Conformed Copy
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SALE AND SERVICING AGREEMENT
between
PREMIER AUTO TRUST 1998-5
Issuer,
and
CHRYSLER FINANCIAL CORPORATION,
Seller and Servicer
Dated as of October 1, 1998
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Table of Contents
Page
----
ARTICLE I
Definitions
SECTION 1.01. Definitions........................................... 1
SECTION 1.02. Other Definitional Provisions......................... 16
ARTICLE II
Conveyance of Receivables
SECTION 2.01. Conveyance of Receivables............................. 17
SECTION 2.02. Conveyance of Fixed Value Payments and Fixed
Value Finance Charges................................. 17
SECTION 2.03. Fixed Value Securities................................ 18
ARTICLE III
The Receivables
SECTION 3.01. Representations and Warranties of Seller
with Respect to the Receivables....................... 19
SECTION 3.02. Repurchase upon Breach................................ 22
SECTION 3.03. Custody of Receivable Files........................... 23
SECTION 3.04. Duties of Servicer as Custodian....................... 23
SECTION 3.05. Instructions; Authority To Act........................ 24
SECTION 3.06. Custodian's Indemnification........................... 24
SECTION 3.07. Effective Period and Termination...................... 24
ARTICLE IV
Administration and Servicing of Receivables
SECTION 4.01. Duties of Servicer.................................... 25
SECTION 4.02. Collection and Allocation of Receivable Payments...... 25
SECTION 4.03. Realization upon Receivables.......................... 26
SECTION 4.04. Physical Damage Insurance............................. 26
SECTION 4.05. Maintenance of Security Interests in
Financed Vehicles..................................... 26
SECTION 4.06. Covenants of Servicer................................. 26
SECTION 4.07. Purchase of Receivables upon Breach................... 26
SECTION 4.08. Servicing Fee......................................... 27
SECTION 4.09. Servicer's Certificate................................ 27
SECTION 4.10. Annual Statement as to Compliance; Notice of Default.. 27
SECTION 4.11. Annual Independent Certified Public Accountants'
Report................................................ 28
SECTION 4.12. Access to Certain Documentation and Information
Regarding Receivables................................. 28
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SECTION 4.13. Servicer Expenses..................................... 28
SECTION 4.14. Appointment of Subservicer............................ 28
ARTICLE V
Distributions; Reserve Account;
Statements to Certificateholders and Noteholders
SECTION 5.01. Establishment of Collection Account................... 29
SECTION 5.02. Collections........................................... 31
SECTION 5.03. Application of Collections............................ 31
SECTION 5.04. [ Reserved ].......................................... 32
SECTION 5.05. Additional Deposits................................... 32
SECTION 5.06. Distributions......................................... 32
SECTION 5.07. Reserve Account....................................... 34
SECTION 5.08. [ Reserved ].......................................... 35
SECTION 5.09. Statements to Noteholders and Certificateholders...... 35
SECTION 5.10. Net Deposits.......................................... 36
ARTICLE VI
The Seller
SECTION 6.01. Representations of Seller............................. 36
SECTION 6.02. Corporate Existence................................... 37
SECTION 6.03. Liability of Seller; Indemnities...................... 37
SECTION 6.04. Merger or Consolidation of, or Assumption of
Obligations of, Seller................................ 38
SECTION 6.05. Limitation on Liability of Seller and Others.......... 39
SECTION 6.06. Seller May Own Notes.................................. 39
ARTICLE VII
The Servicer
SECTION 7.01. Representations of Servicer........................... 39
SECTION 7.02. Indemnities of Servicer............................... 40
SECTION 7.03. Merger or Consolidation of, or Assumption of
Obligations of, Servicer.............................. 41
SECTION 7.04. Limitation on Liability of Servicer and Others........ 42
SECTION 7.05. CFC Not To Resign as Servicer......................... 42
ARTICLE VIII
Default
SECTION 8.01. Servicer Default...................................... 43
