CONFORMED COPY
SERIES 1997-1 SUPPLEMENT
dated as of July 31, 1997 (the "Series
Supplement"), among U.S. AUTO RECEIVABLES
COMPANY, a Delaware corporation, as
Seller, CHRYSLER FINANCIAL CORPORATION, a
Michigan corporation, as Servicer, and
THE BANK OF NEW YORK, a New York banking
corporation, as Trustee.
Pursuant to the Pooling and Servicing Agreement dated as of
May 31, 1991, as assigned by Chrysler Auto Receivables Company ("CARCO") to
the Seller on August 8, 1991 (as assigned, amended and supplemented, the
"Agreement"), among the Seller, Chrysler Credit Corporation, which has been
succeeded by Chrysler Financial Corporation, as Servicer, and Manufacturer
and Traders Trust Company, which has been succeeded by The Bank of New York,
as Trustee, CARCO has created and assigned to the Seller the CARCO Auto Loan
Master Trust (the "Trust"). Section 6.03 of the Agreement provides that the
Seller may from time to time direct the Trustee to issue, on behalf of the
Trust, one or more new Series of Investor Certificates representing
fractional undivided interests in the Trust. The Principal Terms of any new
Series are to be set forth in a Supplement to the Agreement.
Pursuant to this Series Supplement, the Seller and the
Trustee shall create a new Series of Investor Certificates and specify the
Principal Terms thereof.
ARTICLE I
Creation of the Series 1997-1 Certificates
SECTION 1.01. Designation. (a) There is hereby created a
Series of Investor Certificates to be issued pursuant to the Agreement and
this Series Supplement to be known as the "6.689% Auto Loan Asset Backed
Certificates, Series 1997-1".
(b) In the event that any term or provision contained herein
shall conflict with or be inconsistent with any term or provision contained
in the Agreement, the terms and provisions of this Series Supplement shall
govern.
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ARTICLE II
Definitions
SECTION 2.01. Definitions. (a) Whenever used in this Series
Supplement the following words and phrases shall have the following meanings.
"Additional Accumulation Amount" shall mean, with respect to
any Distribution Date, an amount equal to one-fifth of the Invested Amount of
the Series 1997-1 Certificates as of the last day of the February 2004
Collection Period less the Controlled Distribution Amount for such
Distribution Date.
"Additional Carry-Over Amount" shall have the meaning
specified in Section 4.13(b).
"Additional Interest" shall have the meaning specified in
Section 4.02.
"Adjusted Invested Amount" shall mean, with respect to Series
1997-1 for any Collection Period, an amount equal to the sum of (a) the
Initial Invested Amount of the Series 1997-1 Certificates on the
Determination Date occurring in such Collection Period, minus the excess, if
any, of the aggregate amount of Investor Charge-Offs for all Distribution
Dates preceding such date over the aggregate amount of any reimbursements of
Investor Charge-Offs for all Distribution Dates preceding such date and (b)
the applicable Available Subordinated Amount, if any, on the Determination
Date occurring in such Collection Period (in each case, after giving effect
to the allocations, distributions, withdrawals and deposits to be made on the
Distribution Date following the Determination Date during the Collection
Period in which such date occurs).
"Allocable Defaulted Amount" shall mean, with respect to any
Collection Period, the product of (a) the Series 1997-1 Allocation Percentage
with respect to such Collection Period and (b) the Defaulted Amount with
respect to such Collection Period.
"Allocable Miscellaneous Payments" shall mean, with respect
to any Distribution Date, the product of (a) the Series 1997-1 Allocation
Percentage for the related
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Collection Period and (b) Miscellaneous Payments with respect to the related
Collection Period.
"Allocable Non-Principal Collections" shall mean, with
respect to any Deposit Date, the product of (a) the Series 1997-1 Allocation
Percentage for the related Collection Period and (b) the aggregate amount of
Collections of Non-Principal Receivables relating to such Deposit Date.
"Allocable Principal Collections" shall mean, with respect to
any Deposit Date, the product of (a) the Series 1997-1 Allocation Percentage
for the related Collection Period and (b) the aggregate amount of Collections
in respect of Principal Receivables relating to such Deposit Date.
