EXECUTION COPY
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CHASE MANHATTAN BANK USA, N.A.,
a National Banking Association
as Seller and Servicer
and
CHASE MANHATTAN AUTO OWNER TRUST 1996-C,
as Issuer
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SALE AND SERVICING AGREEMENT
Dated as of December 1, 1996
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TABLE OF CONTENTS
Page
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ARTICLE I
SECTION 1.1. Definitions........................................ 1
SECTION 1.2. Usage of Terms..................................... 25
SECTION 1.3. Simple Interest Method;
Allocations...................................... 26
SECTION 1.4. Calculations Relating to the
January 1998 Distribution Date................... 26
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.1. Conveyance of Receivables.......................... 26
SECTION 2.2. Closing............................................ 27
ARTICLE III
THE RECEIVABLES
SECTION 3.1. Representations and Warranties
of Seller; Conditions Relating to Receivables.... 28
SECTION 3.2. Repurchase Upon Breach or
Failure of a Condition........................... 32
SECTION 3.3. Custody of Receivable Files........................ 33
SECTION 3.4. Duties of Servicer as Custodian.................... 34
SECTION 3.5. Instructions; Authority to Act..................... 35
SECTION 3.6. Custodian's Indemnification........................ 35
SECTION 3.7. Effective Period and
Termination...................................... 35
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.1. Duties of Servicer................................. 36
SECTION 4.2. Collection of Receivable
Payments; Refinancing............................ 36
SECTION 4.3. Realization Upon Receivables....................... 37
SECTION 4.4. Maintenance of Security
Interests in Financed Vehicles................... 38
SECTION 4.5. Covenants of Servicer.............................. 38
SECTION 4.6. Purchase of Receivables Upon
Breach........................................... 39
SECTION 4.7. Servicing Fee...................................... 39
SECTION 4.8. Servicer's Certificate............................. 40
SECTION 4.9. Annual Statement as to
Compliance....................................... 40
SECTION 4.10. Annual Audit Report................................ 41
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Page
SECTION 4.11. Access by Holders to Certain
Documentation and Information Regarding
Receivables..................................... 42
SECTION 4.12. Reports to Holders and the
Rating Agencies................................. 42
SECTION 4.13. Reports to the Securities and
Exchange Commission............................. 42
ARTICLE V
ACCOUNTS; DISTRIBUTIONS;
STATEMENTS TO CERTIFICATEHOLDERS
SECTION 5.1. Establishment of Accounts......................... 43
SECTION 5.2. Collections....................................... 44
SECTION 5.3. [Reserved]....................................... 45
SECTION 5.4. Additional Deposits............................... 45
SECTION 5.5. Distributions..................................... 45
SECTION 5.6. Reserve Account................................... 47
SECTION 5.7. Net Deposits...................................... 49
SECTION 5.8. Statements to Certificateholders
and Noteholders................................. 49
ARTICLE VI
THE SELLER
SECTION 6.1. Representations of Seller......................... 51
SECTION 6.2. Liability of Seller;
Indemnities..................................... 52
SECTION 6.3. Merger or Consolidation of
Seller.......................................... 53
SECTION 6.4. Limitation on Liability of
Seller and Others............................... 53
SECTION 6.5. Seller May Own Notes and
Certificates.................................... 53
ARTICLE VII
THE SERVICER
SECTION 7.1. Representations of Servicer....................... 54
SECTION 7.2. Liability of Servicer;
Indemnities..................................... 55
SECTION 7.3. Merger or Consolidation of
Servicer........................................ 57
SECTION 7.4. Limitation on Liability of
Servicer and Others............................. 57
SECTION 7.5. Servicer Not To Resign............................ 58
SECTION 7.6. Delegation of Duties.............................. 58
ARTICLE VIII
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EVENTS OF SERVICING TERMINATION
SECTION 8.1. Events of Servicing Termination.................... 59
SECTION 8.2. Indenture Trustee to Act;
Appointment of Successor......................... 61
SECTION 8.3. Notification to Noteholders and
Certificateholders............................... 62
SECTION 8.4. Waiver of Past Defaults............................ 62
ARTICLE IX
TERMINATION
SECTION 9.1. Optional Purchase of All
Receivables; Trust Termination................... 62
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Amendment.......................................... 64
SECTION 10.2. Protection of Title to Owner
Trust Estate..................................... 66
SECTION 10.3. Governing Law...................................... 68
SECTION 10.4. Notices............................................ 68
SECTION 10.5. Severability of Provisions......................... 68
SECTION 10.6. Assignment; References to Chase
USA.............................................. 69
SECTION 10.7. Certificates and Notes
Nonassessable and Fully Paid..................... 69
SECTION 10.8. Third-Party Beneficiaries.......................... 69
SECTION 10.9. Assignment to Indenture Trustee.................... 69
SECTION 10.10. Limitation of Liability of Owner Trustee
and Indenture Trustee
SCHEDULES
Schedule A - List of Receivables
Schedule B - Location of Receivable Files
EXHIBITS
Exhibit A - Form of Servicer's Certificate
Exhibit B - Form of Monthly Report
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This Sale and Servicing Agreement, dated as of December 1, 1996 (as
amended, supplemented or otherwise modified and in effect from time to time,
this "Agreement") is made between CHASE MANHATTAN BANK USA, N.A., a national
banking association having its principal executive offices located at 000
Xxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000 ("Chase USA" or the "Seller" and the
"Servicer" in its respective capacities as such), and CHASE MANHATTAN AUTO OWNER
TRUST 1996-C, as issuer (the "Issuer").
W I T N E S S E T H :
In consideration of the premises and of the mutual agreements herein
contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
"Accrued Interest" on a Receivable, as of any date of determination,
means that amount of interest accrued on the Principal Balance at the related
Contract Rate but not paid by or on behalf of the Obligor.
"Accounts" means, collectively, the Collection Account and the Note
Distribution Account.
"Administration Agreement" means the Administration Agreement dated
as of December 1, 1996, among the Issuer, the Administrator and the Indenture
Trustee, as the same may be amended and supplemented from time to time.
"Administrator" means The Chase Manhattan Bank, a New York banking
corporation, as administrator, and its successors and assigns.
"Administration Fee" means $1,000, the fee payable to the
Administrator on each Distribution Date pursuant to Section 5.5(c) for services
rendered pursuant to the Administration Agreement.
"Affiliate" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to
the foregoing. A Person shall not be deemed to be an Affiliate of any person
solely because such other Person has the contractual right or obligation to
manage such Person unless such other Person controls such Person through equity
ownership or otherwise.
"Aggregate Net Losses" means, for a Distribution Date, the amount
equal to (i) the aggregate principal balance of the Receivables that became
Defaulted Receivables during the related Collection Period minus (ii) the
Liquidation Proceeds allocable to principal collected during such Collection
Period with respect to any Defaulted Receivables.
"Amount Financed" in respect of a Receivable means the amount
advanced under the Receivable toward the purchase price of the Financed Vehicle
and related costs.
"Assertion" has the meaning specified in Section 4.10.
"Authenticating Agent" has the meaning specified in Section 2.13 of
the Indenture and shall initially be the corporate trust office of The Chase
Manhattan Bank, and its successors and assigns in such capacity.
"Authorized Officer" means any officer of the Owner Trustee,
Indenture Trustee or Servicer who is authorized to act on behalf of the Owner
Trustee, Indenture Trustee or Servicer, as applicable, and who is identified as
such on the list of authorized officers delivered by each such party on the
Closing Date.
"Available Interest" means, for any Distribution Date, that portion
of Collections on the Receivables received during the related Collection Period
allocated to interest and, to the extent attributable to interest, the
Repurchase 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 Repurchase 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 Reserve Account Amount" shall mean, for each Distribution
Date, an amount equal to the lesser of (i) the amount on deposit in the Reserve
Account and (ii) the Specified Reserve Account Balance with respect to such
Distribution Date.
"Average Delinquency Percentage" means for any Distribution Date,
the average of the Delinquency Percentages for
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such Distribution Date and the preceding two (2) Distribution Dates.
"Average Net Loss Ratio" means for any Distribution Date, the
average of the Net Loss Ratios for such Distribution Date and the preceding two
(2) Distribution Dates.
"Basic Documents" means this Agreement, the Certificate of Trust,
the Indenture, the Depository Agreements, the Trust Agreement, the
Administration Agreement and other documents and certificates delivered in
connection therewith.
"Benefit Plan" has the meaning specified in Section 11.12 of the
Trust Agreement.
"Book-Entry Certificates" means beneficial interests in the
Certificates, the ownership and transfers of which shall be made through book
entries by a Clearing Agency or Foreign Clearing Agency as described in Section
3.10 of the Trust Agreement.
"Book-Entry Notes" means beneficial interests in the Notes,
ownership and transfers of which shall be made through book entries by a
Clearing Agency or Foreign Clearing Agency as described in Section 2.10 of the
Indenture.
"Business Day" means a day, other than a Saturday or a Sunday, on
which the Indenture Trustee and banks located in New York, New York, Wilmington,
Delaware and Minneapolis, Minnesota are open for the purpose of conducting a
commercial banking
business.
"Business Trust Statute" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code ss. 3801 et seq., as amended from time to time.
"Capital Accounts" has the meaning specified in Section 5.7 of the
Trust Agreement.
"CEDEL" means Centrale de Livraison de Valeurs Mobilieres, S.A.
"Certificate" means a certificate evidencing the beneficial interest
of a Certificateholder in the Owner Trust Estate, substantially in the form of
Exhibit A to the Trust Agreement.
"Certificate Balance" $30,938,845.63 as of the Closing Date and,
thereafter, means an amount equal to such initial Certificate Balance, reduced
by all amounts allocable to principal previously distributed to
Certificateholders. The Certificate Balance shall also be reduced on any
Distribution Date by the excess, if any, of (i) the sum of (A) the Certificate
Balance and (B) the outstanding principal amount of the Notes (in each case
after giving effect to amounts in respect of principal
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to be deposited in the Certificate Distribution Account and the Note
Distribution Account on such Distribution Date), over (ii) the Pool Balance as
of the close of business on the last day of the preceding Collection Period.
Thereafter, the Certificate Balance shall be increased on any Distribution Date
to the extent that any portion of the Total Distribution Amount on any
Distribution Date is available to pay the existing Certificateholders' Principal
Carryover Shortfall, but not by more than the aggregate reductions in the
Certificate Balance set forth in the preceding sentence.
"Certificate Depository Agreement" means the agreement among the
Issuer, the Owner Trustee, The Chase Manhattan Bank, as agent for the Depository
Trust Company and The Depository Trust Company, as the initial Clearing Agency,
dated as of the Closing Date, relating to the Certificates, substantially in the
form attached as Exhibit C to the Trust Agreement, as the same may be amended
and supplemented from time to time.
"Certificate Distribution Account" has the meaning specified in
Section 5.1 of the Trust Agreement.
"Certificate Final Scheduled Distribution Date" means the June 2003
Distribution Date on which the outstanding principal amount, if any, of the
Certificates is payable.
"Certificate of Trust" means the Certificate of Trust in the form of
Exhibit B to the Trust Agreement to be filed for the Issuer pursuant to Section
3810(a) of the Business Trust Statute.
"Certificate Owner" means, with respect to a Book-Entry Certificate,
the Person who is the owner of such Book-Entry Certificate, as reflected on the
books of the Clearing Agency or Foreign Clearing Agency or on the books of a
direct or indirect Clearing Agency Participant.
"Certificate Pool Factor" as of the close of business on a
Distribution Date means a eight-digit decimal figure equal to the Certificate
Balance (after giving effect to distributions made on such date) divided by the
initial Certificate Balance. The Certificate Pool Factor will be 1.00000000 as
of the Cutoff Date; thereafter, the Certificate Pool Factor will decline to
reflect reductions in the Certificate Balance.
"Certificate Rate" means 6.250% per annum.
"Certificate Register" and "Certificate Registrar" means the
register maintained and the registrar appointed pursuant to Section 3.4 of the
Trust Agreement.
"Certificateholder" means the Person in whose name a Certificate is
registered in the Certificate Register, except that, solely for the purpose of
giving any consent, request, waiver or demand pursuant to any of the Basic
Documents, the
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interest evidenced by any Certificate registered in the name of the Seller, the
Servicer or any Person controlling, controlled by, or under common control with,
the Seller or the Servicer shall not be taken into account in determining
whether the requisite percentage necessary to effect any such consent, request
or waiver shall have been obtained; provided, however, that in determining
whether the Owner Trustee shall be protected in relying upon any such consent,
request, waiver or demand, only Certificates that an Authorized Officer of the
Owner Trustee knows to be so owned shall be so disregarded.
"Certificateholders' Distributable Amount" means for any
Distribution Date, the sum of the Certificateholders' Principal Distributable
Amount and the Certificateholders' Interest Distributable Amount.
"Certificateholders' Interest Carryover Shortfall" means, for any
Distribution Date, the excess of the Certificateholders' Interest Distributable
Amount for the preceding Distribution Date, over the amount in respect of the
interest that was actually deposited in the Certificate Distribution Account on
such preceding Distribution Date, plus interest on such excess, to the extent
permitted by law, at the Certificate Rate from and including such preceding
Distribution Date to but excluding the current Distribution Date.
"Certificateholders' Interest Distributable Amount" means, for any
Distribution Date, the sum of the Certificateholders' Monthly Interest
Distributable Amount for such Distribution Date and the Certificateholders'
Interest Carryover Shortfall for such Distribution Date.
"Certificateholders' Monthly Interest Distributable Amount" means,
for any Distribution Date, one month's interest (or, in the case of the first
Distribution Date, interest accrued from and including the Closing Date to but
excluding such Distribution Date) at the Certificate Rate on the Certificate
Balance on the immediately preceding Distribution Date, after giving effect to
all principal payments on such Distribution Date, (or, in the case of the first
Distribution Date, the Certificate Balance on the Closing Date). Interest shall
be computed on the basis of a 360 day-year of twelve 30-day months for purposes
of this definition.
"Certificateholders' Monthly Principal Distributable Amount" means,
for any Distribution Date prior to the Distribution Date on which the
Outstanding Amount of the Class A-1 Notes has been paid in full, zero; for any
Distribution Date on or after the Distribution Date on which the Outstanding
Amount of the Class A-1 Notes has been paid in full, the Certificateholders'
Percentage of the excess of (i) the Principal Distribution Amount over (ii) the
portion of the Principal Distribution Amount required on the first such
Distribution Date to pay the Outstanding Amount of the Class A-1 Notes in full;
and for any Distribution Date commencing on or after the Distribution
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Date on which the Outstanding Amount of the Notes have been paid in full, the
sum of (i) the Certificateholders' Percentage of the portion of the Principal
Distribution Amount required on the first such Distribution Date to pay the
Outstanding Amount of the Notes in full and (ii) 100% of the remaining Principal
Distribution Amount.
"Certificateholders' Percentage" means 3.1%.
"Certificateholders' Principal Carryover Shortfall" means for any
Distribution Date, the sum of (a) the excess of (i) the Certificateholders'
Principal Distributable Amount for the preceding Distribution Date, over (ii)
the amount in respect of principal that was actually deposited in the
Certificate Distribution Account on such Distribution Date and (b) without
duplication of clause (a), the unreimbursed portion of the amount by which the
Certificate Balance has been reduced pursuant to the second sentence of the
definition thereof.
"Certificateholders' Principal Distributable Amount" means, for any
Distribution Date, the sum of the Certificateholders' Monthly Principal
Distributable Amount for such Distribution Date and the Certificateholders'
Principal Carryover Shortfall for such Distribution Date; provided that the
Certificateholders' Principal Distributable Amount shall not exceed the
Certificate Balance. In addition, on the Certificate Final Scheduled
Distribution Date, the principal required to be distributed to the
Certificateholders will include the lesser of (a) any payments of principal due
and remaining unpaid on each Receivable owned by the Issuer as of the last day
of the immediately preceding Collection Period and (b) the amount that is
necessary (after giving effect to the other amounts to be deposited in the
Certificate Distribution Account on such Distribution Date and allocable to
principal) to reduce the Certificate Balance to zero, in either case after
giving effect to any required distribution of the Noteholders' Principal
Distributable Amount to the Note Distribution Account.
"Chase Connecticut Loan" means a motor vehicle retail installment
sales contract or purchase money loan serviced by Chase USA and either
originated by The Chase Manhattan Bank of Connecticut, National Association or
originated pursuant to agreements with automobile dealers who regularly
originated and sold such contracts and loans to The Chase Manhattan Bank of
Connecticut, National Association.
"Chase Florida Loan" means a motor vehicle retail installment sales
contract or purchase money loan serviced by Chase USA and either originated by
The Chase Manhattan Private Bank of Florida, National Association or originated
pursuant to agreements with automobile dealers who regularly originated and sold
such contracts and loans to The Chase Manhattan Private Bank of Florida,
National Association.
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"Chase Lincoln Loan" means a motor vehicle retail installment sales
contract or purchase money loan serviced by Chase USA and either originated by
Chase Lincoln First Bank, National Association or originated pursuant to
agreements with automobile dealers who regularly originated and sold such
contracts and loans to Chase Lincoln First Bank, National Association.
"Chase Maryland Loan" means a motor vehicle retail installment sales
contract or purchase money loan serviced by Chase USA and either originated by
The Chase Manhattan Bank of Maryland or originated pursuant to agreements with
automobile dealers who regularly originated and sold such contracts and loans to
The Chase Manhattan Bank of Maryland.
"Class A-1 Event" shall have occurred if any Class A-1 Notes are
outstanding on the December 1997 Distribution Date (after giving effect to any
payments made on such date).
"Class A-1 Interest Rate" means 5.489% per annum.
"Class A-1 Notes" means the Class A-1 5.489% Money Market Asset
Backed Notes, substantially in the form of Exhibit B to the Indenture.
"Class A-2 Interest Rate" means 5.750% per annum.
"Class A-2 Notes" means the Class A-2 5.750% Asset Backed Notes,
substantially in the form of Exhibit C to the Indenture.
"Class A-3 Interest Rate" means 5.950% per annum.
"Class A-3 Notes" means the Class A-3 5.950% Asset Backed Notes,
substantially in the form of Exhibit D to the Indenture.
"Class A-4 Interest Rate" means 6.150% per annum.
"Class A-4 Notes" means the Class A-4 6.150% Asset Backed Notes,
substantially in the form of Exhibit E to the Indenture.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act. The initial Clearing Agency
shall be The Depository Trust Company.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other person for whom from time to time a Clearing
Agency effects book-entry transfers of securities deposited with the Clearing
Agency (including a Foreign Clearing Agency).
"Closing Date" means December 18, 1996.
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"Code" means the Internal Revenue Code of 1986, as amended.
"Collection Account" has the meaning specified in Section 5.1(a)(i).
"Collection Period" means each calendar month beginning December
1996 until the Chase Manhattan Auto Owner Trust 1996-C shall terminate pursuant
to Article IX of the Trust Agreement.
"Collections" means all collections in respect of Receivables.
"Contract Rate" of a Receivable means the annual rate of interest
stated in such Receivable.