SECTION 8.02. Appointment of Successor.............................. 44
SECTION 8.03. Notification to Noteholders and Certificateholders.... 44
SECTION 8.04. Waiver of Past Defaults............................... 45
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ARTICLE IX
Termination
SECTION 9.01. Optional Purchase of All Receivables.................. 45
ARTICLE X
Miscellaneous
SECTION 10.01. Amendment............................................. 46
SECTION 10.02. Protection of Title to Trust.......................... 47
SECTION 10.03. Notices............................................... 49
SECTION 10.04. Assignment by the Seller or the Servicer.............. 49
SECTION 10.05. Limitations on Rights of Others....................... 49
SECTION 10.06. Severability.......................................... 49
SECTION 10.07. Separate Counterparts................................. 50
SECTION 10.08. Headings.............................................. 50
SECTION 10.09. Governing Law......................................... 50
SECTION 10.10. Assignment by Issuer.................................. 50
SECTION 10.11. Nonpetition Covenants................................. 50
SECTION 10.12. Limitation of Liability of Owner Trustee and
Indenture Trustee..................................... 50
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 October 1, 1998, between
PREMIER AUTO TRUST 1998-5, 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, if any, of the Total
Distribution Amount for such Distribution Date that remains after the payment
of (i) the Servicing Fee (together with any Servicing Fee that remains unpaid
from prior Distribution Dates), (ii) the Noteholders' Interest Distributable
Amount, (iii) the Regular Principal Distribution Amount and (iv) the amount,
if any, required to be allocated to the Reserve Account on such Distribution
Date pursuant to Section 5.06(a)(ii)(C).
"Amortizing Payment" means, with respect to each Fixed Value
Receivable and each Collection Period prior to the date on which the Fixed
Value Payment relating to such Receivable 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.
"Amortizing Payment Finance Charge" means, with respect to each
payment collected on a Fixed Value Receivable, the finance charge included in
such payment (as determined in accordance with the Servicer's customary
procedures) that is allocable to the related Principal Balance.
"Amount Financed" means (i) with respect to a Standard Receivable,
the amount advanced under such 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 such 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 on each Distribution Date during the
Release Period, the portion, if any, of the Total Distribution Amount which
remains after payment of (a) the Servicing Fee, (b) the Noteholders' Interest
Distributable Amount, (c) the Release Period Noteholders' Principal
Distributable Amount and (d) the amount, if any, required to increase the
amount in the Reserve Account to the Specified Reserve Amount; provided that
on the Last Release Distribution Date the Cash Release Amount shall equal the
Initial Overcollateralization Amount less the aggregate of the Cash Release
Amounts for all prior Distribution Dates.
"Certificate Balance" has the meaning assigned to such term in the
Trust Agreement.
"Certificateholders" has the meaning assigned to such term in the
Trust Agreement.
"Certificates" means the Trust Certificates and the
Overcollateralization Certificates.
"CFC" means Chrysler Financial Corporation, a Michigan corporation,
or its successors.
"Class" means any one of the classes of Notes.
"Class A-1 Final Scheduled Distribution Date" means the July 1999
Distribution Date.
"Class A-1 Initial Principal Balance" shall mean $380,000,000.00.
"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 2001
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 July 2002
Distribution Date.
"Class A-3 Noteholder" means the Person in whose name a Class A-3
Note is registered in the Note Register.
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"Class A-4 Final Scheduled Distribution Date" means the April 2003
Distribution Date.
"Class A-4 Noteholder" means the Person in whose name a Class A-4
Note is registered in the Note Register.
"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 ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇;
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 October 14, 1998.