"Assets Receivables Rate" shall mean, with respect to any
Interest Period, an amount equal to the product of (a) the quotient obtained
by dividing (i) 360 by (ii) the actual number of days elapsed in such
Interest Period and (b) a percentage, expressed as a fraction, (i) the
numerator of which is the sum of (A) Investor Non-Principal Collections for
the Collection Period immediately preceding the last day of such Interest
Period less, if Chrysler Financial Corporation is not the Servicer, the
Monthly Servicing Fee with respect to such immediately preceding Collection
Period and (B) the Investment Proceeds to be applied on the Distribution Date
related to such Interest Period and (ii) the denominator of which is the sum
of (A) the product of (I) the Series 1997-1 Floating Allocation Percentage,
(II) the Series 1997-1 Series Allocation Percentage and (III) the average
Pool Balance (after giving effect to charge-offs) for such immediately
preceding Collection Period, (B) the principal balance on deposit in the
Excess Funding Account on the first day of such Interest Period (after giving
effect to all deposits to and withdrawals therefrom on such first day) and
(C) the principal balance on deposit in the Principal Funding Account on the
first day of such Interest Period (after giving effect to all deposits to and
withdrawals therefrom on such first day).
"Automatic Additional Accounts" shall have the meaning
specified in Section 10.01(e).
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"Automatic Removed Accounts" shall have the meaning specified
in Section 10.01(c).
"Automatic Removal Date" shall have the meaning specified in
Section 10.01(c).
"Available Investor Principal Collections" shall mean, with
respect to any Distribution Date, the sum of (a) an amount equal to Investor
Principal Collections for such Distribution Date, (b) Allocable Miscellaneous
Payments with respect to such Distribution Date, (c) Series 1997-1 Excess
Principal Collections on deposit in the Collection Account for such
Distribution Date and (d) on the Termination Date, any funds in the Reserve
Fund after giving effect to Section 4.08, except for Section 4.08(d).
"Available Seller's Collections" shall mean, with respect to
any Deposit Date, the sum of (a) the Available Seller's Non-Principal
Collections for such Deposit Date and (b) the Available Seller's Principal
Collections for such Deposit Date; provided, however, that the Available
Seller's Collections shall be zero for any Collection Period with respect to
which the Available Subordinated Amount is zero on the Determination Date
immediately following the end of such Collection Period.
"Available Seller's Non-Principal Collections" shall mean,
with respect to any Deposit Date, an amount equal to the result obtained by
multiplying (a) the excess of (i) the Seller's Percentage for the related
Collection Period over (ii) the Excess Seller's Percentage for such
Collection Period by (b) Allocable Non-Principal Collections for such Deposit
Date.
"Available Seller's Principal Collections" shall mean, with
respect to any Deposit Date, an amount equal to the result obtained by
multiplying (a) the excess of (i) the Seller's Percentage for the related
Collection Period over (ii) the Excess Seller's Percentage for such
Collection Period by (b) Allocable Principal Collections for such Deposit
Date.
"Available Subordinated Amount" for the first Determination
Date shall mean an
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amount equal to the Required Subordinated Amount. The Available Subordinated
Amount for any subsequent Determination Date shall mean an amount equal to
(a) the lesser of (i) the Available Subordinated Amount for the preceding
Determination Date, minus (A) the Required Subordination Draw Amount with
respect to the preceding Distribution Date to the extent provided in Section
4.08, minus (B) withdrawals from the Reserve Fund pursuant to Section 4.08 on
the preceding Distribution Date to make distributions pursuant to Section
4.06(a)(iv) (but excluding any other withdrawals from the Reserve Fund), plus
(C) the portion of Excess Servicing for such preceding Distribution Date
distributed to the Seller pursuant to Section 4.10(c), plus (D) the excess,
if any, of the Required Subordinated Amount for such Determination Date over
the Required Subordinated Amount for the immediately preceding Distribution
Date due to an increase in the Subordination Factor and (ii) the product of
the fractional equivalent of the Subordinated Percentage and the Invested
Amount on such Determination Date, minus (b) in the case of clause (a)(i),
the Incremental Subordinated Amount for such preceding Determination Date,
plus (c) the Incremental Subordinated Amount for the current Determination
Date, plus (d) the Subordinated Percentage of funds to be withdrawn from the
Excess Funding Account on the succeeding Distribution Date and paid to the
Seller or allocated to one or more Series; provided, however, that the
Available Subordinated Amount may be increased on any Determination Date by
the Seller, in its sole discretion, by notice to the Trustee on or before
such Determination Date, so long as the cumulative amount of such increases
does not exceed the lesser of (x) $7,777,777 or (y) 1.111111% of the Invested
Amount on such date; provided, however, that, once any Reinvestment Period
(other than a Reinvestment Period which has ended as described in clause (c)
or clause (d) of the definition thereof in this Series Supplement) or any
Early Amortization Period shall have commenced, the Available Subordinated
Amount shall be calculated based on the Invested Amount as of the close of
business on the day preceding such Reinvestment Period or Early Amortization
Period; and provided further, that once the Invested Amount is reduced to
zero, the Available Subordinated Amount shall be zero.
