EXHIBIT 4.3
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SALE AND SERVICING AGREEMENT
between
PREMIER AUTO TRUST 1997-1,
Issuer,
and
CHRYSLER FINANCIAL CORPORATION,
Seller and Servicer
Dated as of March 1, 1997
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TABLE OF CONTENTS
Page
ARTICLE I
Definitions
SECTION 1.01. Definitions............................................. 1
SECTION 1.02. Other Definitional Provisions........................... 15
ARTICLE II
Conveyance of Receivables
SECTION 2.01. Conveyance of Receivables............................... 16
SECTION 2.02. [Reserved].............................................. 17
SECTION 2.03. Conveyance of Fixed Value Payments...................... 17
SECTION 2.04. Fixed Value Securities.................................. 17
ARTICLE III
The Receivables
SECTION 3.01. Representations and Warranties of Seller
with Respect to the Receivables......................... 18
SECTION 3.02. Repurchase upon Breach.................................. 22
SECTION 3.03. Custody of Receivable Files............................. 22
SECTION 3.04. Duties of Servicer as Custodian......................... 22
SECTION 3.05. Instructions; Authority To Act.......................... 23
SECTION 3.06. Custodian's Indemnification............................. 23
SECTION 3.07. Effective Period and Termination........................ 23
ARTICLE IV
Administration and Servicing of Receivables
SECTION 4.01. Duties of Servicer...................................... 24
SECTION 4.02. Collection and Allocation of Receivable Payments........ 24
SECTION 4.03. Realization upon Receivables............................ 25
SECTION 4.04. Physical Damage Insurance............................... 25
SECTION 4.05. Maintenance of Security Interests in Financed Vehicles.. 25
SECTION 4.06. Covenants of Servicer................................... 25
SECTION 4.07. Purchase of Receivables upon Breach..................... 25
SECTION 4.08. Servicing Fee........................................... 26
SECTION 4.09. Servicer's Certificate.................................. 26
SECTION 4.10. Annual Statement as to Compliance; Notice of Default.... 26
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SECTION 4.11. Annual Independent Certified Public Accountants'
Report.................................................. 27
SECTION 4.12. Access to Certain Documentation and Information
Regarding Receivables................................... 27
SECTION 4.13. Servicer Expenses....................................... 27
SECTION 4.14. Appointment of Subservicer.............................. 27
ARTICLE V
Distributions; Reserve Account;
Statements to Certificateholders and Noteholders
SECTION 5.01. Establishment of Trust Accounts......................... 28
SECTION 5.02. Collections............................................. 30
SECTION 5.03. Application of Collections.............................. 30
SECTION 5.04. [Reserved].............................................. 30
SECTION 5.05. Additional Deposits..................................... 31
SECTION 5.06. Distributions........................................... 31
SECTION 5.07. Reserve Account......................................... 32
SECTION 5.08. [Reserved].............................................. 33
SECTION 5.09. Statements to Noteholders and Certificateholders........ 33
SECTION 5.10. Net Deposits............................................ 34
SECTION 5.11. Transfer of Certificates................................ 34
ARTICLE VI
The Seller
SECTION 6.01. Representations of Seller............................... 34
SECTION 6.02. Corporate Existence..................................... 35
SECTION 6.03. Liability of Seller; Indemnities........................ 36
SECTION 6.04. Merger or Consolidation of, or Assumption of
Obligations of, Seller.................................. 37
SECTION 6.05. Limitation on Liability of Seller and Others............ 37
SECTION 6.06. Seller May Own Notes.................................... 37
ARTICLE VII
The Servicer
SECTION 7.01. Representations of Servicer............................. 38
SECTION 7.02. Indemnities of Servicer................................. 39
SECTION 7.03. Merger or Consolidation of, or Assumption of
Obligations of, Servicer................................ 40
SECTION 7.04. Limitation on Liability of Servicer and Others.......... 40
SECTION 7.05. CFC Not To Resign as Servicer........................... 41
ARTICLE VIII
Default
SECTION 8.01. Servicer Default........................................ 41
SECTION 8.02. Appointment of Successor................................ 42
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SECTION 8.03. Notification to Noteholders and Certificateholders...... 43
SECTION 8.04. Waiver of Past Defaults................................. 43
ARTICLE IX
Termination
SECTION 9.01. Optional Purchase of All Receivables.................... 43
ARTICLE X
Miscellaneous
SECTION 10.01. Amendment............................................... 44
SECTION 10.02. Protection of Title to Trust............................ 45
SECTION 10.03. Notices................................................. 47
SECTION 10.04. Assignment by the Seller or the Servicer................ 47
SECTION 10.05. Limitations on Rights of Others......................... 47
SECTION 10.06. Severability............................................ 47
SECTION 10.07. Separate Counterparts................................... 48
SECTION 10.08. Headings................................................ 48
SECTION 10.09. Governing Law........................................... 48
SECTION 10.10. Assignment by Issuer.................................... 48
SECTION 10.11. Nonpetition Covenants................................... 48
SECTION 10.12. Limitation of Liability of Owner Trustee
and Indenture Trustee................................... 48
SCHEDULE A Schedule of Receivables
SCHEDULE B Location of Receivable Files
EXHIBIT A [Reserved]
EXHIBIT B Form of Distribution Statement to Noteholders...........B-1
EXHIBIT C Form of Servicer's Certificate..........................C-1
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SALE AND SERVICING AGREEMENT dated as of March 1, 1997, between PREMIER
AUTO TRUST 1997-1, a Delaware business trust (the "Issuer"), and
CHRYSLER FINANCIAL CORPORATION, a Michigan corporation, as seller and
servicer.
WHEREAS the Issuer desires to purchase a portfolio of receivables
arising in connection with automobile retail installment sale contracts
generated by Chrysler Financial Corporation in the ordinary course of
business; and
WHEREAS Chrysler Financial Corporation is willing to sell such
receivables to, and to service such receivables on behalf of, the Issuer;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall
have the following meanings:
"Accelerated Principal Distribution Amount" means, with respect to any
Distribution Date, an amount equal to that portion of the Total Distribution
Amount for such Distribution Date that remains after the payment of (i) the
Servicing Fee, (ii) the Noteholders' Interest Distributable Amount, (iii) the
Regular Principal Distribution Amount and (iv) the amount, if any, required
to be deposited into the Reserve Account on such Distribution Date pursuant
to Section 5.06(a)(ii)(E).
"Amortizing Payment" means with respect to each Fixed Value Receivable
and each Collection Period prior to the date on which the Fixed Value Payment
is due, the amount specified in the applicable Contract in the payment
schedule as the "Amount of Each Payment", except that in the case of a
prepayment, liquidation or repurchase by the Seller or purchase by the
Servicer, the Amortizing Payment shall be equal to the aggregate "Amount of
Each Payment" that has not yet been paid for the period through and including
the last payment prior to the date when the Fixed Value Payment is due less
the amount of the unearned finance charges under the related Contract
allocable to such amount in accordance with the Servicer's customary
procedures.
"Amount Financed" means (i) with respect to a Standard Receivable, the
amount advanced under the Standard Receivable toward the purchase price of
the Financed Vehicle and any related costs, exclusive of any amount allocable
to the premium of force-placed physical damage insurance covering the
Financed Vehicle; and (ii) with respect to a Fixed Value Receivable an amount
equal to the present value of the fixed level payment monthly installments
(not including the amount designated as the Fixed Value Payment) under the
Fixed Value Receivable, assuming that each payment is made on the due date in
the month in which such payment is due, discounted at the APR for such Fixed
Value Receivable.
"Annual Percentage Rate" or "APR" of a Receivable means the annual rate
of finance charges stated in the related Contract.
"Basic Documents" means the Indenture, the Trust Agreement, the
Administration Agreement and the Purchase Agreement.
"Cash Release Amount" means, with respect to a Distribution Date, the
amount equal to 5.5% of the Regular Principal Distribution Amount for such
Distribution Date.
"Certificate Distribution Account" has the meaning assigned in the
Trust Agreement.
"Certificateholders" has the meaning assigned to such term in the Trust
Agreement.
"Certificates" means the Trust Certificates (as defined in the Trust
Agreement).
"CFC" means Chrysler Financial Corporation, a Michigan corporation, or
its successors.
"Class" means any one of the classes of Notes.
"Class A Notes" means the Class A-1 Notes, Class A-2 Notes, Class A-3
Notes and Class A-4 Notes.
"Class A-1 Final Scheduled Distribution Date" means the December 1997
Distribution Date.
"Class A-1 Noteholder" means the Person in whose name a Class A-1 Note
is registered in the Note Register.
"Class A-2 Final Scheduled Distribution Date" means the April 2000
Distribution Date.
"Class A-2 Noteholder" means the Person in whose name a Class A-2 Note
is registered in the Note Register.
"Class A-3 Final Scheduled Distribution Date" means the August 2001
Distribution Date.
"Class A-3 Noteholder" means the Person in whose name a Class A-3 Note
is registered in the Note Register.
"Class A-4 Final Scheduled Distribution Date" means the April 2002
Distribution Date.
"Class A-4 Noteholder" means the Person in whose name a Class A-4 Note
is registered in the Note Register.
"Class B Available Amount" means, with respect to a Distribution Date,
the lesser of (i) $921,093.75 less the aggregate amount of any applications
of funds in the Reserve Account pursuant to clause second of Section
5.07(c)(i) to pay interest on the Class B Notes and (ii) 1.6375% of the
Outstanding Amount of the Class B Notes on such Distribution Date (before
giving effect to any reduction thereof on such Distribution Date); provided,
however, that the Class B Available Amount shall be zero after any reduction
by a Rating Agency of its rating
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of any Class of Class A Notes to less than "A" or its equivalent, or any
withdrawal of such a rating by a Rating Agency, unless such rating has been
restored.
"Class B Final Scheduled Distribution Date" means the September 2003
Distribution Date.
"Class B Noteholder" means the Person in whose name a Class B Note is
registered in the Note Register.
"Collateral Release Period" means the period from and including the
First Release Distribution Date to and including the Distribution Date on
which the aggregate amount of the cash and Principal Balances of Receivables
released from the lien of the Indenture pursuant to Sections 5.06(a)(ii)(D)
and 5.06(c) is equal to the Initial Overcollateralization Amount.
"Collection Account" means the account designated as such, established
and maintained pursuant to Section 5.01(a)(i).
"Collection Period" means a calendar month. Any amount stated as of the
last day of a Collection Period or as of the first day of a Collection Period
shall give effect to the following calculations as determined as of the close
of business on such last day: (1) all applications of collections, and (2)
all distributions to be made on the following Distribution Date.
"Company" means Premier Receivables L.L.C., a Michigan limited
liability company, and any successor in interest or, if the Rights (as
defined in the Purchase Agreement) have been assigned to a Person that
becomes a transferee in accordance with Section 5.06 of the Purchase
Agreement, such transferee Person and any successor in interest.
"Contract" means a motor vehicle retail installment sale contract.
"Corporate Trust Office" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of the execution of this Agreement is
located at Xxx Xxxxx Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000;
Corporate Trust Services Division; or at such other address as the Indenture
Trustee may designate from time to time by notice to the Noteholders and the
Seller, or the principal corporate trust office of any successor Indenture
Trustee (of which address such successor Indenture Trustee will notify the
Noteholders and the Seller).
"Cutoff Date" means February 26, 1997.
"Dealer" means the dealer who sold a Financed Vehicle and who
originated and assigned the related Receivable to CFC under an existing
agreement between such dealer and CFC.
"Delivery" when used with respect to Trust Account Property means:
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that
constitute "instruments" within the meaning of Section 9-105(1)(i) of
the UCC and are susceptible of physical delivery, transfer thereof to
the Indenture Trustee or its nominee or custodian by physical delivery
to the Indenture Trustee or its nominee or custodian endorsed to, or
registered in the name of, the
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Indenture Trustee or its nominee or custodian or endorsed in blank,
and, with respect to a certificated security (as defined in Section
8-102 of the UCC) transfer thereof (i) by delivery of such certificated
security endorsed to, or registered in the name of, the Indenture
Trustee or its nominee or custodian or endorsed in blank to a financial
intermediary (as defined in Section 8-313 of the 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)
by delivery thereof to a "clearing corporation" (as defined in Section
8-102(3) of the UCC) and the making by such clearing corporation of
appropriate entries on its books reducing the appropriate securities
account of the transferor and increasing the appropriate securities
account of a financial intermediary by the amount of such certificated
security, the identification by the clearing corporation of the
certificated securities for the sole and exclusive account of the
financial intermediary, the maintenance of such certificated securities
by such clearing corporation or a "custodian bank" (as defined in
Section 8-102(4) of the UCC) or the nominee of either subject to the
clearing corporation's exclusive control, 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, in any event, any such Physical Property in registered form shall
be in the name of the Indenture Trustee or its nominee or custodian;
and such additional or alternative procedures as may hereafter become
appropriate to effect the complete transfer of ownership of any such
Trust Account Property (as defined herein) to the Indenture Trustee or
its nominee or 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 book-entry securities held through the
Federal Reserve System pursuant to Federal book-entry regulations, the
following procedures, all in accordance with applicable law, including
applicable Federal regulations and Articles 8 and 9 of the UCC:
book-entry registration of such Trust Account Property to an
appropriate book-entry account maintained with a Federal Reserve Bank
by a financial intermediary which is also a "depository" pursuant to
applicable Federal regulations and issuance by such financial
intermediary of a deposit advice or other written confirmation of such
book-entry registration to the Indenture Trustee or its nominee or
custodian of the purchase by the Indenture Trustee or its nominee or
custodian of such book-entry securities; the identification by the
Federal Reserve Bank of such book-entry securities on its record being
credited to the financial intermediary's Participant's securities
account; the making by such financial intermediary of entries in its
books and records identifying such book-entry security held through the
Federal Reserve System pursuant to Federal book-entry regulations as
being credited to the Indenture Trustee's securities account or
custodian's securities account and indicating that such custodian holds
such Trust Account Property solely as agent for the Indenture Trustee
or its nominee or custodian; and such additional or alternative
procedures as may hereafter become appropriate to effect complete
transfer of ownership of any such Trust Account Property to the
Indenture Trustee or
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its nominee or custodian, consistent with changes in applicable law or
regulations or the interpretation thereof; and
(c) with respect to any item of Trust Account Property that is an
uncertificated security under Article 8 of the 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.
"Depositor" means the Seller in its capacity as Depositor under the
Trust Agreement.
"Distribution Date" means, with respect to each Collection Period, the
sixth day of the following month or, if such day is not a Business Day, the
immediately following Business Day, commencing on April 7, 1997.
"Eligible Deposit Account" means either (a) a segregated account with
an Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution organized under the laws of the
United States of America or any one of the states thereof or the District of
Columbia (or any domestic branch of a foreign bank), having corporate trust
powers and acting as trustee for funds deposited in such account, so long as
any of the securities of such depository institution shall have a credit
rating from each Rating Agency in one of its generic rating categories that
signifies investment grade.
"Eligible Institution" means (a) the corporate trust department of the
Indenture Trustee, the Owner Trustee or The Chase Manhattan Bank so long as
it shall be Paying Agent under the Trust Agreement or (b) a depository
institution organized under the laws of the United States of America or any
one of the states thereof or the District of Columbia (or any domestic branch
of a foreign bank), which (i) has either (A) a long-term unsecured debt
rating of AAA or better by Standard & Poor's and A1 or better by Moody's or
(B) a certificate of deposit rating of A-1+ by Standard & Poor's and P-1 or
better by Moody's, or any other long-term, short-term or certificate of
deposit rating acceptable to the Rating Agencies and (ii) whose deposits are
insured by the FDIC. If so qualified, the Indenture Trustee, the Owner
Trustee or The Chase Manhattan Bank may be considered an Eligible Institution
for the purposes of clause (b) of this definition.