"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 Indenture
Trustee or its nominee or custodian or endorsed in blank, and, with
respect to a certificated security (as
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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 securities intermediary (as defined in
Section 8-102 of the UCC) and the making by such securities
intermediary of entries on its books and records identifying such
certificated securities (as defined in Section 8-102 of the UCC) of
the Indenture Trustee or its nominee or custodian or (ii) by
delivery thereof to a "clearing corporation" (as defined in Section
8-102 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 securities intermediary by the amount of such
certificated security, the identification by the clearing
corporation on its books and records that the certificated
securities are credited to the sole and exclusive securities account
of the securities intermediary, the maintenance of such certificated
securities by such clearing corporation or a custodian or the
nominee of such clearing corporation subject to the clearing
corporation's exclusive control, and the making by such securities
intermediary of entries on its books and records identifying such
certificated securities as being credited to the securities account
of 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 securities intermediary which is
also a "depository" pursuant to applicable Federal regulations; the
identification by the Federal Reserve Bank of such book-entry
securities on its record being credited to the securities
intermediary's securities account; the making by such securities
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; 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 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 (a) above, registration on the books and
records of the issuer thereof in the name of the securities
intermediary, the sending of a confirmation by the securities
intermediary of the purchase by the Indenture Trustee or its nominee
or custodian of such uncertificated security, the making by such
securities intermediary of entries on its books and records
identifying such uncertificated certificates as belonging to the
Indenture Trustee or its nominee or custodian.
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"Depositor" means the Seller in its capacity as Depositor under the
Trust Agreement.
"Distribution Date" means, with respect to each Collection Period,
the eighth day of the following month or, if such day is not a Business Day,
the immediately following Business Day, commencing on November 9, 1998.
"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 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 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;
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(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;
(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 (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
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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 or other action in respect of the
Guaranteed Counterparty is necessary) and that the
Indenture Trustee or the Issuer shall make a
7
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
overcollateralization, 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 Maturity Date" means October 23, 2004.
"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
that is the later of (a) the Distribution Date following the Distribution
Date on which the Overcollateralization Amount is at least equal to the sum
of (i) the Initial Overcollateralization Amount and (ii) the product of (x)
2% and (y) the excess of the Related Pool Balance for such preceding
Distribution Date over the Initial Overcollateralization Amount and (b) the
Distribution Date next succeeding the Distribution Date on which the Class
A-1 Notes have been paid in full.
"Fixed Value Finance Charge" means, with respect to each payment
collected on a Fixed Value Receivable, the finance charge included in such
payment (as determined in accordance with the Servicer's customary
procedures) that is allocable to the related Fixed Value Payment.
"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
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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.
"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 simple interest method, 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 specified
conditions.
"Fixed Value Securities" has the meaning assigned to such term in
Section 2.03.
"Indenture" means the Indenture dated as of October 1, 1998, 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 $52,523,447.71.
"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 (exclusive of collections allocable to Fixed Value
Finance Charges in accordance with Section 5.03(b)), (b) Liquidation Proceeds
with respect to the
9
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.
"Investment Earnings" means, with respect to any Distribution Date,
the investment earnings (net of losses and investment expenses) on amounts on
deposit in the Collection Account to be applied on such Distribution Date
pursuant to Section 5.01(b).
"Issuer" means Premier Auto Trust 1998-5.
"Last Release Distribution Date" means the Distribution Date on
which the aggregate amount of the Cash Release Amounts released from the lien
of the Indenture pursuant to Section 5.06(a)(ii)(D) on such Distribution Date
and all prior Distribution Dates is equal to the Initial
Overcollateralization Amount.
"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 ▇▇▇▇▇'▇ Investors Service, Inc., or its successor.
"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' Interest Distributable Amount
and the Noteholders' Principal Distributable Amount for such Distribution
Date.
10
"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
paid on the Notes 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.
"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 Class A-1 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 or, in the case of the Class A-1 Notes, the related Class A-1
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, on 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 plus (ii) the Accelerated Principal Distribution Amount
plus (iii) any accelerated payments of principal required to be made from
amounts allocated to 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 paid as principal of the Notes 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 allocated for distribution to the Class A-1 Noteholders will
include the amount necessary (after giving effect to the other amounts to be
11
allocated for distribution to the Class A-1 Noteholders 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 allocated for distribution to the Class
A-2 Noteholders will include the amount necessary (after giving effect to the
other amounts to be allocated for distribution to the Class A-2 Noteholders
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 allocated for
distribution to the Class A-3 Noteholders will include the amount necessary
(after giving effect to the other amounts to be allocated for distribution to
the Class A-3 Noteholders 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 allocated for distribution to the Class A-4 Noteholders will
include the amount necessary (after giving effect to the other amounts to be
allocated for distribution to the Class A-4 Noteholders on such Distribution
Date and allocable to principal) to reduce the Outstanding Amount of the
Class A-4 Notes to zero.