"Corporate Trust Office" shall mean the New York office of the
Indenture Trustee or the Wilmington, Delaware office of the Owner Trustee, as
applicable.
"Cutoff Date" means December 1, 1996.
"Dealer" means the dealer which sold a Financed Vehicle and which
originated or assisted in the origination of the Receivable relating to such
Financed Vehicle under a Dealer Agreement.
"Dealer Agreement" means any agreement and, if applicable,
assignment under which the Receivables were originated by or through a Dealer
and sold to the Seller or an affiliate of the Seller.
"Default" means any occurrence that is, or with notice or the lapse
of time or both would become, an Event of Default.
"Defaulted Receivable" means a Receivable (other than a Repurchased
Receivable) as to which the Servicer has determined based on its usual
collection practices and procedures, during any Collection Period, that eventual
payment in full of the Amount Financed (including accrued interest thereon) is
unlikely; provided that such loss recognition cannot be later than the calendar
month in which more than 10% of the scheduled payment becomes 240 days
delinquent.
"Definitive Notes" means Notes issued in certificated, fully
registered form as provided in Section 2.12 of the Indenture.
"Definitive Certificates" means Certificates issued in certificated,
fully registered form as provided in Section 3.12 of the Trust Agreement.
"Delaware Trustee" has the meaning specified in Section 10.1 of the
Trust Agreement.
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"Delinquency Percentage" means, for any Distribution Date, the sum
of the outstanding principal balances of all Receivables which were 60 days or
more delinquent (including Receivables, which are not Defaulted Receivables,
relating to Financed Vehicles that have been repossessed), as of the close of
business on the last day of the Collection Period immediately preceding such
Distribution Date, determined in accordance with the Servicer's normal
practices, such sum expressed as a percentage of the Pool Balance as of the
close of business on the last day of such Collection Period.
"Delivery" when used with respect to Reserve Account Property means:
(a)(i) with respect to "certificated securities" within the
meaning of Section 8-102(1)(a) of the Relevant UCC not held by the initial
Clearing Agency or other "instruments" within the meaning of Section
9-105(1)(i) of the Relevant UCC, (A) physical delivery thereof to the
Indenture Trustee or its nominee or custodian endorsed to, or registered
in the name of, the Indenture Trustee or its nominee or custodian or
endorsed in blank, or, (B) with respect to a certificated security,
possession thereof by a financial intermediary (as defined in Section
8-313(4) of the Relevant UCC) and the making by such financial
intermediary of entries on its books and records identifying such
certificated securities as belonging to the Indenture Trustee or its
nominee or custodian and the sending by such financial intermediary of a
confirmation of the purchase of such certificated security by the
Indenture Trustee or its nominee or custodian, or (ii) with respect to
"certificated securities" within the meaning of Section 8-102(4)(a) of the
Relevant UCC held by the initial Clearing Agency or by a "custodian bank"
within the meaning of Section 8-102(4) of the Relevant UCC (a "Custodian
Bank") or a nominee of either subject to the control of the initial
Clearing Agency, the delivery thereof to the initial Clearing Agency or a
Custodian Bank or a nominee of either subject to the control of the
initial Clearing Agency and in bearer form or endorsed in blank by an
appropriate person or registered on the books of the issuer thereof in the
name of the initial Clearing Agency or its Custodian Bank or a nominee of
either and the identification by book-entry or otherwise on the
records of the financial intermediary, the sending of a confirmation by
the financial intermediary of the purchase by the Indenture Trustee or its
nominee or custodian of such securities and the making by such financial
intermediary of entries on its books and records identifying such
certificated securities as belonging to the Indenture Trustee or its
nominee or custodian (all of the foregoing, "Physical Property"), and such
additional or alternative procedures as may hereafter become appropriate
to effect the complete transfer of ownership of any such Reserve Account
Property to the Indenture Trustee or its nominee or
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custodian, consistent with changes in applicable law or regulations or the
interpretation thereof;
(b) with respect to any securities issued by the U.S.
Treasury, the Federal Home Loan Mortgage Corporation or by the Federal
National Mortgage Association that are maintained in the form of entries
on the records of the Federal Reserve System pursuant to Federal
book-entry regulations, the following procedures: entries on the records
of a member bank of the Federal Reserve System identifying such Reserve
Account Property as belonging to a Federal Reserve "depositary" pursuant
to applicable Federal regulations and the sending by such depositary of
written confirmation of the purchase of such Reserve Account Property to
the Indenture Trustee or its nominee or custodian; the making by such
depositary of entries in its books and records identifying such Reserve
Account Property as belonging to, or otherwise subject to a security
interest in favor of, the Indenture Trustee or its nominee or custodian;
and such additional or alternative procedures as may hereafter become
appropriate to effect transfer of ownership of any such Reserve Account
Property to the Indenture Trustee or its nominee or custodian consistent
with changes in applicable law or regulations or the interpretation
thereof; and
(c) with respect to any item of Reserve Account Property that
is an uncertificated security under Article 8 (or VIII, as applicable) of
the Relevant UCC and that is not governed by clause (b) above,
registration on the books and records of the issuer thereof in the name of
the financial intermediary, the sending of a confirmation by the financial
intermediary of the purchase by the Indenture Trustee or its nominee or
custodian of such uncertificated security, the making by such financial
intermediary of entries on its books and records identifying such
uncertificated certificates as belonging to the Indenture Trustee or its
nominee or custodian; and such additional or alternative procedures as may
hereafter become appropriate to effect transfer of ownership of any such
Reserve Account Property to the Indenture Trustee or its nominee or
custodian consistent with changes in applicable law or regulations or the
interpretation thereof.
"Deposit Date" means the Business Day immediately preceding each
Distribution Date.
"Depositor" means the Seller in its capacity as Depositor under the
Trust Agreement.
"Depository Agreements" mean, collectively, the Certificate
Depository Agreement and the Note Depository Agreement.
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"Determination Date" means the 10th calendar day of the month (or,
(i) if such 10th calendar day is not a Business Day, the Business Day preceding
the 10th calendar day of the month or (ii) if any Class A-1 Notes are
Outstanding on the December 1997 Distribution Date, January 7, 1998) immediately
succeeding the related Collection Period.
"Distribution Date" means, in the case of the first Collection
Period, January 15, 1997, and in the case of every Collection Period thereafter,
the 15th day of the following month, or if the 15th day is not a Business Day,
the next following Business Day, commencing with the first Distribution Date;
provided, however, that solely for purposes of determining the Note Final
Scheduled Distribution Date for the Class A-1 Notes, making payments on the
Notes pursuant to Section 5.5 hereof and the Indenture and the Notes and making
withdrawals from the Reserve Account, if the Class A-1 Event shall have
occurred, the Distribution Date in the case of December 1997 Collection Period
shall be (x) January 12, 1998 with respect to the Class A-1 Notes, and (y)
January 15, 1998 with respect to the Class A-2 Notes, the Class A-3 Notes, the
Class A-4 Notes and the Certificates.
"Eligible Deposit Account" means (a) a segregated identifiable trust
account established in the trust department of a Qualified Trust Institution,
which shall, except in the case of the Reserve Account, initially be The Chase
Manhattan Bank, and may be maintained with The Chase Manhattan Bank so long as
The Chase Manhattan Bank is a Qualified Trust Institution; or (b) a separately
identifiable deposit account established in the deposit taking department of a
Qualified Institution, which, except in the case of the Reserve Account, may be
The Chase Manhattan Bank so long as The Chase Manhattan Bank is a Qualified
Institution.
"ERISA" has the meaning specified in Section 11.12 of the Trust
Agreement.
"Executive Officer" means, with respect to any corporation or bank,
the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer,
President, Executive Vice President, any Vice President, the Secretary or the
Treasurer of such corporation or bank, and with respect to any partnership, any
general partner thereof.
"Euroclear Operator" means Xxxxxx Guaranty Trust Company of New
York, Brussels, Belgium office, in its capacity as the operator of the Euroclear
system.
"Event of Default" means an event specified in Section 5.1 of the
Indenture.
"Event of Servicing Termination" means an event specified in Section
8.1.
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"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Expenses" has the meaning specified in Section 8.2 of the Trust
Agreement.
"FDIC" means the Federal Deposit Insurance Corporation or any
successor thereto.
"FHLMC" means the Federal Home Loan Mortgage Corporation or any
successor thereto.
"Final Scheduled Maturity Date" means the last day of the Collection
Period immediately preceding the Certificate Final Scheduled Distribution Date.
"Financed Vehicle" means, with respect to a Receivable, the new or
used automobile or light-duty truck, together with all accessions thereto,
securing an Obligor's indebtedness under such Receivable.
"Fitch" means Fitch Investors Service L.P. and its successors and
assigns.
"FNMA" means the Federal National Mortgage Association or any
successor thereto.
"Foreign Clearing Agency" means, collectively, CEDEL and the
Euroclear Operator.
"General Partner" means Chase Auto Funding Corporation, as general
partner under the Trust Agreement.
"General Partner Percentage" means 1.0014777%.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, and xxxxx x xxxx upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to the Indenture. A Grant of the Trust Estate or of any other agreement
or instrument shall include all rights, powers and options (but none of the
obligations) of the Granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments and all other moneys payable thereunder, to give and
receive notices and other communications, to make waivers or other agreements,
to exercise all rights and options, to bring Proceedings in the name of the
Granting party or otherwise and generally to do and receive anything that the
Granting party is or may be entitled to do or receive thereunder or with respect
thereto.
"Holder" or "Holders" means, unless the context otherwise requires,
both Certificateholders and Noteholders.
12
"Indemnified Parties" has the meaning specified in Section 8.2 of
the Trust Agreement.
"Indenture" means the Indenture dated as of December 1, 1996,
between the Issuer and the Indenture Trustee, as the same may be amended and
supplemented from time to time.
"Indenture Trustee" means, initially, Norwest Bank Minnesota,
National Association, as Indenture Trustee under the Indenture, or any successor
Indenture Trustee under the Indenture.
"Independent" means, when used with respect to any specified Person,
that the person (a) is in fact independent of the Issuer, any other obligor upon
the Notes, the Seller and any Affiliate of any of the foregoing persons, (b)
does not have any direct financial interest or any material indirect financial
interest in the Issuer, any such other obligor, the Seller or any Affiliate of
any of the foregoing Persons and (c) is not connected with the Issuer, any such
other obligor, the Seller or any Affiliate of any of the foregoing Persons as an
officer, employee, promoter, underwriter, trustee, partner, director or Person
performing similar functions.
"Independent Certificate" means a certificate or opinion to be
delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1 of the
Indenture, made by an Independent engineer, appraiser or other expert appointed
by the Issuer and approved by the Indenture Trustee in the exercise of
reasonable care, and such opinion or certificate shall state that the signer has
read the definition of "Independent" in the Indenture and that the signer is
Independent within the meaning thereof.
"Insolvency Event" means, for a specified Person, (a) the filing of
a decree or order for relief by a court having jurisdiction in the premises in
respect of such Person or any substantial part of its property in an involuntary
case under any applicable Federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver (including any
receiver appointed under the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended), liquidator, assignee, custodian, trustee,
sequestrator or similar official for such Person or for any substantial part of
its property, or ordering the winding-up or liquidation of such Person's
affairs, and such decree or order shall remain unstayed and in effect for a
period of 60 consecutive days; or (b) the commencement by such Person of a
voluntary case under any applicable Federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or the consent by such Person to
the entry of an order for relief in an involuntary case under any such law, or
the consent by such Person to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official
13
for such Person or for any substantial part of its property, or the making of
such Person of any general assignment for the benefit of creditors, or the
failure by such Person generally to pay its debts as such debts become due, or
the taking of action by such Person in furtherance of any of the foregoing.
"Interest Rate" means the rate of interest borne by the Notes of any
class.
"Investment Earnings" means, with respect to any Distribution Date,
the investment earnings (net of losses and investment expenses) on amounts on
deposit in the Collection Account.
"Issuer" means Chase Manhattan Auto Trust 1996-C until a successor
replaces it and, thereafter, means such successor and, for purposes of any
provision contained in the Indenture and required by the TIA, each other obligor
on the Notes.
"Issuer Order" and "Issuer Request" means a written order or request
signed in the name of the Issuer by any of its authorized officers and delivered
to the Indenture Trustee.
"January 1998 Class A-1 Note Distribution" means the amount
distributable from the Collection Account pursuant to Section 5.5 to the
Noteholders of the Class A-1 Notes on the January 1998 Distribution Date with
respect to the Class A-1 Notes if the Class A-2 Event has occurred.
"Late Fees" means 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 Receivables.
"Lien" means a security interest, lien, charge, pledge or
encumbrance of any kind other than tax liens, mechanics' liens or any other
liens that attach by operation of law.
"Liquidation Proceeds" means, with respect to any Receivable, (i)
insurance proceeds, (ii) the monies collected during a Collection Period from
whatever source on a Defaulted Receivable and (iii) proceeds of a Financed
Vehicle sold after repossession, in each case net of any liquidation expenses
and payments required by law to be remitted to the Obligor.
"Moody's" means Xxxxx'x Investors Service, a division of Dun &
Bradstreet Corporation, and its successors and assigns.
"Net Loss Ratio" means, for any Distribution Date, an amount,
expressed as a percentage, equal to (i) the Aggregate Net Losses for such
Distribution Date divided by (ii) the average of the Pool Balances on each of
the related Settlement Dates and the last day of the related Collection Period.
14
"Note" means a Class A-1 Note, a Class A-2 Note, a Class A-3 Note or
a Class A-4 Note.
"Note Depository Agreement" means the agreement among the Issuer,
the Indenture Trustee, The Chase Manhattan Bank, as agent for The Depository
Trust Company and The Depository Trust Company, as the initial Clearing Agency,
dated as of the Closing Date, relating to the Notes, as the same may be amended
or supplemented from time to time or any similar agreement with any successor
Clearing Agency.
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 5.1(a)(ii).
"Note Final Scheduled Distribution Date" means for (a) the Class A-1
Notes, the January 1998 Distribution Date, (b) the Class A-2 Notes, the May 1999
Distribution Date, (c) the Class A-3 Notes, the November 2000 Distribution Date
and (d) the Class A-4 Notes, the March 2002 Distribution Date.
"Note Owner" means, with respect to a Book-Entry Note, the person
who is the owner of such Book-Entry Note, as reflected on the books of the
Clearing Agency or Foreign Clearing Agency, or on the books of a direct or
indirect Clearing Agency Participant.
"Note Pool Factor" for each class of Notes as of the close of
business on a Distribution Date means an eight-digit decimal figure equal to the
Outstanding Amount of such class of Notes divided by the original Outstanding
Amount of such class of Notes. The Note Pool Factor for each class of Notes will
be 1.00000000 as of the Cutoff Date; thereafter, the Note Pool Factor for each
class of Notes will decline to reflect reductions in the Outstanding Amount of
such class of Notes.
"Noteholder" means the Person in whose name a Note is registered on
the Note Register.
"Noteholders' Distributable Amount" means, for any Distribution
Date, the sum of the Noteholders' Principal Distributable Amount and the
Noteholders' Interest Distributable Amount for all Classes of Notes.
"Noteholders' Interest Carryover Shortfall" means, for any
Distribution Date for any class of Notes, the excess of (x) the Noteholders'
Interest Distributable Amount for the preceding Distribution Date for such class
of Notes, over (y) the amount in respect of interest that was actually deposited
in the Note Distribution Account on such preceding Distribution Date with
respect to such class of Notes, plus interest on the amount of interest due but
not paid to Noteholders of such class on the preceding Distribution Date, to the
extent permitted by law, at the applicable Interest Rate from such preceding
Distribution Date through the current Distribution Date.
15
"Noteholders' Interest Distributable Amount" means, for any
Distribution Date for any class of Notes, the sum of (x) the Noteholders'
Monthly Interest Distributable Amount for such class of Notes for such
Distribution Date and (y) the Noteholders' Interest Carryover Shortfall for such
Distribution Date for such
class of Notes.
"Noteholders' Monthly Interest Distributable Amount" means, for any
Distribution Date for each class of Notes, one month's interest (or, in the case
of the first Distribution Date, interest accrued from and including the Closing
Date to but excluding such Distribution Date) at the related Interest Rate on
the Outstanding Amount of the Notes of such class on such Distribution Date (or,
in the case of the first Distribution Date, on the Closing Date). Interest for
purposes of this definition (i) on the Class A-1 Notes shall be computed on the
basis of a 360-day year for the actual number of days elapsed (or 31 days in the
case of the January 1998 Distribution Date) and (ii) on the Class A-2 Notes, the
Class A-3 Notes and the Class A-4 Notes shall be computed on the basis of a
360-day year of twelve 30-day months.
"Noteholders' Monthly Principal Distributable Amount" means, for any
Distribution Date prior to the Distribution Date on which the Outstanding Amount
of the Class A-1 Notes has been paid in full, 100% of the Principal Distribution
Amount; and for any Distribution Date commencing on the Distribution Date on
which the Outstanding Amount of the Class A-1 Notes has been paid in full until
the Notes have been paid in full, the sum of (i) the portion of the Principal
Distribution Amount required on the first such Distribution Date to pay the
Outstanding Amount of the Class A-1 Notes in full and (ii) the Noteholders'
Percentage of the remaining Principal Distribution Amount.
"Noteholders' Percentage" means 96.9%.
"Noteholders' Principal Carryover Shortfall" means for any
Distribution Date, the excess of (x) the Noteholders' Principal Distributable
Amount for the preceding Distribution Date over (y) the amount in respect of
principal that was actually deposited in the Note Distribution Account on such
Distribution Date.
"Noteholders' Principal Distributable Amount" means, for any
Distribution Date, the sum of (i) the Noteholder's Monthly Principal
Distributable Amount for such Distribution Date and (ii) the Noteholders'
Principal Carryover Shortfall for such Distribution Date; provided that the
Noteholders' Principal Distributable Amount shall not exceed the Outstanding
Amount of the Notes. In addition, on the Note Final Scheduled Distribution Date
of each class of Notes, the principal required to be deposited in the Note
Distribution Account will include the amount necessary (after giving effect to
the other amounts to be deposited in the Note Distribution Account on such
Distribution
16
Date and allocable to principal) to reduce the Outstanding Amount of such class
of Notes to zero.
"Note Register" and "Note Registrar" have the meanings specified in
Section 2.4 of the Indenture.
"Obligor" on a Receivable means the purchaser or the co-purchasers
of the Financed Vehicle purchased in part or in whole by the execution and
delivery of such Receivable or any other Person who owes or may be liable for
payments under such Receivable.
"Offered Percentage" means 98.9985223%.
"Officer's Certificate" means a certificate signed by the chairman
of the board, the president, the treasurer, the controller, any executive or
senior vice president or any vice president of the Seller or Servicer, as
appropriate, meeting the requirements of Section 11.1 of the Indenture.