"Eligible Investments" means book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence:
(a) direct obligations of, and obligations fully guaranteed as to
the full and timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of
any depository institution or trust company incorporated under the laws
of the United States of America or any state thereof (or any domestic
branch of a foreign bank) and subject to supervision and examination by
Federal or State banking or depository institution authorities;
provided, however, that at the time of the investment or contractual
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commitment to invest therein, the commercial paper or other short-term
unsecured debt obligations (other than such obligations the rating of
which is based on the credit of a Person other than such depository
institution or trust company) thereof shall have a credit rating from
each of the Rating Agencies in the highest applicable rating category
granted thereby;
(c) commercial paper, variable amount notes or other short term
debt obligations having, at the time of the investment or contractual
commitment to invest therein, a rating from each of the Rating Agencies
in the highest applicable rating category granted thereby;
(d) investments in money market or common trust funds having a
rating from each of the Rating Agencies in the highest applicable
rating category granted thereby (including funds for which the
Indenture Trustee or the Owner Trustee or any of their respective
Affiliates is investment manager or advisor);
(e) bankers' acceptances issued by any depository institution or
trust company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of
America or any agency or instrumentality thereof the obligations of
which are backed by the full faith and credit of the United States of
America, in either case entered into with a depository institution or
trust company (acting as principal) described in clause (b);
(g) repurchase obligations with respect to any security or whole
loan, entered into with (i) a depository institution or trust company
(acting as principal) described in clause (b) above (except that the
rating referred to in the proviso in such clause (b) shall be A-1 or
higher in the case of Standard & Poor's) (such depository institution
or trust company being referred to in this definition as a "financial
institution"), (ii) a broker/dealer (acting as principal) registered as
a broker or dealer under Section 15 of the Exchange Act (a
"broker/dealer") the unsecured short-term debt obligations of which are
rated P-1 by Moody's and at least A-1 by Standard & Poor's at the time
of entering into such repurchase obligation (a "rated broker/dealer"),
(iii) an unrated broker/dealer (an "unrated broker/dealer"), acting as
principal, that is a wholly-owned subsidiary of a non-bank holding
company the unsecured short-term debt obligations of which are rated
P-1 by Moody's and at least A-1 by Standard & Poor's at the time of
entering into such repurchase obligation (a "Rated Holding Company") or
(iv) an unrated subsidiary (a "Guaranteed Counterparty"), acting as
principal, that is a wholly-owned subsidiary of a direct or indirect
parent Rated Holding Company, which guarantees such subsidiary's
obligations under such repurchase agreement; provided that the
following conditions are satisfied:
(A) the aggregate amount of funds invested in repurchase
obligations of a financial institution, a rated broker/dealer, an
unrated broker/dealer or Guaranteed Counterparty in respect of
which the Standard & Poor's unsecured short-term ratings are A-1
(in the case of an unrated broker/dealer or Guaranteed
Counterparty, such rating being that of the related Rated Holding
Company) shall not exceed 20% of the sum of the then outstanding
principal balance of the Notes
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(there being no limit on the amount of funds that may be invested
in repurchase obligations in respect of which such Standard &
Poor's rating is A-1+ (in the case of an unrated broker/dealer or
Guaranteed Counterparty, such rating being that of the related
Rated Holding Company));
(B) in the case of the Reserve Account, the rating from
Standard & Poor's in respect of the unsecured short-term debt
obligations of the financial institution, rated broker/dealer,
unrated broker/dealer or Guaranteed Counterparty (in the case of
an unrated broker/dealer or Guaranteed Counterparty, such rating
being that of the related Rated Holding Company) shall be A-1+;
(C) the repurchase obligation must mature within 30 days of
the date on which the Indenture Trustee or the Issuer, as
applicable, enters into such repurchase obligation;
(D) the repurchase obligation shall not be subordinated to
any other obligation of the related financial institution, rated
broker/dealer, unrated broker/dealer or Guaranteed Counterparty;
(E) the collateral subject to the repurchase obligation is
held, in the appropriate form, by a custodial bank on behalf of
the Indenture Trustee or the Issuer, as applicable;
(F) the repurchase obligation shall require that the
collateral subject thereto shall be marked to market daily;
(G) in the case of a repurchase obligation of a Guaranteed
Counterparty, the following conditions shall also be satisfied:
(i) the Indenture Trustee or the Issuer, as
applicable, shall have received an opinion of counsel (which
may be in-house counsel) to the effect that the guarantee of
the related Rated Holding Company is a legal, valid and
binding agreement of the Rated Holding Company, enforceable
in accordance with its terms, subject as to enforceability
to bankruptcy, insolvency, reorganization and moratorium or
other similar laws affecting creditors' rights generally and
to general equitable principles;
(ii) the Indenture Trustee or the Issuer, as
applicable, shall have received (x) an incumbency
certificate for the signer of such guarantee, certified by
an officer of such Rated Holding Company and (y) a
resolution, certified by an officer of the Rated Holding
Company, of the board of directors (or applicable committee
thereof) of the Rated Holding Company authorizing the
execution, delivery and performance of such guarantee by the
Rated Holding Company;
(iii) the only conditions to the obligation of such
Rated Holding Company to pay on behalf of the Guaranteed
Counterparty shall be that the Guaranteed Counterparty shall
not have paid under such repurchase obligation when required
(it being understood that no notice to, demand on
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or other action in respect of the Guaranteed Counterparty is
necessary) and that the Indenture Trustee or the Issuer
shall make a demand on the Rated Holding Company to make the
payment due under such guarantee;
(iv) the guarantee of the Rated Holding Company shall
be irrevocable with respect to such repurchase obligation
and shall not be subordinated to any other obligation of the
Rated Holding Company; and
(v) each of Standard & Poor's and Moody's has
confirmed in writing to the Indenture Trustee or Issuer, as
applicable, that it has reviewed the form of the guarantee
of the Rated Holding Company and has determined that the
issuance of such guarantee will not result in the downgrade
or withdrawal of the ratings assigned to the Notes.
(H) the repurchase obligation shall require that the
repurchase obligation be overcollateralized and shall provide
that, upon any failure to maintain such over-collateralization,
the repurchase obligation shall become due and payable, and
unless the repurchase obligation is satisfied immediately, the
collateral subject to the repurchase agreement shall be
liquidated and the proceeds applied to satisfy the unsatisfied
portion of the repurchase obligation;
(h) any other investment with respect to which the Issuer or the
Servicer has received written notification from the Rating Agencies
that the acquisition of such investment as an Eligible Investment will
not result in a withdrawal or downgrading of the ratings on the Notes.
"FDIC" means the Federal Deposit Insurance Corporation.
"Final Scheduled Distribution Date" means the Distribution Date
immediately following the Final Scheduled Maturity Date.
"Final Scheduled Maturity Date" means March 31, 2003.
"Financed Vehicle" means an automobile or light-duty truck, together
with all accessions thereto, securing an Obligor's indebtedness under the
respective Standard Receivable or Fixed Value Receivable.
"First Release Distribution Date" means the first Distribution Date on
which the Overcollateralization Amount is at least equal to the sum of (a)
the Initial Overcollateralization Amount and (b) the product of (i) 2% and
(ii) the excess of the Related Pool Balance over the Initial
Overcollateralization Amount.
"Fixed Value Payment" means, with respect to each Fixed Value
Receivable, the amount specified on the applicable Contract as the "Amount of
Fixed Value Payment" reduced (i) in the case of a prepayment or repurchase,
by the amount of the unearned finance charges under the Contract allocable to
such payment in accordance with the Servicer's customary procedures and (ii)
in the case of a liquidation, by the excess of Liquidation Proceeds collected
by the Servicer over the Amortizing Payment on such date.
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"Fixed Value Receivable" means any Contract listed on Schedule A (which
Schedule may be in the form of microfiche) that provides for amortization of
the loan over a series of fixed level payment monthly installments in
accordance with the actuarial method, the simple interest method or the Rule
of 78s, but also requires a final payment that is greater than the scheduled
monthly payments and is due after payment of such scheduled monthly payments
and that may be made by (i) payment in full in cash of a fixed value amount,
(ii) return of the Financed Vehicle to the Servicer provided certain
conditions are satisfied or (iii) refinancing the final fixed value payment
in accordance with certain conditions.
"Fixed Value Securities" has the meaning assigned to such term in
Section 2.04.
"Indenture" means the Indenture dated as of March 1, 1997, between the
Issuer and the Indenture Trustee.
"Indenture Trustee" means the Person acting as Indenture Trustee under
the Indenture, its successors in interest and any successor trustee under the
Indenture.
"Initial Overcollateralization Amount" means $60,012,089.22.
"Insolvency Event" means, with respect to 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, 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
for such Person or for any substantial part of its property, or the making by
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 Distribution Amount" means, with respect to any Distribution
Date, the sum of the following amounts, without duplication, with respect to
the Receivables in respect of the Collection Period preceding such
Distribution Date: (a) that portion of all collections on Receivables
allocable to interest, (b) Liquidation Proceeds with respect to the
Receivables to the extent allocable to interest due thereon in accordance
with the Servicer's customary servicing procedures, (c) the Purchase Amount
of each Receivable that became a Purchased Receivable during such Collection
Period to the extent attributable to accrued interest on such Receivable, (d)
Recoveries for such Collection Period, and (e) Investment Earnings for the
related Distribution Date; provided, however, that in calculating the
Interest Distribution Amount all payments and proceeds (including Liquidation
Proceeds) of any Purchased Receivables the Purchase Amount of which has been
included in the Interest Distribution Amount in a prior Collection Period
shall be excluded.
9
"Investment Earnings" means, with respect to any Distribution Date, the
investment earnings (net of losses and investment expenses) on amounts on
deposit in the Trust Accounts to be deposited into the Collection Account on
such Distribution Date pursuant to Section 5.01(b).
"Issuer" means Premier Auto Trust 1997-1.
"Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective Receivable by operation of law as a result of
any act or omission by the related Obligor.
"Liquidated Receivable" means any Receivable liquidated by the Servicer
through the sale of a Financed Vehicle or otherwise.
"Liquidation Proceeds" means, with respect to any Liquidated
Receivable, the moneys collected in respect thereof, from whatever source on
a Liquidated Receivable during the Collection Period in which such Receivable
became a Liquidated Receivable, net of the sum of any amounts expended by the
Servicer in connection with such liquidation and any amounts required by law
to be remitted to the Obligor on such Liquidated Receivable.
"Moody's" means Xxxxx'x Investors Service, Inc., or its successor.
"Note Amount" means, with respect to any Distribution Date, the
aggregate outstanding principal amount of the Notes after giving effect to
payments of principal made on the Notes on all preceding Distribution Dates.
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 5.01.
"Note Pool Factor" means, with respect to each Class of Notes as of the
close of business on the last day of a Collection Period, a seven-digit
decimal figure equal to the outstanding principal balance of such Class of
Notes (after giving effect to any reductions thereof to be made on the
immediately following Distribution Date) divided by the original outstanding
principal balance of such Class of Notes. The Note Pool Factor will be
1.0000000 as of the Closing Date; thereafter, the Note Pool Factor will
decline to reflect reductions in the outstanding principal balance of such
Class of Notes.
"Noteholders' Distributable Amount" means, with respect to any
Distribution Date, the sum of the Noteholders' Principal Distributable Amount
and the Noteholders' Interest Distributable Amount for such Distribution
Date.
"Noteholders' Interest Carryover Shortfall" means, with respect to any
Distribution Date, the excess of the sum of the Noteholders' Monthly Interest
Distributable Amount for the preceding Distribution Date and any outstanding
Noteholders' Interest Carryover Shortfall on such preceding Distribution
Date, over the amount in respect of interest that is actually deposited in
the Note Distribution Account on such preceding Distribution Date, plus
interest on the amount of interest due but not paid to Noteholders on the
preceding Distribution Date, to the extent permitted by law, at the
respective Interest Rates borne by each Class of the Notes for the related
Interest Period.
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"Noteholders' Interest Distributable Amount" means, with respect to any
Distribution Date, the sum of the Noteholders' Monthly Interest Distributable
Amount for such Distribution Date and the Noteholders' Interest Carryover
Shortfall for such Distribution Date. For all purposes of this Agreement and
the Basic Documents, interest with respect to all Classes of Notes other than
the Class A-1 Notes shall be computed on the basis of a 360-day year
consisting of twelve 30-day months; and interest with respect to the Class
A-1 Notes shall be computed on the basis of the actual number of days in each
applicable Interest Accrual Period divided by 360.
"Noteholders' Monthly Interest Distributable Amount" means, with
respect to any Distribution Date, interest accrued for the related Interest
Accrual Period on each Class of Notes at the respective Interest Rate for
such Class on the outstanding principal balance of the Notes of such Class on
the immediately preceding Distribution Date (or, in the case of the first
Distribution Date, the Closing Date), after giving effect to all
distributions of principal to the Noteholders of such Class on or prior to
such Distribution Date (or, in the case of the first Distribution Date, on
the Closing Date).
"Noteholders' Monthly Principal Distributable Amount" means, with
respect to any Distribution Date, the sum of (i) the Regular Principal
Distribution Amount (less, on each Distribution Date in the Collateral
Release Period, the Cash Release Amount) plus (ii) the Accelerated Principal
Distribution Amount plus (iii) any accelerated payments of principal required
to be made from amounts on deposit in the Reserve Account pursuant to Section
5.07(b)(ii).
"Noteholders' Principal Carryover Shortfall" means, as of the close of
any Distribution Date, the excess of the Noteholders' Monthly Principal
Distributable Amount and any outstanding Noteholders' Principal Carryover
Shortfall from the preceding Distribution Date, over the amount in respect of
principal that is actually deposited in the Note Distribution Account on such
current Distribution Date.
"Noteholders' Principal Distributable Amount" means, with respect to
any Distribution Date, the sum of the Noteholders' Monthly Principal
Distributable Amount for such Distribution Date and the Noteholders'
Principal Carryover Shortfall as of the close of the preceding Distribution
Date; provided, however, that the Noteholders' Principal Distributable Amount
shall not exceed the outstanding principal balance of the Notes. In addition,
(a) on the Class A-1 Final Scheduled Distribution Date, 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 Date and allocable to
principal) to reduce the Outstanding Amount of the Class A-1 Notes to zero;
(b) on the Class A-2 Final Scheduled Distribution Date, 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 Date and allocable to
principal) to reduce the Outstanding Amount of the Class A-2 Notes to zero;
(c) on the Class A-3 Final Scheduled Distribution Date, 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 Date and allocable to
principal) to reduce the Outstanding Amount of the Class A-3 Notes to zero;
(d) on the Class A-4 Final Scheduled Distribution Date, the principal
required to be deposited in the Note Distribution Account will include the
amount necessary (after giving effect to the
11
other amounts to be deposited in the Note Distribution Account on such
Distribution Date and allocable to principal) to reduce the Outstanding
Amount of the Class A-4 Notes to zero; and (e) on the Class B Final Scheduled
Distribution Date, 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 Date and allocable to principal) to reduce the Outstanding
Amount of the Class B Notes to zero.
"Obligor" on a Receivable means the purchaser or co-purchasers of the
Financed Vehicle and any other Person who owes payments under the Receivable.
