
Period End Outstanding Principal Amount...... $ 7,451,714 $ 6,028,312 $ 4,540,693 $ 3,007,240 $ 2,399,047
Average Outstanding Principal Amount(2)...... $ 6,572,006 $ 5,104,644 $ 3,999,579 $ 2,702,488 $ 2,139,176
Number of Repossessions...................... 1,863 1,590 2,064 1,807 1,435
Number of Gross Charge-Offs.................. 2,633 2,348 2,879 2,310 1,833
Gross Charge-Offs(3)......................... $ 11,765 $ 10,639 $ 14,923 $ 13,456 $ 13,660
Gross Charge-Offs as a % of Period End
Outstanding Principal Amount(7)............ 0.16% 0.18% 0.33% 0.45% 0.57%
Gross Charge-Offs as a % of Average
Outstanding Principal Amount(7)............ 0.18% 0.21% 0.37% 0.50% 0.64%
Recoveries(4)................................ $ (3,869) $ (4,700) $ (4,648) $ (2,846) $ (2,286)
Net Charge-Offs(5)........................... $ 7,896 $ 5,939 $ 10,275 $ 10,610 $ 11,374
Net Charge-Offs as a % of Period End
Outstanding Principal Amount(7)............ 0.11% 0.10% 0.23% 0.35% 0.47%
Net Charge-Offs as a % of Average Outstanding
Principal Amount(7)........................ 0.12% 0.12% 0.26% 0.39% 0.53%
- ------------------
(1) Number of loans as of period end.
(2) Averages for 1993, 1994, 1995 and 1996 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 June 30, 1996, approximately 3.20% of the aggregate principal balance
of Motor Vehicle Loans in the portfolio presented were Chase Maryland Loans.
(7) Percentages for the six-month periods ended June 30, 1996 and June 30, 1995
are annualized.
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 December 31,
1995, Chase USA (New York)'s total assets were approximately $5.0 billion, total
liabilities were approximately $4.5 billion, and total stockholders' equity was
approximately $505.1 million. Such amounts do not reflect the acquisition by
Chase USA (New York) of the automotive loan business of Chase N.A. on July 15,
1996.
USE OF PROCEEDS
After the deposit of the Reserve Account Initial Deposit and the deduction
of estimated expenses, the net proceeds to be received by the Seller from the
sale of the Certificates on the Closing Date will be $1,490,337,789.98 and 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
On each Distribution Date, interest on the Certificates at the applicable
Pass-Through Rate will be distributed on the Class A Certificate Balance and the
Class B Certificate Balance, respectively, in each case as of the prior
Distribution Date (after giving effect to any payments made on such immediately
prior Distribution Date). In the event of a principal prepayment on a
Receivable, Certificateholders will generally receive their pro rata share of
interest for the full Collection Period with respect to the unpaid principal
balance of such Receivable as of the first day of such Collection Period to the
extent that amounts on deposit in the Collection Account and in the Reserve
Account are available for such purposes. The Receivables are Simple Interest
Receivables and, to the extent that payments of the fixed monthly installments
thereunder are received prior to the scheduled due dates for such installments,
the portions of such installments allocable to interest will be less than they
would be if the payments were received as scheduled. If the Reserve Account is
exhausted and losses on the Receivables occur, the amount of interest
distributed to the Class B Certificateholders may be less than described above.
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 is required to equal at least the sum of (x) the weighted average
of the Class A Pass-Through Rate and the Class B Pass-Through Rate (based on
their respective Certificate balances) and (y) 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
S-13
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
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 Class A 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 Class B Pass-Through Rate on the Class B Certificate
Balance. Distributions to the Class A Certificateholders and Class B
Certificateholders will only be made to the extent that sufficient funds are
available in the Collection Account and the Reserve Account to make such
distributions. See '--Distributions on Certificates' herein.
Principal and interest to Certificateholders may be provided by payments
made by or on behalf of the Obligors, Advances or draws from the Reserve
Account. 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 '--Reserve 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 be made by, or on behalf of, the Trustee on the
Distribution Date immediately succeeding such Collection Period, commencing
October 15, 1996. 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 in the
Prospectus. 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 Securities' 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 in the name of the Trustee on behalf of the
Trust and for the benefit of the Class A Certificateholders (the 'CLASS A
DISTRIBUTION ACCOUNT') and a segregated distribution account in the name of the
Trustee on behalf of the Trust and for the benefit of the Class B
Certificateholders (the 'CLASS B DISTRIBUTION ACCOUNT,' and together with the
Class A Distribution Account, the 'DISTRIBUTION ACCOUNTS'). The Collection
Account and each Distribution Account will be an Eligible Deposit Account as
described under 'Description of the Transfer and Servicing Agreements--Accounts'
in the Prospectus. The Collection Account and each 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 Distribution
Account for the purpose of making distributions to Certificateholders in the
manner provided in the Agreement.