"Opinion of Counsel" means a written opinion of counsel (who may be
counsel to the Seller or the Servicer) reasonably acceptable in form and
substance to the Indenture Trustee, meeting the requirements of Section 11.1 of
the Indenture (or in the case of an Opinion of Counsel delivered to the Owner
Trustee, reasonably acceptable in form and substance to the Owner Trustee).
"Optional Purchase Percentage" shall be 5%.
"Original Pool Balance" shall be $996,938,845.63.
"Outstanding" means, when used with respect to Notes, as of the date
of determination, all Notes theretofore authenticated and delivered under the
Indenture except:
(a) Notes theretofore canceled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(b) Notes or portions thereof the payment for which money in
the necessary amount has been theretofore deposited with the
Indenture Trustee or any Paying Agent in trust for the Holders of
such Notes (provided that if such Notes are to be redeemed, notice
of such redemption has been duly given pursuant to the Indenture or
provision therefor, satisfactory to the Indenture Trustee, has been
made); and
(c) Notes in exchange for or in lieu of other Notes which have
been authenticated and delivered pursuant to the Indenture unless
proof satisfactory to the Indenture Trustee is presented that any
such Notes are held by a bona fide purchaser;
17
provided that in determining whether the Holders of the requisite Outstanding
Amount of the Notes have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or under any Basic Document, Notes owned by
the Issuer, any other obligor upon the Notes, the Seller or any Affiliate of any
of the foregoing Persons shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Indenture Trustee shall be protected in
relying upon any such request, demand, authorization, direction, notice, consent
or waiver, only Notes that an Authorized Officer of the Indenture Trustee either
actually knows to be so owned or has received written notice that such Note is
so owned shall be so disregarded. Notes so owned that have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Indenture Trustee the pledgee's right so to act with respect
to such Notes and that the pledgee is not the Issuer, any other obligor upon the
Notes, the Seller or any Affiliate of any of the foregoing Persons.
"Outstanding Amount" means, when used with respect to Notes, as of
any date of determination, the aggregate principal amount of all Notes, or a
class of Notes, as applicable, Outstanding as of such date.
"Owner" has the meaning specified in Section 5.1 of the Trust
Agreement.
"Owner Trust Estate" means all right, title and interest of the
Issuer in and to the property and rights assigned to the Issuer pursuant to
Article II of this Agreement, all funds on deposit from time to time in the
Trust Accounts (other than the Note Distribution Account) and the Certificate
Distribution Account and all other property of Issuer from time to time,
including any rights of the Owner Trustee and the Issuer pursuant to this
Agreement.
"Owner Trustee" means Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as owner trustee under
the Trust Agreement, and any successor Owner Trustee thereunder.
"Paying Agent" means: (a) when used in the Indenture or otherwise
with respect to the Notes, the Indenture Trustee or any other Person that meets
the eligibility standards for the Indenture Trustee specified in Section 6.11 of
the Indenture and is authorized by the Indenture Trustee to make the payments to
and distributions from the Collection Account and the Note Distribution Account,
including payment of principal of or interest on the Notes on behalf of the
Issuer; and (b) when used in the Trust Agreement or otherwise with respect to
the Certificates, the Owner Trustee or any other paying agent or co-paying agent
appointed pursuant to Section 3.9 of the Trust Agreement, and in the case of the
Indenture with respect to the Notes, and the Trust Agreement with respect to the
Certificates,
18
such Paying Agent shall initially be the corporate trust office of The Chase
Manhattan Bank.
"Permitted Investments" means, at any time, any one or more of the
following obligations and securities (excluding any security with the "r" symbol
attached to its rating):
(i) obligations of the United States of America or any agency
thereof, provided such obligations are backed by the full faith and
credit of the United States of America;
(ii) general obligations of or obligations guaranteed as to
the timely payment of interest and principal by any state of the
United States of America or the District of Columbia then rated
"A-1+" or "AAA" by Standard & Poor's, "F-1+" or "AAA" by Fitch (if
rated by Fitch) and "P-1+" or "Aaa" by Moody's;
(iii) commercial paper which is then rated "P-1" by Moody's,
"F-1+" by Fitch (if rated by Fitch) and "A-1+" by Standard & Poor's;
(iv) certificates of deposit, demand or time deposits, federal
funds or banker's acceptances issued by any depository institution
or trust company (including the Indenture Trustee acting in its
commercial banking capacity) incorporated under the laws of the
United States or of any state thereof or incorporated under the laws
of a foreign jurisdiction with a branch or agency located in the
United States of America and subject to supervision and examination
by federal or state banking authorities which short term unsecured
deposit obligations of such depository institution or trust company
are then rated "P-1" by Moody's, "F-1+" by Fitch (if rated by Fitch)
and "A-1+" by Standard & Poor's;
(v) demand or time deposits of, or certificates of deposit
issued by, any bank, trust company, savings bank or other savings
institution so long as such deposits or certificates of deposit are
fully insured by the FDIC;
(vi) guaranteed reinvestment agreements issued by any bank,
insurance company or other corporation the short term unsecured debt
or deposits of which are rated "P-1" by Moody's, "AAA" by Fitch (if
rated by Fitch) and "A-1+" by Standard & Poor's or the long-term
unsecured debt of which are rated "Aaa" by Moody's, "AAA" by Fitch
(if rated by Fitch) and "AAA" by Standard & Poor's;
(vii) repurchase obligations with respect to any security
described in clauses (i) or (ii) herein or any
19
other security issued or guaranteed by the FHLMC, FNMA or any
other agency or instrumentality of the United States of America
which is backed by the full faith and credit of the United States of
America, in either case entered into with a federal agency or a
depository institution or trust company (acting as principal)
described in (iv) above;
(viii) investments in money market funds, which funds (A) are
not subject to any sales, load or other similar charge; and (B) are
rated at least "AAAM" or "AAAM-G" by Standard & Poor's, "AAAV-1+" by
Fitch (if rated by Fitch) and "Aaa" by Moody's;
(ix) such other investments where either (A) the short-term
unsecured debt or deposits of the obligor on such investments are
rated "A-1+" by Standard & Poor's, "F-1" by Fitch (if rated by
Fitch) and "P-1" by Moody's; and
(x) any other obligation or security satisfying the Rating
Agency Condition;
Permitted Investments include money market mutual funds (so long as such fund
has the ratings specified in clause (viii) hereof), including, without
limitation, the VISTA U.S. Government Money Market Fund or any other fund for
which The Chase Manhattan Bank, the Indenture Trustee or an Affiliate thereof
serves as an investment advisor, administrator, shareholder servicing agent,
and/or custodian or subcustodian, notwithstanding that (i) The Chase Manhattan
Bank, Norwest Bank Minnesota, National Association, Wilmington Trust Company or
an Affiliate thereof charges and collects fees and expenses from such funds for
services rendered, (ii) The Chase Manhattan Bank, Norwest Bank Minnesota,
National Association, Wilmington Trust Company or an Affiliate thereof charges
and collects fees and expenses for services rendered pursuant to this Agreement,
and (iii) services performed for such funds and pursuant to this Agreement may
converge at any time. The Indenture Trustee specifically authorizes The Chase
Manhattan Bank, Norwest Bank Minnesota, National Association, Wilmington Trust
Company or an Affiliate thereof to charge and collect all fees and expenses from
such funds for services rendered to such funds (but not to exceed investment
earnings), in addition to any fees and expenses The Chase Manhattan Bank,
Norwest Bank Minnesota, National Association, or Wilmington Trust Company, as
applicable, may charge and collect for services rendered pursuant to this
Agreement.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, trust, unincorporated organization, or government or any agency or
political subdivision thereof, or any other entity of whatever nature.
20
"Physical Property" has the meaning specified in the definition of
"Delivery" above.
"Pool Balance" as of any date of determination means the aggregate
Principal Balance of the Receivables, calculated as of the close of business on
such date.
"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.5 of the Indenture in lieu of a
mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same
debt as the mutilated, lost, destroyed or stolen Note.
"Principal Balance" of a Receivable, as of any date of
determination, means the Amount Financed minus that portion of all payments
received on or prior to such date allocable to principal. The Principal Balance
of a Defaulted Receivable or a Repurchased Receivable shall be deemed to be
zero, in each case, as of such date.
"Principal Distribution Amount" means, for any Distribution Date,
the sum of (i) Available Principal and (ii) Aggregate Net Losses.
"Proceeding" means any suit in equity, action or law or other
judicial or administrative proceeding.
"Qualified Institution" means a depository institution organized
under the laws of the United States of America or any one of the States thereof
or incorporated under the laws of a foreign jurisdiction with a branch or agency
located in the United States of America or one of the States thereof and subject
to supervision and examination by federal or state banking authorities which at
all times has the Required Deposit Rating and, in the case of any such
institution organized under the laws of the United States of America, whose
deposits are insured by the FDIC.
"Qualified Trust Institution" means an institution organized under
the laws of the United States of America or any one of the States thereof or
incorporated under the laws of a foreign jurisdiction with a branch or agency
located in the United States of America or one of the States thereof and subject
to supervision and examination by federal or state banking authorities which at
all times (i) is authorized under such laws to act as a trustee or in any other
fiduciary capacity, (ii) has not less than one billion dollars in assets under
fiduciary management, and (iii) has a long term deposits rating of not less than
BBB- by Standard & Poor's, "Baa3" by Moody's and "BBB-" by Fitch (if rated by
Fitch).
21
"Rating Agency" means any of Standard & Poor's, Moody's or Xxxxx.
"Rating Agency Condition" means, with respect to any action or
event, that each Rating Agency shall have notified the Seller, the Servicer, the
Indenture Trustee and the Owner Trustee, in writing, that such action or event
will not result in reduction or withdrawal of any then outstanding rating of any
outstanding Note or Certificate with respect to which it is the Rating Agency.
"Receivable" means a retail installment sale contract or purchase
money promissory note and security agreement executed by an Obligor in respect
of a Financed Vehicle, and all proceeds thereof and payments thereunder (other
than interest accrued and unpaid as of the Cutoff Date), which Receivable shall
be identified on Schedule A to this Agreement.
"Receivable Files" means the documents specified in Section 3.3.
"Receivables Pool" means the pool of Receivables included in the
Trust.
"Record Date" means, with respect to any Distribution Date, the
Business Day prior to such Distribution Date unless Definitive Notes or
Definitive Certificates are issued, in which case, Record Date, with respect to
such Definitive Notes or Definitive Certificates, as applicable, shall mean the
last day of the immediately preceding calendar month.
"Redemption Date" means in the case of a redemption of the Notes
pursuant to Section 10.1(a) of the Indenture or a payment to Noteholders
pursuant to Section 10.1(b) of the Indenture, the Distribution Date specified by
the Servicer or the Issuer pursuant to such Section 10.1(a) or (b), as
applicable.
"Redemption Price" means (a) in the case of a redemption of the
Notes pursuant to Section 10.1(a) of the Indenture, an amount equal to the
Outstanding Amount of the Notes plus accrued and unpaid interest thereon to but
excluding the Redemption Date, or (b) in the case of payment made to Noteholders
pursuant to Section 10.1(b) of the Indenture, the amount on deposit in the Note
Distribution Account, but not in excess of the amount set forth in clause (a).
"Relevant UCC" means the Uniform Commercial Code as in effect in the
applicable jurisdiction.
"Repurchase Amount" of a Repurchased Receivable or any Receivable
purchased by the Servicer pursuant to Section 9.1, means the sum, as of the last
day of the Collection Period on which such Receivable becomes such, of the
Principal Balance thereof plus the Accrued Interest thereon.
22
"Repurchased Receivable" means a Receivable repurchased by the
Seller pursuant to Section 3.2 or purchased by the Servicer pursuant to Section
4.6.
"Required Deposit Rating" shall be a short-term certificate of
deposit rating from Moody's of "P-1", from Fitch of "F-1+" (if rated by Fitch)
and from Standard & Poor's of "A-1+," and a long-term unsecured debt rating of
not less than "Aa3" by Moody's, "AA" by Fitch (if rated by Fitch) and "AA-" by
Standard & Poor's.
"Reserve Account" means the account designated as such, established
and maintained pursuant to Section 5.6.
"Reserve Account Initial Deposit" means an amount equal to
$14,954,082.68.
"Reserve Account Property" means all amounts and investments held
from time to time in the Reserve Account (whether in the form of deposit
accounts, Physical Property, book-entry securities, uncertificated securities or
otherwise), including the Reserve Account Initial Deposit and all proceeds of
the foregoing.
"Reserve Account Transfer Amount" means, for any Distribution Date,
an amount equal to the lesser of (a) the amount of cash or other immediately
available funds on deposit in the Reserve Account on such Distribution Date
(before giving effect to any withdrawals therefrom relating to such Distribution
Date) and (b) the amount, if any, by which the sum of the amounts set forth in
clauses (i) through (vi) of Section 5.5(c), inclusive, exceeds the Total
Distribution Amount for such Distribution Date.
"Responsible Officer" means, with respect to the Indenture Trustee,
any officer within the Corporate Trust Office of the Indenture Trustee,
including any Vice President, Assistant Vice President, Assistant Treasurer,
Assistant Secretary, or any other officer of the Indenture Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also, with respect to a particular matter, any other officer to
whom such matter is referred because of such officer's knowledge of and
familiarity with the particular subject.
"Sale Proceeds" has the meaning specified in Section 9.1(b).
"Securities Act" means the Securities Act of 1933, as amended.
"Seller" means Chase Manhattan Bank USA, N.A., a national banking
association with its principal executive offices in Wilmington, Delaware, in its
capacity as the seller of the Receivables under this Agreement, and each
successor to Chase
23
Manhattan Bank USA, N.A. (in the same capacity) pursuant to Section 6.3.
"Servicer" means Chase Manhattan Bank USA, N.A., a national banking
association with its principal offices in Wilmington, Delaware, in its capacity
as the servicer of the Receivables under this Agreement, and each successor to
Chase Manhattan Bank USA, N.A. (in the same capacity) pursuant to Section 7.3.
"Servicer's Certificate" means a certificate, substantially in the
form of Exhibit A attached hereto, completed and executed by the Servicer by its
chairman of the board, the president, treasurer, controller or any executive,
senior vice president or vice president pursuant to Section 4.8.
"Servicing Fee" with regard to a Collection Period means the fee
payable to the Servicer for services rendered during such Collection Period,
determined pursuant to Section 4.7.
"Servicing Fee Rate" means 1.00% per annum.
"Settlement Date" means, with respect to any Collection Period, the
last day of the Collection Period immediately preceding such Collection Period,
and with respect to any Distribution Date, the last day of the second Collection
Period preceding the Collection Period in which such Distribution Date occurs.
"Specified Reserve Account Balance" with respect to any Distribution
Date, means 3.00% of the Pool Balance as of the related Settlement Date, but in
any event will not be less than the lesser of (i) $7,477,041.34 and (ii) the sum
of (A) such Pool Balance plus (B) an amount sufficient to pay interest on each
class of Notes and the Certificates through its related Note Final Scheduled
Distribution Date or the Certificate Final Scheduled Distribution Date, as
applicable, at a rate equal to the sum of (x) the related Interest Rate or the
Certificate Rate plus (y) the Servicing Fee Rate; provided that the Specified
Reserve Account Balance will be calculated using a percentage of 6.00% for any
Distribution Date on which the Average Net Loss Ratio exceeds 1.25% or the
Average Delinquency Percentage exceeds 1.25%. Upon written notification to the
Indenture Trustee by the Seller, the Specified Reserve Account Balance may be
reduced to a lesser amount as determined by the Seller so long as such reduction
satisfies the Rating Agency Condition.
"Standard & Poor's" means Standard & Poor's Ratings Services, and
its successors and assigns.
"Total Distribution Amount" means, for any Distribution Date, the
sum of Available Interest and Available Principal for such Distribution Date.
The Total Distribution Amount on any Distribution Date shall exclude all
payments and proceeds
24
(including any Liquidation Proceeds and any amounts received from Dealers with
respect to Receivables) of (i) any Receivables the Repurchase Amount of which
has been included in the Total Distribution Amount for a prior Distribution Date
and (ii) Investment Earnings and any Late Fees.
"Trust Accounts" means, collectively, the Collection Account, the
Note Distribution Account and the Reserve Account.
"Trust Agreement" means the Trust Agreement dated as of December 1,
1996, between the Seller and the Owner Trustee, as the same may be amended and
supplemented from time to time.
"Trust Estate" means all money, instruments, rights and other
property that are subject or intended to be subject to the lien and security
interest of the Indenture for the benefit of the Noteholders (including all
property and interests Granted to the Indenture Trustee), including all proceeds
thereof and the Reserve Account.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939
as in force on the date hereof, unless otherwise specifically provided.
SECTION 1.2. Usage of Terms. With respect to all terms in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other gender; references to "writing" include
printing, typing, lithography, and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement; references to
Persons include their permitted successors and assigns; and the term "including"
means "including without limitation." All references herein to Articles,
Sections, Subsections and Exhibits are references to Articles, Sections,
Subsections and Exhibits contained in or attached to this Agreement unless
otherwise specified.
SECTION 1.3. Simple Interest Method; Allocations. All allocations of
payments to principal and interest and determinations of periodic charges and
the like on the Receivables shall be based on a year with the actual number of
days in such year and twelve months with the actual number of days in each such
month. Each payment on a Receivable shall be applied first to the amount of
interest accrued on such Receivable to the date of receipt, then to reduce the
scheduled principal amount outstanding on the Receivable to the extent of the
remaining scheduled payment and then to any outstanding fees and Late Fees under
the terms of the Receivable. Amounts paid by the Seller or the Servicer in
respect of Repurchased Receivables shall be allocated first to any Accrued
Interest and then to the Principal Balance of the related Receivable.
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SECTION 1.4. Calculations Relating to the January 1998 Distribution
Date. If the Class A-1 Event has occurred, the calculations hereunder for the
January 1998 Distribution Dates with respect to the Total Distribution Amount,
the Noteholders' Distributable Amount, the Certificateholders' Distributable
Amount, the Specified Reserve Account Balance and the Reserve Account Transfer
Amount, and the respective components thereof, shall be calculated as if there
were a single January 1998 Distribution Date. Amounts hereunder will be
distributed on the respective January 1998 Distribution Dates in accordance with
Section 5.5(d).
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.1. Conveyance of Receivables. In consideration of the
Issuer's delivery of the Notes and the Certificates to and upon the order of the
Seller, the Seller does hereby sell, transfer, assign, and otherwise convey to
the Issuer, without recourse (subject to the Seller's obligations herein):
(i) all right, title, and interest of the Seller in, to and
under the Receivables listed in Schedule A hereto, all proceeds
thereof and all amounts and monies received thereon on and after the
Cutoff Date (including proceeds of the repurchase of Receivables by
the Seller pursuant to Section 3.2 or the purchase of Receivables by
the Servicer pursuant to Section 4.6 or 9.1), together with the
interest of the Seller in the security interests in the Financed
Vehicles granted by the Obligors pursuant to the Receivables and in
any repossessed Financed Vehicles;
(ii) all right, title and interest of the Seller in any
Liquidation Proceeds and in any proceeds of any extended warranties,
theft and physical damage, credit life or credit disability policies
relating to the Financed Vehicles or the Obligors;
(iii) all right, title and interest of the Seller in any
proceeds from Dealer repurchase obligations relating to the
Receivables; and
(iv) all proceeds (as defined in the Relevant UCC) of the
foregoing.