"Officers' Certificate" means a certificate signed by (a) the chairman
of the board, any vice president, the controller or any assistant controller
and (b) the president, a treasurer, assistant treasurer, secretary or
assistant secretary of the Seller, the Company or the Servicer, as
appropriate.
"OMSC" means Overseas Military Sales Corporation, or its successor.
"OMSC Receivable" means any Standard Receivable acquired by CFC from
OMSC.
"Opinion of Counsel" means one or more written opinions of counsel, who
may be an employee of or counsel to the Seller, the Company or the Servicer,
which counsel shall be acceptable to the Indenture Trustee, the Owner Trustee
or the Rating Agencies, as applicable.
"Original Pool Balance" means $1,560,012,089.22.
"Overcollateralization Amount" means, with respect to any Distribution
Date, the excess of (i) the Related Pool Balance over (ii) the Note Amount.
"Overcollateralization Percentage" means, with respect to any
Distribution Date, the percentage derived from the fraction, the numerator of
which is the Overcollateralization Amount for such Distribution Date and the
denominator of which is the Related Pool Balance.
"Owner Trust Estate" has the meaning assigned to such term in the Trust
Agreement.
"Owner Trustee" means the Person acting as Owner Trustee under the
Trust Agreement, its successors in interest and any successor owner trustee
under the Trust Agreement.
"Payment Determination Date" means, with respect to any Distribution
Date, the Business Day immediately preceding such Distribution Date.
"Physical Property" has the meaning assigned to such term in the
definition of "Delivery" above.
"Pool Balance" means, as of the close of business on the last day of a
Collection Period, the aggregate Principal Balance of the Receivables as of
such day (excluding Purchased Receivables and Liquidated Receivables).
"Principal Balance" of a Receivable, as of the close of business on the
last day of a Collection Period, means the Amount Financed minus the sum of
(i) the portion of all payments
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made by or on behalf of the related Obligor on or prior to such day and
allocable to principal using the Simple Interest Method and (ii) any payment
of the Purchase Amount with respect to the Receivable allocable to principal.
"Purchase Agreement" means the Purchase Agreement dated as of March 1,
1997, between the Seller and the Company.
"Purchase Amount" means the amount, as of the close of business on the
last day of a Collection Period, required to prepay in full a Receivable
under the terms thereof including interest to the end of the month of
purchase.
"Purchased Receivable" means a Receivable purchased as of the close of
business on the last day of a Collection Period by the Servicer pursuant to
Section 4.07 or by the Seller pursuant to Section 3.02.
"Rating Agency" means Moody's and Standard & Poor's or, if no such
organization or successor is any longer in existence, a nationally recognized
statistical rating organization or other comparable Person designated by the
Seller, notice of which designation shall be given to the Indenture Trustee,
the Owner Trustee and the Servicer. Any notice required to be given to a
Rating Agency pursuant to this Agreement shall also be given to Fitch
Investors Service, L.P. and Duff & Xxxxxx Credit Rating Co., although, except
as set forth above, neither shall be deemed to be a Rating Agency for any
purposes of this Agreement.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given 10 days' (or such shorter period as shall
be acceptable to each Rating Agency) prior notice thereof and that each of
the Rating Agencies shall have notified the Seller, the Company, the
Servicer, the Owner Trustee and the Indenture Trustee in writing that such
action will not result in a reduction or withdrawal of the then current
rating of the Notes.
"Realized Losses" means, with respect to any Receivable that becomes a
Liquidated Receivable, the excess of the Principal Balance of such Liquidated
Receivable over Liquidation Proceeds to the extent allocable to principal.
"Receivable" means (i) any Standard Receivable and (ii) the Amortizing
Payments with respect to any Fixed Value Receivable.
"Receivable Files" means the documents specified in Section 3.03.
"Recoveries" means, with respect to any Receivable that becomes a
Liquidated Receivable, monies collected in respect thereof, from whatever
source, during any Collection Period following the Collection Period in which
such Receivable became a Liquidated Receivable, net of the sum of any amounts
expended by the Servicer for the account of the Obligor and any amounts
required by law to be remitted to the Obligor.
"Regular Principal Distribution Amount" means, with respect to any
Distribution Date, the sum of the following amounts, without duplication,
with respect to the Receivables in respect of the Collection Period preceding
such Distribution Date: (a) that portion of all collections on Receivables
allocable to principal, (b) all Liquidation Proceeds attributable to the
principal amount of Receivables that became Liquidated Receivables during
such Collection
13
Period in accordance with the Servicer's customary servicing procedures, plus
the amount of Realized Losses with respect to such Liquidated Receivables,
(c) to the extent attributable to principal, the Purchase Amount of each
Receivable that became a Purchased Receivable during such Collection Period,
(d) partial prepayments relating to refunds of extended warranty protection
plan costs or of physical damage, credit life or disability insurance policy
premiums, but only if such costs or premiums were financed by the respective
Obligors thereon as of the date of the original contract and only to the
extent not included under clause (a) above, and (e) on the Final Scheduled
Distribution Date, any amounts advanced by the Servicer on such Final
Scheduled Distribution Date with respect to principal on the Receivables;
provided, however, that in calculating the Regular Principal Distribution
Amount all payments and proceeds (including Liquidation Proceeds) of any
Purchased Receivables the Purchase Amount of which has been included in the
Principal Distribution Amount in a prior Collection Period will be excluded
"Related Pool Balance" means, with respect to any Distribution Date,
the Pool Balance as of the beginning of the preceding Collection Period.
"Reserve Account" means the account designated as such, established and
maintained pursuant to Section 5.01.
"Reserve Account Initial Deposit" means the initial deposit of cash and
Eligible Investments in the amount of $15,000,000 made by the Seller into the
Reserve Account on the Closing Date.
"Seller" means CFC and its successors in interest to the extent
permitted hereunder.
"Servicer" means CFC, as the servicer of the Receivables, and each
successor to CFC (in the same capacity) pursuant to Section 7.03 or 8.02.
"Servicer Default" means an event specified in Section 8.01.
"Servicer's Certificate" means an Officers' Certificate of the Servicer
delivered pursuant to Section 4.09, substantially in the form of Exhibit C.
"Servicing Fee" means the fee payable to the Servicer for services
rendered during each Collection Period, determined pursuant to Section 4.08.
"Servicing Fee Rate" means 1.00% per annum.
"Simple Interest Method" means the method of allocating a fixed level
payment to principal and interest, pursuant to which the portion of such
payment that is allocated to interest is equal to the product of the fixed
rate of interest multiplied by the unpaid principal balance multiplied by the
period of time elapsed since the preceding payment of interest was made and
the remainder of such payment is allocable to principal.
"Simple Interest Receivable" means any Receivable under which the
portion of a payment allocable to interest and the portion allocable to
principal is determined in accordance with the Simple Interest Method.
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"Specified Reserve Account Balance" means, with respect to any
Distribution Date, an amount equal to the Reserve Account Initial Deposit;
provided, however, that if, after the Collateral Release Period, the
Overcollateralization Percentage at any time equals at least 7.75%, then the
Specified Reserve Account Balance shall be $11,250,000.
"Standard & Poor's" means Standard & Poor's Ratings Services, a
division of The XxXxxx-Xxxx Companies, Inc., or its successor.
"Standard Receivable" means any Contract listed on Schedule A (which
Schedule may be in the form of microfiche) that is not a Fixed Value
Receivable.
"Targeted Overcollateralization Amount" means, with respect to a
Distribution Date, the amount equal to (a) the quotient derived from dividing
the Note Amount for such Distribution Date by 0.945 minus (b) such Note
Amount.
"Total Distribution Amount" means, for each Distribution Date, the sum
of the applicable Interest Distribution Amount and the applicable Regular
Principal Distribution Amount (other than the portion thereof attributable to
Realized Losses).
"Trust" means the Issuer.
"Trust Account Property" means the Trust Accounts, all amounts and
investments held from time to time in any Trust 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.
"Trust Accounts" has the meaning assigned thereto in Section 5.01.
"Trust Agreement" means the Amended and Restated Trust Agreement dated
as of March 1, 1997, among the Seller, the Company and the Owner Trustee.
"Trust Officer" means, in the case of the Indenture Trustee, any
Officer within the Corporate Trust Office of the Indenture Trustee, including
any Vice President, Assistant Vice President, Secretary, 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 and, with respect to the Owner Trustee, any
officer in the Corporate Trust Administration Department of the Owner Trustee
with direct responsibility for the administration of the Trust Agreement and
the Basic Documents on behalf of the Owner Trustee.
SECTION 1.02. Other Definitional Provisions. (a) Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to
them in the Indenture.
(b) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant
hereto unless otherwise defined therein.
15
(c) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given
to them under generally accepted accounting principles. To the extent that
the definitions of accounting terms in this Agreement or in any such
certificate or other document are inconsistent with the meanings of such
terms under generally accepted accounting principles, the definitions
contained in this Agreement or in any such certificate or other document
shall control.
(d) The words "hereof", "herein", "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement; Article, Section,
Schedule and Exhibit references contained in this Agreement are references to
Articles, Sections, Schedules and Exhibits in or to this Agreement unless
otherwise specified; and the term "including" shall mean "including without
limitation".
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means
such agreement, instrument or statute as from time to time amended, modified
or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.
ARTICLE II
Conveyance of Receivables
SECTION 2.01. Conveyance of Receivables. In consideration of the
Issuer's delivery to or upon the order of the Seller of $1,557,019,230.96,
less (i) the amount to be deposited to the Reserve Account on the Closing
Date and (ii) the Initial Overcollateralization Amount, and the Certificates,
the Seller does hereby sell, transfer, assign, set over and otherwise convey
to the Issuer, without recourse (subject to the obligations of the Seller set
forth herein), all right, title and interest of the Seller in and to:
(a) the Receivables and all moneys received thereon on and after
February 26, 1997;
(b) the security interests in the Financed Vehicles granted by
Obligors pursuant to the Receivables and any other interest of the
Seller in the Financed Vehicles;
(c) any proceeds with respect to the Receivables from claims on
any physical damage, credit life or disability insurance policies
covering Financed Vehicles or Obligors;
16
(d) any proceeds from recourse to Dealers with respect to
Receivables with respect to which the Servicer has determined in
accordance with its customary servicing procedures that eventual
payment in full is unlikely;
(e) any Financed Vehicle that shall have secured a Receivable and
shall have been acquired by or on behalf of the Seller, the Servicer,
the Company or the Trust;
(f) all right, title and interest in all funds on deposit from
time to time in the Trust Accounts, including the Reserve Account
Initial Deposit, and in all investments and proceeds thereof (including
all income thereon); and
(g) the proceeds of any and all of the foregoing.
The Seller hereby directs the Issuer to issue the Certificates to the
Company. The Seller and the Issuer acknowledge that $250,000,000 of the
purchase price of the Receivables owed by the Issuer to the Seller pursuant
to this Section 2.01 shall be offset by the Issuer against delivery of the
Class A-1 Notes to the Seller.
SECTION 2.02. [Reserved]
SECTION 2.03. Conveyance of Fixed Value Payments. Promptly following
the transfer to the Issuer of the Receivables on the Closing Date, the Issuer
shall, without further action hereunder, be deemed to sell, transfer, assign,
set over and otherwise convey to the Seller, effective as of the Closing
Date, without recourse, representation or warranty, all the right, title and
interest of the Issuer in and to the Fixed Value Payments, all monies due and
to become due and all amounts received with respect thereto and all proceeds
thereof, subject to Section 5.03(b).
SECTION 2.04. Fixed Value Securities. (a) At any time after the Closing
Date, at the option of the Seller and upon 10 days prior notice to the Owner
Trustee and the Indenture Trustee, the Seller will be permitted to sell to
the Issuer, and the Issuer shall be obligated to purchase from the Seller
(subject to the availability of funds), all or any portion of the Fixed Value
Payments, subject to the terms and conditions described below. Upon any such
sale, (x) the Seller and the Owner Trustee will enter into an amendment to
this Agreement and the Basic Documents to provide for, at the election of the
Seller, the issuance of certificates representing ownership interests in the
Trust to the extent of such Fixed Value Payments or the issuance of
indebtedness by the Issuer secured by such Fixed Value Payments
(collectively, the "Fixed Value Securities") and to make any other provisions
herein or therein that are necessary or desirable in connection therewith and
(y) the Owner Trustee will enter into any other agreements or instruments
related thereto as requested by the Seller; provided, however, that the Owner
Trustee may, but shall not be obligated to, enter into any such amendment,
agreement or instrument that affects the Owner Trustee's own rights, duties
or immunities under this Agreement; and provided, further, that the
obligation of the Issuer to purchase such Fixed Value Payments and of the
Owner Trustee to enter into any such amendment or other agreement or
instrument is subject to the following conditions precedent:
(i) such amendment and other agreements and instruments, in forms
satisfactory to the Owner Trustee and, in the case of amendments or
agreements to be executed and delivered by the Indenture Trustee, in
forms satisfactory to the Indenture Trustee, shall
17
have been executed by each other party thereto and delivered to the
Owner Trustee or the Indenture Trustee as appropriate;
(ii) the Seller shall have delivered to the Owner Trustee and the
Indenture Trustee an Officers' Certificate and an Opinion of Counsel to
the effect that each condition precedent (including the requirement
with respect to all required filings) provided by this Section has been
complied with and such amendment or other agreement or instrument is
authorized or permitted by this Agreement;
(iii) the Rating Agency Condition shall have been satisfied with
respect to such sale and issuance;
(iv) such sale and issuance and such amendment or other agreement
or instrument shall not adversely affect in any material respect the
interest of any Noteholder or Certificateholder, and the Depositor
shall have provided to the Owner Trustee and the Indenture Trustee an
Officers' Certificate to such effect;
(v) the Owner Trustee and the Indenture Trustee shall have
received an Opinion of Counsel to the effect that such sale and
issuance will not have any material tax consequence to any Noteholder
or Certificateholder; and
(vi) all filings and other actions required to continue the first
perfected interest of the Trust in the Owner Trust Estate and the
Indenture Trustee in the Collateral shall have been duly made or taken
by the Seller.
(b) Except as described in Section 10.04, the Seller will not sell,
transfer, assign, set over or otherwise convey the Fixed Value Payments other
than to the Issuer pursuant to paragraph (a).
ARTICLE III
The Receivables
SECTION 3.01. Representations and Warranties of Seller with Respect to
the Receivables. The Seller makes the following representations and
warranties as to the Receivables on which the Issuer is deemed to have relied
in acquiring the Receivables. Such representations and warranties speak as of
the execution and delivery of this Agreement and as of the Closing Date, 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.
(a) Characteristics of Receivables. Each Standard Receivable and
Fixed Value Receivable (A) was originated in the United States of
America by a Dealer for the retail sale of a Financed Vehicle in the
ordinary course of such Dealer's business, was fully and properly
executed by the parties thereto, was purchased by the Seller from such
Dealer under an existing dealer agreement, (B) has created or shall
create a valid, subsisting and enforceable first priority security
interest in favor of the Seller and is assignable by the Seller to the
Issuer and by the Issuer to the Indenture Trustee, (C) contains
customary and enforceable provisions such that the rights and remedies
of
18
the holder thereof are adequate for realization against the collateral
of the benefits of the security, and (D) provides for level monthly
payments (provided, that the payment in the first or last month in the
life of the Standard Receivable or Fixed Value Receivable may be
minimally different from the level payments and that the payment in the
last month of a Fixed Value Receivable may be a Fixed Value Payment)
that fully amortize the Amount Financed by maturity and yield interest
at the Annual Percentage Rate. The Obligor on each OMSC Receivable was
in the services of the United States of America military at the time
such OMSC Receivable was originated. No Receivable conveyed to the
Issuer on the Closing Date is an OMSC Receivable.