S-14
RESERVE ACCOUNT
The Reserve Account will be created with an initial deposit by the Seller
of cash or Permitted 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 Servicer and deposits to the Distribution Accounts have been
made will be deposited into the Reserve Account.
The Reserve Account will be an Eligible Deposit Account which shall be
established by the Servicer and maintained in the name of, and under the control
of, the Collateral Agent. Funds on deposit in the Reserve Account will be
invested in Permitted Investments selected by the Seller maturing not later than
the next Deposit Date; provided, that such Permitted Investments may mature
later than such next Deposit Date to the extent that such investments do not
adversely affect any rating of the Certificates by a Rating Agency. The Reserve
Account and any amounts therein will not be property of the Trust, but will be
pledged to and held for the benefit of the Collateral Agent, as secured party
for the benefit of Certificateholders. See 'Description of the Transfer and
Servicing Agreements--Accounts' in the Prospectus.
On each Distribution Date, the amount available in the Reserve Account (the
'AVAILABLE RESERVE ACCOUNT AMOUNT') will equal the lesser of (i) the amount on
deposit in the Reserve Account (exclusive of investment earnings) and (ii) the
Specified Reserve Account Balance.
On each Deposit Date, the Trustee shall demand a withdrawal from the
Reserve Account in an amount equal to the sum of (i) the excess, if any, of the
sum of the amounts required to be distributed to Certificateholders and the
Servicing Fee payable to the Servicer on such Distribution Date over the sum of
Available Interest and Available Principal for such Distribution Date (net of
amounts to be applied in reimbursement of outstanding Advances) ('PAYMENT
DEFICIENCIES') and (ii) the amount of any outstanding Advances of interest
accrued on Defaulted Receivables to the extent not recovered from Liquidation
Proceeds. Such Payment Deficiencies may result from, among other things,
realized losses on Receivables, 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 aggregate amount withdrawn from the
Reserve Account on any Deposit Date will not exceed the Available Reserve
Account Amount with respect to the related Distribution Date. The Trustee will
deposit the proceeds of such withdrawals into the Collection Account.
The Specified Reserve Account Balance on any Distribution Date will equal
3.25% of the Pool Balance as of the related Settlement Date, but in any event
will not be less than the lesser of (i) $11,431,103 and (ii) the sum of such
Pool Balance plus an amount sufficient to pay interest on such Pool Balance
through the Final Scheduled Distribution Date at a rate equal to the sum of (x)
the weighted average of the Class A Pass-Through Rate and the Class B
Pass-Through Rate (based on their respective Certificate balances) and (y) the
Servicing Fee Rate; provided that the Specified Reserve Account Balance will be
calculated using a percentage of 5.25% for any Distribution Date (beginning
December 16, 1996) on which the Average Net Loss Ratio exceeds 1.25% or the
Average Delinquency Percentage exceeds 1.25%.
'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.
'AVERAGE DELINQUENCY PERCENTAGE' means, as of any Distribution Date,
the average of the Delinquency Percentages for the preceding three
Collection Periods.
'AVERAGE NET LOSS RATIO' means, as of any Distribution Date, the
average of the Net Loss Ratios for the preceding three Collection Periods.
'DELINQUENCY PERCENTAGE' means, with respect to a Collection Period,
the sum of the outstanding principal balances of all Receivables which 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.
'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
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Financed Vehicle sold after repossession, in each case net of any
liquidation expenses and payments required by law to be remitted to the
Obligor.
'NET LOSS RATIO' means, for any Collection Period, the ratio,
expressed as a percentage, equal to (i) the Aggregate Net Losses for such
Collection Period, divided by (ii) the average of the Pool Balances on the
related Settlement Date and the last day of such Collection Period.
The Specified Reserve Account Balance may be reduced to a lesser amount as
determined by the Seller; provided, that such reduction does not adversely
affect any rating of the Certificates by a Rating Agency. Amounts on deposit in
the Reserve Account will be released to the Seller on each Distribution Date to
the extent that the amount on deposit in the Reserve Account would exceed the
Specified Reserve Account Balance. The Collateral Agent will cause all
Investment Earnings attributable to the Reserve Account to be distributed on
each Distribution Date to the Seller. Upon distribution to the Seller of amounts
from the Reserve Account, the Certificateholders will not have any rights in, or
claims to, such amounts.
DISTRIBUTIONS ON CERTIFICATES
On or before the 10th day of each month (or, if such 10th 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 amount to be withdrawn from the Reserve
Account; (v) Class A Monthly Interest, Class A Monthly Principal, Class B
Monthly Interest and Class B Monthly Principal; (vi) the Servicing Fee; and
(vii) the amount to be deposited in the Reserve Account.