"Notes" means the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes
and Class A-4 Notes.
"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 $1,802,523,447.71.
"Overcollateralization Amount" means, with respect to any
Distribution Date, (i) the Related Pool Balance minus (ii) the Securities
Amount.
"Overcollateralization Certificates" has the meaning assigned to
such term in the Trust Agreement.
"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.
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"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 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
October 1, 1998, 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 IBCA,
Inc. and Duff & ▇▇▇▇▇▇ 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.
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"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 Period in accordance with the Servicer's customary servicing
procedures, plus the amount of Realized Losses with respect to such
Liquidated Receivables and (c) to the extent attributable to principal, the
Purchase Amount of each Receivable that became a Purchased Receivable during
such Collection Period.
"Related Pool Balance" means, with respect to any Distribution Date,
the Pool Balance as of the end of the related Collection Period.
"Release Period" means the period from and including the First
Release Distribution Date to and including the Last Release Distribution
Date.
"Release Period Noteholders' Principal Distributable Amount" means,
with respect to any Distribution Date during the Release Period, the amount
equal to the excess, if any, of (a) the Securities Amount on such
Distribution Date (but prior to giving effect to any distributions on such
Distribution Date) over (b) the product of (1) 95.00% and (2) the Related
Pool Balance; provided further that on the Last Release Distribution Date,
the Release Period Noteholders' Principal Distributable Amount shall equal
(x) the Noteholders' Principal Distributable Amount less (y) the Cash Release
Amount.
"Reserve Account" means the account that is part of the Collection
Account and is 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 $4,375,000.00 made by the Seller
into the Collection Account on the Closing Date.
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"Securities Amount" means, with respect to any Distribution Date,
the sum of the aggregate Outstanding Principal Amount of the Notes and the
Certificate Balance of the Overcollateralization Certificates after giving
effect to payments of principal made on the Notes and the
Overcollateralization Certificates on such Distribution 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 a fraction, the numerator of which is the number of days elapsed since the
preceding payment of interest was made, the denominator of which is 365, 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.
"Specified Reserve Amount" means, with respect to any Distribution
Date, an amount equal to the Reserve Account Initial Deposit.
"Standard & Poor's" means Standard & Poor's Ratings Services, a
division of The ▇▇▇▇▇▇-▇▇▇▇ 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.
"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.
15
"Trust Account Property" means the Collection Account, all amounts
and investments held from time to time in the Collection 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 Agreement" means the Amended and Restated Trust Agreement
dated as of October 1, 1998, among the Seller, the Company and the Owner
Trustee.
"Trust Certificates" has the meaning assigned to such term in the
Trust Agreement.
"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.
(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".
16
(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 (x)
$[1,297,580,312.50] (which amount represents the Original Pool Balance less
(i) the Reserve Account Initial Deposit, (ii) the Initial
Overcollateralization Amount, (iii) the Class A-1 Initial Principal Balance,
(iv) the Initial Certificate Balance (as defined in the Trust Agreement) and
(v) certain other expenses of the Issuer), and (y) 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 October 14, 1998;
(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;
(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 Collection Account, 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.
17
(h) The Seller hereby directs the Issuer to issue the
Certificates to the Company. The Seller and the Issuer acknowledge
that $380,000,000.00 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. Conveyance of Fixed Value Payments and Fixed Value
Finance Charges. 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 and the Fixed Value Finance Charges, 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 2.03. Fixed Value Securities. i) 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 and/or Fixed Value Finance Charges, 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 and/or Fixed Value Finance Charges 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 or any other Basic Document; and provided,
further, that the obligation of the Issuer to purchase such Fixed Value
Payments and/or Fixed Value Finance Charges 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 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;
18
(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 and
Fixed Value Finance Charges other than to the Issuer pursuant to paragraph
i).