(b) Schedule of Receivables. The information set forth in
Schedule A to this Agreement is true and correct in all material
respects as of the opening of business on the applicable Cutoff Date,
and no selection procedures believed to be adverse to the Noteholders
or were utilized in selecting the Receivables. The computer tape or
other listing regarding the Standard Receivables and the Fixed Value
Receivables made available to the Issuer and its assigns (which
computer tape or other listing is required to be delivered as specified
herein) is true and correct in all respects.
(c) Compliance with Law. Each Standard Receivable and Fixed Value
Receivable and the sale of the Financed Vehicle complied at the time it
was originated or made and, at the execution of this Agreement,
complies in all material respects with all requirements of applicable
federal, state and local laws and regulations thereunder (or, in the
case of the OMSC Receivables, Swiss laws and regulations and the laws
and regulations of the jurisdiction where the Receivable was
originated), including usury laws, the federal Truth-in-Lending Act,
the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the
Fair Debt Collection Practices Act, the Federal Trade Commission Act,
the Xxxxxxxx-Xxxx Warranty Act, the Federal Reserve Board's Regulations
B and Z, the Texas Consumer Credit Code and State adaptations of the
National Consumer Act and of the Uniform Consumer Credit Code, and
other consumer credit laws and equal credit opportunity and disclosure
laws.
(d) Binding Obligation. Each Standard Receivable and Fixed Value
Receivable represents the genuine, legal, valid and binding payment
obligation in writing of the Obligor, enforceable by the holder thereof
in accordance with its terms.
(e) No Government Obligor. None of the Standard Receivables or
Fixed Value Receivables is due from the United States of America or any
State or from any agency, department or instrumentality of the United
States of America or any State.
(f) Security Interest in Financed Vehicle. Immediately prior to
the sale, assignment and transfer thereof, each Standard Receivable and
Fixed Value Receivable shall be secured by a validly perfected first
security interest in the Financed Vehicle in favor of the Seller as
secured party or all necessary and appropriate actions have been
commenced that would result in the valid perfection of a first security
interest in the Financed Vehicle in favor of the Seller as secured
party.
(g) Receivables in Force. No Standard Receivable or Fixed Value
Receivable has been satisfied, subordinated or rescinded, nor has any
Financed Vehicle been released
19
from the lien granted by the related Standard Receivable or Fixed Value
Receivable in whole or in part.
(h) No Amendments. No Standard Receivable or Fixed Value
Receivable has been amended such that the amount of the Obligor's
scheduled payments has been increased except for increases resulting
from the inclusion of any premiums for forced placed physical damage
insurance covering the Financed Vehicle.
(i) No Waiver. No provision of a Standard Receivable or Fixed
Value Receivable has been waived.
(j) No Defenses. No right of rescission, setoff, counterclaim or
defense has been asserted or threatened with respect to any Standard
Receivable or Fixed Value Receivable.
(k) No Liens. To the best of the Seller's knowledge, no liens or
claims have been filed for work, labor or materials relating to a
Financed Vehicle that are liens prior to, or equal to or coordinate
with, the security interest in the Financed Vehicle granted by any
Standard Receivable or Fixed Value Receivable.
(l) No Default. No Standard Receivable or Fixed Value Receivable
has a payment that is more than 30 days overdue as of the related
Cutoff Date, and, except as permitted in this paragraph, no default,
breach, violation or event permitting acceleration under the terms of
any Standard Receivable or Fixed Value Receivable has occurred; and no
continuing condition that with notice or the lapse of time would
constitute a default, breach, violation or event permitting
acceleration under the terms of any Standard Receivable or Fixed Value
Receivable has arisen; and the Seller has not waived and shall not
waive any of the foregoing.
(m) Insurance. The Seller, in accordance with its customary
procedures, has determined that, at the origination of the Receivable,
the Obligor had obtained physical damage insurance covering the
Financed Vehicle and under the terms of the Standard Receivable and
Fixed Value Receivable the Obligor is required to maintain such
insurance.
(n) Title. It is the intention of the Seller that the transfer
and assignment herein contemplated constitute a sale of the Standard
Receivables and Fixed Value Receivables from the Seller to the Issuer
and that the beneficial interest in and title to the Standard
Receivables and Fixed Value Receivables not be part of the debtor's
estate in the event of the filing of a bankruptcy petition by or
against the Seller under any bankruptcy law. No Standard Receivable or
Fixed Value Receivable has been sold, transferred, assigned or pledged
by the Seller to any Person other than the Issuer. Immediately prior to
the transfer and assignment herein contemplated, the Seller had good
and marketable title to each Standard Receivable and Fixed Value
Receivable free and clear of all Liens, encumbrances, security
interests and rights of others and, immediately upon the transfer
thereof, the Issuer shall have good and marketable title to each
Standard Receivable and Fixed Value Receivable, free and clear of all
Liens, encumbrances, security interests and rights of others; and the
transfer has been perfected under the UCC.
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(o) Lawful Assignment. No Standard Receivable or Fixed Value
Receivable has been originated in, or is subject to the laws of, any
jurisdiction under which the sale, transfer and assignment of such
Standard Receivable or Fixed Value Receivable or any Receivable under
this Agreement or the Indenture is unlawful, void or voidable.
(p) All Filings Made. All filings (including UCC filings)
necessary in any jurisdiction to give the Issuer a first perfected
ownership interest in the Standard Receivables and Fixed Value
Receivables, and to give the Indenture Trustee a first perfected
security interest therein, shall have been made.
(q) One Original. There is only one original executed copy of
each Standard Receivable and Fixed Value Receivable.
(r) Maturity of Receivables. Each Standard Receivable and Fixed
Value Receivable has a final maturity date not later than March 31,
2003.
(s) Scheduled Payments. (A) Each Standard Receivable and Fixed
Value Receivable has a first scheduled due date on or prior to the end
of the month following the related Cutoff Date and (B) no Standard
Receivable or Fixed Value Receivable has a payment that is more than 30
days overdue as of the related Cutoff Date, and has a final scheduled
payment date no later than the Final Scheduled Maturity Date.
(t) Location of Receivable Files. The Receivable Files are kept
at one or more of the locations listed in Schedule B.
(u) Remaining Maturity. The latest scheduled maturity of any
Standard Receivable or Fixed Value Receivable shall be no later than
the Final Scheduled Maturity Date.
(v) Outstanding Principal Balance. Each Standard Receivable and
Fixed Value Receivable has an outstanding principal balance of at least
$300.
(w) No Bankruptcies or First-Time Buyers. No Obligor on any
Standard Receivable or Fixed Value Receivable as of the related Cutoff
Date was noted in the related Receivable File as having filed for
bankruptcy, and no such Obligor financed a Financed Vehicle under the
Seller's "New Finance Buyer Plan" program.
(x) No Repossessions. No Financed Vehicle securing any Standard
Receivable or Fixed Value Receivable is in repossession status.
(y) Chattel Paper. Each Standard Receivable and Fixed Value
Receivable constitutes "chattel paper" as defined in the UCC.
(z) Agreement. The representations of the Seller in Section 6.01
are true and correct.
(aa) Financing. As of the Cutoff Date, approximately 31.06% of
the aggregate principal balance of the Receivables, constituting 37.26%
of the number of Receivables, represents previously titled vehicles;
approximately 73.36% of the aggregate principal
21
balance of the Receivables represents financing of vehicles
manufactured or distributed by Chrysler Corporation; all of the
Receivables are Simple Interest Receivables; by aggregate principal
balance, approximately 3.40% of the Receivables are Fixed Value
Receivables. The aggregate principal balance of the Receivables, as of
the Cutoff Date is $1,560,012,089.22. For the purposes of this
subparagraph (aa), Receivable shall mean only that portion of the
Receivables with respect to which the Trust has an ownership interest.
SECTION 3.02. Repurchase upon Breach. The Seller, the Servicer or the
Owner Trustee, as the case may be, shall inform the other parties to this
Agreement and the Indenture Trustee promptly, in writing, upon the discovery
of any breach of the Seller's representations and warranties made pursuant to
Section 3.01 or 6.01. Unless any such breach shall have been cured by the
last day of the second Collection Period following the discovery thereof by
the Owner Trustee or receipt by the Owner Trustee of written notice from the
Seller or the Servicer of such breach, the Seller shall be obligated to
repurchase any Receivable materially and adversely affected by any such
breach as of such last day (or, at the Seller's option, the last day of the
first Collection Period following the discovery). In consideration of the
repurchase of any such Receivable, the Seller shall remit the Purchase
Amount, in the manner specified in Section 5.05. Subject to the provisions of
Section 6.03, the sole remedy of the Issuer, the Owner Trustee, the Indenture
Trustee, the Noteholders or the Certificateholders with respect to a breach
of representations and warranties pursuant to Section 3.01 and the agreement
contained in this Section shall be to require the Seller to repurchase
Receivables pursuant to this Section, subject to the conditions contained
herein.
SECTION 3.03. Custody of Receivable Files. To assure uniform quality in
servicing the Receivables and to reduce administrative costs, the Issuer
hereby revocably appoints the Servicer, and the Servicer hereby accepts such
appointment, to act for the benefit of the Issuer and the Indenture Trustee
as custodian of the following documents or instruments which are hereby or
will hereby be constructively delivered to the Indenture Trustee, as pledgee
of the Issuer, as of the Closing Date with respect to each Receivable:
(a) the fully executed original of the Standard Receivable or
Fixed Value Receivable;
(b) the original credit application fully executed by the
Obligor;
(c) the original certificate of title or such documents that the
Servicer or the Seller shall keep on file, in accordance with its
customary procedures, evidencing the security interest of the Seller in
the Financed Vehicle; and
(d) any and all other documents that the Servicer or the Seller
shall keep on file, in accordance with its customary procedures,
relating to a Standard Receivable or Fixed Value Receivable, an Obligor
or a Financed Vehicle.
SECTION 3.04. Duties of Servicer as Custodian. (a) Safekeeping. The
Servicer shall hold the Receivable Files as custodian for the benefit of the
Issuer and maintain such accurate and complete accounts, records and computer
systems pertaining to each Receivable File as shall enable the Issuer to
comply with this Agreement. In performing its duties as custodian the
Servicer shall act with reasonable care, using that degree of skill and
attention that the
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Servicer exercises with respect to the receivable files relating to all
comparable automotive receivables that the Servicer services for itself or
others. The Servicer shall conduct, or cause to be conducted, periodic audits
of the Receivable Files held by it under this Agreement and of the related
accounts, records and computer systems, in such a manner as shall enable the
Issuer or the Indenture Trustee to verify the accuracy of the Servicer's
record keeping. The Servicer shall promptly report to the Issuer and the
Indenture Trustee any failure on its part to hold the Receivable Files and
maintain its accounts, records and computer systems as herein provided and
shall promptly take appropriate action to remedy any such failure. Nothing
herein shall be deemed to require an initial review or any periodic review by
the Issuer or the Indenture Trustee of the Receivable Files.
(b) Maintenance of and Access to Records. The Servicer shall maintain
each Receivable File at one of its offices specified in Schedule B or at such
other office as shall be specified to the Issuer and the Indenture Trustee by
written notice not later than 90 days after any change in location. The
Servicer shall make available to the Issuer and the Indenture Trustee or
their respective duly authorized representatives, attorneys or auditors a
list of locations of the Receivable Files and the related accounts, records
and computer systems maintained by the Servicer at such times during normal
business hours as the Issuer or the Indenture Trustee shall instruct.
(c) Release of Documents. Upon instruction from the Indenture Trustee,
the Servicer shall release any Receivable File to the Indenture Trustee, the
Indenture Trustee's agent or the Indenture Trustee's designee, as the case
may be, at such place or places as the Indenture Trustee may designate, as
soon as practicable.
SECTION 3.05. 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 a Trust Officer of
the Indenture Trustee.
SECTION 3.06. Custodian's Indemnification. The Servicer as custodian
shall indemnify the Trust, the Owner Trustee and the Indenture Trustee and
each of their respective officers, directors, employees and agents for any
and all liabilities, obligations, losses, compensatory damages, payments,
costs or expenses of any kind whatsoever that may be imposed on, incurred by
or asserted against the Trust, the Owner Trustee or the Indenture Trustee or
any of their respective officers, directors, employees and agents as the
result of any improper 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 to the Owner Trustee for any
portion of any such amount resulting from the willful misfeasance, bad faith
or negligence of the Owner Trustee, and the Servicer shall not be liable to
the Indenture Trustee for any portion of any such amount resulting from the
willful misfeasance, bad faith or negligence of the Indenture Trustee.
SECTION 3.07. 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. If CFC shall resign as Servicer in accordance with the provisions of
this Agreement or if all of the rights and obligations of any Servicer shall
have been terminated under Section 8.01, the appointment of such Servicer as
custodian shall be terminated by the Indenture Trustee or by the Holders of
Notes evidencing not less than 25% of the Outstanding Amount of the Notes or,
with the consent of Holders of the Notes
23
evidencing not less than 25% of the Outstanding Amount of the Notes, by the
Owner Trustee, in the same manner as the Indenture Trustee or such Holders
may terminate the rights and obligations of the Servicer under Section 8.01.
The Indenture Trustee or, with the consent of the Indenture Trustee, the
Owner Trustee may terminate the Servicer's appointment as custodian, with
cause, at any time upon written notification to the Servicer and, without
cause, upon 30 days' prior written notification to the Servicer. As soon as
practicable after any termination of such appointment, the Servicer shall
deliver the Receivable Files to the Indenture Trustee or the Indenture
Trustee's agent at such place or places as the Indenture Trustee may
reasonably designate.
ARTICLE IV
Administration and Servicing of Receivables
SECTION 4.01. Duties of Servicer. The Servicer, for the benefit of the
Issuer (to the extent provided herein), shall manage, service, administer and
make collections on the Receivables (other than Purchased Receivables) with
reasonable care, using that degree of skill and attention that the Servicer
exercises with respect to all comparable automotive receivables that it
services for itself or others. The Servicer's duties shall include collection
and posting of all payments, responding to inquiries of Obligors on such
Receivables, investigating delinquencies, sending payment coupons to
Obligors, reporting tax information to Obligors, accounting for collections
and furnishing monthly and annual statements to the Owner Trustee and the
Indenture Trustee with respect to distributions. Subject to the provisions of
Section 4.02, the Servicer shall follow its customary standards, policies and
procedures in performing its duties as Servicer. Without limiting the
generality of the foregoing, the Servicer is authorized and empowered to
execute and deliver, on behalf of itself, the Issuer, the Owner Trustee, the
Indenture Trustee, the Certificateholders and the Noteholders or any of them,
any and all instruments of satisfaction or cancellation, or partial or full
release or discharge, and all other comparable instruments, with respect to
such Receivables or to the Financed Vehicles securing such Receivables. If
the Servicer shall commence a legal proceeding to enforce a Receivable, the
Issuer (in the case of a Receivable other than a Purchased Receivable) shall
thereupon be deemed to have automatically assigned, solely for the purpose of
collection, such Receivable to the Servicer. If in any enforcement suit or
legal proceeding it shall be held that the Servicer may not enforce a
Receivable on the ground that it shall not be a real party in interest or a
holder entitled to enforce such Receivable, the Owner Trustee shall, at the
Servicer's expense and direction, take steps to enforce such Receivable,
including bringing suit in its name or the name of the Owner Trustee, the
Indenture Trustee, the Certificateholders or the Noteholders. The Owner
Trustee shall upon the written request of the Servicer furnish the Servicer
with any powers of attorney and other documents reasonably necessary or
appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder.