On each Distribution Date, after payment to the Servicer from the
Collection Account of amounts in respect of Advances previously made by the
Servicer (as described below under 'Pooling and Servicing Agreement--
Advances'), the Servicer will make the following distributions and deposits from
the Collection Account, to the extent of the sum of Available Interest for such
Distribution Date and any Available Reserve Account Amount remaining after any
withdrawal from the Reserve Account to reimburse the Servicer for Advances
previously made by the Servicer (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 and
Available Interest for such Distribution Date and any Available Reserve Account
Amount remaining after any withdrawal from the Reserve Account in respect of
Advances described above and 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;
(f) to the Collateral Agent for deposit in the Reserve Account, any
remaining Available Interest and Available Principal.
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
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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
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 Class A
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 Class A Pass-Through Rate multiplied by the Class A Certificate Balance as
of the preceding Distribution Date (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 Aggregate Net 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 Scheduled 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 Class B
Pass-Through Rate.
'CLASS B INTEREST DISTRIBUTABLE AMOUNT' means, with respect to any
Distribution Date, the sum of Class B Monthly Interest for such Distribution
Date and the Class B Interest Carryover Shortfall for such Distribution Date.
'CLASS B MONTHLY INTEREST' means, for any Distribution Date, one-twelfth of
the Class B Pass-Through Rate multiplied by the Class B Certificate Balance as
of the preceding Distribution Date (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 Aggregate Net 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.
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'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, the Class B
Principal Carryover Shortfall for such Distribution Date. In addition, on the
Final Scheduled 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.
In the event that the Reserve Account 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, Investment Earnings on amounts on
deposit in the Collection Account, 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 Earnings
will not be paid to the Servicer, but will be deposited in the Reserve Account.
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
Agreement 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 Class A
Pass-Through Rate and Class B Pass-Through Rate on the related Class A
Certificate Balance and Class B Certificate Balance, respectively, to the
Certificateholders. 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 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
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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 Reserve Account 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 Scheduled 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 funds in
the Reserve Account. In the event that the Servicer does not make an Advance,
any Payment Deficiency resulting therefrom will be funded by a withdrawal from
the Reserve Account to the extent of the Available Reserve Account Amount.
To the extent that the amount set forth in clause (y) above plus amounts
withdrawn from the Reserve Account 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 Advances with respect to such Receivable.
Before a Receivable becomes a Defaulted Receivable, any such reimbursement will
only be from accrued interest due from the Obligor under such Receivable.
In addition, on each Deposit Date the Trustee shall demand a withdrawal
from the Reserve Account equal to the amount of any outstanding Advances of
interest accrued on Defaulted Receivables to the extent not recovered from
Liquidation Proceeds.
The Servicer will deposit all Advances with respect to any Distribution
Date into the Collection Account on the related Deposit Date.
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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 offering 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 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 U.S. federal income tax purposes.
Accordingly, for such purposes, each Certificateholder will be treated as the
owner of a fractional undivided interest in the assets 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. The Seller has retained a fixed
portion of the interest due on each Receivable equal to the difference between
the Contract Rate of the Receivable and a base rate (the 'BASE RATE') on each
such Receivable (such difference referred to as the 'RETAINED YIELD'). The Base
Rate on each Receivable is the weighted average interest rate on each Receivable
equal to (i) the Class A Percentage of such Receivable multiplied by the sum of
the Class A Pass-Through Rate and the Servicing Fee Rate, plus (ii) the Class B
Percentage of such Receivable multiplied by the sum of the Class B Pass-Through
Rate and the Servicing Fee Rate. The Seller and the Certificateholders (by
accepting a beneficial interest in a Certificate) will
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agree to treat the Certificates as ownership interests in the Receivables (other
than the Retained Yield). In addition, the Servicer and the Seller have
represented that the Servicing Fee Rate and all other amounts paid to, or
retained by, the Servicer represent a reasonable, arm's length servicing fee.
Accordingly, the Trustee and the Servicer intend to treat the Retained Yield 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.'
Thus, 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. However, if the Class B Pass-Through Rate exceeds the Class
A Pass-Through Rate, a portion of the interest accrued on each Receivable will
be treated as a 'stripped-coupon' purchased by the Class B Certificateholders
(the 'CLASS B STRIPPED COUPON'). In such case, each Class A Certificateholder
will be treated as owning its pro rata percentage interest in the principal of,
and interest payable on, each Receivable (minus the portion of the interest
payable on such Receivable that represents (i) the Retained Yield and (ii) the
Class B Stripped Coupon purchased by the Class B Certificateholders), and such
interest in each Receivable will be treated as a 'stripped bond' within the
meaning of Section 1286 of the Code. Similarly, in this instance, each Class B
Certificateholder will be treated as owning its pro rata percentage in the
principal of, and interest payable on, each Receivable, minus the portion of
such interest that represents the Retained Yield, plus the amount of the Class B
Stripped Coupon.