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 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
19
Financed by maturity and yield interest at the Annual Percentage
Rate. 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 Certificateholders 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 ▇▇▇▇▇▇▇▇-▇▇▇▇ 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 from the lien granted by the
related Standard Receivable or Fixed Value Receivable in whole or in
part.
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(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 Standard
Receivable or Fixed Value 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 Receivable 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
October 31, 2004.
(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 $300.00.
(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 the subject
of a bankruptcy proceeding, 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.
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(aa) Financing. As of the Cutoff Date, approximately 19.46%
of the aggregate principal balance of the Receivables, constituting
22.82% of the number of Receivables, represents previously titled
vehicles; approximately 80.54% of the aggregate principal balance of
the Receivables, constituting 77.18% of the number of Receivables,
represents financing of vehicles manufactured or distributed by
Chrysler Corporation; all of the Receivables are Simple Interest
Receivables; by aggregate principal balance, approximately 21.24% of
the Receivables are Fixed Value Receivables. The aggregate principal
balance of the Receivables, as of the Cutoff Date is
$1,802,523,447.71. 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
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(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. i) 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 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
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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 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
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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 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 Standard Receivable or
Fixed Value 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 Standard Receivable
or Fixed Value 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 Standard Receivable or Fixed Value Receivable. The Servicer shall
not agree to any alteration of the interest rate or the originally scheduled
payments on any Standard Receivable or Fixed Value 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 Fixed Value Receivable.
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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 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 (or, in the case of the
initial Collection Period, a fraction, the numerator of which is equal to the
number of days elapsed from the Cutoff Date through the last day of such
initial Collection Period and the denominator of which is 360), (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
27
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.
i) The Servicer shall deliver to the Owner Trustee and the Indenture Trustee,
on or before April 30 of each year beginning April 30, 1999, 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 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, 1999, 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.
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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 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 Collection Account. 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. The Servicer shall establish the
Reserve Account as part of the Collection Account.
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(b) Funds on deposit in the Collection Account 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, 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 Collection Account 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 shall be invested in Eligible
Investments that will mature (1) not later than the Business Day immediately
preceding the next Distribution Date or (2) 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 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 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 the Collection 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) (1) The Indenture Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Collection Account
and in all proceeds thereof (including all
30
income thereon) and all such funds, investments, proceeds and income shall be
part of the Trust Estate. The Collection Account shall be under the sole
dominion and control of the Indenture Trustee for the benefit of the
Noteholders and the Certificateholders, as applicable. If, at any time, the
Collection Account 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 Collection Account as an Eligible Deposit
Account and shall transfer any cash and/or any investments to such new
Collection 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
securities intermediary (as such term is defined in Section
8-102 of the UCC) acting solely for the Indenture Trustee;
(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 Collection Account for the purpose
of permitting the Servicer to carry out its respective duties
hereunder or permitting the Indenture Trustee to carry out its
duties under the Indenture.
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SECTION 5.02. Collections. Subject to the continued satisfaction of
the commingling conditions described below, the Servicer shall remit 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), all Liquidation Proceeds and any subsequent Recoveries, both
as collected during a Collection Period, on or prior to the Payment
Determination Date preceding the related Distribution Date. Notwithstanding
the foregoing, if any of the commingling conditions ceases to be met, the
Servicer shall remit 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), all Liquidation Proceeds
and any subsequent Recoveries within two Business Days of receipt thereof.