SECTION 4.02. Collection and Allocation of Receivable Payments. The
Servicer shall make reasonable efforts to collect all payments called for
under the terms and provisions of the Receivables as and when the same shall
become due and shall follow such collection procedures as it follows with
respect to all comparable automotive receivables that it services for itself
or others. The Servicer shall allocate collections between principal and
interest in accordance with the customary servicing procedures it follows
with respect to all comparable
24
automotive receivables that it services for itself or others. The Servicer
may grant extensions, rebates or adjustments on a Standard Receivable or
Fixed Value Receivable, which shall not, for the purposes of this Agreement,
modify the original due dates or amounts of the originally scheduled payments
of interest on such Receivable; provided, however, that if the Servicer
extends the date for final payment by the Obligor of any Receivable beyond
the Final Scheduled Maturity Date, it shall promptly repurchase the
Receivable from the Issuer in accordance with the terms of Section 4.07. The
Servicer may in its discretion waive any late payment charge or any other
fees that may be collected in the ordinary course of servicing a Receivable.
The Servicer shall not agree to any alteration of the interest rate or the
originally scheduled payments on any Receivable.
SECTION 4.03. Realization upon Receivables. On behalf of the Issuer,
the Servicer shall use its best efforts, consistent with its customary
servicing procedures, to repossess or otherwise convert the ownership of the
Financed Vehicle securing any Receivable as to which the Servicer shall have
determined eventual payment in full is unlikely. The Servicer shall follow
such customary and usual practices and procedures as it shall deem necessary
or advisable in its servicing of automotive receivables, which may include
reasonable efforts to realize upon any recourse to Dealers and selling the
Financed Vehicle at public or private sale. The foregoing shall be subject to
the provision that, in any case in which the 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 discretion that such repair and/or repossession will increase the
Liquidation Proceeds by an amount greater than the amount of such expenses.
SECTION 4.04. Physical Damage Insurance. The Servicer shall, in
accordance with its customary servicing procedures, require that each Obligor
shall have obtained physical damage insurance covering the Financed Vehicle
as of the execution of the Standard Receivable or the Fixed Value Receivable.
SECTION 4.05. Maintenance of Security Interests in Financed Vehicles.
The Servicer shall, in accordance with its customary servicing procedures,
take such steps as are necessary to maintain perfection of the security
interest created by each Standard Receivable and Fixed Value Receivable in
the related Financed Vehicle. The Servicer is hereby authorized to take such
steps as are necessary to re-perfect such security interest on behalf of the
Issuer and the Indenture Trustee in the event of the relocation of a Financed
Vehicle or for any other reason.
SECTION 4.06. Covenants of Servicer. The Servicer shall not release the
Financed Vehicle securing any Receivable from the security interest granted
by such Receivable in whole or in part except in the event of payment in full
by the Obligor thereunder or repossession, nor shall the Servicer impair the
rights of the Issuer, the Indenture Trustee, the Certificateholders or the
Noteholders in such Receivable, nor shall the Servicer increase the number of
scheduled payments due under a Standard Receivable or Fixed Value Receivable.
SECTION 4.07. Purchase of Receivables upon Breach. The Servicer or the
Owner Trustee shall inform the other party and the Indenture Trustee and the
Seller promptly, in writing, upon the discovery of any breach pursuant to
Section 4.02, 4.05 or 4.06. Unless the breach shall have been cured by the
last day of the second Collection Period following such discovery (or, at the
Servicer's election, the last day of the first following Collection Period),
the Servicer shall purchase any Receivable materially and adversely affected
by such breach
25
as of such last day. If the Servicer takes any action during any Collection
Period pursuant to Section 4.02 that impairs the rights of the Issuer, the
Indenture Trustee, the Certificateholders or the Noteholders in any
Receivable or as otherwise provided in Section 4.02, the Servicer shall
purchase such Receivable as of the last day of such Collection Period. In
consideration of the purchase of any such Receivable pursuant to either of
the two preceding sentences, the Servicer shall remit the Purchase Amount in
the manner specified in Section 5.05. Subject to Section 7.02, the sole
remedy of the Issuer, the Owner Trustee, the Indenture Trustee, the
Certificateholders or the Noteholders with respect to a breach pursuant to
Section 4.02, 4.05 or 4.06 shall be to require the Servicer to purchase
Receivables pursuant to this Section. 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.
SECTION 4.08. Servicing Fee. The Servicing Fee for a Distribution Date
shall equal the product of (a) one-twelfth, (b) the Servicing Fee Rate and
(c) the Pool Balance as of the first day of the preceding Collection Period.
The Servicer shall also be entitled to all late fees, prepayment charges, and
other administrative fees or similar charges allowed by applicable law with
respect to the Receivables, collected (from whatever source) on the
Receivables, plus any reimbursement pursuant to the last paragraph of Section
7.02.
SECTION 4.09. Servicer's Certificate. Not later than 11:00 A.M. (New
York time) on each Payment Determination Date, the Servicer shall deliver to
the Owner Trustee, each Paying Agent, the Indenture Trustee and the Seller,
with a copy to the Rating Agencies, a Servicer's Certificate containing all
information necessary to make the distributions to be made on the related
Distribution Date pursuant to Sections 5.06 and 5.07 for the related
Collection Period. Receivables to be purchased by the Servicer or to be
repurchased by the Seller shall be identified by the Servicer by account
number with respect to such Receivable (as specified in Schedule A).
SECTION 4.10. Annual Statement as to Compliance; Notice of Default. (a)
The Servicer shall deliver to the Owner Trustee and the Indenture Trustee, on
or before April 30 of each year beginning April 30, 1998, an Officers'
Certificate, dated as of December 31 of the preceding year, stating that (i)
a review of the activities of the Servicer during the preceding 12-month
period (or such longer period as shall have elapsed since the Closing Date)
and of its performance under this Agreement has been made under such
officers' supervision and (ii) to the best of such officers' knowledge, based
on such review, the Servicer has fulfilled all its obligations under this
Agreement throughout such year or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to
such officers and the nature and status thereof. The Indenture Trustee shall
send a copy of such certificate and the report referred to in Section 4.11 to
the Rating Agencies. A copy of such certificate and the report referred to in
Section 4.11 may be obtained by any Certificateholder, Noteholder or Note
Owner by a request in writing to the Owner Trustee addressed to the Corporate
Trust Office. Upon the telephone request of the Owner Trustee, the Indenture
Trustee will promptly furnish the Owner Trustee a list of Noteholders as of
the date specified by the Owner Trustee.
(b) The Servicer shall deliver to the Owner Trustee, the Indenture
Trustee and the Rating Agencies, promptly after having obtained knowledge
thereof, but in no event later than five (5) Business Days thereafter,
written notice in an Officers' Certificate of any event which
26
with the giving of notice or lapse of time, or both, would become a Servicer
Default under Section 8.01(a) or (b).
SECTION 4.11. Annual Independent Certified Public Accountants' Report.
The Servicer shall cause a firm of independent certified public accountants,
which may also render other services to the Servicer, the Seller or their
Affiliates, to deliver to the Owner Trustee and the Indenture Trustee on or
before April 30 of each year beginning April 30, 1998, a report addressed to
the Board of Directors of the Servicer, to the effect that such firm has
examined the financial statements of CFC and issued its report thereon and
that such examination (a) was made in accordance with generally accepted
auditing standards and accordingly included such tests of the accounting
records and such other auditing procedures as such firm considered necessary
in the circumstances; (b) included tests relating to automotive loans
serviced for others in accordance with the requirements of the Uniform Single
Attestation Program for Mortgage Bankers (the "Program"), to the extent the
procedures in such Program are applicable to the servicing obligations set
forth in this Agreement; and (c) except as described in the report, disclosed
no exceptions or errors in the records relating to automobile and light-duty
truck loans serviced for others that, in the firm's opinion, paragraph four
of such Program requires such firm to report.
Such report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the
American Institute of Certified Public Accountants.
SECTION 4.12. Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall provide to the Certificateholders and
Noteholders access to the Receivable Files in such cases where the
Certificateholders or Noteholders shall be required by applicable statutes or
regulations to review such documentation. Access shall be afforded without
charge, but only upon reasonable request and during the normal business hours
at the offices of the Servicer. Nothing in this Section shall affect the
obligation of the Servicer to observe any applicable law prohibiting
disclosure of information regarding the Obligors and the failure of the
Servicer to provide access to information as a result of such obligation
shall not constitute a breach of this Section.
SECTION 4.13. Servicer Expenses. The Servicer shall be required to pay
all expenses incurred by it in connection with its activities hereunder,
including fees and disbursements of independent accountants, taxes imposed on
the Servicer and expenses incurred in connection with distributions and
reports to Certificateholders and Noteholders.
SECTION 4.14. Appointment of Subservicer. The Servicer may at any time
appoint a subservicer to perform all or any portion of its obligations as
Servicer hereunder; provided, however, that the Rating Agency Condition shall
have been satisfied in connection therewith; and provided, further, that the
Servicer shall remain obligated and be liable to the Issuer, the Owner
Trustee, the Indenture Trustee, the Certificateholders and the Noteholders
for the servicing and administering of the Receivables in accordance with the
provisions hereof without diminution of such obligation and liability by
virtue of the appointment of such subservicer and to the same extent and
under the same terms and conditions as if the Servicer alone were servicing
and administering the Receivables. The fees and expenses of the subservicer
shall be as agreed between the Servicer and its subservicer from time to
time, and
27
none of the Issuer, the Owner Trustee, the Indenture Trustee, the
Certificateholders or the Noteholders shall have any responsibility therefor.
ARTICLE V
Distributions; Reserve Account;
Statements to Certificateholders and Noteholders
SECTION 5.01. Establishment of Trust Accounts. (a) (i) The Servicer,
for the benefit of the Noteholders and the Certificateholders, shall
establish and maintain in the name of the Indenture Trustee an Eligible
Deposit Account (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) The Servicer, for the benefit of the Noteholders, shall
establish and maintain in the name of the Indenture Trustee an Eligible
Deposit Account (the "Note Distribution Account"), bearing a
designation clearly indicating that the funds deposited therein are
held for the benefit of the Noteholders.
(iii) The Servicer, for the benefit of the Noteholders and the
Certificateholders, shall establish and maintain in the name of the
Indenture Trustee an Eligible Deposit Account (the "Reserve Account"),
bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Noteholders and the
Certificateholders.
(b) Funds on deposit in the Collection Account, the Note Distribution
Account and the Reserve Account (collectively the "Trust Accounts") shall be
invested (1) by the Indenture Trustee in Eligible Investments selected in
writing by the Servicer or an investment manager selected by the Servicer,
which investment manager shall have agreed to comply with the terms of this
Agreement as it relates to investing such funds or (2) by an investment
manager in Eligible Investments selected by such investment manager; provided
that (A) such investment manager shall be selected by the Servicer, (B) such
investment manager shall have agreed to comply with the terms of this
Agreement as it relates to investing such funds, (C) any investment so
selected by such investment manager shall be made in the name of the
Indenture Trustee and shall be settled by a Delivery to the Indenture Trustee
that complies with the terms of this Agreement as it relates to investing
such funds, and (D) prior to the settlement of any investment so selected by
such investment manager the Indenture Trustee shall affirm that such
investment is an Eligible Investment. The Servicer initially appoints the
Indenture Trustee investment manager hereunder, which the Indenture Trustee
hereby accepts. It is understood and agreed that the Indenture Trustee shall
not be liable for any loss arising from an investment in Eligible Investments
made in accordance with this Section 5.01(b). All such Eligible Investments
shall be held by the Indenture Trustee for the benefit of the Noteholders and
the Certificateholders or the Noteholders, as applicable; provided, that on
each Payment Determination Date all interest and other investment income (net
of losses and investment expenses) on funds on deposit in the Trust Accounts
shall be deposited into the Collection Account and shall be deemed to
constitute a portion of the Interest Distribution Amount for the related
Distribution Date. Other than as permitted by the Rating Agencies, funds on
deposit in the Collection Account, the Reserve Account and the Note
Distribution Account shall be invested in Eligible Investments that will
mature (A) not later than the
28
Business Day immediately preceding the next Distribution Date or (B) on such
next Distribution Date if either (x) such investment is held in the corporate
trust department of the institution with which the Collection Account, the
Reserve Account, the Note Distribution Account or the Certificate
Distribution Account, as applicable, is then maintained and is invested
either in a time deposit of the Indenture Trustee rated at least A-1 by
Standard & Poor's and P-1 by Moody's (such account being maintained within
the corporate trust department of the Indenture Trustee) or in the Indenture
Trustee's common trust fund so long as such fund is rated in the highest
applicable rating category by Standard & Poor's and Moody's or (y) the
Indenture Trustee (so long as the short-term unsecured debt obligations of
the Indenture Trustee are either (i) rated at least P-1 by Moody's and A-1 by
Standard & Poor's on the date such investment is made or (ii) guaranteed by
an entity whose short-term unsecured debt obligations are rated at least P-1
by Moody's and A-1 by Standard & Poor's on the date such investment is made)
has agreed to advance funds on such Distribution Date to the Note
Distribution Account and the Certificate Distribution Account in the amount
payable on such investment on such Distribution Date pending receipt thereof
to the extent necessary to make distributions on such Distribution Date.The
guarantee referred to in clause (y) of the preceding sentence shall be
subject to the Rating Agency Condition. For the purpose of the foregoing,
unless the Indenture Trustee affirmatively agrees in writing to make such
advance with respect to such investment prior to the time an investment is
made, it shall not be deemed to have agreed to make such advance. Funds
deposited in a Trust Account on a day which immediately precedes a
Distribution Date upon the maturity of any Eligible Investments are not
required to be invested overnight.
(c) (i) The Indenture Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Trust
Accounts and in all proceeds thereof (including all income thereon) and
all such funds, investments, proceeds and income shall be part of the
Trust Estate. The Trust Accounts shall be under the sole dominion and
control of the Indenture Trustee for the benefit of the Noteholders or
the Noteholders and the Certificateholders, as the case may be. If, at
any time, any of the Trust Accounts ceases to be an Eligible Deposit
Account, the Indenture Trustee (or the Servicer on its behalf) shall
within 10 Business Days (or such longer period, not to exceed 30
calendar days, as to which each Rating Agency may consent) establish a
new Trust Account as an Eligible Deposit Account and shall transfer any
cash and/or any investments to such new Trust Account.
(ii) With respect to the Trust Account Property, the Indenture
Trustee agrees, by its acceptance hereof, that:
(A) any Trust Account Property that is held in deposit
accounts shall be held solely in the Eligible Deposit Accounts,
subject to the last sentence of Section 5.01(c)(i); and each such
Eligible Deposit Account shall be subject to the exclusive
custody and control of the Indenture Trustee, and the Indenture
Trustee shall have sole signature authority with respect thereto;
(B) any Trust 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, pending maturity or disposition, solely by the
Indenture Trustee or a financial intermediary (as such term is
defined in Section 8-313(4) of the UCC) acting solely for the
Indenture Trustee;
29
(C) any Trust 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, through continued book-entry registration of such
Trust Account Property as described in such paragraph; and
(D) any Trust Account Property that is an "uncertificated
security" under Article VIII of the UCC and that is not governed
by clause (C) 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, through continued registration of the
Indenture Trustee's (or its nominee's) ownership of such
security.