The stripped bonds described above 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
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 applicable 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.
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.
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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.
Class B Certificateholders. Even if the Class B Pass-Through Rate exceeds
the Class A Pass-Through Rate, it is believed that the Class B
Certificateholders generally will be subject to tax in the same manner as Class
A Certificateholders. However, in this instance no U.S. federal income tax
authorities address the precise method of taxation of an instrument such as the
Class B Certificates. In the absence of applicable authorities, the Servicer
intends to report income to Class B Certificateholders in the manner described
below.
As discussed above, if the Class B Pass-Through Rate exceeds the Class A
Pass-Through Rate, each Class B Certificateholder will be treated as owning (i)
the Class B Percentage of the principal on each Receivable plus (ii) a
disproportionate portion of the interest on each Receivable (not including the
Retained Yield). Income will be reported to a Class B Certificateholder based on
the assumption that all amounts payable to the Class B Certificateholders
(including amounts payable with respect to the Class B Stripped Coupon) are
taxable under the coupon stripping provisions of the Code, and will be
aggregated and treated as a single debt obligation. In applying those
provisions, the Servicer will take the position that a Class B
Certificateholder's entire share of the interest on a Receivable (including
amounts payable with respect to the Class B Stripped Coupon) will qualify as
'qualified stated interest.' Thus, except to the extent modified by the effects
of subordination of the Class B Certificates, as described below, income will be
reported to Class B Certificateholders in the manner described above for holders
of the Certificates.
Effect of Subordination. If the Class B Certificateholders received a
Shortfall Amount due to the subordination of the Class B Certificates, holders
of Class B Certificates would probably be treated for U.S. federal income tax
purposes as if they had (i) received as distributions their full share of such
receipts and (ii) paid over to the Class A Certificateholders an amount equal to
such Shortfall Amount, and (iii) retained the right to reimbursement of such
amounts to the extent of future collections otherwise available for deposit in
the Cash Collateral Account.
S-22
Under this analysis, (i) 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 (ii) a loss would be allowed to the Class B
Certificateholders only when their right to receive reimbursement of such
Shortfall Amount became worthless (i.e., when it becomes clear that such amount
will not be available from any source to reimburse such loss), and (iii)
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.
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
S-23
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
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 Chase Securities Inc. (the successor to Chemical
Securities Inc.), the managing underwriter, an administrative exemption,
Prohibited Transaction Exemption 90-33 (Exemption Application No. D-7940) (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
S-24
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;
(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 Standard & Poor's Rating Services,
Moody's Investors Service, Inc., Duff & Phelps Credit Rating Co. 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 Class B
Certificates with assets
S-25
of the general account of an insurance company, to the extent permitted under
Section 401(c) of ERISA. Purchasers using insurance company general account
funds to purchase Class B Certificates should also consider the availability of
exemptive relief under Section III of Prohibited Transaction Class Exemption
95-60 (60 Fed. Reg. 35925, July 12, 1995) issued by the U.S. Department of
Labor.
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 'Underwriting Agreement'), the Seller has agreed to sell to the Class A
Underwriters (the 'Class A Underwriters'), and each of the Class A Underwriters
has severally agreed to purchase the principal amount of the Class A
Certificates set forth opposite its name below.
PRINCIPAL AMOUNT
UNDERWRITER OF CLASS A CERTIFICATES
- ----------------------------------------------------- -----------------------
Chase Securities Inc................................. 295,822,107.71
Banc One Capital Corporation......................... 295,650,000.00
Bear, Stearns & Co. Inc.............................. 295,650,000.00
Merrill Lynch, Pierce, Fenner & Smith Incorporated... 295,650,000.00
Morgan Stanley & Co. Incorporated.................... 295,650,000.00
-----------------------
Total........................................... 1,478,422,107.71
-----------------------
-----------------------
The Seller has been advised by the Class A Underwriters that the Class A
Underwriters propose 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 0.125% of the principal amount of
the Class A Certificates. The Class A Underwriters may allow, and such dealers
may reallow, concessions not in excess of 0.100% of the principal amount of the
Class A Certificates to certain brokers and dealers. After the initial public
offering, the public offering price of the Class A Certificates and other
selling terms may be changed by the Class A Underwriters.
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Seller has agreed to sell to Chase Securities Inc. (the 'Class B
Underwriter' and, together with the Class A Underwriters, the 'Underwriters'),
and the Class B Underwriter has agreed to purchase the principal amount of the
Class B Certificates.