The commingling conditions are as follows: (i) CFC must be the Servicer, (ii)
no Servicer Default shall have occurred and be continuing and (iii) (x) CFC
must maintain a short-term rating of at least A-1 by Standard & Poor's and
P-1 by Moody's or (y) if daily remittances occur hereunder, 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). Notwithstanding anything herein to the
contrary, so long as CFC is the Servicer, CFC may withhold from the deposit
into the Collection Account any amounts indicated on the related Servicer's
Certificate as being due and payable to CFC or the Seller and pay such
amounts directly to CFC or the Seller, as applicable. 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. In the event the commingling conditions cease to be
met, the Servicer shall make daily remittance of collections to the
Collection Account within two Business Days of receipt thereof; provided
however, daily remittance may commence no later than five Business Days
following a reduction of CFC's short-term ratings below A-1 by Standard &
Poor's or P-1 by Moody's.
SECTION 5.03. Application of Collections. i) 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 collections of finance charges on a Fixed Value Receivable
(as determined in accordance with the Servicer's customary procedures) shall
be applied, first, to the Amortizing Payment Finance Charges due and unpaid
on the related Principal Balance and then to the Fixed Value Finance Charges
due and unpaid on the related Fixed Value Payment. The Servicer shall release
to the Company the Collections allocated to Fixed Value Finance Charges
pursuant to the preceding sentence. 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) (1) On each Payment Determination Date, the Servicer shall
calculate all amounts required to be distributed to the Noteholders and the
Certificateholders and all amounts to be allocated within the Collection
Account as described below. For purposes of this Section, the Servicing Fee
for the related Distribution Date and any previously unpaid Servicing Fees
shall, and the Cash Release Amount to be distributed to the Holders of the
Trust Certificates may, be deducted from the Total Distribution Amount at any
time on or prior to the Distribution Date.
(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
allocations and distributions by 11:00 A.M. (New York time), to the
extent of the Total Distribution Amount (net of the Servicing Fee
for such Distribution Date and any previously unpaid Servicing Fees
and any Cash Release Amount deducted pursuant to Section
5.06(a)(i)), in the following order of priority:
(A) allocate to the Noteholders for distribution
pursuant to Section 8.02 of the Indenture, from the Total
Distribution Amount, the Noteholders' Interest
Distributable Amount;
(B) allocate to the Noteholders for distribution
pursuant to Section 8.02 of the Indenture, from the Total
Distribution Amount remaining after the application of
clause (A), the Noteholders' Principal Distributable
Amount; provided, however, that on each Distribution Date
during the Release Period, the Release Period Noteholder's
Principal Distributable Amount (rather than the
Noteholders' Principal Distributable Amount) shall be
allocated to the Noteholders for distribution to the
Noteholders pursuant to Section 8.02 of the Indenture;
(C) allocate to the Reserve Account, from the
Total Distribution Amount remaining after the application
of clauses (A) and (B) (it being understood that the
Accelerated Principal Distribution Amount and the Cash
Release Amount are a function of and subject to the amount
required to be allocated to the Reserve Account pursuant to
this clause (C)), the excess, if any, of the Specified
Reserve Amount over the amount then allocated to the
Reserve Account;
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(D) if all of the conditions set forth in Section
5.06(b) are satisfied, distribute to the Holders of the
Trust Certificates, from the Total Distribution Amount
remaining after the application of clauses (A) through (C),
the Cash Release Amount for such Distribution Date to the
extent not already deducted pursuant to Section 5.06(a)(i);
(E) distribute to the Holders of the
Overcollateralization Certificates, the Total Distribution
Amount remaining after the application of clauses (A)
through (D) and only after the Notes have been paid in
full, until the Certificate Balance has been reduced to
zero; and
(F) distribute to the Holders of the Trust
Certificates the portion, if any, of the Total Distribution
Amount remaining after the application of clauses (A)
through (E).
If pursuant to Section 5.02, the Servicer is permitted to remit collections
on the Receivables to the Collection Account on the Payment Determination
Date preceding the related Distribution Date, then the Servicer may net the
amounts, if any, distributable pursuant to clauses (D), (E) and (F) out of
the Total Distribution Amount before depositing the Total Distribution Amount
into the Collection Account and pay such amounts directly to the related
recipient.
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.