(iii) The Servicer shall have the power, revocable by the
Indenture Trustee or by the Owner Trustee with the consent of the
Indenture Trustee, to instruct the Indenture Trustee to make
withdrawals and payments from the Trust Accounts for the purpose of
permitting the Servicer or the Owner Trustee to carry out its
respective duties hereunder or permitting the Indenture Trustee to
carry out its duties under the Indenture.
SECTION 5.02. Collections. The Servicer shall remit within two Business
Days of receipt thereof to the Collection Account all payments by or on
behalf of the Obligors with respect to the Receivables (other than Purchased
Receivables and not including Fixed Value Payments) and all Liquidation
Proceeds, both as collected during the Collection Period. Notwithstanding the
foregoing, for so long as (i) CFC remains the Servicer, (ii) no Servicer
Default shall have occurred and be continuing and (iii)(x) CFC maintains a
short-term rating of at least A-1 by Standard & Poor's and P-1 by Moody's
(and for five Business Days following a reduction in either such rating) or
(y) prior to ceasing daily remittances, the Rating Agency Condition shall
have been satisfied (and any conditions or limitations imposed by the Rating
Agencies in connection therewith are complied with), the Servicer shall remit
such collections with respect to the preceding calendar month to the
Collection Account on the Payment Determination Date immediately preceding
the related Distribution Date. For purposes of this Article V the phrase
"payments by or on behalf of Obligors" shall mean payments made with respect
to the Receivables by Persons other than the Servicer or the Seller.
SECTION 5.03. Application of Collections. (a) All collections for the
Collection Period shall be applied by the Servicer as follows:
With respect to each Receivable (other than a Purchased
Receivable), payments by or on behalf of the Obligor shall be applied,
to interest and principal in accordance with the Simple Interest
Method.
(b) All Liquidation Proceeds and any subsequent Recoveries with respect
to any Fixed Value Receivable shall be applied first to the related
Receivable and only after the payment in full of the Principal Balance
thereof plus accrued but unpaid interest thereon shall any such Liquidation
Proceeds or Recoveries be applied to, or constitute, the related Fixed Value
Payment.
SECTION 5.04. [Reserved]
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SECTION 5.05. Additional Deposits. The Servicer and the Seller shall
deposit or cause to be deposited in the Collection Account the aggregate
Purchase Amount with respect to Purchased Receivables and the Servicer shall
deposit therein all amounts to be paid under Section 9.01. The Servicer will
deposit the aggregate Purchase Amount with respect to Purchased Receivables
when such obligations are due, unless the Servicer shall not be required to
make daily deposits pursuant to Section 5.02. All such other deposits shall
be made on the Payment Determination Date for the related Collection Period.
SECTION 5.06. Distributions.
(a) (i) On each Payment Determination Date, the Servicer shall
calculate all amounts required to be deposited in the Note Distribution
Account and the Certificate Distribution Account.
(ii) On each Distribution Date, the Servicer shall instruct
the Indenture Trustee (based on the information contained in the
Servicer's Certificate delivered on the related Payment Determination
Date pursuant to Section 4.09) to make the following deposits and
distributions for receipt by the Servicer or deposit in the applicable
account by 11:00 A.M. (New York time), to the extent of the Total
Distribution Amount, in the following order of priority:
(A) to the Servicer, from the Interest Distribution Amount,
the Servicing Fee (and all unpaid Servicing Fees from prior
Collection Periods);
(B) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of clause
(A), the Noteholders' Interest Distributable Amount;
(C) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of clauses
(A) and (B), the Noteholders' Principal Distributable Amount;
(D) if all of the conditions set forth in Section 5.06(b)
are satisfied, to the Certificate Distribution Account, from the
Total Distribution Amount remaining after the application of
clauses (A) through (C), the Cash Release Amount for such
Distribution Date;
(E) to the Reserve Account, from the Total Distribution
Amount remaining after the application of clauses (A) through (D)
(it being understood that the Accelerated Principal Distribution
Amount is a function of and subject to the amount required to be
deposited in the Reserve Account pursuant to this clause (E)),
the amount, if any, necessary to reinstate the balance in the
Reserve Account up to the Specified Reserve Account Balance; and
(F) to the Certificate Distribution Account, the portion, if
any, of the Total Distribution Amount remaining after the
application of clauses (A) through (E).
Notwithstanding that the Notes have been paid in full, the Indenture Trustee
shall continue to maintain the Collection Account hereunder until the Pool
Balance is reduced to zero.
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(b) The distribution of a Cash Release Amount pursuant to Section
5.06(a)(ii)(D) and the release of Receivables from the lien of the Indenture
pursuant to Section 5.06(c) on a Distribution Date shall be subject to the
satisfaction of all of the following conditions:
(i) no such distribution or release shall be made until the First
Release Date;
(ii) subject to condition (iii) below, the aggregate Principal
Balance of Receivables released in respect of such Distribution Date
shall equal (x) the Overcollateralization Amount for such Distribution
Date less (y) the Targeted Overcollateralization Amount;
(iii) the aggregate amount of Cash Release Amounts distributed
pursuant to Section 5.06(a)(ii)(D) and the aggregate Principal Balance
of Receivables released pursuant to Section 5.06(c) shall not exceed
the Initial Overcollateralization Amount; and
(iv) the entire amount of the Noteholders' Principal Distribution
Amount for such Distribution Date is distributed pursuant to Section
5.06(a)(ii)(c).
(c) If on any Distribution Date all of the conditions in Section
5.06(b) will be satisfied, then on the related Payment Determination Date the
Servicer shall notify the Owner Trustee of such fact and instruct the
Indenture Trustee to release from the lien of the Indenture and transfer to
the Trust, free and clear of the lien of the Indenture, Receivables having
the aggregate Principal Balance specified in Section 5.06(b)(ii). The
Servicer shall randomly select the Receivables to be released.
SECTION 5.07. Reserve Account. (a) On the Closing Date, the Owner
Trustee will deposit, on behalf of the Seller, the Reserve Account Initial
Deposit into the Reserve Account from the net proceeds of the sale of the
Notes.
(b) (i) After giving effect to clause (ii) below, if the amount
on deposit in the Reserve Account on any Distribution Date (after
giving effect to all deposits thereto or withdrawals therefrom on such
Distribution Date) is greater than the Specified Reserve Account
Balance for such Distribution Date, the Servicer shall instruct the
Indenture Trustee to distribute the amount of such excess to the
Seller.
(ii) On each Distribution Date subsequent to any reduction
or withdrawal by any Rating Agency of its rating of any Class of Class
A Notes, unless such rating has been restored, if the amount on deposit
in the Reserve Account (after taking into account any deposits thereto
pursuant to Section 5.06(a) and withdrawals therefrom pursuant to
Section 5.07(c) or (d) on such date) is greater than the Specified
Reserve Account Balance for such Distribution Date, then the Servicer
shall instruct the Indenture Trustee to include the amount of such
excess in the Noteholders' Monthly Principal Distribution Amount and to
deposit the amount of such excess to the Collection Account for deposit
to the Note Distribution Account for distribution to Noteholders as an
accelerated payment of principal on such Distribution Date; provided,
that the amount of such deposit shall not exceed the outstanding
principal balance of the Notes after giving effect to all other
payments of principal to be made on such date.
(c) (i) In the event that the Noteholders' Distributable Amount
for a Distribution Date exceeds the sum of the amounts deposited into
the Note Distribution Account
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pursuant to Section 5.06(a)(ii)(B) and (C) on such Distribution Date,
the Servicer shall instruct the Indenture Trustee to withdraw from the
Reserve Account on such Distribution Date an amount equal to such
excess, to the extent of funds available therein, and deposit such
amount into the Note Distribution Account; provided that such amount
shall be applied first to the payment of interest due on the Class A
Notes to the extent, if any, that the amount deposited pursuant to
Section 5.06(a)(ii)(B) is not sufficient to cover such payment of
interest, second, to the extent of the Class B Available Amount, to the
payment of interest due on the Class B Notes (to the extent, if any,
the amount deposited pursuant to Section 5.06(a)(ii)(B) is not
sufficient to cover such payment of interest) and third to the payment
of principal of the Notes but only to the extent of the amount
remaining in the Reserve Account less the Class B Available Amount
(calculated after giving effect to the amount applied pursuant to
clause second on such Distribution Date).
(ii) In the event that the Noteholders' Principal
Distributable Amount on the Class A-1 Final Scheduled Distribution
Date, the Class A-2 Final Scheduled Distribution Date, the Class A-3
Final Scheduled Distribution Date, the Class A-4 Final Scheduled
Distribution Date or the Class B Final Scheduled Distribution Date
exceeds the amount deposited into the Note Distribution Account
pursuant to Section 5.06(a)(ii)(C) on such Distribution Date, the
Servicer shall instruct the Indenture Trustee to withdraw from the
Reserve Account on such Distribution Date an amount equal to such
excess, to the extent of funds available therein, and deposit such
amount into the Note Distribution Account.
(d) Subject to Section 9.01, amounts will continue to be applied
pursuant to Section 5.06(a) following payment in full of the Outstanding
Amount of the Notes until the Pool Balance is reduced to zero. Following the
payment in full of the aggregate Outstanding Amount of the Notes and of all
other amounts owing or to be distributed hereunder or under the Indenture or
the Trust Agreement to Noteholders and the termination of the Trust, any
amount remaining on deposit in the Reserve Account shall be distributed to
the Seller.
SECTION 5.08. [Reserved]
SECTION 5.09. Statements to Noteholders and Certificateholders. On each
Distribution Date, the Servicer shall provide to the Owner Trustee (with a
copy to the Rating Agencies and each Paying Agent) for the Owner Trustee to
forward to each Certificateholder of record as of the most recent Record Date
and to the Indenture Trustee (with a copy to each Paying Agent) for the
Indenture Trustee to forward to each Noteholder of record as of the most
recent Record Date a statement substantially in the form of Exhibit B,
setting forth at least the following information as to the Notes, to the
extent applicable:
(i) the amount of such distribution allocable to principal
allocable to each Class of Notes;
(ii) the amount of such distribution allocable to interest
allocable to each Class of Notes;
(iii) the outstanding principal balance of each Class of Notes
and the Note Pool Factor for each such Class as of the close of
business on the last day of the preceding
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Collection Period, after giving effect to payments allocated to
principal reported under clause (i) above;
(iv) the amount of the Servicing Fee paid to the Servicer with
respect to the related Collection Period;
(v) the amount of Realized Losses, if any, with respect to the
related Collection Period;
(vi) the balance of the Reserve Account on such Payment
Determination Date after giving effect to deposits and withdrawals to
be made on the next following Distribution Date, if any;
(vii) the Pool Balance as of the close of business on the last
day of the related Collection Period, after giving effect to payments
allocated to principal reported under clause (i) above; and
(viii) the amount, if any, distributed to the Certificate
Distribution Account.
Each amount set forth on the Distribution Date statement under clauses
(i), (ii) or (iv) above shall be expressed as a dollar amount per $1,000 of
original principal balance of a Note.
SECTION 5.10. Net Deposits. As an administrative convenience, unless
the Servicer is required to remit collections daily, the Servicer will be
permitted to make the deposit of collections on the Receivables and Purchase
Amounts for or with respect to the Collection Period net of distributions to
be made to the Servicer with respect to the Collection Period. The Servicer,
however, will account to the Owner Trustee, the Indenture Trustee, the
Noteholders and the Certificateholders as if all deposits, distributions and
transfers were made individually.
SECTION 5.11. Transfer of Certificates. In the event any Holder of a
Certificate shall wish to transfer such Certificate, the Seller shall provide
to such Holder and any prospective transferee designated by such Holder
information regarding the Certificates and the Receivables and such other
information as shall be necessary to satisfy the condition to eligibility set
forth in Rule 144A(d)(4) for transfer of any such Certificate without
registration thereof under the Securities Act of 1933, as amended, pursuant
to the exemption from registration provided by Rule 144A.
ARTICLE VI
The Seller
SECTION 6.01. Representations of Seller. The Seller makes the following
representations on which the Issuer is deemed to have relied in acquiring the
Receivables. The representations speak as of the execution and delivery of
this Agreement and as of the Closing Date, and shall survive the sale of the
Receivables to the Issuer and the pledge thereof to the Indenture Trustee
pursuant to the Indenture.
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(a) Organization and Good Standing. The Seller is duly organized
and validly existing as a corporation in good standing under the laws
of the State of Michigan, with the corporate 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, the corporate power, authority and legal
right to acquire and own the Standard Receivables and Fixed Value
Receivables.
(b) Due Qualification. The Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of property or the conduct of its business shall
require such qualifications.
(c) Power and Authority. The Seller has the corporate power and
authority to execute and deliver this Agreement 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 and deposited with the
Issuer, and the Seller shall have duly authorized such sale and
assignment to the Issuer by all necessary corporate action; and the
execution, delivery and performance of this Agreement has been duly
authorized by the Seller by all necessary corporate action.
(d) Binding Obligation. This Agreement constitutes a legal, valid
and binding obligation of the Seller enforceable in accordance with its
terms.
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof
do not conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time)
a default under, the articles of incorporation or bylaws of the Seller,
or any indenture, agreement or other instrument to which the Seller is
a party or by which it is bound; or 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 (other than
pursuant to this Agreement and the Basic Documents); or 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.
(f) No Proceedings. To the Seller's best knowledge, there are no
proceedings or investigations pending or threatened before any court,
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or its properties:
(i) asserting the invalidity of this Agreement, the Indenture or any of
the other Basic Documents, the Notes or the Certificates, (ii) seeking
to prevent the issuance of the Notes or the Certificates or the
consummation of any of the transactions contemplated by this Agreement,
the Indenture or any of the other Basic Documents, (iii) 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, the Indenture, any of the other
Basic Documents, the Notes or the Certificates or (iv) which might
adversely affect the federal or state income tax attributes of the
Notes or the Certificates.
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SECTION 6.02. Corporate Existence. During the term of this Agreement,
the Seller will keep in full force and effect its existence, rights and
franchises as a corporation under the laws of the jurisdiction of its
incorporation and will obtain and preserve its qualification to do business
in each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the Basic
Documents and each other instrument or agreement necessary or appropriate to
the proper administration of this Agreement and the transactions contemplated
hereby. In addition, all transactions and dealings between the Seller and its
Affiliates (including the Company) will be conducted on an arm's-length
basis.
SECTION 6.03. Liability of Seller; Indemnities. The Seller shall be
liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Seller under this Agreement:
(a) The Seller shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Company and the
Servicer and any of the officers, directors, employees and agents of
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 the transactions contemplated herein and in the
Basic Documents, including any sales, gross receipts, general
corporation, tangible personal property, privilege or license taxes
(but, in the case of the Issuer, 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 Certificates and the
Notes, or asserted with respect to ownership of the Receivables, or
federal or other income taxes arising out of distributions on the
Certificates or the Notes) and costs and expenses in defending against
the same.
(b) The Seller shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Company, the
Certificateholders and the Noteholders and any of the officers,
directors, employees and agents of 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 willful misfeasance, bad faith
or negligence in the performance of its duties under this Agreement, or
by reason of reckless disregard of its obligations and duties under
this Agreement and (ii) the Seller's or the Issuer's violation of
federal or state securities laws in connection with the offering and
sale of the Notes and the Certificates.