In connection with such sale, the Seller agrees to record and file,
at its own expense, financing statements (and continuation statements with
respect to such financing statements when applicable) with respect to the
Receivables for the sale of accounts and chattel paper meeting the requirements
of applicable state law in such manner and in such jurisdictions as are
26
necessary to perfect the sale and assignment of the Receivables to the Issuer.
It is the intention of the Seller and the Issuer that the assignment
and transfer herein contemplated constitute a sale of the Receivables, conveying
good title thereto free and clear of any liens and encumbrances, from the Seller
to the Issuer and the Receivables not be part of the Seller's estate in the
event of an insolvency. In the event that such conveyance is deemed to be a
pledge to secure a loan, the Seller hereby grants to the Issuer a first priority
perfected security interest in all of the Seller's right, title and interest in,
to and under the items of property listed in clauses (i) through (iii) above,
and in all proceeds (as defined in the Relevant UCC) of the foregoing, to secure
the loan deemed to be made in connection with such pledge and, in such event,
this Agreement shall constitute a security agreement under applicable law.
SECTION 2.2. Closing.
The conveyance of the Receivables shall take place at the offices of
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx on the
Closing Date, simultaneously with the closing of the transactions contemplated
by the underwriting agreements related to the Notes and the Certificates and the
other Basic Documents. Upon the acceptance by the Seller of the Notes and the
Certificates, the ownership of each Receivable and the contents of the related
Receivable File will be vested in the Issuer, subject only to the lien of the
Indenture.
ARTICLE III
THE RECEIVABLES
SECTION 3.1. Representations and Warranties of Seller; Conditions
Relating to Receivables.
(a) The Seller makes the following representations and warranties as
to the Receivables on which the Issuer shall rely in acquiring the Receivables.
Such representations and warranties shall speak as of the Cutoff Date unless
otherwise specified, but shall survive the sale, transfer, and assignment of the
Receivables to the Issuer and the pledge thereof to the Indenture Trustee
pursuant to the Indenture.
(i) Schedule of Receivables. The information set forth in
Schedule A hereto with respect to each Receivable is true and
correct in all material respects, and no selection procedures
materially adverse to the Holders has been utilized in selecting the
Receivables from all receivables owned by the Seller which meet the
selection criteria specified herein.
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(ii) No Sale or Transfer. No Receivable has been sold,
transferred, assigned or pledged by the Seller to any Person other
than the Issuer.
(iii) Good Title. Immediately prior to the transfer and
assignment of the Receivables to the Issuer herein contemplated, the
Seller has good and marketable title to each Receivable free and
clear of all Liens and rights of others; and, immediately upon the
transfer thereof, the Issuer has either (i) good and marketable
title to each Receivable, free and clear of all Liens and rights of
others, other than the Lien of the Indenture Trustee under the
Indenture, and the transfer has been perfected under applicable law
or (ii) a first priority perfected security interest in each
Receivable and the proceeds thereof.
(b) Each Receivable satisfies the following conditions as of the
Cutoff Date unless otherwise specified and such conditions shall survive the
sale, transfer and assignment of the Receivables to the Issuer and the pledge
thereof to the Indenture Trustee pursuant to the Indenture.
(i) Acquisition. Each Receivable has been acquired directly or
indirectly from or made through a Dealer located in the United States
(including the District of Columbia);
(ii) Security. Each Receivable is secured by a new or used
automobile or light-duty truck;
(iii) Maturity of Receivables. Each Receivable conveyed hereby
has a remaining maturity, as of the Cutoff Date, of not less than 6 months
nor greater than 72 months, and (i) with respect to Receivables secured by
new Financed Vehicles, an original maturity of at least 12 months and not
more than 84 months and (ii) with respect to Receivables secured by used
Financed Vehicles, an original maturity of at least 12 months and not more
than 72 months;
(iv) Contract Rate. Each Receivable is a fully-amortizing
fixed rate simple interest contract that provides for level scheduled
monthly payments over its remaining term, and has a Contract Rate of at
least 7.75% and not more than 20.00% and is not secured by any interest in
real estate;
(v) No Repossessions. Each Receivable is secured by a Financed
Vehicle that, as of the Cutoff Date, had not been repossessed without
reinstatement of such Receivable;
(vi) Obligor Not Subject to Bankruptcy Proceedings. Each
Receivable has been entered into by an Obligor who had not been identified
on the computer files of
28
the Seller as in bankruptcy proceedings as of the Cutoff Date;
(vii) No Overdue Payments. Each Receivable had no payment that
was more than 30 days past due as of the Cutoff Date;
(viii) Advance Payments. Each Receivable had not been paid
more than three months in advance as of the Cutoff Date;
(ix) Remaining Principal Balance. Each Receivable had a
remaining principal balance, as of the Cutoff Date, of at least $2,000 and
not greater than $75,000;
(x) No Force Placed Insurance. As of the Cutoff Date, each
Receivable was secured by a Financed Vehicle that was not insured by a
force placed insurance policy or any vendor's single interest and
non-filing insurance policy.
(xi) Receivable Files. The Receivable Files shall be kept at
one or more of the locations specified in Schedule B hereto;
(xii) Characteristics of Receivables. Each Receivable (a) has
been originated in the form of a credit sales transaction by a Dealer or a
purchase money loan 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, has been fully and properly executed by
the parties thereto and, if a retail installment sales contract, has
been purchased by the Seller from such Dealer or an affiliate of
the Seller, and has been validly assigned by such Dealer or an
affiliate of the Seller to the Seller in accordance with its terms; (b)
contains customary and enforceable provisions such that the rights and
remedies of the holder thereof are adequate for realization against the
collateral of the benefits of the security; and (c) provides for fully
amortizing level scheduled monthly payments (provided that the payment in
the last month in the life of the Receivable may be different from the
level scheduled payment) and for accrual of interest at a fixed rate
according to the simple interest method;
(xiii) Compliance with Laws. Each Receivable and each sale of
the related Financed Vehicle complied at the time it was originated or
made, and complied on and after the Cutoff Date, 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 Xxxxxxxx-Xxxx Warranty Act, Federal
Reserve Board Regulations B and Z, state adaptations of the National
Consumer Act and of the Uniform Consumer Credit
29
Code, and any other consumer credit, equal opportunity, and disclosure
laws applicable to such Receivable and sale thereof;
(xiv) Binding Obligation. Each Receivable constitutes the
legal, valid, and binding payment obligation in writing of the Obligor,
enforceable by the holder thereof in all material respects in accordance
with its terms, subject, as to enforcement, to applicable bankruptcy,
insolvency, reorganization, liquidation and other similar laws and
equitable principles relating to or affecting the enforcement of
creditors' rights;
(xv) No Government Obligor. Each Receivable is not due from
the United States of America or any State or from any agency, department,
instrumentality or political subdivision of the United States of America
or any State or local municipality, and each Receivable is not due from a
business except to the extent that such Receivable has a personal
guaranty;
(xvi) Security Interest in Financed Vehicle. Immediately prior
to the sale and assignment thereof to the Issuer as herein contemplated,
each Receivable was secured by a validly perfected first priority security
interest in the related Financed Vehicle in favor of or for the benefit of
the Seller as secured party (subject to administrative delays and clerical
errors on the part of the applicable governmental agency and to any
statutory or other lien arising by operation of law after the Closing Date
which is prior to such security interest), the Seller's security
interest (or beneficial interest therein) is assignable, and has been so
assigned by the Seller to the Issuer, and at such time as enforcement of
such security interest is sought, each Receivable shall be secured by a
validly perfected first priority security interest in the related Financed
Vehicle for the benefit of the Issuer (subject to administrative delays
and clerical errors on the part of the applicable governmental agency and
to any statutory or other lien arising by operation of law after the
Closing Date which is prior to such security interest);
(xvii) Receivables in Force. No Receivable has been satisfied,
subordinated, or rescinded, nor has any Financed Vehicle been released
from the Lien granted by the related Receivable, in whole or in part;
(xviii) No Waiver. No provision of a Receivable has been
waived in such a manner that such Receivable fails either to meet all of
the representations and warranties made by the Seller herein with respect
thereto or to meet all of the conditions with respect thereto pursuant to
this Section 3.1(b);
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(xix) No Amendments. No Receivable has been amended except
pursuant to either instruments included in the Receivable Files or
instruments to be included in the Receivable Files pursuant to Section 4.2
(or otherwise maintained by the Seller in the ordinary course of its
business), and no such amendment has caused such Receivable either to fail
to meet all of the representations and warranties made by the Seller
herein with respect thereto or to fail to meet all of the conditions with
respect thereto pursuant to this Section 3.1(b);
(xx) No Defenses. As of the 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;
(xxi) No Liens. As of the 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;
(xxii) No Default. Except for payment defaults continuing for
a period of not more than 30 days as of the Cutoff Date, the Seller has no
knowledge that a default, breach, violation, or event permitting
acceleration under the terms of any Receivable exists; 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 the Seller
has not waived any of the foregoing;
(xxiii) Insurance. Each Receivable requires that the Obligor
thereunder maintain comprehensive, liability, theft and physical damage
insurance covering the Financed Vehicle;
(xxiv) Lawful Assignment. No Receivable has been originated
in, or is subject to the laws of, any jurisdiction under which the sale,
transfer, and assignment of such Receivable under this Agreement or
pursuant to transfers of the Certificates or the Notes is unlawful, void
or voidable;
(xxv) All Filings Made. No filings (other than filings under
the Relevant UCC which have been made) or other actions are necessary in
any jurisdiction to give the Issuer a first perfected security interest in
the Receivables;
(xxvi) One Original. There is no more than one original
executed copy of each Receivable which, immediately
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prior to the delivery thereof to the Servicer (as custodian for the
Issuer), was in the possession of the Seller;
(xxvii) Excluded Loans. Each Receivable is (A) not a Chase
Connecticut Loan, Chase Florida Loan, Chase Lincoln Loan, Chase Maryland
Loan or a Receivable originated by or through a Dealer located in the
States of Alabama or New Hampshire, and (B) has not been the subject of a
previous securitization; and
(xxviii) Account Number. Each Receivable has been assigned an
account number that corresponds to the number assigned to the Dealer from
or through whom such Receivable was acquired.
SECTION 3.2. Repurchase Upon Breach or Failure of a Condition. The
Seller, the Servicer, the Indenture Trustee or the Owner Trustee, as the case
may be, shall inform the other parties in writing, upon the discovery by the
Seller, the Servicer or an Authorized Officer of the Indenture Trustee or the
Owner Trustee of either any breach of the Seller's representations and
warranties set forth in Section 3.1(a) or the failure of any Receivable to
satisfy any of the conditions set forth in Section 3.1(b) which materially and
adversely affects the Holders' interest in any Receivable. Unless the breach or
failed condition shall have been cured by the last day of the Collection Period
following the Collection Period in which such discovery occurred (or, at the
Seller's option, the last day of the Collection Period in which such discovery
occurred), the Seller shall repurchase any Receivable the Holders' interest in
which was materially and adversely affected by the breach or failed condition,
as of such last day. Notwithstanding anything herein to the contrary, with
respect to the breach of a representation and warranty in Section
3.1(b)(xxviii), the Seller shall repurchase such Receivable regardless of its
effect on the interest of the Holders in such Receivable or whether notice
thereof has been delivered by any of the parties thereto, and the repurchase of
any such Receivable shall take place at any time as is administratively
convenient for the Seller and the Servicer. In consideration of the repurchase
of a Receivable, the Seller shall remit the Repurchase Amount of such Receivable
as of such last day (less any Liquidation Proceeds deposited, or to be
deposited, by the Servicer in the Collection Account with respect to such
Receivable pursuant to Section 4.3) in the manner specified in Section 5.4. The
sole remedy of the Issuer, the Indenture Trustee or the Holders with respect
either to a breach of the Seller's representations and warranties set forth in
Section 3.1(a) or to a failure of any of the conditions set forth in Section
3.1(b) shall be to require the Seller to repurchase Receivables pursuant to this
Section 3.2. The obligation of the Seller to repurchase under this Section 3.2
shall not be dependent upon the actual knowledge of the Seller of any breached
representation or warranty. The Owner Trustee shall have no duty to conduct any
affirmative investigation as to the occurrence of any condition requiring the
repurchase of any Receivable pursuant
32
to this Section 3.2 or the eligibility of any Receivable for purposes of this
Agreement.
SECTION 3.3. Custody of Receivable Files. To assure uniform quality
in servicing the Receivables and to reduce administrative costs, the Issuer,
upon the execution and delivery of this Agreement, agrees to have the Servicer
act as custodian of the following documents or instruments (the "Receivable
Files") which are hereby constructively delivered to the Issuer with respect to
each Receivable:
(i) The original executed Receivable;
(ii) The original credit application or, if no such original
exists, a copy thereof; and
(iii) Any and all other documents or records that the Seller
or the Servicer, as the case may be, shall keep on file, in
accordance with its customary procedures, relating to a Receivable,
an Obligor, or a Financed Vehicle.
The Servicer hereby agrees to act as custodian and as agent for the
Issuer hereunder. The Servicer acknowledges that it holds the documents and
instruments relating to the Receivables for the benefit of the Issuer. The
Issuer shall have no responsibility to monitor the Servicer's performance as
custodian and shall have no liability in connection with the Servicer's
performance of such duties hereunder.
SECTION 3.4. Duties of Servicer as Custodian.
(a) Safekeeping. The Servicer, in its capacity as custodian, shall
hold the Receivable Files on behalf of the Issuer, and maintain such accurate
and complete accounts, records (either original execution documents or copies of
such originally executed documents shall be sufficient), and computer systems
pertaining to the Receivables as shall enable the Issuer to comply with its
obligations pursuant to this Agreement. In performing its duties as custodian,
the Servicer shall act with reasonable care, using that degree of skill and
attention that the Servicer exercises with respect to the receivable files of
comparable new or used automobile receivables that the Servicer services for
itself. The Servicer shall conduct, or cause to be conducted, periodic audits of
the files of all receivables owned or serviced by the Servicer which shall
include the Receivable Files held by it under this Agreement and the related
accounts, records, and computer systems, in such a manner as shall enable the
Owner Trustee or the Indenture Trustee to identify all Receivable Files and such
related accounts, records and computer systems and to verify, if the Owner
Trustee or the Indenture Trustee so elects, the accuracy of the Servicer's
recordkeeping. The Servicer shall promptly report to the Owner Trustee or the
Indenture Trustee any failure on its part to hold the Receivable Files and
maintain its accounts, records, and computer systems as
33
herein provided, and promptly take appropriate action to remedy any such
failure.
(b) Maintenance of and Access to Records. The Servicer shall
maintain each Receivable File at one of the locations specified in Schedule B to
this Agreement, or at such other location as shall be specified to the Owner
Trustee and the Indenture Trustee by 30 days' prior written notice. The Servicer
shall make available to the Owner Trustee, the Indenture Trustee or their
respective duly authorized representatives, attorneys, or auditors, the
Receivable Files and the related accounts, records, and computer systems
maintained by the Servicer at such times during normal operating hours as the
Owner Trustee or Indenture Trustee shall reasonably instruct which does not
unreasonably interfere with the Servicer's normal operations or customer or
employee relations.
(c) Release of Documents. Upon instruction from the Indenture
Trustee (or, if the Notes have been paid in full, from the Owner Trustee), the
Servicer shall release any document in the Receivable Files to the Indenture
Trustee or Owner Trustee, as the case may be, its agent or its designee at such
place or places as such Person may reasonably designate as soon as reasonably
practicable to the extent it does not unreasonably interfere with the Servicer's
normal operations or customer or employee relations. The Servicer shall not be
responsible for any loss occasioned by the failure of the Owner Trustee or
Indenture Trustee, its agent or its designee to return any document or any delay
in doing so.
(d) Title to Receivables. The Servicer agrees that, in respect of
any Receivable held by it as custodian hereunder, (i) the Servicer will not at
any time have or in any way attempt to assert any interest in such Receivable or
the related Receivable File, other than solely for the purpose of collecting or
enforcing the Receivable for the benefit of the Issuer and (ii) the related
Receivable File shall at all times be property of the Issuer.
SECTION 3.5. Instructions; Authority to Act. The Servicer shall be
deemed to have received proper instructions with respect to the Receivable Files
upon its receipt of written instructions signed by an Authorized Officer of the
Indenture Trustee (or, if the Notes have been paid in full, of the Owner
Trustee). A certified copy of a by-law or of a resolution of the Board of
Directors of the Owner Trustee or the Indenture Trustee shall constitute
conclusive evidence of the authority of any such Authorized Officer to act and
shall be considered in full force and effect until receipt by the Servicer of
written notice to the contrary given by the Owner Trustee or the Indenture
Trustee.
SECTION 3.6. Custodian's Indemnification. The Servicer, as
custodian, shall indemnify the Issuer, the Owner Trustee and the Indenture
Trustee for any and all liabilities, obligations, losses, damages, payments,
costs, or expenses of any
34
kind whatsoever that may be imposed on, incurred, or asserted against the
Issuer, the Owner Trustee or the Indenture Trustee as the result of any act or
omission in any way relating to the maintenance and custody by the Servicer, as
custodian, of the Receivable Files; provided, however, that the Servicer shall
not be liable for any portion of any such amount resulting from the wilful
misfeasance, bad faith, or negligence of the Issuer, the Owner Trustee or the
Indenture Trustee.
SECTION 3.7. Effective Period and Termination. The Servicer's
appointment as custodian shall become effective as of the Cutoff Date and shall
continue in full force and effect until terminated pursuant to this Section 3.7
or until this Agreement shall be terminated. If the Servicer shall resign as
Servicer under Section 7.5 or if all of the rights and obligations of the
Servicer shall have been terminated under Section 8.1, the appointment of the
Servicer as custodian may be terminated by the Indenture Trustee or by the
Holders of Notes evidencing not less than 50% of the aggregate Outstanding
Amount of the Notes (or, if there are no Notes outstanding, the Holders of
Certificates representing not less than 50% of the Certificate Balance), in the
same manner as the Indenture Trustee or such Holders may terminate the rights
and obligations of the Servicer under Section 8.1. As soon as practicable after
any termination of such appointment, the Servicer shall, at its expense, deliver
the Receivable Files to the Issuer or the Issuer's agent at such place or places
as the Issuer may reasonably designate. Notwithstanding the termination of the
Servicer as custodian, the Owner Trustee agrees that upon any such termination,
the Issuer shall provide, or cause its agent to provide, access to the
Receivable Files to the Servicer for the purpose of carrying out its duties and
responsibilities with respect to the servicing of the Receivables hereunder.