The Seller has been advised by the Class B Underwriter that the Class B
Underwriter proposes initially to offer the Class B Certificates to the public
at the price set forth on the cover page hereof, and to certain dealers at such
price less an initial concession not in excess of 0.250% of the principle amount
of the Class B Certificates. The Class B Underwriter may allow, and such dealers
may reallow, concessions not in excess of 0.125% of the Class B Certificates to
certain brokers and dealers. After the initial public offering of the Class B
Certificates, the public offering price and other selling terms may be changed
by the Class B Underwriter.
This Prospectus Supplement and the 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/or investment banking transactions with the Seller and its affiliates.
S-26
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 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 Orest J. Lechnowsky, Esq., a
Senior Vice President of Chase Financial Corporation, an affiliate of the Bank,
and for the Underwriter by Orrick, Herrington & Sutcliffe LLP, New York, New
York. From time to time Simpson Thacher & Bartlett and Orrick, Herrington &
Sutcliffe LLP will provide legal services to the Seller and its affiliates.
S-27
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S-28
INDEX OF TERMS
TERM PAGE
- ---- ----
Advance...................................... S-19
Aggregate Net Losses......................... S-15
Agreement.................................... S-1
Available Interest........................... S-16
Available Principal.......................... S-17
Available Reserve Account Amount............. S-15
Average Delinquency Percentage............... S-15
Average Net Loss Ratio....................... S-15
Bank......................................... S-1
Base Rate.................................... S-20
Business Day................................. S-2
Cedel........................................ i
Certificateholders........................... S-2
Certificates................................. i
Chase........................................ S-14
Chase USA (New York)......................... S-1
Class A Certificate Balance.................. S-2
Class A Certificateholders................... S-2
Class A Certificates......................... i
Class A Distribution Account................. S-14
Class A Interest Carryover Shortfall......... S-17
Class A Interest Distributable Amount........ S-17
Class A Monthly Interest..................... S-17
Class A Monthly Principal.................... S-17
Class A Pass-Through Rate.................... S-2
Class A Percentage........................... S-1
Class A Principal Carryover Shortfall........ S-17
Class A Principal Distributable Amount....... S-17
Class B Certificate Balance.................. S-2
Class B Certificateholders................... S-2
Class B Certificates......................... i
Class B Distribution Account................. S-14
Class B Interest Carryover Shortfall......... S-17
Class B Interest Distributable Amount........ S-17
Class B Monthly Interest..................... S-17
Class B Monthly Principal.................... S-17
Class B Pass-Through Rate.................... S-2
Class B Percentage........................... S-1
Class B Principal Carryover Shortfall........ S-17
Class B Principal Distributable Amount....... S-17
Class B Stripped Coupon...................... S-21
Closing Date................................. i
Code......................................... S-20
Collateral Agent............................. S-1, S-4
Collection Account........................... S-14
Collection Period............................ S-3
Contract Rate................................ S-7
Cutoff Date.................................. i
Delinquency Percentage....................... S-15
Distribution Accounts........................ S-14
DOL.......................................... S-24
S-29
TERM PAGE
- ---- ----
DTC.......................................... i
Euroclear.................................... i
Exemption.................................... S-24
FDIC......................................... i
Federal Tax Counsel.......................... S-20
Final Scheduled Distribution Date............ i
Financed Vehicles............................ S-7
IRS.......................................... S-20
Liquidation Proceeds......................... S-15
Net Loss Ratio............................... S-15
Outstanding Advances......................... S-3
Pass-Through Rate............................ S-2
Paying Agent................................. S-14
Payment Deficiencies......................... S-15
Plan Asset Regulation........................ S-24
Plan Assets.................................. S-24
Plans........................................ S-24
Purchase Price............................... S-21
Rating Agency................................ S-4
Receivables Pool............................. S-7
Record Date.................................. S-2
Reserve Account.............................. S-3
Reserve Account Initial Deposit.............. S-3
Restricted Group............................. S-28
Retained Yield............................... S-20
Seller....................................... i, S-1
Servicer..................................... i, S-1
Servicing Fee Rate........................... S-20
Settlement Date.............................. S-3
Shortfall Amount............................. S-8
Specified Reserve Account Balance............ S-4
Trust........................................ i
Trustee...................................... S-1, S-5
U.S.......................................... S-22
Underwriters................................. S-26
S-30
ANNEX I
GLOBAL CLEARANCE, SETTLEMENT AND
TAX DOCUMENTATION PROCEDURES
Except in certain limited circumstances, the globally offered Chase
Manhattan Grantor Trust 1996-B 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 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
S-A-1
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.
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;
S-A-2
(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 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-3
[This page intentionally left blank]
[LOGO] CHASE 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
13 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 September 9, 1996.
(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.
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.