(c) The Seller shall indemnify, defend and hold harmless the
Owner Trustee and the Indenture Trustee and their respective officers,
directors, employees and agents from and against all costs, expenses,
losses, claims, damages and liabilities arising out of or incurred in
connection with the acceptance or performance of the trusts and duties
herein and in the Trust Agreement contained, in the case of the Owner
Trustee, and in the Indenture contained, in the case of the Indenture
Trustee, except to the extent that such cost, expense, loss, claim,
damage or liability: (i) in the case of the Owner Trustee, shall be due
to the willful misfeasance, bad faith or negligence (except for errors
in judgment) of the Owner Trustee or, in the case of the Indenture
Trustee, shall be due to the willful misfeasance, bad faith or
negligence (except for errors in judgment) of the Indenture Trustee; or
(ii) in the case of the Owner Trustee, shall arise from the breach by
the Owner Trustee of any of its representations or warranties set forth
in Section 7.03 of the Trust Agreement.
36
(d) The Seller shall pay any and all taxes levied or assessed
upon all or any part of the Owner Trust Estate.
Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee or the Indenture Trustee and the termination of
this Agreement and shall include reasonable fees and expenses of counsel and
expenses of litigation. If the Seller shall have made any indemnity payments
pursuant to this Section and the Person to or on behalf of whom such payments
are made thereafter shall collect any of such amounts from others, such
Person shall promptly repay such amounts to the Seller, without interest.
SECTION 6.04. Merger or Consolidation of, or Assumption of Obligations
of, Seller. Any Person (a) into which the Seller may be merged or
consolidated, (b) which may result from any merger or consolidation to which
the Seller shall be a party or (c) which may succeed to the properties and
assets of the Seller substantially as a whole, which person in any of the
foregoing cases executes an agreement of assumption 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; provided, however, that
(i) immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 3.01 shall have been breached and no
Servicer Default, and no event that, after notice or lapse of time, or both,
would become a Servicer Default shall have occurred and be continuing, (ii)
the Seller shall have delivered to the Owner Trustee and the Indenture
Trustee an Officers' Certificate and an Opinion of Counsel each stating that
such consolidation, merger or succession and such agreement of assumption
comply with this Section and that all conditions precedent, if any, provided
for in this Agreement relating to such transaction have been complied with,
(iii) the Rating Agency Condition shall have been satisfied with respect to
such transaction and (iv) the Seller shall have delivered to the Owner
Trustee and the Indenture Trustee an Opinion of Counsel either (A) stating
that, in the opinion of such counsel, all financing statements and
continuation statements and amendments thereto have been executed and filed
that are necessary fully to preserve and protect the interest of the Owner
Trustee and Indenture Trustee, respectively, in the Receivables and reciting
the details of such filings, or (B) stating that, in the opinion of such
counsel, no such action shall be necessary to preserve and protect such
interests. Notwithstanding anything herein to the contrary, the execution of
the foregoing agreement of assumption and compliance with clauses (i), (ii),
(iii) and (iv) above shall be conditions to the consummation of the
transactions referred to in clauses (a), (b) or (c) above.
SECTION 6.05. 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. The Seller shall not be under any obligation to appear in,
prosecute or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in
any expense or liability.
SECTION 6.06. Seller May Own Notes. The Seller and any Affiliate
thereof may in its individual or any other capacity become the owner or
pledgee of Notes with the same rights as it would have if it were not the
Seller or an Affiliate thereof, except as expressly provided
37
herein or in any Basic Document. The Seller shall not own any Certificates
unless the Rating Agency Condition is satisfied.
ARTICLE VII
The Servicer
SECTION 7.01. Representations of Servicer. The Servicer makes the
following representations on which the Issuer is deemed to have relied in
acquiring the Receivables. The representations speak as of the execution and
delivery of this Agreement and as of the Closing Date, and shall survive the
sale of the Receivables to the Issuer and the pledge thereof to the Indenture
Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Servicer is duly
organized and validly existing as a corporation in good standing under
the laws of the state of its incorporation, with the corporate 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, the corporate power,
authority and legal right to acquire, own, sell and service the
Standard Receivables and the Fixed Value Receivables and to hold the
Receivable Files as custodian.
(b) Due Qualification. The Servicer is duly qualified to do
business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of property or the conduct of its business
(including the servicing of the Standard Receivables and the Fixed
Value Receivables as required by this Agreement) shall require such
qualifications.
(c) Power and Authority. The Servicer has the corporate power and
authority to execute and deliver this Agreement and to carry out its
terms; and the execution, delivery and performance of this Agreement
have been duly authorized by the Servicer by all necessary corporate
action.
(d) Binding Obligation. This Agreement constitutes a legal, valid
and binding obligation of the Servicer enforceable in accordance with
its terms.
(e) No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof
shall not conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time)
a default under, the articles of incorporation or bylaws of the
Servicer, or any indenture, agreement or other instrument to which the
Servicer is a party or by which it is bound; or 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 (other than
this Agreement); or 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.
38
(f) No Proceedings. To the Servicer's best knowledge, there are
no proceedings or investigations pending or threatened before any
court, regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Servicer or its
properties: (i) asserting the invalidity of this Agreement, the
Indenture, any of the other Basic Documents, the Notes or the
Certificates, (ii) seeking to prevent the issuance of the Notes or the
Certificates or the consummation of any of the transactions
contemplated by this Agreement, the Indenture or any of the other Basic
Documents, (iii) 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, the Indenture, any of the other Basic Documents, the Notes
or the Certificates or (iv) relating to the Servicer and which might
adversely affect the federal or state income tax attributes of the
Notes or the Certificates.
(g) No Insolvent Obligors. As of the related Cutoff Date, no
Obligor on a Standard Receivable or Fixed Value Receivable is shown on
the Receivable Files as the subject of a bankruptcy proceeding.
SECTION 7.02. Indemnities of Servicer. The Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under this Agreement:
(a) The Servicer shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Noteholders, the
Certificateholders, the Company and the Seller and any of the officers,
directors, employees and agents of the Issuer, the Owner Trustee and
the Indenture Trustee 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.
(b) The Servicer shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Seller, the
Company, the Certificateholders and the Noteholders and any of the
officers, directors, employees and agents of the Issuer, the Owner
Trustee and the Indenture Trustee 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 any such Person through, the negligence, willful
misfeasance 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.
For purposes of this Section, in the event of the termination of the
rights and obligations of CFC (or any successor thereto pursuant to Section
7.03) as Servicer pursuant to Section 8.01, or a resignation by such Servicer
pursuant to this Agreement, such Servicer shall be deemed to be the Servicer
pending appointment of a successor Servicer (other than the Indenture
Trustee) pursuant to Section 8.02.
Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee or the Indenture Trustee or the termination of
this Agreement and 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 and the Person to or on behalf of
39
whom such payments are made thereafter collects any of such amounts from
others, such Person shall promptly repay such amounts to the Servicer,
without interest.
SECTION 7.03. Merger or Consolidation of, or Assumption of Obligations
of, Servicer. Any Person (a) into which the Servicer may be merged or
consolidated, (b) which may result from any merger or consolidation to which
the Servicer shall be a party, (c) which may succeed to the properties and
assets of the Servicer substantially as a whole or (d) with respect to the
Servicer's obligations hereunder, which is a corporation 50% or more of the
voting stock of which is owned, directly or indirectly, by Chrysler
Corporation, which Person executed an agreement of assumption to perform
every obligation of the Servicer hereunder, shall be the successor to the
Servicer under this Agreement without further act on the part of any of the
parties to this Agreement; provided, however, that (i) immediately after
giving effect to such transaction, no Servicer Default and no event which,
after notice or lapse of time, or both, would become a Servicer Default shall
have occurred and be continuing, (ii) the Servicer shall have delivered to
the Owner Trustee and the Indenture Trustee an Officers' Certificate and an
Opinion of Counsel each stating that such consolidation, merger or succession
and such agreement of assumption comply with this Section and that all
conditions precedent provided for in this Agreement relating to such
transaction have been complied with, (iii) the Rating Agency Condition shall
have been satisfied with respect to such transaction, (iv) immediately after
giving effect to such transaction, the successor to the Servicer shall become
the Administrator under the Administration Agreement in accordance with
Section 8 of such Agreement and (v) the Servicer shall have delivered to the
Owner Trustee and the Indenture Trustee an Opinion of Counsel stating that,
in the opinion of such counsel, either (A) all financing statements and
continuation statements and amendments thereto have been executed and filed
that are necessary fully to preserve and protect the interest of the Owner
Trustee and the Indenture Trustee, respectively, in the Receivables and
reciting the details of such filings or (B) no such action shall be necessary
to preserve and protect such interests. Notwithstanding anything herein to
the contrary, the execution of the foregoing agreement of assumption and
compliance with clauses (i), (ii), (iii), (iv) and (v) above shall be
conditions to the consummation of the transactions referred to in clause (a),
(b) or (c) above.
SECTION 7.04. Limitation on Liability of Servicer and Others. Neither
the Servicer nor any of the directors, officers, employees or agents of the
Servicer shall be under any liability to the Issuer, the Noteholders or the
Certificateholders, except as provided under this Agreement, for any action
taken or for refraining from the taking of any action pursuant to this
Agreement or for errors in judgment; 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 willful misfeasance, bad faith or
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties under this Agreement. The Servicer and any director,
officer, employee or agent of the Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any
person respecting any matters arising under this Agreement.
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 duties to service the Receivables in accordance with
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
40
the Basic Documents and the rights and duties of the parties to this
Agreement and the Basic Documents and the interests of the Certificateholders
under this Agreement and the Noteholders under the Indenture.
SECTION 7.05. CFC Not To Resign as Servicer. Subject to the provisions
of Section 7.03, CFC shall not resign from the obligations and duties hereby
imposed on it as Servicer under this Agreement except upon a determination
that the performance of its duties under this Agreement shall no longer be
permissible under applicable law and cannot be cured. Notice of any such
determination permitting the resignation of CFC shall be communicated to the
Owner Trustee and the Indenture Trustee 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 shall be
evidenced by an Opinion of Counsel to such effect delivered to the Owner
Trustee and the Indenture Trustee concurrently with or promptly after such
notice. No such resignation shall become effective until the Indenture
Trustee or a successor Servicer shall (i) have assumed the responsibilities
and obligations of CFC in accordance with Section 8.02 and (ii) have become
the Administrator under the Administration Agreement in accordance with
Section 8 of such Agreement.
ARTICLE VIII
Default
SECTION 8.01. Servicer Default. If any one of the following events (a
"Servicer Default") shall occur and be continuing:
(a) 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 required payment or to direct the Indenture
Trustee to make any required distributions therefrom, which failure
continues unremedied for a period of three Business Days after written
notice of such failure is received by the Servicer from the Owner
Trustee or the Indenture Trustee or after discovery of such failure by
an officer of the Servicer; or
(b) failure by the Servicer or the Seller, as the case may be,
duly to observe or to perform in any material respect any other
covenants or agreements of the Servicer or the Seller (as the case may
be) set forth in this Agreement or any other Basic Document, which
failure shall (i) materially and adversely affect the rights of
Certificateholders or Noteholders and (ii) 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 (A)
to the Servicer or the Seller (as the case may be) by the Owner Trustee
or the Indenture Trustee or (B) to the Servicer or the Seller (as the
case may be), and to the Owner Trustee and the Indenture Trustee by the
Holders of Notes or Certificates, as applicable, evidencing not less
than 25% of the Outstanding Amount of the Notes or Percentage Interests
(as defined in the Trust Agreement) aggregating at least 25%;or
(c) the occurrence of an Insolvency Event with respect to the
Seller, the Servicer or the Company;
41
then, and in each and every case, so long as the Servicer Default shall not
have been remedied, either the Indenture Trustee or the Holders of Notes
evidencing not less than 25% of the Outstanding Amount of the Notes, by
notice then given in writing to the Servicer (and to the Indenture Trustee
and the Owner Trustee if given by the Noteholders) may terminate all the
rights and obligations (other than the obligations set forth in Section 7.02
hereof) 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 Notes, the Certificates or
the Receivables or otherwise, shall, without further action, pass to and be
vested in the Indenture Trustee or such successor Servicer as may be
appointed under Section 8.02; and, without limitation, the Indenture Trustee
and the Owner Trustee are hereby authorized and empowered to execute and
deliver, for the benefit 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 Receivables and related documents, or otherwise. The
predecessor Servicer shall cooperate with the successor Servicer, the
Indenture Trustee and the Owner 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, or shall thereafter be received by it with respect to any
Receivable. All reasonable costs and expenses (including attorneys' fees)
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 shall be paid by the predecessor Servicer
upon presentation of reasonable documentation of such costs and expenses.
Upon receipt of notice of the occurrence of a Servicer Default, the Owner
Trustee shall give notice thereof to the Rating Agencies.
SECTION 8.02. Appointment of Successor. (a) Upon the Servicer's receipt
of notice of termination pursuant to Section 8.01 or the Servicer's
resignation in accordance with the terms of this Agreement, the predecessor
Servicer shall continue to perform its functions as Servicer under this
Agreement, in the case of termination, only until the date specified in such
termination notice or, if no such date is specified in a notice of
termination, until receipt of such notice and, in the case of resignation,
until the later of (i) the date 45 days from the delivery to the Owner
Trustee and the Indenture Trustee of written notice of such resignation (or
written confirmation of such notice) in accordance with the terms of this
Agreement and (ii) the date upon which the predecessor Servicer shall become
unable to act as Servicer, as specified in the notice of resignation and
accompanying Opinion of Counsel. In the event of the Servicer's termination
hereunder, the Indenture Trustee shall appoint a successor Servicer, and the
successor Servicer shall accept its appointment (including its appointment as
Administrator under the Administration Agreement as set forth in Section
8.02(b)) by a written assumption in form acceptable to the Owner Trustee and
the Indenture Trustee. In the event that a successor Servicer has not been
appointed at the time when the predecessor Servicer has ceased to act as
Servicer in accordance with this Section, the Indenture Trustee without
further action shall automatically be appointed the successor Servicer and
the Indenture Trustee shall be entitled to the Servicing Fee. Notwithstanding
the above, the Indenture Trustee shall, if it shall be legally unable so to
act, appoint or petition a court of competent jurisdiction to appoint any
established institution, having a net worth of not less than $100,000,000 and
whose regular business shall include the servicing of automotive receivables,
as the successor to the Servicer under this Agreement.
42
(b) Upon appointment, the successor Servicer (including the Indenture
Trustee acting as successor Servicer) shall (i) be the successor in all
respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities arising thereafter relating thereto
placed on the predecessor Servicer and shall be entitled to the Servicing Fee
and all the rights granted to the predecessor Servicer by the terms and
provisions of this Agreement and (ii) become the Administrator under the
Administration Agreement in accordance with Section 8 of such Agreement.
(c) The Servicer may not resign unless it is prohibited from serving as
such by law.
SECTION 8.03. Notification to Noteholders and Certificateholders. Upon
any termination of, or appointment of a successor to, the 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 Noteholders and the Rating Agencies.
SECTION 8.04. Waiver of Past Defaults. The Holders of Notes evidencing
not less than a majority of the Outstanding Amount of the Notes or the
Holders (as defined in the Trust Agreement) of Certificates evidencing not
less than a majority of the Percentage Interests (as defined in the Trust
Agreement) may, on behalf of all Noteholders and Certificateholders, waive in
writing any default by the Servicer in the performance of its obligations
hereunder and its consequences, except a default in making any required
deposits to or payments from any of the Trust Accounts in the Certificate
Distribution Account or accordance with this Agreement. Upon any such waiver
of a past default, such default shall cease to exist, and any Servicer
Default 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 thereto.