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.1. Duties of Servicer. The Servicer is hereby authorized
to act as agent for the Issuer and in such capacity shall manage, service,
administer and make collections on the Receivables (other than Repurchased
Receivables) with reasonable care, using that degree of skill and attention that
the Servicer exercises with respect to comparable new or used automobile
receivables that it services for itself. The Servicer's duties shall include
collection and posting of all payments, responding to inquiries by Obligors or
by federal, state, or local governmental authorities with respect to the
Receivables, investigating delinquencies, reporting tax information to Obligors
in accordance with its customary practices, advancing costs of disposition of
defaults, accounting for collections, furnishing monthly and annual statements
to the Indenture Trustee with respect to distributions. The Servicer shall
follow its customary standards, policies, and procedures in
35
performing its duties as Servicer hereunder; provided that the Servicer shall be
permitted to take or to refrain from taking any action not specified in this
Agreement with respect to servicing the Receivables if such action or inaction
would not contravene any material term of this Agreement or materially adversely
affect the interests of Holders. Without limiting the generality of the
foregoing, the Servicer shall be authorized and empowered by the Issuer to
execute and deliver, on behalf of itself, the Owner Trustee, the Indenture
Trustee and the Holders, or any of them, any and all instruments of satisfaction
or cancellation, or of partial or full release or discharge, and all other
comparable instruments, without recourse to the Issuer, with respect to the
Receivables or with respect to the Financed Vehicles. If the Servicer shall
commence a legal proceeding to enforce a Receivable or a Defaulted Receivable,
the Issuer shall thereupon be deemed to have automatically assigned such
Receivable and the related property conveyed to the Issuer with respect to such
Receivable to the Servicer, solely for the purpose of collection. The Owner
Trustee shall furnish the Servicer with such documents as have been prepared by
the Servicer for execution by the Owner Trustee and as are necessary or
appropriate to enable the Servicer to carry out its servicing and administrative
duties hereunder.
SECTION 4.2. Collection of Receivable Payments; Refinancing. (a) The
Servicer shall make reasonable efforts to collect all payments called for under
the terms and provisions of the Receivables and of this Agreement as and when
the same shall become due, and shall follow such collection procedures as it
follows with respect to comparable new or used automobile receivables that it
services for itself and that are consistent with prudent industry standards. In
connection therewith, the Servicer may grant extensions, rebates or adjustments
on a Receivable without the consent of the Issuer; provided, however, that if
the Servicer extends the date for final payment by the Obligor of any Receivable
beyond the Final Scheduled Maturity Date, it shall promptly repurchase such
Receivable pursuant to Section 4.6. The Servicer is authorized in its discretion
to waive any Late Fees that may be due in the ordinary course of collecting a
Receivable; provided, further, the Servicer shall not agree to any change in the
underlying Contract Rate on any Receivable, to any change in the Principal
Balance thereof (except with respect to a prepayment of a scheduled payment that
does not result in a deferral of any other scheduled payment), to any reduction
of the total number of payments due thereunder or, subject to the foregoing, to
any reduction of the amount of any scheduled payment on a Receivable. In the
event that at the end of the scheduled term of any Receivable, the outstanding
principal amount thereof is such that the final payment to be made by the
related Obligor is larger than the regularly scheduled payment of principal and
interest made by such Obligor, the Servicer may permit such Obligor to pay such
remaining principal amount in more than one payment of principal and interest;
provided, however, that the last such payment shall be due on or prior to the
Final Scheduled Maturity Date.
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(b) Notwithstanding anything in this Agreement to the contrary, the
Servicer may refinance any Receivable by accepting a new promissory note from
the related Obligor and applying the proceeds of such refinancing to pay all
obligations in full of such Obligor under such Receivable. The receivable
created by the refinancing shall not be property of the Issuer.
SECTION 4.3. Realization Upon Receivables. The Servicer shall use
reasonable efforts, consistent with its customary servicing procedures, to
repossess or otherwise take possession of the Financed Vehicle securing any
Receivable which the Servicer shall have determined to be a Defaulted Receivable
or otherwise. 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. The Servicer
shall be entitled to recover from proceeds all reasonable expenses incurred by
it in the course of converting the Financed Vehicle into cash proceeds. The
Liquidation Proceeds with respect to a Receivable shall be deposited by the
Servicer in the Collection Account in the manner specified in Section 5.2 and
shall be applied to reduce (or to satisfy, as the case may be) the Repurchase
Amount of the Receivable, if such Receivable is to be repurchased by the Seller
pursuant to Section 3.2, or is to be purchased by the Servicer pursuant to
Section 4.6. The foregoing shall be subject to the provision that, in any case
in which a Financed Vehicle shall have suffered damage, the Servicer shall not
expend funds in connection with the repair or the repossession of such Financed
Vehicle unless it shall determine in its sole discretion that such repair and/or
repossession will increase the Liquidation Proceeds of the related Receivable by
an amount equal to or greater than the amount of such expenses.
SECTION 4.4. Maintenance of Security Interests in Financed Vehicles.
The Servicer, in accordance with its customary servicing procedures, shall take
such steps as are necessary to maintain perfection of the first priority
security interest created in any Financed Vehicle which secures a Receivable.
The Owner Trustee, on behalf of the Issuer, and the Indenture Trustee hereby
authorize the Servicer, and the Servicer hereby agrees, to take such steps as
are necessary to re-perfect such security interest in the event of the
relocation of a Financed Vehicle or for any other reason, in either case, when
the Servicer has knowledge of the need for such re-perfection. In the event that
the assignment of a Receivable to the Issuer and by the Issuer to the Indenture
Trustee pursuant to the Indenture is insufficient without a notation on the
related Financed Vehicle's certificate of title, or without fulfilling any
additional administrative requirements under the laws of the State in which the
Financed Vehicle is located, to grant to the Indenture Trustee a perfected
security interest in the related Financed Vehicle, the Servicer hereby agrees
that the Seller's
37
listing as the secured party on the certificate of title is deemed in its
capacity as agent of the Indenture Trustee and further agrees to hold such
certificate of title as the Indenture Trustee's agent and custodian; provided,
however, that the Servicer shall not, nor shall the Owner Trustee, the Indenture
Trustee or Holders have the right to require that the Servicer, make any such
notation on the related Financed Vehicles' certificate of title or fulfill any
such additional administrative requirement of the laws of the State in which a
Financed Vehicle is located.
SECTION 4.5. Covenants of Servicer. The Servicer hereby makes the
following covenants on which the Issuer will rely in accepting the Receivables:
(i) Security Interest to Remain in Force. The Financed Vehicle
securing each Receivable shall not be released from the security
interest granted by the Receivable in whole or in part except if
such Financed Vehicle is substituted in whole by the manufacturer,
dealer or seller as a result of mechanical defects or a total loss
of the Financed Vehicle because of accident or theft or as otherwise
contemplated herein;
(ii) No Impairment. The Servicer shall not impair the rights
of the Issuer, the Indenture Trustee or any Holder in the
Receivables; and
(iii) Extensions, Defaulted Receivables. The Servicer shall
not increase the number of payments under a Receivable, nor increase
the Amount Financed under a Receivable, nor extend or forgive
payments on a Receivable, except as provided in Section 4.2.
SECTION 4.6. Purchase of Receivables Upon Breach. The Seller, the
Servicer, the Indenture Trustee or the Owner Trustee, as the case may be, shall
inform the other parties promptly, in writing, upon the discovery by the Seller,
the Servicer or an Authorized Officer of the Indenture Trustee or the Owner
Trustee, as the case may be, of any breach by the Servicer of its covenants
under Section 4.5 which materially and adversely affects the interest of the
Holders in any Receivable (for this purpose, any breach of the covenant set
forth in Section 4.5(iii) shall be deemed to materially and adversely affect the
interest of the Holders in a Receivable). Except as otherwise specified in
Section 4.2, unless the breach shall have been cured by the last day of the
Collection Period following the Collection Period in which such discovery
occurred (or, at the Servicer's election, the last day of the Collection Period
in which such discovery occurred), the Servicer shall purchase any Receivable
materially and adversely affected by such breach as of such last day. In
consideration of the purchase of such Receivable, the Servicer shall remit the
Repurchase Amount (less any Liquidation Proceeds deposited, or to be deposited,
by the Servicer in the Collection Account with respect to such Receivable
pursuant to Section 4.3)
38
in the manner specified in Section 5.4. The sole remedy of the Issuer, the Owner
Trustee, the Indenture Trustee or the Holders against the Servicer with respect
to a breach pursuant to Section 4.2 or 4.5 shall be to require the Servicer to
purchase Receivables pursuant to this Section 4.6. The Owner Trustee shall have
no duty to conduct any affirmative investigation as to the occurrence of any
condition requiring the repurchase of any Receivable pursuant to this Section
4.6 or the eligibility of any Receivable for purposes of this Agreement.
SECTION 4.7. Servicing Fee. The Servicing Fee for a Collection
Period shall be payable on the related Distribution Date pursuant to Section 5.5
and shall equal the sum of (i) the product of one-twelfth of the Servicing Fee
Rate and the Pool Balance as of the related Settlement Date and (ii) Late Fees
received from Obligors during such Collection Period. In addition, as part of
the Servicing Fee, the Servicer shall be entitled to receive on each
Distribution Date Investment Earnings when and as paid on amounts on deposit in
the Collection Account or earned on collections pending deposit in the
Collection Account. The Servicer shall be required to pay from its own account
all expenses incurred by it in connection with its activities hereunder
(including fees and disbursements of independent accountants and auditors, taxes
imposed on the Servicer, and other costs incurred in connection with
administering and servicing the Receivables) and the fees and disbursements of
the Issuer, the Administrator, the Owner Trustee, the Indenture Trustee, the
Owner Trustee's and the Indenture Trustee's counsel, the Paying Agent, the
Authenticating Agent, the Note Registrar and the Certificate Registrar except
for United States federal, state and local income and franchise taxes, if any,
imposed on the Issuer or any Holder or any expenses in connection with realizing
upon Receivables under Section 4.3.
SECTION 4.8. Servicer's Certificate. On or before each Determination
Date, the Servicer shall deliver to the Indenture Trustee, the Owner Trustee,
the Paying Agent and the Rating Agencies a Servicer's Certificate, substantially
in the form of Exhibit A hereto, for the Collection Period preceding such
Determination Date, containing all information necessary to make the
distributions pursuant to Section 5.5, and all information necessary for the
Paying Agent to send statements to Holders pursuant to Section 5.8. The Servicer
shall deliver to the Rating Agencies any information, to the extent it is
available to the Servicer, that the Rating Agencies reasonably request in order
to monitor the Issuer. The Servicer shall also specify each Receivable which the
Seller or the Servicer is required to repurchase or purchase, as the case may
be, as of the last day of the preceding Collection Period and each Receivable
which the Servicer shall have determined to be a Defaulted Receivable during the
preceding Collection Period. Subsequent to the Closing Date, the form of
Servicer's Certificate may be revised or modified to cure any ambiguities or
inconsistencies between such form and this Agreement; provided, however, that no
39
material information shall be deleted from the form of Servicer's Certificate.
In the event that the form of Servicer's Certificate is revised or modified in
accordance with the preceding sentence, a form thereof, as so revised or
modified, shall be provided to the Owner Trustee, the Paying Agent, the
Indenture Trustee and each Rating Agency.
SECTION 4.9. Annual Statement as to Compliance. (a) The Servicer
shall deliver to a firm of independent certified public accountants, on or
before March 31 of each year commencing March 31, 1998, a certificate signed by
the chairman of the board, the president, the treasurer, the controller, any
executive or senior vice president or any vice president of the Servicer,
stating that (a) a review of the activities of the Servicer during the year
ended the preceding December 31 and of its performance under this Agreement has
been made under such officer's supervision and (b) to the best of such officer's
knowledge, based on such review, the Servicer has fulfilled all its obligations
in all material respects under this Agreement throughout such year, or, if there
has been a default in the fulfillment of any such obligation, specifying each
such default known to such officer and the nature and status thereof.
(b) The Servicer shall deliver to the Indenture Trustee, the Owner
Trustee and each Rating Agency promptly after having obtained knowledge thereof,
but in no event later than five Business Days thereafter, an Officer's
Certificate specifying any event which with the giving of notice or lapse of
time, or both, would become an Event of Servicing Termination under Section 8.1.
The Seller shall deliver to the Indenture Trustee and the Owner Trustee,
promptly after having obtained knowledge thereof, but in no event later than
five Business Days thereafter, an Officer's Certificate specifying any event
which with the giving of notice or lapse of time, or both, would become an Event
of Servicing Termination under Section 8.1.
SECTION 4.10. Annual Audit Report. The Servicer shall cause a firm
of independent public accountants (which may provide other services to the
Servicer or the Seller) to prepare a report (with a copy of the certificate
described in Section 4.9(a) attached) addressed to the Board of Directors of the
Servicer, for the information and use of the Indenture Trustee, the Owner
Trustee and the Rating Agencies on or before March 31 of each year, beginning
March 31, 1998, to the effect that, with respect to the twelve months ended the
preceding December 31, such firm has either (A) examined a written assertion by
the Servicer about the effectiveness of the Servicer's internal control
structure over the processing and reporting of transactions relating to
securitized automobile loans with respect to the criteria set forth by the
Servicer (the "Assertion") and that, on the basis of such examination, such firm
is of the opinion that the Servicer's Assertion is fairly stated in all material
respects except for (i) such exceptions as such firm believes to be immaterial
and (ii) such other exceptions as shall be set forth in such firm's report, or
(B) such firm has performed the following Procedures:
40
1. For a sample of daily cash receipts during the preceding calendar year:
a. Trace total cash receipts to deposits on bank statements.
b. Agree cash receipts for securitized loans to computer reports.
c. Trace cash receipts for securitized loans to disbursements to the
Owner Trustee and the Indenture Trustee.
2. For a sample of monthly cash receipt reports:
a. Agree total cash receipts per the cash receipt reports to "Total
Payments From Obligors Applied to Collection Period" per monthly
Servicer Certificates.
b. Agree total principal payments per the cash receipt reports to
"Principal Payments" per monthly Servicer Certificates.
3. For a sample of loans delinquent 30 days or more and for a sample of loans
in repossession status, selected from the loan delinquency report or a new
repossession report, as applicable, at a point in time, trace loan number
to inclusion in the loan collection system.
The determination of which of the two alternative reports to be prepared and
delivered, and the size of each sample to be tested, shall be decided in the
sole discretion of the Servicer. The report of the independent certified public
accountants shall also indicate that such accounting firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants.
SECTION 4.11. Access by Holders to Certain Documentation and
Information Regarding Receivables. The Servicer shall provide to the Holders
access to the Receivable Files in such cases where the Holders shall be required
by applicable statutes or regulations to have access to such documentation.
Access by the Holders shall be afforded without charge, but only upon reasonable
request and during normal business hours which does not unreasonably interfere
with the Servicer's normal operations or customer or employee relations. Nothing
in this Section 4.11 shall affect the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the Obligors, and
the failure of the Servicer to provide access to information as a result of such
obligation shall not constitute a breach of this Section 4.11.
SECTION 4.12. Reports to Holders and the Rating Agencies. (a) The
Indenture Trustee or the Owner Trustee, as applicable, shall provide to any
Holder who so requests in writing (addressed to the Corporate Trust Office of
such trustee) a copy of any Servicer's Certificate described in Section 4.8, of
the annual statement described in Section 4.9, or of the annual
41
report described in Section 4.10. The Indenture Trustee or the Owner Trustee, as
applicable, may require the Holder to pay a reasonable sum to cover the cost of
the Indenture Trustee's or the Owner Trustee's complying with such request, as
applicable.
(b) The Indenture Trustee or the Owner Trustee, as applicable, shall
forward to the Rating Agencies the statement to Holders described in Section 5.8
and any other reports it may receive pursuant to this Agreement to (i) Standard
& Poor's Ratings Services, Asset-Backed Surveillance Group, 00 Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, (ii) Xxxxx'x Investors Service, ABS Monitoring Dept., 00
Xxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 and (iii) to Fitch Investors
Services, L.P., Xxx Xxxxx Xxxxxx Xxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000.
SECTION 4.13. Reports to the Securities and Exchange Commission. The
Servicer shall, on behalf of the Issuer, cause to be filed with the Commission
any periodic reports required to be filed under the provisions of the Exchange
Act and the rules and regulations of the Securities and Exchange Commission
thereunder.
ARTICLE V
ACCOUNTS; DISTRIBUTIONS;
STATEMENTS TO CERTIFICATEHOLDERS
SECTION 5.1. Establishment of Accounts. (a) The Servicer shall
establish and maintain:
(i) For the benefit of the Noteholders and the
Certificateholders, in the name of the Indenture Trustee, an
Eligible Deposit Account for the deposit of Collections (the
"Collection Account"), bearing a designation clearly indicating that
the funds deposited therein are held for the benefit of the
Noteholders and the Certificateholders.
(ii) For the benefit of the Noteholders, in the name of the
Indenture Trustee, an Eligible Deposit Account for the deposit of
distributions to the Noteholders (the "Note Distribution Account"),
bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Noteholders.
Each Account shall be an Eligible Deposit Account established
initially at The Chase Manhattan Bank.
(b) Should any depositary of an Account or of the Certificate
Distribution Account (including The Chase Manhattan Bank (or an Affiliate
thereof)) cease to be either a Qualified Institution or a Qualified Trust
Institution, as applicable, then the Servicer shall, with the Seller's
assistance as necessary,
42
cause the related account to be moved to a Qualified Institution or a Qualified
Trust Institution, unless the Rating Agency Condition is satisfied in connection
with such depositary's ceasing to be a Qualified Institution or a Qualified
Trust Institution, as the case may be.
All amounts held in the Collection Account shall be invested by the
bank or trust company then maintaining the account (at the written direction of
the Servicer) in Permitted Investments that mature not later than the Deposit
Date next succeeding the date of investment (or, if the Class A-1 Event has
occurred not later than January 9, 1998, in the case of investments made prior
to the Deposit Date in January 1998, in an amount at least equal to the January
1998 Class A-1 Note Distribution) except, if the Collection Account is
maintained with the Indenture Trustee for investments on which the Indenture
Trustee is the obligor (including repurchase agreements on which the Indenture
Trustee, in its commercial capacity, is liable as principal), which investments
may mature on the next succeeding Distribution Date; provided, however, that
once such amounts have been invested by such bank or trust company, as
applicable, in Permitted Investments, such Permitted Investments must be held
or maintained until they mature on or before the dates described above.
Amounts on deposit in the Note Distribution Account shall not be invested.
(c) The Indenture Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Accounts and in all
proceeds thereof (excluding Investment Earnings) and all such funds,
investments, proceeds and income shall be part of the Owner Trust Estate. Except
as otherwise provided herein, the Accounts shall be under the sole dominion and
control of Indenture Trustee for the benefit of the Noteholders and the
Certificateholders, or the Noteholders, as the case may be.
SECTION 5.2. Collections. The Servicer shall remit daily within
forty-eight hours of receipt to the Collection Account all payments by or on
behalf of the Obligors on the Receivables and all Liquidation Proceeds, both as
collected during the Collection Period. Chase USA has requested that, so long as
it is acting as the Servicer, the Servicer be permitted to make remittances of
collections on a less frequent basis than that specified in the immediately
preceding sentence. It is understood that such less frequent remittances may be
made only on the specific terms and conditions set forth below in this Section
5.2 and only for so long as such terms and conditions are fulfilled.