2
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............................................................ 13
Certain Legal Aspects................................................. 13
Trust's Relationship to the Seller, the Servicer and their
Affiliates......................................................... 14
Subordination; Limited Assets......................................... 14
Maturity and Prepayment Considerations................................ 15
Risk of Commingling................................................... 15
Risks Associated with Subsequent Receivables and the Pre-Funding
Account............................................................ 16
Rights of Noteholders and Certificateholders.......................... 16
THE TRUSTS.............................................................. 17
THE RECEIVABLES POOLS................................................... 17
General............................................................... 17
Delinquency and Loan Loss Information................................. 19
Origination and Servicing of Motor Vehicle Loans...................... 20
Underwriting of Motor Vehicle Loans................................... 21
Insurance and Collection Procedures................................... 22
WEIGHTED AVERAGE LIFE OF THE SECURITIES................................. 23
POOL FACTORS AND TRADING INFORMATION.................................... 24
USE OF PROCEEDS......................................................... 25
CHASE USA (NEW YORK) AND CHASE USA (DELAWARE)........................... 25
DESCRIPTION OF THE NOTES................................................ 26
General............................................................... 26
Principal and Interest on the Notes................................... 26
The Indenture......................................................... 27
Certain Covenants..................................................... 29
The Indenture Trustee................................................. 30
DESCRIPTION OF THE CERTIFICATES......................................... 30
General............................................................... 30
Distributions of Principal and Interest............................... 31
The Trustee........................................................... 31
CERTAIN INFORMATION REGARDING THE SECURITIES............................ 32
Fixed Rate Securities................................................. 32
Floating Rate Securities.............................................. 32
Indexed Securities.................................................... 32
Book-Entry Registration............................................... 33
Definitive Securities................................................. 36
List of Securityholders............................................... 37
Reports to Securityholders............................................ 37
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS.................... 39
Sale and Assignment of Receivables.................................... 39
Accounts.............................................................. 40
Servicing Procedures.................................................. 42
Collections........................................................... 42
Servicing Compensation and Payment of Expenses........................ 43
Advances.............................................................. 43
4
PAGE
----
Distributions......................................................... 43
Credit and Cash Flow Enhancement...................................... 44
Net Deposits.......................................................... 45
Statements to Trustees and Trust...................................... 45
Evidence as to Compliance............................................. 46
Certain Matters Regarding the Servicer................................ 46
Events Of Servicing Termination....................................... 47
Rights Upon Event of Servicing Termination............................ 48
Waiver of Past Defaults............................................... 48
Amendment............................................................. 49
Insolvency Event...................................................... 49
Payment of Notes...................................................... 50
General Partner Liability............................................. 50
Termination........................................................... 50
Administration Agreement.............................................. 51
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES................................ 52
General............................................................... 52
Security Interests In The Financed Vehicles........................... 52
Enforcement Of Security Interests In Vehicles......................... 53
Other Matters......................................................... 54
Repurchase Obligation................................................. 55
ERISA CONSIDERATIONS.................................................... 55
PLAN OF DISTRIBUTION.................................................... 55
RATINGS................................................................. 56
LEGAL MATTERS........................................................... 56
INDEX OF TERMS.......................................................... 57
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'). Immediately following 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 '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
6
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 Each or any class of Securities of a series may be
SECURITIES............... 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, 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.
7
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.
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.
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
8
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 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.
CREDIT AND CASH FLOW If and to the extent specified in the related
ENHANCEMENT.............. 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
9
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 (the '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 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.
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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
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 With respect to each Trust, the Seller will assign to
AGREEMENTS............... 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
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
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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 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 Each Prospectus Supplement will specify the ratings
SECURITIES............... upon which the issuance of each series of Securities
will be conditioned. See 'Ratings' herein.
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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 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
13
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' and 'Description of the Transfer and
Servicing Agreements--Rights Upon Event of Servicing Termination' and
'--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.
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-
14
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 Prospectus 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.
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' in the related
Prospectus Supplement or 'Description of the Transfer and Servicing
Agreements--Servicing Procedures' herein. 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.
15
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
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.
16
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 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 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, had
not been 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 an Actuarial Receivable or a
Simple Interest Receivable (either of which may be a Final Payment Receivable),
(vi) had not been paid more
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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 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
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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 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 loan 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 Trust will not include Chase
Florida Loans but the Portfolio Experience presented in the related Prospectus
Supplement will include data with
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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 (the '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 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
20
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 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
21
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 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
22
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.
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
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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 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
24
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
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. Immediately following 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 11753
(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)'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.
25
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 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.
26
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.
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
27
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 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
28
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 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
29
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.
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.
30
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
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 Pool 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. 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 on any
Distribution Date or Payment Date, as applicable, until the Securityholders
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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.