(b) The distribution of a Cash Release Amount pursuant to Section
5.06(a)(ii)(D) 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 Distribution Date; and
(ii) the amount allocated to the Reserve Account is equal
to the Specified Reserve Amount and the aggregate amount of Cash
Release Amounts distributed pursuant to Section 5.06(a)(ii)(D) on or
prior to such Distribution Date shall not exceed the Initial
Overcollateralization Amount.
SECTION 5.07. Reserve Account. i) On the Closing Date, the Owner
Trustee will deposit, on behalf of the Seller, the Reserve Account Initial
Deposit into the Collection Account from the net proceeds of the sale of the
Notes which amount shall be allocated to the Reserve Account.
(b) (1) After giving effect to clause (ii) below, if the amount
allocated to the Reserve Account on any Distribution Date (after giving
effect to all allocations thereto or withdrawals therefrom on such
Distribution Date) is greater than the Specified Reserve Amount, the Servicer
shall instruct the Indenture Trustee to distribute the amount of such excess
to the Seller.
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(ii) On each Distribution Date subsequent to any
reduction or withdrawal by any Rating Agency of its rating of any
Class of Notes, unless such rating has been restored, if the amount
allocated to the Reserve Account (after taking into account any
allocations 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 Amount, then the Servicer shall
instruct the Indenture Trustee to include the amount of such excess
in the Noteholders' Monthly Principal Distribution Amount and to
allocate the amount of such excess 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) (1) In the event that the Noteholders' Distributable Amount for
a Distribution Date exceeds the sum of the amounts allocated for distribution
to the Noteholders pursuant to Section 5.06(a)(ii)(A) and (B) 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 allocate such
amount for distribution to the Noteholders; provided that such amount shall
be applied first, to the payment of interest due on the Notes to the extent,
if any, that the amount allocated pursuant to Section 5.06(a)(ii)(A) is not
sufficient to cover such payment of interest; and second, to the payment of
principal of the Notes.
(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 or the Class A-4 Final Scheduled
Distribution Date exceeds the amount allocated for distribution to
the Noteholders pursuant to Section 5.06(a)(ii)(B) 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 allocate such amount for distribution to the
Noteholders.
(d) Subject to Section 9.01, amounts will continue to be applied
pursuant to Section 5.06(a) following payment in full of both the Outstanding
Amount of the Notes and of the Certificate Balance of the
Overcollateralization Certificates until the Pool Balance is reduced to zero.
Following the payment in full of the aggregate Outstanding Amount of the
Notes and of the Certificate Balance of the Overcollateralization
Certificates 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 then allocated to 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
35
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 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 amount allocated to the Reserve Account on such
Payment Determination Date after giving effect to allocations
thereto and withdrawals therefrom 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, allocated for distribution to
the Certificateholders.
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.
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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.
(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 the 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.
37
(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.
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 (or another legal entity) under the
laws of the jurisdiction of its organization 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
38
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.
(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
39
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 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.
40
(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.
(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,
41
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 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 legal entity 50%
or more of the voting power of which is owned, directly or indirectly, by
Chrysler Corporation or an affiliate of or successor to Chrysler Corporation
or an affiliate of such successor, 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
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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 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.
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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 deposit in the
Collection Account any required payment or to direct the Indenture
Trustee to make any required distributions therefrom, which failure
continues unremedied for a period of five 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, Trust Certificates or
Overcollateralization Certificates, as applicable, evidencing not
less than 25% of the Outstanding Amount of the Notes, evidencing
Percentage Interests (as defined in the Trust Agreement) aggregating
at least 25% or evidencing not less than 25% of the Certificate
Balance; or
(c) the occurrence of an Insolvency Event with respect to
the Seller, the Servicer or the Company;
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
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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. i) 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.