Accordingly, notwithstanding the provisions of the first sentence of this
Section 5.2, the Servicer shall remit such collections to the Collection Account
in Automated Clearinghouse Corporation next-day funds or immediately available
funds no later than 11:00 a.m., New York City time, on the Deposit Date but only
for so long as (i) the short-term certificate of deposit ratings of the Servicer
are at least "P-1" by Moody's, "F-1" by Fitch (if rated by Fitch) and "A-1" by
Standard & Poor's, or the
43
Rating Agency Condition is satisfied as a result of Collections being remitted
on a monthly, rather than daily, basis and (ii) the Servicer shall be Chase USA
or The Chase Manhattan Bank; provided, however, that if the Class A-1 Event has
occurred, with respect to Collections received during the December 1997
Collection Period, the Servicer shall remit to the Collection Account on January
9, 1998 an amount of such Collections equal to the January 1998 Class A-1 Note
Distribution. Upon remittance by the Servicer of Collections to the Collection
Account pursuant to the preceding sentence, the Paying Agent shall provide
written notice to the Indenture Trustee and the Owner Trustee no later than 11
a.m., New York City time, on each Deposit Date (or January 9, 1998), setting
forth the amounts remitted by the Servicer on such date and, if the Paying Agent
fails to provide the Indenture Trustee and the Owner Trustee, with such written
notice by 12 noon, New York City time, on such Deposit Date (or January 9,
1998), then the Indenture Trustee and the Owner Trustee shall assume that no
deposits were made to the Collection Account pursuant to this Section 5.2. For
purposes of this Section 5.2 the phrase "payments made on behalf of the
Obligors" shall mean payments made by Persons other than the Seller or the
Servicer.
SECTION 5.3. [Reserved].
SECTION 5.4. Additional Deposits. The Servicer, or the Seller, as
the case may be, shall deposit into the Collection Account the aggregate
Repurchase Amount pursuant to Sections 3.2, 4.6 and 9.1(a), as applicable. All
remittances shall be made to the Collection Account, in Automated Clearinghouse
Corporation next-day funds or immediately available funds, no later than 11
a.m., New York City time, on the Deposit Date; provided, however, that if the
Class A-1 Event has occurred and the amount of Collections on the Receivables
received during the December 1997 Collection Period is less than the January
1998 Class A-1 Note Distribution, such remittances (up to the amount of such
shortfall) shall be deposited no later than January 9, 1998.
SECTION 5.5. Distributions. (a) No later than 12 noon, New York City
time, on each Determination Date, the Servicer shall calculate all amounts
required to determine the amounts to be withdrawn from the Reserve Account (if
any) and deposited into the Collection Account and the amounts to be withdrawn
from the Collection Account and paid to the Servicer and the Administrator,
deposited into the Note Distribution Account and the Certificate Distribution
Account and paid to the Seller and the General Partner, in each case, with
respect to the next succeeding Distribution Date.
(b) On each Deposit Date, the Servicer shall instruct the Indenture
Trustee in writing (based on the information contained in the Servicer's
Certificate delivered on the related Determination Date pursuant to Section 4.8)
to withdraw from the Reserve Account and deposit in the Collection Account the
Reserve Account Transfer Amount (if any) for the related Distribution
44
Date, and the Indenture Trustee shall so withdraw and deposit the Reserve
Account Transfer Amount for such Distribution Date; provided, however, that if
the Class A-1 Event has occurred and the Total Distribution Amount is less than
the January 1998 Class A-1 Note Distribution, the Servicer shall instruct the
Indenture Trustee in writing to withdraw from the Reserve Account and deposit in
the Collection Account on January 9, 1998 a portion of the Reserve Account
Transfer Amount for the January 1998 Distribution Date equal to the lesser of
such Reserve Account Transfer Amount and the amount of such insufficiency as
determined by the Servicer.
(c) Not later than 11:00 a.m., New York City time, on each
Distribution Date, at the Servicer's direction, the Indenture Trustee, or the
Paying Agent on behalf of the Indenture Trustee, shall cause to be made the
following distributions, to the extent of the Total Distribution Amount then on
deposit in the Collection Account and amounts withdrawn from the Reserve Account
and deposited in the Collection Account by wire transfer of immediately
available funds, in the following order of priority and in the amounts set forth
in the Servicer's Certificate for such Distribution Date:
(i) to the Servicer, the sum of (x) the Servicing Fee for the
preceding Collection Period, plus (y) the amount of any Servicing
Fee previously due but not paid, if any, to the extent such amounts
are not deducted from the Servicer's remittance to the Collection
Account pursuant to Section 5.7;
(ii) to the Administrator, the sum of (x) the Administration
Fee for such Distribution Date, plus (y) the amount of any
Administration Fee previously due but not paid, if any;
(iii) to the Note Distribution Account, the Noteholders'
Interest Distributable Amount;
(iv) except as set forth in Section 5.5(d), to the Owner
Trustee for deposit in the Certificate Distribution Account, the
Certificateholders' Interest Distributable Amount;
(v) except as set forth in Section 5.5(d), to the Note
Distribution Account, the Noteholders' Principal Distributable
Amount;
(vi) except as set forth in Section 5.5(d), to the Owner
Trustee for deposit in the Certificate Distribution Account, the
Certificateholders' Principal Distributable Amount; and
(vii) except as set forth in Section 5.5(d), to the Reserve
Account, any remaining portion of the Total Distribution Amount.
45
In the event that the Collection Account is maintained with an
institution other than the Indenture Trustee, the Servicer shall instruct and
cause such institution to make all deposits and distributions pursuant to this
Section 5.5(c) on the related Deposit Date.
(d) If (i) the Notes have been declared immediately due and payable
as provided in Section 5.2 of the Indenture or (ii) in the event that an
Insolvency Event shall occur with respect to the General Partner, any amounts
remaining in the Collection Account after the distributions described in clauses
(i), (ii) and (iii) of Section 5.5(c) shall be distributed as follows: (1) an
amount equal to the Outstanding Amount of the Notes will be deposited into the
Note Distribution Account, and (2) any remaining amounts will be applied
pursuant to clauses (iv), (vi) and (vii) of Section 5.5(c).
(e) Notwithstanding any of the foregoing to the contrary, if the
Class A-1 Event shall have occurred (x) the January 1998 Class A-1 Note
Distribution will be deposited in the Note Distribution Account on the January
1998 Distribution Date with respect to Class A-1 Notes pursuant to clauses
(iii) and (v) of Section 5.5(c) and (y) the remainder of the Noteholders'
Distributable Amount will be withdrawn from the Collection Account, as
applicable, and applied on the January 1998 Distribution Date with respect to
the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes and the
Certificates pursuant to clauses (i) through (vii), inclusive, of Section
5.5(c); provided, however if the sum of the Total Distribution Amount and the
Reserve Account Transfer Amount for the January 1998 Distribution Date is less
than the sum of the amounts set forth in clauses (i) through (v) of Section
5.5(c), amounts shall be distributed with respect to the Class A-1 Notes only
to the same extent that such amounts would have been distributable therefrom
if the January 1998 Distribution Date with respect to the Class A-1 Notes was
the same as that with respect to the Class A-2 Notes, the Class A-3 Notes, the
Class A-4 Notes and the Certificates.
SECTION 5.6. Reserve Account. (a) The Seller shall establish and
maintain an Eligible Deposit Account (the "Reserve Account") at Norwest Bank
Minnesota, National Association in the name of the Indenture Trustee for the
benefit of the Noteholders and the Certificateholders. Pursuant to Section 2.5
of the Trust Agreement, on the Closing Date, the Owner Trustee shall deposit the
Reserve Account Initial Deposit into the Reserve Account.
(b) Should any sole depositary of the Reserve Account cease to be
either a Qualified Institution or a Qualified Trust Institution, the Seller
shall cause the Reserve Account to be moved to a Qualified Institution or a
Qualified Trust Institution, as applicable, unless the Seller provides the
Indenture Trustee with a letter from the Rating Agencies to the effect that the
Rating Agency Condition will be satisfied in
46
connection with such depositary's ceasing to be a Qualified Institution or a
Qualified Trust Institution, as the case may be.
All amounts held in the Reserve Account shall be invested by the
bank or trust company then maintaining the account (at the written direction of
the Seller) in Permitted Investments that mature not later than the Deposit Date
next succeeding the date of investment (or if the Class A-1 Event has occurred,
not later than January 9, 1998 to the extent of the January 1998 Class A-1 Note
Distribution) except, if the Reserve Account is maintained with the Indenture
Trustee, for investments on which the Indenture Trustee is the obligor
(including repurchase agreements on which the Indenture Trustee in its
commercial capacity is liable as principal), which investments may mature on the
next succeeding Distribution Date; provided, however, that amounts on deposit in
the Reserve Account may be invested in Permitted Investments that mature later
than the next succeeding Deposit Date (or January 9, 1997 if the Class A-1 Event
has occurred) if the Rating Agency Condition is satisfied.
(c) With respect to the Reserve Account Property:
(i) any Reserve Account Property that constitutes Physical
Property shall be delivered to the Indenture Trustee in accordance
with paragraph (a) of the definition of "Delivery" and shall be held
by the Indenture Trustee, pending maturity or disposition;
(ii) any Reserve Account Property that is a book-entry
security held through the Federal Reserve System pursuant to Federal
book-entry regulations shall be delivered in accordance with
paragraph (b) of the definition of "Delivery" and shall be
maintained by the Indenture Trustee, pending maturity or
disposition; and
(iii) any Reserve Account Property that is an "uncertificated
security" under Article 8 (or VIII as applicable) of the Relevant
UCC and that is not governed by clause (ii) above shall be delivered
to the Indenture Trustee in accordance with paragraph (c) of the
definition of "Delivery" and shall be maintained by the Indenture
Trustee, pending maturity or disposition.
The Indenture Trustee shall, at the expense of the Servicer, take such action as
is required to maintain the Indenture Trustee's security interest in any Reserve
Account Property; provided, however, that (x) the Indenture Trustee shall not be
required to prepare or file any financing statements or continuation statements
and (y) the Indenture Trustee may rely upon the written instructions of the
Servicer as to the method by which the security interest of the Indenture
Trustee may be perfected. Upon written request from the Indenture Trustee, the
Servicer shall provide such instructions and an opinion of counsel with respect
to the method of perfection of such security interest; provided, however, that
the Servicer shall not be obligated to
47
deliver to the Indenture Trustee an opinion of counsel with respect to the
method of perfecting a security interest in any Permitted Investment the method
of perfecting an ownership interest in which was described in that certain legal
opinion of Xxxxxx & Xxxxxxx LLP, special local counsel to the Indenture Trustee,
dated December 18, 1996, unless there has been change in law or the
interpretation thereof from the date of such opinion with respect to the method
of perfecting a security interest in such Permitted Investment.
(d) On each Distribution Date (which is January 15, 1998 if the
Class A-1 Event has occurred), the Indenture Trustee shall withdraw from the
Reserve Account and pay to the Seller the Offered Percentage of the excess, if
any, of the amount on deposit in the Reserve Account (after giving effect to all
deposits therein or withdrawals therefrom on such Distribution Date) over the
Specified Reserve Account Balance with respect to such Distribution Date and pay
to the General Partner the General Partner Percentage of such excess amount.
Upon any distribution to the Seller or the General Partner of amounts from the
Reserve Account, the Holders will have no rights in, or claims, to, such
amounts. Amounts properly distributed to the Seller or the General Partner from
the Reserve Account shall not be available under any circumstances to the
Indenture Trustee, and neither the Seller nor the General Partner shall in any
event thereafter be required to refund any such distributed amounts.
(e) The Indenture Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Reserve Account and in
all proceeds thereof and all such funds, investments, proceeds and income shall
be part of the Trust Estate. Except as otherwise provided herein, the Reserve
Account shall be under the sole dominion and control of the Indenture Trustee
for the benefit of the Noteholders and the Certificateholders.
SECTION 5.7. Net Deposits. Chase USA (in its capacity as the Seller
or the Servicer) may make the remittances pursuant to Sections 5.2 and 5.4
above, net of amounts to be retained by it or distributed to it (also in any
such capacity) pursuant to Section 4.7 (if applicable) and Section 5.5, if (a)
it shall be the Servicer and (b) it is entitled, pursuant to Section 5.2, to
make deposits on a monthly basis, rather than a daily basis. Nonetheless, the
Servicer shall account for all of the above described amounts as if such amounts
were deposited and distributed separately.
SECTION 5.8. Statements to Certificateholders and Noteholders. (a)
On each Distribution Date, the Servicer shall provide to the Indenture Trustee
(for the Indenture Trustee to forward to each Noteholder of record pursuant to
the Indenture) and to the Owner Trustee (for the Owner Trustee to forward to
each Certificateholder of record pursuant to the Trust Agreement) a statement
substantially in the form of Exhibit B (or such other form that is acceptable to
the Indenture Trustee, the Owner
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Trustee and the Servicer), with a copy to the Rating Agencies, setting forth at
least the following information as to the Notes (separately stating such
information as to the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes
and the Class A-4 Notes) and the Certificates, to the extent applicable:
(i) the amount of such distribution allocable to principal on
each class of Notes and the Certificates;
(ii) the amount of such distribution allocable to interest on
each class of Notes and the Certificates;
(iii) the amount of the Servicing Fee paid to the Servicer
with respect to the related Collection Period;
(iv) the amount of the Administration Fee paid to the
Administrator on such Distribution Date;
(v) the Outstanding Amount of each class of the Notes, the
Class A-1 Note Pool Factor, the Class A-2 Note Pool Factor, the
Class A-3 Note Pool Factor, the Class A-4 Note Pool Factor, the
Certificate Balance and the Certificate Pool Factor, in each case
after giving effect to payments allocated to principal reported
under (i) above;
(vi) the Pool Balance as of the last day of the preceding
Collection Period;
(vii) the aggregate amount of the Repurchase Amounts for
Repurchased Receivables with respect to the related Collection
Period paid by each of the Seller and the Servicer (accounted for
separately);
(viii) the amount of Aggregate Net Losses, if any, for such
Distribution Date;
(ix) the balance of the Reserve Account on such Distribution
Date, after giving effect to deposits into and withdrawals from the
Reserve Account on such Distribution Date;
(x) the Specified Reserve Account Balance for such
Distribution Date;
(xi) the Total Distribution Amount for such Distribution Date;
(xii) the Noteholders' Distributable Amount and the components
thereof;
(xiii) the Certificateholders' Distributable Amount and the
components thereof; and
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(xiv) the Reserve Account Transfer Amount, if any, for such
Distribution Date.
Each amount set forth pursuant to subclause (i), (ii), (iii), (iv),
(xii) or (xiii) above shall be expressed as a dollar amount per $1,000 of
original principal balance of a Note or a Certificate, as applicable.
ARTICLE VI
THE SELLER
SECTION 6.1. Representations of Seller. The Seller makes the
following representations on which the Issuer shall rely in acquiring the
Receivables. The representations shall speak as of the execution and delivery of
this Agreement, and shall survive the sale of the Receivables to the Issuer and
pledge thereof to the Indenture Trustee pursuant to the Indenture.
(i) Organization and Good Standing. The Seller has been duly
organized and is validly existing as a national banking association
in good standing under the laws of the United States of America,
with power and authority to own its properties and to conduct its
business as such properties are currently owned and such business is
presently conducted, and had at all relevant times, and has, power,
authority, and legal right to acquire and own the Receivables.
(ii) Power and Authority. The Seller has the power and
authority to execute and deliver this Agreement and the other Basic
Documents to which it is a party and to carry out their respective
terms, the Seller has full power and authority to sell and assign
the property to be sold and assigned to the Issuer as the Owner
Trust Estate and has duly authorized such sale and assignment to the
Issuer by all necessary corporate action; and the execution,
delivery, and performance of this Agreement and the other Basic
Documents to which it is a party has been duly authorized by the
Seller by all necessary action.
(iii) Valid Sale; Binding Obligations. This Agreement effects a
valid sale, transfer, and assignment of the Receivables, enforceable
against creditors of and purchasers from the Seller; this Agreement
and each of the other Basic Documents to which it is a party
constitutes a legal, valid, and binding obligation of the Seller
enforceable in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, or other
similar laws affecting the enforcement of creditors' rights in
general and by general principles
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of equity, regardless of whether such enforceability is considered
in a proceeding in equity or at law.
(iv) No Violation. The consummation of the transactions
contemplated by this Agreement and the other Basic Documents and the
fulfillment of the terms hereof and thereof do not conflict with,
result in any breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time) a default
under, the articles of association or bylaws of the Seller, or
conflict with or breach any of the material terms or provisions of,
or constitute (with or without notice or lapse of time) a default
under, any indenture, agreement, or other instrument to which the
Seller is a party or by which it is bound; nor result in the
creation or imposition of any lien upon any of its properties
pursuant to the terms of any such indenture, agreement, or other
instrument; nor violate any law or, to the best of the Seller's
knowledge, any order, rule, or regulation applicable to the Seller
of any court or of any federal or state regulatory body,
administrative agency, or other governmental instrumentality having
jurisdiction over the Seller or its properties.
(v) No Proceedings. There are no proceedings or
investigations pending, or, to the Seller's best knowledge,
threatened, before any court, regulatory body, administrative
agency, or other governmental instrumentality having jurisdiction
over the Seller or its properties: (a) asserting the invalidity of
this Agreement, any other Basic Document, the Notes or the
Certificates, (b) seeking to prevent the issuance of the Notes or
the Certificates or the consummation of any of the transactions
contemplated by this Agreement or any other Basic Document, (c)
seeking any determination or ruling that might materially and
adversely affect the performance by the Seller of its obligations
under, or the validity or enforceability of, this Agreement, any
other Basic Document, the Notes or the Certificates, or (d) relating
to the Seller and which might adversely affect the federal or state
income tax attributes of the Notes or the Certificates.
SECTION 6.2. Liability of Seller; Indemnities. The Seller shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Seller in such capacity under this Agreement and shall have no
other obligations or liabilities hereunder.
The Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee and the Indenture Trustee from and against any taxes that may at
any time be asserted against any such Person with respect to, and as of the date
of, the sale of the Receivables to the Issuer or the issuance and original sale
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of the Notes and the Certificates, including any sales, gross receipts, general
corporation, tangible or intangible personal property, privilege, or license
taxes (but not including any taxes asserted with respect to ownership of the
Receivables or federal or other income taxes, including franchise taxes measured
by net income), arising out of the transactions contemplated by this Agreement
and the other Basic Documents, and costs and expenses in defending against the
same.
The Seller shall indemnify, defend, and hold harmless the Issuer,
the Owner Trustee and the Indenture Trustee from and against any loss, liability
or expense incurred by reason of (i) the Seller's wilful misfeasance, bad faith,
or gross negligence in the performance of its duties hereunder, or by reason of
reckless disregard of the obligations and duties hereunder and (ii) the Seller's
violation of federal or state securities laws in connection with the
registration of the sale of the Notes and the Certificates.