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
32
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
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.
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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 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
34
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,
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
35
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.
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.
36
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
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;
(vi) the Pool Balance as of the close of business on the last day of
the preceding Collection Period;
37
(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.
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.
38
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 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
39
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 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
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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.'
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
41
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.
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
42
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 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 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,
43
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.
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 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')
44
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 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
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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.
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.
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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 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
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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 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
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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 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
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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.
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 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
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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').
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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 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
52
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 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.
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.
53
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 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 a criterion in the related Sale
and Servicing
54
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.
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.
55
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.
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 LLP, New York, New York. From time to time Simpson Thacher & Bartlett
and Orrick, Herrington & Sutcliffe LLP may provide legal services to the Seller
and its affiliates.
56
INDEX OF TERMS
TERM PAGE
- ---- ----
Actuarial Receivables........................ 18
Administration Agreement..................... 51
Administration Fee........................... 51
Administrator................................ 51
Advance...................................... 43
Applicable Trustee........................... 34
Assignments.................................. 20
Bank......................................... 6
Base Rate.................................... 32
Book-Entry Securities........................ 7
Business Day................................. 42
Calculation Agent............................ 32
Cash Collateral Account...................... 45
Cash Collateral Depositor.................... 10,44
Cash Collateral Guaranty..................... 10,45
Cash Collateral Trustee...................... 45
Cede......................................... 2
CEDEL........................................ 35
CEDEL Participants........................... 35
Certificate Balance.......................... 8
Certificate Distribution Account............. 40
Certificate Pool Factor...................... 24
Certificateholders........................... 34
Certificates................................. 1
Chase........................................ 6
Chase Auto Finance........................... 6,17
Chase Connecticut Bank....................... 19
Chase Connecticut Loans...................... 19
Chase Florida Bank........................... 19
Chase Florida Loans.......................... 19
Chase Lincoln Bank........................... 19
Chase Lincoln Loans.......................... 19
Chase Maryland Loans......................... 20
Chase N.A.................................... 6
Chase USA (Delaware)......................... 1
Chase USA (New York)......................... 1
Chase USA Merger............................. 6
Closing Date................................. 39
Code......................................... 55
Collection Account........................... 40
Collection Period............................ 42
Commission................................... 2
Commodity Indexed Securities................. 33
Contract Rate................................ 17
Cooperative.................................. 35
Corporation.................................. 6
Currency Indexed Securities.................. 33
Cutoff Date.................................. 17
Dealer Agreements............................ 20
Dealers...................................... 20
57
TERM PAGE
- ---- ----
Defaulted Receivable......................... 42
Definitive Certificates...................... 36
Definitive Notes............................. 36
Definitive Securities........................ 36
Deposit Date................................. 42
Depositaries................................. 33
Depository................................... 26
Disqualified Persons......................... 55
Distribution Date............................ 31
DSCs......................................... 21
DTC.......................................... 2
Due Date..................................... 18
Eligible Deposit Account..................... 41
ERISA........................................ 55
Euroclear.................................... 35
Euroclear Operator........................... 35
Euroclear Participants....................... 35
Euroclear System............................. 35
Events of Default............................ 28
Events of Servicing Termination.............. 47
Exchange Act................................. 2
Face Amount.................................. 33
FDIA......................................... 13
FDIC......................................... 1
Federal Tax Counsel.......................... 12
Final Payment Receivables.................... 18
Financed Vehicles............................ 9
FIRREA....................................... 13
Fixed Rate Securities........................ 32
Floating Rate Securities..................... 32
FTC Rule..................................... 54
Funding Period............................... 1,9
General Partner.............................. 13
Holders...................................... 7
Indenture.................................... 7
Index........................................ 33