"Base Mortgage Loans" shall mean the mortgage loans underlying
the Reference Collateral Pool.
"Carry-over Amount" shall mean, for any Distribution Date with
respect to which the related Swap
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Rate is calculated on the basis of the Assets Receivables Rate, an amount
equal to the excess, if any, of (a) the Swap Rate determined as if such Swap
Rate were calculated on the basis of the LIBOR formula set forth in clause
(a) of the definition of Swap Rate for the immediately preceding Interest
Period over (b) the Assets Receivables Rate for the immediately preceding
Interest Period, such excess, if any (expressed as a rate percent per annum)
being, multiplied by the Notional Amount as of the preceding Distribution
Date (or, in the case of the September 1997 Distribution Date, as of the
Closing Date) after giving effect to all distributions on such date and (ii)
multiplied by a fraction, the numerator of which is the actual number of days
in such interest period and the denominator of which is 360.
"Carry-over Shortfall" shall have the meaning specified in
Section 4.13(b).
"Certificate Rate" shall mean 6.689% per annum; provided,
however, that in the event that the Series 1997-1 Certificates are still
outstanding following the Expected Payment Date, then the "Certificate Rate"
for each Interest Period commencing on or after the Expected Payment Date
shall mean 0.25% per annum above one-month LIBOR prevailing on the related
LIBOR Determination Date.
"Certificateholders Monthly Servicing Fee" shall have the
meaning specified in Section 3.01.
"Closing Date" shall mean August 18, 1997.
"Contingent Assignment Agreement" shall mean the triparty
contingent assignment agreement dated as of August 18, 1997, between the
Trust, the Swap Counterparty and the Contingent Swap Counterparty.
"Contingent Swap Counterparty" shall mean Morgan Stanley
Capital Services Inc., or its successor in interest, or any successor
contingent swap counterparty.
"Contingent Swap Guarantee" shall mean the guarantee dated as
of August 18, 1997, by the Contingent Swap Guarantor in favor of the Trust.
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"Contingent Swap Guarantor" shall mean Morgan Stanley, Dean
Witter, Discovery & Co., or its successor in interest, or any successor
contingent swap guarantor.
"Controlled Amortization Amount" shall mean, with respect to
any Distribution Date, the product of (a) the Monthly Amortization Rate for
such Distribution Date and (b) the outstanding principal balance of the
Series 1997-1 Certificates as of the prior Distribution Date (after giving
effect to any distribution of principal to Series 1997-1 Certificateholders
on such prior Distribution Date).
"Controlled Amortization Period" shall mean, unless an Early
Amortization Event or a Reinvestment Period (other than a Reinvestment Period
which has ended as described in clause (c) or clause (d) of the definition
thereof in this Series Supplement) shall have occurred prior thereto, the
period commencing with the close of business on the last day of the June 1999
Collection Period and ending on the first to occur of (a) the payment in full
of the Invested Amount, (b) the commencement of a Reinvestment Period (other
than a Reinvestment Period which has ended as described in clause (c) or
clause (d) of the definition thereof in this Series Supplement), (c) the
commencement of an Early Amortization Period and (d) the Termination Date.
"Controlled Distribution Amount" shall mean, with respect to
any Distribution Date, an amount equal to the sum of (a) the Controlled
Amortization Amount for such Distribution Date and (b) the Controlled
Amortization Amounts (or portion thereof) for all prior Distribution Dates
which have not been paid to the Series 1997-1 Certificateholders.
"Deficiency Amount" shall have the meaning specified in
Section 4.05.
"Early Amortization Event" shall mean any Early Amortization
Event specified in Section 7.01 of this Series Supplement.
"Early Amortization Period" shall mean a period beginning on
the day on which an Early Amortization Event specified in Section 7.01 of
this Series Supplement shall have occurred with respect to Series 1997-1 and
terminating on the earliest of (a) the payment in full of
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the outstanding principal balance of the Series 1997-1 Certificates and (b)
the Termination Date; provided, however, that for purposes of Section 4.04 of
the Agreement, Early Amortization Period shall also include, prior to the
occurrence of the Fully Reinvested Date and the making of all allocations,
distributions, withdrawals and deposits required to be made on such date, any
Reinvestment Period.