Indemnification under this Section 6.2 shall include reasonable fees
and expenses of counsel and expenses of litigation. If the Seller shall have
made any indemnity payments to the Issuer, the Owner Trustee or the Indenture
Trustee, respectively, pursuant to this Section 6.2 and the Issuer, the Owner
Trustee or the Indenture Trustee, respectively, thereafter shall collect any of
such amounts from others, the Issuer, the Owner Trustee or the Indenture
Trustee, respectively, shall repay such amounts to the Seller, without interest.
SECTION 6.3. Merger or Consolidation of Seller. Any corporation or
other entity (i) into which the Seller may be merged or consolidated, (ii) which
may result from any merger, conversion, or consolidation to which the Seller
shall be a party, or (iii) which may succeed to all or substantially all of the
business of the Seller, which corporation or other entity shall be bound to
perform every obligation of the Seller under this Agreement, shall be the
successor to the Seller hereunder without the execution or filing of any
document or any further act by any of the parties to this Agreement. The Seller
shall give prompt written notice of any merger or consolidation to the Issuer,
the Owner Trustee, the Indenture Trustee, the Servicer and the Rating Agencies.
SECTION 6.4. Limitation on Liability of Seller and Others. The
Seller and any director, officer, employee or agent of the Seller may rely in
good faith on the advice of counsel or on any document of any kind, prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder or under any other Basic Documents. The Seller shall not be under any
obligation under this Agreement to appear in, prosecute, or defend any legal
action that shall be unrelated to its obligations under this Agreement or any
other Basic Document, and that in its opinion may involve it in any expense or
liability.
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SECTION 6.5. Seller May Own Notes and Certificates. The Seller or
any of its Affiliates may in its individual or any other capacity become the
owner or pledgee of Notes or Certificates with the same rights as it would have
if it were not the Seller or an Affiliate thereof, except as otherwise provided
in the definition of "Outstanding" specified in Section 1.1. Notes or
Certificates so owned by or pledged to the Seller or any Affiliate thereof shall
have an equal and proportionate benefit under the provisions of this Agreement,
without preference, priority, or distinction as among all of the Notes or
Certificates, as applicable.
ARTICLE VII
THE SERVICER
SECTION 7.1. Representations of Servicer. The Servicer makes the
following representations on which the Issuer shall rely in acquiring the
Receivables. The representations shall speak as of the execution and delivery of
this Agreement (or as of a date a Person (other than the Indenture Trustee)
becomes Servicer pursuant to Section 7.3 or Section 8.2), and shall survive the
sale of the Receivables to the Issuer and the pledge thereof to the Indenture
Trustee pursuant to the Indenture.
(i) Organization and Good Standing. The Servicer has been
duly organized and is validly existing as a national banking
association or corporation and is in good standing under the laws of
the United States of America or the jurisdiction of its
incorporation, with power and authority to own its properties and to
conduct its business as such properties are currently owned and such
business is presently conducted, and had at all relevant times, and
has, power, authority, and legal right to acquire, own, sell, and
service the Receivables and to hold the Receivable Files as
custodian on behalf of the Issuer.
(ii) Power and Authority. The Servicer has the power and
authority to execute and deliver this Agreement and the Basic
Documents to which it is a party and to carry out the terms thereof;
and the execution, delivery, and performance of this Agreement and
the other Basic Documents has been duly authorized by the Servicer
by all necessary action.
(iii) Binding Obligations. This Agreement and the other Basic
Documents to which it is a party constitute legal, valid, and
binding obligations of the Servicer enforceable in accordance with
their respective terms subject, as to enforcement, to applicable
bankruptcy, insolvency, reorganization, liquidation or other similar
laws and equitable principles relating to or
53
affecting the enforcement of creditors' rights, whether considered
in a proceeding at law or in equity.
(iv) No Violation. The consummation of the transactions
contemplated by this Agreement and the other Basic Documents and the
fulfillment of the terms hereof and thereof do not conflict with,
result in any breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time) a default
under, the articles of association or bylaws of the Servicer, or
conflict with or breach any of the material terms or provisions of,
or constitute (with or without notice or lapse of time) a default
under, any indenture, agreement, or other instrument to which the
Servicer is a party or by which it is bound; nor result in the
creation or imposition of any lien upon any of its properties
pursuant to the terms of any such indenture, agreement, or other
instrument; nor violate any law or, to the best of the Servicer's
knowledge, any order, rule, or regulation applicable to the Servicer
of any court or of any federal or state regulatory body,
administrative agency, or other governmental instrumentality having
jurisdiction over the Servicer or its properties.
(v) No Proceedings. There are no proceedings or
investigations pending, or to the Servicer's best knowledge,
threatened, before any court, regulatory body, administrative
agency, or other governmental instrumentality having jurisdiction
over the Servicer or its properties: (a) asserting the invalidity of
this Agreement, the Notes or the Certificates, (b) seeking to
prevent the issuance of the Notes or the Certificates or the
consummation of any of the transactions contemplated by this
Agreement or any other Basic Document, (c) seeking any determination
or ruling that might materially and adversely affect the performance
by the Servicer of its obligations under, or the validity or
enforceability of, this Agreement, any other Basic Document, the
Notes or the Certificates, or (d) relating to the Servicer and which
might adversely affect the federal or state income tax attributes of
the Notes or the Certificates.
(vi) Fidelity Bond. The Servicer maintains a fidelity bond in
such form and amount as is customary for banks acting as custodian
of funds and documents in respect of retail automotive installment
sales contracts.
SECTION 7.2. Liability of Servicer; Indemnities. The Servicer shall
be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Servicer under this Agreement and shall have no
other obligations or liabilities hereunder.
54
(i) The Servicer shall defend, indemnify, and hold harmless
the Issuer, the Owner Trustee, the Indenture Trustee and the Holders
from and against any and all costs, expenses, losses, damages,
claims, and liabilities, arising out of or resulting from the use,
ownership, or operation by the Servicer or any Affiliate thereof of
a Financed Vehicle.
(ii) The Servicer shall indemnify, defend, and hold harmless
the Issuer, the Owner Trustee and the Indenture Trustee from and
against any taxes that may at any time be asserted against the
Issuer with respect to the transactions contemplated in this
Agreement, including, without limitation, any sales, gross receipts,
general corporation, tangible or intangible personal property,
privilege, or license taxes (but not including any taxes asserted
with respect to, and as of the date of, the sale of the Receivables
to the Issuer or the issuance and original sale of the Notes or the
Certificates, or asserted with respect to ownership of the
Receivables or federal, state or other income taxes, including
franchise taxes measured by net income) arising out of distributions
on the Notes or the Certificates and costs and expenses in defending
against the same.
(iii) The Servicer shall indemnify, defend, and hold harmless
the Issuer, the Owner Trustee, the Indenture Trustee and the Holders
from and against any and all costs, expenses, losses, claims,
damages, and liabilities to the extent that such cost, expense,
loss, claim, damage, or liability arose out of, or was imposed upon
the Issuer, the Owner Trustee, the Indenture Trustee or the Holders
through the wilful misfeasance, gross negligence, or bad faith of
the Servicer in the performance of its duties under this Agreement
or by reason of reckless disregard of its obligations and duties
under this Agreement.
Indemnification under this Section 7.2 shall include reasonable fees
and expenses of counsel and expenses of litigation. If the Servicer shall have
made any indemnity payments pursuant to this Section 7.2 and the recipient
thereafter collects any of such amounts from others, the recipient shall
promptly repay such amounts to the Servicer, without interest. The
indemnification obligations of the Servicer set forth in this Section 7.2 shall
survive the termination of such Servicer with respect to any act or failure to
act which occurs prior to such Servicer's termination. The provisions of Section
6.7 of the Indenture and Sections 8.1 and 8.2 of the Trust Agreement with
respect to the Servicer's obligations are incorporated by reference herein.
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SECTION 7.3. Merger or Consolidation of Servicer. Any corporation or
other entity (i) into which the Servicer may be merged or consolidated, (ii)
which may result from any merger, conversion, or consolidation to which the
Servicer shall be a party, or (iii) which may succeed to all or substantially
all of the business of the Servicer, which corporation or other entity shall be
bound to perform every obligation of the Servicer hereunder, shall be the
successor to the Servicer under this Agreement without the execution or filing
of any document or any further act on the part of any of the parties to this
Agreement. The Servicer shall promptly inform the Issuer, the Owner Trustee, the
Indenture Trustee, the Seller and the Rating Agencies in writing of any such
merger or consolidation.
SECTION 7.4. Limitation on Liability of Servicer and Others.
(a) Neither the Servicer nor any of the directors or officers or
employees or agents of the Servicer shall be under any liability to the Issuer,
the Owner Trustee, the Indenture Trustee or the Holders, except as provided
under this Agreement, for any action taken or for refraining from the taking of
any action pursuant to this Agreement; provided, however, that this provision
shall not protect the Servicer or any such person against any liability that
would otherwise be imposed by reason of wilful misfeasance, gross negligence, or
bad faith in the performance of duties or by reason of reckless disregard of
obligations and duties under this Agreement. The Servicer and any director or
officer or employee or agent of the Servicer may rely in good faith on the
advice of counsel or on any document of any kind prima facie properly executed
and submitted by any Person respecting any matters arising under this Agreement.
(b) The Servicer, and any director, or officer, employee or agent of
the Servicer, shall be indemnified by the Issuer and held harmless against any
loss, liability, or expense (including reasonable attorneys' fees and expenses)
incurred in connection with any legal action relating to the performance of the
Servicer's duties under this Agreement, other than (i) any loss or liability
otherwise reimbursable pursuant to this Agreement or the Basic Documents; (ii)
any loss, liability, or expense incurred solely by reason of the Servicer's
wilful misfeasance, negligence, or bad faith in the performance of its duties
hereunder or by reason of reckless disregard of its obligations and duties under
this Agreement or the Basic Documents; and (iii) any loss, liability, or expense
for which the Issuer is to be indemnified by the Servicer under this Agreement
or the Basic Documents. Any amounts due the Servicer pursuant to this Section
7.4 shall be payable on a Distribution Date from amounts distributable to the
Seller and the General Partner from the Reserve Account pursuant to Section
5.6(d).
(c) Except as provided in this Agreement, the Servicer shall not be
under any obligation to appear in, prosecute, or defend any legal action that
shall not be incidental to its
56
obligations under this Agreement, and that in its opinion may involve it in any
expense or liability; provided, however, that the Servicer may undertake any
reasonable action that it may deem necessary or desirable in respect of this
Agreement and the rights and duties of the parties to this Agreement and the
interests of the Holders under this Agreement. In such event, the legal expenses
and costs of such action and any liability resulting therefrom shall be
expenses, costs, and liabilities of the Issuer, and the Servicer shall be
entitled to be reimbursed therefor. Any amounts due the Servicer pursuant to
this Section shall be payable on a Distribution Date from amounts distributable
to the Seller and the General Partner from the Reserve Account pursuant to
Section 5.6(d).
The Person to be indemnified shall provide the Issuer, the Owner
Trustee and the Indenture Trustee with a certificate and accompanying Opinion of
Counsel requesting indemnification and setting forth the basis for such request.
SECTION 7.5. Servicer Not To Resign. Except as permitted by Section
7.3, the Servicer shall not resign from its obligations and duties under this
Agreement except (i) upon determination that the performance of its duties shall
no longer be permissible under applicable law or (ii) in the event of the
appointment of a successor Servicer, upon satisfaction of the Rating Agency
Condition. Notice of any such determination permitting the resignation of the
Servicer shall be communicated to the Issuer, the Indenture Trustee, the Owner
Trustee and the Rating Agencies at the earliest practicable time (and, if such
communication is not in writing, shall be confirmed in writing at the earliest
practicable time) and any such determination permitting the resignation of the
Servicer shall be evidenced by an Opinion of Counsel to such effect delivered to
the Issuer, the Indenture Trustee and the Owner Trustee concurrently with such
notice. No such resignation shall become effective until the Indenture 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 law) or a successor Servicer shall have
assumed the responsibilities and obligations of the Servicer hereunder in
accordance with Section 8.2.
SECTION 7.6. Delegation of Duties. So long as Chase USA acts as
Servicer, the Servicer shall have the right, in the ordinary course of its
business, to delegate any of its duties under this Agreement to any Person. Any
compensation payable to such Person shall be paid by the Servicer from its own
funds and none of the Issuer, the Owner Trustee, the Indenture Trustee or the
Holders shall have any liability to such Person with respect thereto.
Notwithstanding any delegation of duties by the Servicer pursuant to this
Section 7.6, the Servicer shall not be relieved of its liability and
responsibility with respect to such duties, and any such delegation shall not
constitute a resignation within the meaning of Section 7.5. Any agreement that
may be entered into by the Servicer and a Person that
57
provides for any delegation of the Servicer's duties hereunder to such Person
shall be deemed to be between the Servicer and such Person alone, and the
Issuer, the Owner Trustee, the Indenture Trustee and Holders shall not be deemed
parties thereto and shall have no claims, rights, obligations, duties or
liabilities with respect thereto.
ARTICLE VIII
EVENTS OF SERVICING TERMINATION
SECTION 8.1. Events of Servicing Termination. Any one of the
following events which shall occur and be continuing shall constitute an event
of servicing termination hereunder (each, an "Event of Servicing Termination"):
(i) Any failure by the Servicer to deliver to the Indenture
Trustee the Servicer's Certificate for the related Collection
Period, or any failure by the Servicer to deliver to the Indenture
Trustee, for deposit in any of the Trust Accounts or the Certificate
Distribution Account, any proceeds or payment required to be so
delivered under the terms of the Certificates or the Notes and this
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 a period of five Business Days after (A) discovery by an officer
of the Servicer or (B) written notice (1) to the Servicer by the
Indenture Trustee or the Owner Trustee or (2) to the Indenture
Trustee or the Owner Trustee, as applicable, and the Servicer by the
Holders of Notes evidencing not less than 25% of the Outstanding
Amount of the Notes (or, if the Notes have been paid in full, by
Holders of the Certificates evidencing not less than 25% of the
Certificate Balance);
(ii) Failure on the part of the Servicer duly to observe or to
perform in any material respect any other covenants or agreements of
the Servicer set forth in this Agreement or the Indenture, which
failure shall (a) materially and adversely affect the rights of the
Issuer or the Holders, and (b) continue unremedied for a period of
60 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given (1) to the
Servicer by the Indenture Trustee or the Owner Trustee, or (2) to
the Indenture Trustee or the Owner Trustee, as applicable, and the
Servicer by the Holders of Notes evidencing not less than 25% of the
Outstanding Amount of the Notes (or, if the Notes have been paid
in full, by Holders of the Certificates evidencing not less than
25% of the Certificate Balance);
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(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 unstayed and in effect for a period of 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 shall admit in
writing its inability to pay its debts generally as they become due,
file a petition to take advantage of any applicable insolvency or
reorganization statute, make an assignment for the benefit of its
creditors, or voluntarily suspend payment of its obligations.
Upon the occurrence of any Event of Servicing Termination as described above,
and in each and every case and for so long as such Event of Servicing
Termination shall not have been remedied, either the Indenture Trustee or the
Holders of Notes evidencing not less than 50% of the Outstanding Amount of the
Notes (or, if the Notes have been paid in full and the Indenture has been
discharged in accordance with its terms, by the Owner Trustee or the Holders of
Certificates evidencing not less than 50% of the Certificate Balance), by notice
given in writing to the Servicer (and to the Indenture Trustee or the Owner
Trustee, as applicable, if given by Holders) may terminate all of the rights and
obligations of the Servicer under this Agreement. On or after the receipt by the
Servicer of such written notice, all authority and power of the Servicer under
this Agreement, whether with respect to the Certificates, the Notes or the
Receivables or otherwise, shall pass to and be vested in the Indenture Trustee
pursuant to this Section 8.1; and, without limitation, the Indenture Trustee
shall be hereby authorized and empowered to execute and deliver, on behalf of
the predecessor Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of the Receivable
Files, or otherwise. The predecessor Servicer shall cooperate with the successor
Servicer and the Indenture Trustee in effecting the termination of the
responsibilities and rights of the predecessor Servicer under this Agreement,
including the transfer to the successor Servicer for administration by it of all
cash amounts that shall at the time be held by the predecessor Servicer for
deposit, shall have been deposited by the predecessor Servicer in the Collection
Account, or shall thereafter be received with respect to a Receivable.
59
All reasonable costs and expenses (including attorneys' fees and disbursements)
incurred in connection with transferring the Receivable Files to the successor
Servicer and amending this Agreement to reflect such succession as Servicer
pursuant to this Section 8.1 shall be paid by the predecessor Servicer upon
presentation of reasonable documentation of such costs and expenses. The
Indenture Trustee and the Owner Trustee shall give written notice of any
termination of the Servicer to their related Holders, and the Indenture Trustee
shall give such notice to the Rating Agencies. Neither the Indenture Trustee nor
any successor Servicer shall be deemed to be in default hereunder by reason of
its failure to make, or any delay in making, any distribution hereunder or any
portion thereof which was caused by (i) the failure of the predecessor Servicer
to deliver, or any delay in delivering cash, documents or records to it, or (ii)
restrictions imposed by any regulatory authority having jurisdiction over the
predecessor Servicer.
SECTION 8.2. Indenture Trustee to Act; Appointment of Successor.
Upon the Servicer's receipt of notice of termination pursuant to Section 8.1 or
resignation pursuant to Section 7.5, the Indenture Trustee shall be the
successor in all respects to the Servicer in its capacity as Servicer under this
Agreement, and shall be subject to all the responsibilities, duties and
liabilities arising thereafter relating thereto placed on the Servicer by the
terms and provisions of this Agreement. As compensation therefor, the Indenture
Trustee shall be entitled to such compensation (whether payable out of the
Collection Account or otherwise) as the Servicer would have been entitled to
under this Agreement if no such notice of termination or resignation had been
given. Notwithstanding the above, the Indenture Trustee may, if it shall be
unwilling so to act, or shall, if it shall be legally unable so to act, appoint,
or petition a court of competent jurisdiction to appoint, any established
financial institution (x) having a net worth of not less than $100,000,000 as of
the last day of the most recent fiscal quarter for such institution and (y)
whose regular business shall include the servicing of automobile receivables, as
successor Servicer under this Agreement; provided, that the appointment of any
such successor Servicer is required to satisfy the Rating Agency Condition. In
connection with such appointment, the Indenture Trustee may make such
arrangements for the compensation of such successor Servicer out of payments on
Receivables as it and such successor Servicer shall agree; provided, however,
that no such compensation shall be in excess of that permitted the Servicer
under this Agreement. The Indenture Trustee and such successor Servicer shall
take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession. Unless the Indenture Trustee shall be prohibited
by law from so acting, the Indenture Trustee shall not be relieved of its duties
as successor Servicer under this Section 8.2 until the newly appointed successor
Servicer shall have assumed the responsibilities and obligations of the Servicer
under this Agreement.
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SECTION 8.3. Notification to Noteholders and Certificateholders.