ARTICLE IX
Termination
SECTION 9.01. Optional Purchase of All Receivables. (a) As of the last
day of any Collection Period immediately preceding a Distribution Date as of
which the then outstanding Pool Balance is 10% or less of the Original Pool
Balance and the Class A-1 Notes, Class A-2 Notes and Class A-3 Notes have
been paid in full, the Servicer shall have the option to purchase the Owner
Trust Estate, other than the Trust Accounts and the Certificate Distribution
Account; provided, however, that, unless Moody's agrees otherwise, the
Servicer may not effect any such purchase if the rating of CFC's long-term
debt obligations is less than Baa3 by Moody's, unless the Owner Trustee and
the Indenture Trustee shall have received an Opinion of Counsel to the effect
that such purchase would not constitute a fraudulent conveyance. To exercise
such option, the Servicer shall deposit pursuant to Section 5.05 in the
Collection Account an amount equal to the aggregate Purchase Amount for the
Receivables (including defaulted Receivables), plus the appraised value of
any such other property held by the Trust other than the Trust Accounts and
the Certificate Distribution Account, such value to be determined by an
appraiser mutually agreed upon by the Servicer, the Owner Trustee and the
Indenture Trustee, and shall succeed to all interests in and to the Trust.
Notwithstanding the foregoing, the Servicer shall not be permitted to
exercise such option unless the amount to be deposited in the Collection
Account pursuant to the preceding
43
sentence is greater than or equal to the sum of the outstanding principal
balance of the Notes and all accrued but unpaid interest (including any
overdue interest and premium) thereon.
(b) As described in Article IX of the Trust Agreement, notice of any
termination of the Trust shall be given by the Servicer to the Owner Trustee
and the Indenture Trustee as soon as practicable after the Servicer has
received notice thereof.
(c) 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
other than Section 5.07(b) and the Owner Trustee will succeed to the rights
of, and assume the obligations of, the Indenture Trustee pursuant to this
Agreement.
ARTICLE X
Miscellaneous
SECTION 10.01. Amendment. This Agreement may be amended by the Seller,
the Servicer and the Issuer, with the consent of the Indenture Trustee, but
without the consent of any of the Noteholders or the Certificateholders, to
cure any ambiguity, to correct or supplement any provisions in this Agreement
or for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions in this Agreement or of modifying in any
manner the rights of the Noteholders or the Certificateholders; provided,
however, that such action shall not, as evidenced by an Opinion of Counsel
delivered to the Owner Trustee and the Indenture Trustee, adversely affect in
any material respect the interests of any Noteholder or Certificateholder.
This Agreement may also be amended from time to time by the Seller, the
Servicer and the Issuer, with the consent of the Indenture Trustee, the
consent of the Holders of Notes evidencing not less than a majority of the
Outstanding Amount of the Notes and the consent of the Holders (as defined in
the Trust Agreement) of outstanding Certificates evidencing not less than a
majority of the Percentage Interests (as defined in the Trust Agreement), for
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; provided,
however, that no such amendment shall (a) increase or reduce in any manner
the amount of, or accelerate or delay the timing of, collections of payments
on Receivables or distributions that shall be required to be made for the
benefit of the Noteholders or the Certificateholders or (b) reduce the
aforesaid percentage of the Outstanding Amount of the Notes and the
Percentage Interests (as defined in the Trust Agreement), the Holders of
which are required to consent to any such amendment, without the consent of
the Holders of all the outstanding Notes and the Holders (as defined in the
Trust Agreement) of all the outstanding Certificates.
Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, the Indenture Trustee and
each of the Rating Agencies.
44
It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent
shall approve the substance thereof.
Prior to the execution of any amendment to this Agreement, the Owner
Trustee and the Indenture 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 and the Opinion of Counsel referred
to in Section 10.02(i)(1). The Owner Trustee and the Indenture Trustee may,
but shall not be obligated to, enter into any such amendment which affects
the Owner Trustee's or the Indenture Trustee's, as applicable, own rights,
duties or immunities under this Agreement or otherwise.
SECTION 10.02. Protection of Title to Trust. (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 interest of the
Issuer and of the Indenture Trustee in the Receivables and in the proceeds
thereof. The Seller shall deliver (or cause to be delivered) to the Owner
Trustee and the 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 in accordance with
paragraph (a) above seriously misleading within the meaning of ss. 9-402(7)
of the UCC, unless it shall have given the Owner Trustee and the Indenture
Trustee at least five days' prior written notice thereof and shall have
promptly filed appropriate amendments to all previously filed financing
statements or continuation statements.
(c) Each of the Seller and the Servicer shall have an obligation to
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 UCC would require
the filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement and shall promptly file any such
amendment or 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
Standard Receivable and each Fixed Value 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 Standard Receivables and
the Fixed Value Receivables, the Servicer's master computer records
(including any backup archives) that refer to a Standard Receivable or a
Fixed Value Receivable shall indicate clearly the interest of the Issuer and
the Indenture Trustee in such Standard Receivable or Fixed Value Receivable
and that
45
such Standard Receivable or Fixed Value Receivable is owned by the Issuer and
has been pledged to the Indenture Trustee. Indication of the Issuer's and the
Indenture Trustee's interest in a Standard Receivable or Fixed Value
Receivable shall be deleted from or modified on the Servicer's computer
systems when, and only when, the related Receivable shall have been paid in
full or repurchased.
(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
automotive receivables to any prospective purchaser, lender or other
transferee, the Servicer shall give to such prospective purchaser, lender or
other transferee computer tapes, records or printouts (including any restored
from backup archives) that, if they shall refer in any manner whatsoever to
any Standard Receivable or Fixed Value Receivable, shall indicate clearly
that such Standard Receivable or such Fixed Value Receivable has 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 its agents at
any time during normal business hours to inspect, audit and make copies of
and abstracts from the Servicer's records regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the Owner Trustee or to
the Indenture Trustee, within five Business Days, a list of all Receivables
(by contract number and name of Obligor) then held as part of the Trust,
together with a reconciliation of such list to the Schedule of Receivables
and to each of the Servicer's Certificates furnished before such request
indicating removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Owner Trustee and the Indenture
Trustee:
(1) promptly after the execution and delivery of this Agreement
and of each amendment hereto, an Opinion of Counsel stating that, in
the opinion of such counsel, either (A) all financing statements and
continuation statements have been executed and filed that are necessary
fully to preserve and protect the interest of the Owner Trustee 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) no such action shall be necessary to preserve and
protect such interest; and
(2) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the Cutoff Date, an Opinion of Counsel, dated as of a date during
such 90-day period, stating that, in the opinion of such counsel,
either (A) all financing statements and continuation statements have
been executed and filed that are necessary fully to preserve and
protect the interest of the Owner Trustee 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) no
such action shall be necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (1) or (2) above shall specify
any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
46
(j) The Seller shall, to the extent required by applicable law, cause
the Notes to be registered with the Commission pursuant to Section 12(b) or
Section 12(g) of the Exchange Act within the time periods specified in such
sections.
SECTION 10.03. Notices. All demands, notices, communications and
instructions upon or to the Seller, the Servicer, the Owner Trustee, the
Indenture Trustee or the Rating Agencies 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 or the Servicer, to Chrysler Financial Corporation,
00000 Xxxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxx 00000, Attention of Assistant
Secretary ((000) 000-0000), (b) in the case of the Issuer or the Owner
Trustee, at the Corporate Trust Office (as defined in the Trust Agreement),
(c) in the case of the Indenture Trustee, at the Corporate Trust Office, (d)
in the case of Moody's, to Xxxxx'x Investors Service, Inc., ABS Monitoring
Department, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, (e) in the case of
Standard & Poor's, to Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc., 00 Xxxxxxxx (00xx Xxxxx), Xxx Xxxx, Xxx Xxxx
00000, Attention of Asset Backed Surveillance Department, (f) in the case of
Fitch Investors Service, L.P., to Xxx Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, X.X.
00000, and (g) in the case of Duff & Xxxxxx Credit Rating Co., to 00 Xxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000; or, as to each of the
foregoing, at such other address as shall be designated by written notice to
the other parties.
SECTION 10.04. Assignment by the Seller or the Servicer.
Notwithstanding anything to the contrary contained herein, except as provided
in the remainder of this Section, as provided in Sections 6.04 and 7.03
herein and as provided in the provisions of this Agreement concerning the
resignation of the Servicer, this Agreement may not be assigned by the Seller
or the Servicer. The Issuer and the Servicer hereby acknowledge and consent
to the conveyance and assignment (i) by the Seller to the Company pursuant to
the Purchase Agreement and (ii) by the Company to a limited liability company
or other Person (provided that conveyance and assignment is made in
accordance with Section 5.06 of the Purchase Agreement), of any and all of
the Seller's rights and interests (and corresponding obligations, if any)
hereunder with respect to receiving amounts from the Reserve Account and with
respect to receiving and conveying any Fixed Value Payments, and the Issuer
and the Servicer hereby agree that the Company, and any such assignee of the
Company, shall be entitled to enforce such rights and interests directly
against the Issuer as if the Company, or such assignee of the Company, were
itself a party to this Agreement.
SECTION 10.05. Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Seller, the Company (and any
assignee of the Company pursuant to Section 10.04), the Servicer, the Issuer,
the Owner Trustee, the Certificateholders, the Indenture Trustee and the
Noteholders, and nothing in this Agreement, whether express or implied, shall
be construed to give to any other Person any legal or equitable right, remedy
or claim in the Owner Trust Estate or under or in respect of this Agreement
or any covenants, conditions or provisions contained herein.
SECTION 10.06. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
47
SECTION 10.07. Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 10.08. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 10.09. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
SECTION 10.10. Assignment by Issuer. 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/or the assignment of any or all of the
Issuer's rights and obligations hereunder to the Indenture Trustee.
SECTION 10.11. Nonpetition Covenants. (a) Notwithstanding any prior
termination of this Agreement, the Servicer and the Seller shall not, prior
to the date which is one year and one day after the termination of this
Agreement with respect to the Issuer or the Company, acquiesce, petition or
otherwise invoke or cause the Issuer or the Company (or any assignee of the
Company pursuant to Section 10.04) to invoke the process of any court or
government authority for the purpose of commencing or sustaining a case
against the Issuer or the Company (or any assignee of the Company pursuant to
Section 10.04) under any federal or state bankruptcy, insolvency or similar
law, or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Issuer or the Company (or any
assignee of the Company pursuant to Section 10.04) or any substantial part of
its property, or ordering the winding up or liquidation of the affairs of the
Issuer or the Company (or any assignee of the Company pursuant to Section
10.04).
(b) Notwithstanding any prior termination of this Agreement, the
Servicer shall not, prior to the date which is one year and one day after the
termination of this Agreement with respect to the Seller, acquiesce, petition
or otherwise invoke or cause the Seller to invoke the process of any court or
government authority for the purpose of commencing or sustaining a case
against the Seller under any federal or state bankruptcy, insolvency or
similar law, or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of the Seller or any
substantial part of its property, or ordering the winding up or liquidation
of the affairs of the Seller.
SECTION 10.12. Limitation of Liability of Owner Trustee and Indenture
Trustee. (a) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by Chase Manhattan Bank Delaware not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Chase Manhattan Bank Delaware 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
48
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.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by The First National Bank of Chicago, not in its
individual capacity but solely as Indenture Trustee and in no event shall The
First National Bank of Chicago 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.
49
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
PREMIER AUTO TRUST 1997-1
By: CHASE MANHATTAN BANK DELAWARE, not in
its individual capacity but solely as Owner
Trustee on behalf of the Trust
By: /s/ Xxxx X. Xxxxxx
---------------------------------------
Name: Xxxx X. Xxxxxx
Title: Senior Trust Officer
CHRYSLER FINANCIAL CORPORATION,
Seller and Servicer
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President and Treasurer
Acknowledged and accepted
as of the day and year
first above written:
THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity
but solely as Indenture Trustee
By: /s/ X.X. Xxxxxx
-------------------
Name: X.X. Xxxxxx
Title: Vice President
SCHEDULE A
Schedule of Receivables
Delivered to the Owner Trustee and Indenture Trustee at Closing
SCHEDULE B
Location of Receivable Files
Chrysler Financial Corporation
00000 Xxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000-0000
EXHIBIT A
[Reserved]
A-1
EXHIBIT B
Form of Distribution Statement to Noteholders
Chrysler Financial Corporation
Premier Auto Trust 1997-1 Distribution Date Statement to Noteholders
-----------------------------------------------------------------------------
Principal Distribution Amount
Class A-1 Notes: ($ per $1,000 original principal amount)
Class A-2 Notes: ($ per $1,000 original principal amount)
Class A-3 Notes: ($ per $1,000 original principal amount)
Class A-4 Notes: ($ per $1,000 original principal amount)
Class B Notes: ($ per $1,000 original principal amount)
Interest Distribution Amount
Class A-1 Notes: ($ per $1,000 original principal amount)
Class A-2 Notes: ($ per $1,000 original principal amount)
Class A-3 Notes: ($ per $1,000 original principal amount)
Class A-4 Notes: ($ per $1,000 original principal amount)
Class B Notes: ($ per $1,000 original principal amount)
Note Balance
Class A-1 Notes
Class A-2 Notes
Class A-3 Notes
Class A-4 Notes
Class B Notes
Note Pool Factor
Class A-1 Notes
Class A-2 Notes
Class A-3 Notes
Class A-4 Notes
Class B Notes
Servicing Fee
Servicing Fee Per $1,000 Note
Realized Losses
Reserve Account Balance
B-1
EXHIBIT C
Form of Servicer's Certificate
Chrysler Financial Corporation
Premier Auto Trust 1997-1 Monthly Servicer's Certificate
=============================================================================
Period
Distribution Date
Dates Covered From & Incl. To & Incl.
-----------------------------------------------------------------------------
Collections
Accrual
30/360 Days
Actual/360 Days
Receivables Balances Beginning Ending
-----------------------------------------------------------------------------
Pool Balance
Simple Interest
Original Pool Balance
Principal Distribution Amount
-----------------------------------------------------------------------------
Principal Collections
+ Repurchases
+ Liquidation Proceeds
+ Realized Losses
Interest Distribution Amount
-----------------------------------------------------------------------------
Collections - Simple Interest Contracts
+ Investment Earnings
Total Distribution Amount
-----------------------------------------------------------------------------
Principal Distribution Amount
+ Interest Distribution Amount
-- Realized Losses
Total Distribution Amount:
Loss & Delinquency
C-1
Account Activity
------------------------------------------------------
Beginning Ending Interest/Interest
Shortfall Balance Balance Change Factor Servicing
----------------------------------------------------------------------------
Initial Pool
Principal Paydown
Reserve
Notes
Class A-1
Class A-2
Class A-3
Class A-4
Class B
Overcollateralization
Overcollateralization
Percentage
Principal Allocation
--------------------------------------------------------------
Mandatory
Regular Accelerated Redemption/ Total Principal
Principal Principal Repayment Principal Shortfall
---------------------------------------------------------------------------
Notes
Class A-1
Class A-2
Class A-3
Class A-4
Class B
Total
Miscellaneous
-----------------------------------------------------------------------------
Amounts released to the Certificate Distribution Account
Cash Release Amount
Receivables to be released
Specified Reserve Account Balance
Distribution Amount to Seller
Servicing Fee to Servicer
Allocation of Funds
-----------------------------------------------------------------------------
Sources
Principal Distribution Amount
Interest Distribution Amount
Redemption/Prepay Amount
Total Sources
C-2