Indexed Commodity............................ 33
Indexed Currency............................. 33
Indexed Principal Amount..................... 32
Indexed Securities........................... 32
Indirect Participants........................ 7
Initial Pool Balance......................... 50
Initial Receivables.......................... 9
Insolvency Event............................. 49
Interest Rate................................ 7
Interest Reset Period........................ 32
Investment Earnings.......................... 42
Issuer....................................... 6
Late Fees.................................... 43
LIBOR........................................ 32
Loan Agreement............................... 45
Merger....................................... 6
58
TERM PAGE
- ---- ----
Motor Vehicle Loans.......................... 19
Note Distribution Account.................... 40
Note Pool Factor............................. 24
Noteholders.................................. 34
Notes........................................ 1
Obligors..................................... 17
Originating Bank............................. 6,17
Owner Trustee................................ 7
Participants................................. 7
Parties in Interest.......................... 55
Pass Through Rate............................ 8
Payahead Account............................. 41
Payaheads.................................... 41
Paying Agent................................. 42
Payment Date................................. 26
Percentage Interest.......................... 7
Permitted Investments........................ 41
Plan Assets.................................. 55
Plans........................................ 55
Pool Balance................................. 25
Pooling and Servicing Agreement.............. 6
Portfolio Experience......................... 19
Pre-Funding Account.......................... 1,9
Pre-Funding Amount........................... 9
Prospectus Supplement........................ 1
Purchase Amount.............................. 40
Qualified Institution........................ 41
Qualified Trust Institution.................. 41
Rating Agency................................ 56
Receivables.................................. 17
Receivables Pool............................. 17
Registration Statement....................... 2
Related Documents............................ 29
Required Rate................................ 11
Reserve Account.............................. 44
Rules........................................ 34
Sale and Servicing Agreement................. 9
Schedule of Receivables...................... 39
Securities................................... 1
Securities Act............................... 2
Securityholder............................... 34
Securityholders.............................. 7,42
Seller....................................... 1,6
Servicer..................................... 1,6
Servicing Fee................................ 43
Servicing Fee Rate........................... 43
Simple Interest Receivables.................. 18
Spread....................................... 32
Spread Multiplier............................ 32
Stock Index.................................. 33
Stock Indexed Securities..................... 33
Strip Certificates........................... 8
59
TERM PAGE
- ---- ----
Strip Notes.................................. 8
Subsequent Receivables....................... 9
Subsequent Transfer Date..................... 39
Terms and Conditions......................... 35
The Chase Manhattan Bank..................... 25
The Chase Manhattan Corporation.............. 25
Transfer Agent and Registrar................. 37
Transfer and Servicing Agreements............ 39
Trust........................................ 1
Trust Accounts............................... 41
Trust Agreement.............................. 6
Trustee...................................... 7
UCC.......................................... 52
Underwriters................................. 55
Yield Supplement Account..................... 11
Yield Supplement Agreement................... 11
60
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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 SUPPLEMENT OR THE PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE SELLER OR THE UNDERWRITERS. NEITHER THE DELIVERY
OF THIS PROSPECTUS SUPPLEMENT OR THE 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 OR THE RECEIVABLES SINCE THE DATE THEREOF. THIS
PROSPECTUS SUPPLEMENT AND THE PROSPECTUS DO 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.
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TABLE OF CONTENTS
PAGE
----
Prospectus Supplement......................................... i
Summary of Terms.............................................. S-1
Risk Factors.................................................. S-5
The Trust..................................................... S-6
The Receivables Pool.......................................... S-7
Chase USA..................................................... S-13
Use of Proceeds............................................... S-13
Weighted Average Life of the Certificates..................... S-13
Yield Considerations.......................................... S-13
The Certificates.............................................. S-13
Pooling and Servicing Agreement............................... S-18
Certain Federal Income Tax Consequences....................... S-20
Certain State Tax Consequences................................ S-24
ERISA Considerations.......................................... S-24
Underwriting.................................................. S-26
Legal Matters................................................. S-27
Index of Terms................................................ S-29
Annex I
Prospectus.................................................... 1
Summary of Prospectus......................................... 6
Risk Factors.................................................. 13
The Trusts.................................................... 17
The Receivables Pools......................................... 17
Weighted Average Life of the Securities....................... 23
Pool Factors and Trading Information.......................... 24
Use of Proceeds............................................... 25
Chase USA (New York) and Chase USA (Delaware)................. 25
Description of the Notes...................................... 26
Description of the Certificates............................... 30
Certain Information Regarding the Securities.................. 32
Description of the Transfer and Servicing Agreements.......... 39
Certain Legal Aspects of the Receivables...................... 52
ERISA Considerations.......................................... 55
Plan of Distribution.......................................... 55
Ratings....................................................... 56
Legal Matters................................................. 56
Index of Terms................................................ 57
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UNTIL DECEMBER 9, 1996 (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.
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[LOGO] CHASE
CHASE MANHATTAN AUTO GRANTOR TRUST 1996-B
$1,478,422,107.71 6.61%
AUTOMOBILE LOAN PASS-THROUGH CERTIFICATES, CLASS A
$45,725,000.00 6.76%
AUTOMOBILE LOAN PASS-THROUGH
CERTIFICATES, CLASS B
CHASE MANHATTAN BANK USA, N.A.
SELLER AND SERVICER
------------------------
PROSPECTUS SUPPLEMENT
------------------------
Underwriters of the Class A Certificates
CHASE SECURITIES INC.
BANC ONE
CAPITAL CORPORATION
BEAR, STEARNS & CO. INC.
MERRILL LYNCH & CO.
MORGAN STANLEY & CO.
INCORPORATED
Underwriter of the Class B Certificates
CHASE SECURITIES INC.
SEPTEMBER 10, 1996
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