Upon any Event of Servicing Termination, or appointment of a successor Servicer
pursuant to this Article VIII, the Owner Trustee shall give prompt written
notice thereof to Certificateholders and the Indenture Trustee shall give prompt
written notice thereof to the Noteholders, at their respective addresses of
record, and to the Rating Agencies.
SECTION 8.4. Waiver of Past Defaults. The Holders of Notes
evidencing at least a majority of the Outstanding Amount of the Notes (or, the
Holders of Certificates evidencing not less than a majority of the Certificate
Balance, in the case of any Event of Servicing Termination that does not
adversely affect the Indenture Trustee or the Noteholders) may, on behalf of all
such Holders, waive any default by the Servicer in the performance of its
obligations hereunder and its consequences, except a default in the failure to
make any required deposits to or payments from any of the Trust Accounts or the
Certificate Distribution Account in accordance with this Agreement. Upon any
such waiver of a past default, such default shall cease to exist, and any Event
of Servicing Termination arising therefrom shall be deemed to have been remedied
for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon except to the
extent expressly so waived. The Servicer shall give prompt written notice of any
waiver to the Rating Agencies; provided, however, that the Indenture Trustee or
the Owner Trustee shall only be required to give such notice if a Responsible
Officer thereof has actual knowledge of the related event.
ARTICLE IX
TERMINATION
SECTION 9.1. Optional Purchase of All Receivables; Trust
Termination. (a) As of the last day of any Collection Period as of which the
Pool Balance shall be equal to or less than the Optional Purchase Percentage of
the Original Pool Balance, the Servicer shall have the option to purchase the
Owner Trust Estate, other than the Trust Accounts and the Certificate
Distribution Account. To exercise such option, the Servicer shall notify the
Indenture Trustee, the Owner Trustee, the Note Registrar and the Certificate
Registrar in writing, no later than the 25th day of the Collection Period
following which purchase is to be effected, shall pay the aggregate Repurchase
Amount for the Receivables (including Defaulted Receivables) and shall succeed
to all interests in, to and under such property. The payment shall be made in
the manner specified in Section 5.4, and shall be distributed pursuant to
Section 5.5. The Indenture Trustee shall not permit the purchase of the Owner
Trust Estate pursuant to this Section unless the Servicer's long-term unsecured
debt is rated at the time of such purchase at least "BBB-" by Standard & Poor's
and Fitch (if rated by Fitch) and "Baa3" by Moody's or the Servicer provides to
the Indenture Trustee an Opinion of Counsel
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in form and substance satisfactory to the Rating Agencies to the effect that
such purchase will not constitute a fraudulent transfer under applicable state
and federal law.
(b) Upon any sale of the assets of the Issuer pursuant to Section
9.2 of the Trust Agreement or Article V of the Indenture, the Servicer shall
instruct the Indenture Trustee or the Owner Trustee, as applicable, in writing
to deposit the proceeds from such sale after all payments and reserves therefrom
(including the expenses of such sale) have been made (the "Sale Proceeds") in
the Collection Account. On the Distribution Date on which the Sale Proceeds are
deposited in the Collection Account (or, if such proceeds are not so deposited
on a Distribution Date, on the Distribution Date immediately following such
deposit), the Servicer shall instruct the Indenture Trustee or the Owner
Trustee, as applicable, in writing to make, and the Indenture Trustee or the
Owner Trustee, as applicable, shall make, the following deposits and
distributions (after the application on such Distribution Date of the Total
Distribution Amount pursuant to Section 5.5) from the Sale Proceeds and any
funds remaining on deposit in the Reserve Account (including the proceeds of any
sale of investments therein):
(i) to the Note Distribution Account, any portion of the
Noteholders' Interest Distributable Amount not otherwise deposited
into the Note Distribution Account on such Distribution Date;
(ii) to the Note Distribution Account, the Outstanding Amount
of the Notes (after giving effect to the reduction in the
Outstanding Amount of the Notes resulting from the deposits made in
the Note Distribution Account on such Distribution Date);
(iii) to the Certificate Distribution Account, any portion of
the Certificateholders' Interest Distributable Amount not otherwise
deposited into the Certificate Distribution Account on such
Distribution Date; and
(iv) to the Certificate Distribution Account, the Certificate
Balance and any Certificateholders' Principal Carryover Shortfall
(after giving effect to the reduction in the Certificate Balance
resulting from the deposits made in the Certificate Distribution
Account on such Distribution Date).
The Offered Percentage of any Sale Proceeds remaining after the deposits
described above shall be paid to the Seller and the General Partner Percentage
of such amounts shall be paid to the General Partner.
(c) Notice of any termination of the Issuer shall be given by the
Servicer to the Owner Trustee, the Indenture Trustee
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and the Rating Agencies as soon as practicable after the Servicer has received
notice thereof.
(d) Following the satisfaction and discharge of the Indenture and
the payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder and
the Owner Trustee will succeed to the rights of, and assume the obligations of,
the Indenture Trustee pursuant to this Agreement.
(e) After the payment to the Indenture Trustee, the Owner Trustee,
the Holders and the Servicer of all amounts required to be paid under this
Agreement, the Indenture and the Trust Agreement, the Offered Percentage of any
amounts on deposit in the Reserve Account or the Collection Account shall be
paid to the Seller and the General Partner Percentage of such amounts shall be
paid to the General Partner, and the Offered Percentage of any other assets
remaining in the Owner Trust Estate shall be distributed to the Seller and the
General Partner Percentage of such other assets shall be distributed to the
General Partner.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Amendment. This Agreement may be amended by the
Seller, the Servicer and the Owner Trustee, with the prior consent of the
Indenture Trustee and prior notice to the Rating Agencies but without prior
notice to or the consent of any of the Holders, (i) to cure any ambiguity, to
correct or supplement any provisions in this Agreement which may be inconsistent
with any other provisions herein, to evidence a succession to the Servicer or
the Seller pursuant to this Agreement or to add any other provisions with
respect to matters or questions arising under this Agreement that shall not be
inconsistent with the provisions of this Agreement; provided, however, that such
action shall not, as evidenced by an Officer's Certificate and/or an Opinion of
Counsel delivered to the Owner Trustee and the Indenture Trustee, adversely and
materially affect the interests of the Issuer or any of the Holders; provided,
further, that the Servicer shall deliver written notice of such changes to each
Rating Agency prior to the execution of any such amendment, or (ii) to effect a
transfer or assignment in compliance with Section 10.6(a) of this Agreement.
Notwithstanding the foregoing, no amendment modifying the provisions of Section
5.5 shall become effective without satisfaction of the Rating Agency Condition.
This Agreement may also be amended from time to time by the Seller,
the Servicer and the Owner Trustee, with the consent of the Indenture Trustee,
the Holders of Certificates evidencing at least a majority of the Certificate
Balance of the Certificates and the consent of the Holders of Notes evidencing
at least a majority of the Outstanding Amount of the Notes, for
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the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement, or of modifying in any manner the
rights of the Noteholders or the Certificateholders (including effecting a
transfer or assignment in compliance with Section 10.6(a) of this Agreement);
provided, however, that no such amendment, except with the consent of the
Holders of all Certificates or Notes, as applicable, then outstanding, shall (a)
increase or reduce in any manner the amount of, or accelerate or delay the
timing of, collections of payments of Receivables, or distributions that shall
be required to be made on any Certificate or Note, or (b) reduce the aforesaid
percentage of the Certificate Balance of the Certificates or the Outstanding
Amount of the Notes required to consent to any such amendment.
Promptly after the execution of any amendment or consent referred to
in this Section 10.1, the Owner Trustee shall furnish a copy of such amendment
or consent to the Indenture Trustee and each Noteholder and Certificateholder
and to the Rating Agencies.
It shall not be necessary for the consent of the Indenture Trustee,
the Certificateholders or the Noteholders pursuant to this Section 10.1 to
approve the particular form of any proposed amendment or consent, but it shall
be sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents and of evidencing the authorization of the execution
thereof by Certificateholders or Noteholders shall be subject to such reasonable
requirements as the Indenture Trustee or the Owner Trustee may prescribe.
Prior to the execution of any amendment to this Agreement, the
Indenture Trustee and the Owner Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. The Indenture Trustee and the Owner
Trustee shall not be obligated to enter into any such amendment which affects
the Indenture Trustee's and the Owner Trustee's own rights, duties or immunities
under this Agreement.
Satisfaction of the Rating Agency Condition is required prior to the
execution of any amendment to this Agreement, other than an amendment permitted
pursuant to clause (i) of the first paragraph of this Section 10.1.
SECTION 10.2. Protection of Title to Owner Trust Estate.
(a) The Seller shall execute and file such financing statements and
cause to be executed and filed such continuation statements, all in such manner
and in such places as may be required by law fully to preserve, maintain, and
protect the interests of the Issuer and the Indenture Trustee in the Receivables
and in the proceeds thereof. The Servicer shall deliver (or cause to be
delivered) to the Owner Trustee and the
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Indenture Trustee file-stamped copies of, or filing receipts for, any document
filed as provided above, as soon as available following such filing.
(b) Neither the Seller nor the Servicer shall change its name,
identity, or corporate structure in any manner that would, could, or might make
any financing statement or continuation statement filed by the Seller in
accordance with paragraph (a) above seriously misleading within the meaning of
ss. 9-402(7) (or any comparable section) of the Relevant UCC, unless it shall
have given the Owner Trustee and the Indenture Trustee at least 30 days prior
written notice thereof.
(c) The Seller and the Servicer shall give the Owner Trustee and the
Indenture Trustee at least 60 days prior written notice of any relocation of its
principal executive office if, as a result of such relocation, the applicable
provisions of the Relevant UCC would require the filing of any amendment of any
previously filed financing or continuation statement or of any new financing
statement. The Servicer shall at all times maintain each office from which it
shall service Receivables, and its principal executive office, within the United
States of America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know at any time the status of such Receivable, including payments and
recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Collection Account
in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from
and after the time of sale under this Agreement of the Receivables to the
Issuer, the Servicer's master computer records (including archives) that shall
refer to a Receivable indicate clearly, by numerical code or otherwise, that
such Receivable is owned by the Issuer and has been pledged to the Indenture
Trustee. Indication of the Issuer's and Indenture Trustee's interest in a
Receivable shall be deleted from or modified on the Servicer's computer systems
when, and only when, the Receivable shall have been paid in full, repurchased or
assigned pursuant hereto.
(f) If at any time the Seller or the Servicer shall propose to sell,
grant a security interest in, or otherwise transfer any interest in a new or
used automobile receivable to any prospective purchaser, creditor, or other
transferee, the Seller or the Servicer, as the case may be, shall give to such
prospective purchaser, creditor, or other transferee computer tapes, records, or
print-outs (including any restored from archives) that, if they shall refer in
any manner whatsoever to any Receivable, shall indicate clearly that such
Receivable has
65
been sold and is owned by the Issuer and has been pledged to the Indenture
Trustee.
(g) The Servicer shall permit the Indenture Trustee and the Owner
Trustee and their respective agents upon reasonable notice at any time during
normal business hours which does not unreasonably interfere with the Servicer's
normal operations or customer or employee relations to inspect, audit, and make
copies of and abstracts from the Servicer's records regarding the Receivables.
(h) Upon request, the Servicer shall furnish to the Owner Trustee or
the Indenture Trustee, within five Business Days, a list of all Receivables by
contract number and name of Obligor then held by the Issuer, together with a
reconciliation of such list to the Schedule of Receivables attached as Schedule
A to this Agreement and to each of the Servicer Certificates indicating removal
of Receivables from the Owner Trust Estate.
(i) The Servicer shall deliver to the Owner Trustee and the
Indenture Trustee:
(i) upon the execution and delivery of this Agreement, an
Opinion of Counsel either (a) stating that, in the opinion of such
counsel, all financing statements and continuation statements have
been executed and filed that are necessary fully to preserve and
protect the interest of the Issuer and the Indenture Trustee in the
Receivables, and reciting the details of such filings or referring
to prior Opinions of Counsel in which such details are given, or (b)
stating that, in the opinion of such counsel, no such action shall
be necessary to preserve and protect such interest; and
(ii) on or before March 31 of each year, commencing with March
31, 1998, an Opinion of Counsel, dated as of such date, either (a)
stating that, in the opinion of such counsel, all financing
statements and continuation statements have been executed and filed
that are necessary fully to preserve and protect the interest of the
Issuer and the Indenture Trustee in the Receivables, and reciting
the details of such filings or referring to prior opinions of
Counsel in which such details are given, or (b) stating that, in the
opinion of such counsel, no such action shall be necessary to
preserve and protect such interest. Notwithstanding the provisions
of Section 10.4, such Opinion of Counsel may be sent by regular
non-certified mail, and such mailed opinion shall be deemed
delivered when so mailed.
(j) The Seller shall, to the extent required by applicable law,
cause the Certificates and the Notes to be registered with the Securities and
Exchange Commission pursuant
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to Section 12(b) or Section 12(g) of the Exchange Act within the time periods
specified in such sections.
(k) For the purpose of facilitating the execution of this Agreement
and for other purposes, this Agreement may be executed simultaneously in any
number of counterparts, each of which counterparts shall be deemed to be an
original, and all of which counterparts shall constitute but one and the same
instrument.
SECTION 10.3. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without reference
to its conflict of law provisions, and the obligations, rights, remedies of the
parties hereunder shall be determined in accordance with such laws.
SECTION 10.4. Notices. All demands, notices, and communications
under this Agreement shall be in writing, personally delivered or mailed by
certified mail, return receipt requested, and shall be deemed to have been duly
given upon receipt (a) in the case of the Seller, c/o Chase Automotive Finance,
000 Xxxxxxx Xxxxxx, Xxxxxx Xxxx, Xxx Xxxx 00000 Attention: Financial Controller,
or at such other address as shall be designated by the Seller in a written
notice to the Indenture Trustee, (b) in the case of the Servicer, c/o Chase
Automotive Finance, 000 Xxxxxxx, Xxxxxx Xxxx, Xxx Xxxx 00000, Attention:
Financial Controller, or at such other address as shall be designated by the
Servicer in a written notice to the Indenture Trustee, (c) in the case of the
Indenture Trustee, at Xxxxx Xxxxxx xxx Xxxxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx
00000-0000, Attention: Corporate Trust Office, and, (d) in the case of the
Issuer and the Owner Trustee, at c/o Wilmington Trust Company, Xxxxxx Square
North, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attention: Corporate
Trust Administration. Any notice required or permitted to be mailed to a Holder
shall be given by first class mail, postage prepaid, at the address of record
of such Holder. Any notice to a Holder so mailed within the time prescribed in
this Agreement shall be conclusively presumed to have been duly given, whether
or not the Holder shall receive such notice.
SECTION 10.5. Severability of Provisions. If any one or more of the
covenants, agreements, provisions, or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions, or
terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the
Certificates or of the Notes or the rights of the Holders thereof.
SECTION 10.6. Assignment; References to Chase USA. Notwithstanding
anything to the contrary contained herein, except as provided in Sections 6.3,
7.3, 7.5 and 8.2, neither the Seller nor the Servicer may assign all, or a
portion of, its
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rights, obligations and duties under this Agreement unless (i) such transfer or
assignment satisfies the Rating Agency Condition. In the event of a transfer or
assignment pursuant to this Section 10.6, the Rating Agencies shall be provided
with notice of such transfer or assignment.
SECTION 10.7. Certificates and Notes Nonassessable and Fully Paid.
The interests represented by the Certificates and Notes shall be nonassessable
for any losses or expenses of the Issuer or for any reason whatsoever, and, upon
authentication thereof by the Indenture Trustee and the Owner Trustee pursuant
to the Trust Agreement and the Indenture, respectively, each Certificate and
Note shall be deemed fully paid.
SECTION 10.8. Third-Party Beneficiaries. This Agreement will inure
to the benefit of and be binding upon the parties hereto, and their respective
successors and permitted assigns. The Administrator, the Owner Trustee,
individually and on behalf of the Certificateholders, and the Indenture Trustee,
individually and on behalf of the Noteholders are third-party beneficiaries to
this Agreement and are entitled to the rights and benefits hereunder and may
enforce the provisions hereof as it were a party hereto. Except as otherwise
provided in this Agreement, no other person will have any right or obligation
hereunder.
SECTION 10.9. Assignment to Indenture Trustee. The Seller hereby
acknowledges and consents to any mortgage, pledge, assignment and grant of a
security interest by the Issuer to the Indenture Trustee pursuant to the
Indenture for the benefit of the Noteholders of all right, title and interest of
the Issuer in, to and under the Receivables and the other property constituting
the Owner Trust Estate and/or the assignment of any or all of the Issuer's
rights and obligations hereunder to the Indenture Trustee.
SECTION 10.10. Limitation of Liability of Owner Trustee and
Indenture Trustee. (a) Notwithstanding anything contained herein to the
contrary, this Agreement has been countersigned by Wilmington Trust Company not
in its individual capacity but solely in its capacity as Owner Trustee of the
Issuer, and in no event shall Wilmington Trust Company in its individual
capacity or, except as expressly provided in the Trust Agreement, as
beneficial owner of the Issuer have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer hereunder
or in any of the certificates, notices or agreements delivered pursuant hereto,
as to all of which recourse shall be had solely to the assets of the Issuer. For
all purposes of this Agreement, in the performance of its duties or obligations
hereunder or in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Articles VI, VII and VIII of the Trust
Agreement.
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(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been acknowledged and accepted by Norwest Bank Minnesota, National
Association not in its individual capacity but solely as Indenture Trustee, and
in no event shall Norwest Bank Minnesota, National Association have any
liability for the representations, warranties, covenants, agreements or other
obligations of the Issuer hereunder or in any of the certificates, notices or
agreements delivered pursuant hereto, as to all of which recourse shall be had
solely to the assets of the Issuer.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
CHASE MANHATTAN BANK USA, N.A.,
as Seller and Servicer
By_________________________________________
Name:
Title:
CHASE MANHATTAN AUTO OWNER TRUST,
1996-C
as Issuer
By: WILMINGTON TRUST COMPANY,
not in its individual
capacity but solely as
Owner Trustee on behalf
of the Issuer
By_________________________________________
Name:
Title:
Acknowledged and Accepted:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
not in its individual capacity,
but solely in its capacity
as Indenture Trustee
By:_________________________
Name:
Title:
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SCHEDULE A
[LIST OF RECEIVABLES]
Delivered to the Owner Trustee and the Indenture Trustee
on the Closing Date.
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SCHEDULE B
Location of Receivable Files
The Chase Manhattan Bank
20 Clinton Avenue South
0xx Xxxxx
XXXXXX Xxxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Iron Mountain
Xxxxx 0-X Xxxxx
X.X. Xxx 000
Xx. Xxxx, XX 00000
The Chase Manhattan Bank
000 Xxxxxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
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EXHIBIT A
[FORM OF SERVICER'S CERTIFICATE]
A-1
EXHIBIT B
[FORM OF CERTIFICATEHOLDER AND NOTEHOLDER REPORT]
E-1