(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
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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,
the Holders (as defined in the Trust Agreement) of Trust Certificates
evidencing not less than a majority of the Percentage Interests (as defined
in the Trust Agreement) or the Holders (as defined in the Trust Agreement) of
Overcollateralization Certificates evidencing not less than a majority of the
Certificate Balance may, on behalf of all Noteholders, the Holders of the
Trust Certificates or the Holders of the Overcollateralization Certificates,
as the case may be, 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 allocations or distributions from the
Collection Account in 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. i) 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 Collection 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 Collection 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 sentence is greater than or
equal to the sum of the outstanding principal balance of the Notes and the
Certificate Balance of the Overcollateralization Certificates 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.
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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 (including for the issuance of Fixed Value Securities pursuant to
Section 2.03) 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, the consent of the Holders (as defined in
the Trust Agreement) of outstanding Trust Certificates evidencing not less
than a majority of the Percentage Interests (as defined in the Trust
Agreement) and the consent of the Holders (as defined in the Trust Agreement)
of Overcollateralization Certificates evidencing not less than a majority of
the Certificate Balance of the Overcollateralization Certificates, 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, the Percentage Interests (as defined
in the Trust Agreement) or the aforesaid percentage of the Certificate
Balance of the Overcollateralization Certificates, the Holders of which are
required to consent to any such amendment, without the consent of the Holders
of all the outstanding Notes, the Holders (as defined in the Trust Agreement)
of all the outstanding Trust Certificates and the Holders (as defined in the
Trust Agreement) of all the outstanding Overcollateralization 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.
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
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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. i) 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 Standard Receivable or Fixed Value 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 Standard Receivable or Fixed Value Receivable and the amounts from time
to time deposited in the Collection Account in respect of such Standard
Receivable or Fixed Value 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 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 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
48
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 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 Standard Receivable
or Fixed Value 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.
49
(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,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention of Assistant
Secretary ((▇▇▇) ▇▇▇-▇▇▇▇), (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 ▇▇▇▇▇'▇ Investors Service, Inc., ABS Monitoring
Department, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, (e) in the case of
Standard & Poor's, to Standard & Poor's Ratings Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., ▇▇ ▇▇▇▇▇▇▇▇ (▇▇▇▇ ▇▇▇▇▇), ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention of Asset Backed Surveillance Department, (f) in the case of
Fitch IBCA, Inc., to ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇, and (g) in
the case of Duff & ▇▇▇▇▇▇ Credit Rating Co., to ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; 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
50
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
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. i) 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.
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SECTION 10.12. Limitation of Liability of Owner Trustee and
Indenture Trustee. i) 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 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.
52
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 1998-5
By: CHASE MANHATTAN BANK
DELAWARE, not in its
individual capacity but
solely as Owner Trustee on
behalf of the Trust
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
CHRYSLER FINANCIAL CORPORATION,
Seller and Servicer
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President and Treasurer
Acknowledged and accepted
as of the day and year
first above written:
FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity
but solely as Indenture Trustee
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
53
SCHEDULE A
Schedule of Receivables
Delivered to the Owner Trustee and Indenture Trustee at Closing
SCHEDULE B
Location of Receivable Files
Chrysler Financial Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
EXHIBIT A
[ Reserved ]
A-1
EXHIBIT B
Form of Distribution Statement to Noteholders
Chrysler Financial Corporation
Premier Auto Trust 1998-5 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 $1,000 original principal amount)
Interest Distribution Amount
Class A-1 Notes: ($ 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)
Note Balance
Class A-1 Notes
Class A-2 Notes
Class A-3 Notes
Class A-4 Notes
Note Pool Factor
Class A-1 Notes
Class A-2 Notes
Class A-3 Notes
Class A-4 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 1998-5 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
Balance Balance Change Factor Servicing
------------------------------------------------------------
Shortfall
-----------------------------------------------------------------------------------------------------
Initial Pool
Principal Paydown
Reserve
Notes
Class A-1
Class A-2
Class A-3
Class A-4
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
Total
=================================================================================
==========================================================================================================
Miscellaneous
-----------------------------------------------------------------------------
Amounts allocated for distribution to Certificateholders
Release Period Noteholders' Principal Distributable Amount
Cash Release Amount
Receivables to be released
Specified Reserve Amount
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