"Eligible Investments" shall mean (a) book-entry securities,
negotiable instruments or securities represented by instruments in bearer or
registered form having original or remaining maturities of 30 days or less
(unless each Rating Agency confirms in writing that a longer maturity will
not result in the downgrade or withdrawal of such Rating Agency's rating of
the Series 1997-1 Certificates), but in no event occurring later than the
Distribution Date next succeeding the Trustee's acquisition thereof (unless
each Rating Agency confirms in writing that a longer maturity will not result
in the downgrade or withdrawal of such Rating Agency's rating of the Series
1997-1 Certificates), which evidence:
(i) direct obligations of, and obligations fully
guaranteed as to timely payment by, the United States of America;
(ii) 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 Trust's 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 or entity other than such depository institution or trust
company) thereof shall have a credit rating from each of the
Rating Agencies in the highest investment category granted
thereby;
(iii) commercial paper having, at the time of the
Trust's investment or contractual commitment to invest
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therein, a rating from each of the Rating Agencies in the highest
investment category granted thereby;
(iv) except during a Reinvestment Period, investments
in money market funds having a rating from each of the Rating
Agencies in the highest investment category granted thereby or
otherwise approved in writing thereby;
(v) bankers' acceptances issued by any depository
institution or trust company referred to in clause (ii) above;
(vi) 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 (ii); and
(vii) 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 (ii) above (except that the rating referred to in the
proviso in such clause (ii) 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
Securities Exchange Act of 1934, as amended (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 nonbank 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
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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 Series 1997-1
Certificates (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 any Series 1997-1
Account (other than the Collection Account and the
Yield Supplement Account), the rating from Standard &
Poor's in respect of the unsecured short-term debt
obligations of the Financial Institution, Rated
Broker/Dealer, Unrated Broker/Dealer or Guaranteed
Counterparty (in the case of an Unrated Broker/Dealer
or Guaranteed Counterparty, such rating being that of
the related Rated Holding Company) shall be A-1+;
(C) the repurchase obligation must mature
within 30 days of the date on which the Trustee
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 Trustee;
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(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 Trustee 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 Trustee 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 Trustee shall
make a demand on the Rated Holding
Company to make the payment due under
such guarantee;
(iv) the guarantee of the
Rated Holding Company shall be
irrevocable with respect to
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such repurchase obligation and shall not
be subordinate to other obligations of
the Rated Holding Company; and
(v) each of Standard & Poor's
and Moody's has confirmed in writing to
the Trustee that it has reviewed the form
of the guarantee of the Rated Holding
Company and has determined that the
Trust's investment in such repurchase
obligation, taking into account the
issuance of such guarantee, will not
result in the downgrade or withdrawal of
the ratings assigned to the Series 1997-1
Certificates; and
(H) the repurchase obligations shall
require that the repurchase obligation be over-
collateralized 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; and
(b) any other investment consisting of a financial asset that by its terms
converts to cash within a finite period of time; provided that each Rating
Agency shall have notified the Seller, the Servicer and the Trustee that the
Trust's investment therein will not result in a reduction or withdrawal of
the rating of any outstanding class or Series with respect to which it is a
Rating Agency.
"Excess Funding Account" shall have the meaning specified in
Section 4.04(d)(i).
"Excess Reserve Fund Required Amount" shall mean, for any
Distribution Date with respect to an Early Amortization Period or any
Distribution Date with respect to a Reinvestment Period that occurs prior to
the Fully Reinvested Date, an amount equal to the greater of (a) 5% of the
initial principal balance of the Series 1997-1 Certificates and (b) the
excess of (i) the sum of (x) the Available Subordinated Amount on the
preceding Determination Date (after giving effect to the allocations,
distributions,
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withdrawals and deposits to be made on such Distribution Date) and (y) an
amount equal to (A) the excess of the Required Participation Percentage over
100%, multiplied by (B) the outstanding principal balance of the Series
1997-1 Certificates on such Distribution Date (after giving effect to any
changes therein on such Distribution Date) over (ii) the excess of (x) the
Series 1997-1 Allocation Percentage of the Pool Balance on the last day of
the immediately preceding Collection Period over (y) the Invested Amount on
such Distribution Date (after giving effect to changes therein on such
Distribution Date); provided that the Excess Reserve Fund Required Amount
shall not exceed such Available Subordinated Amount.
"Excess Seller's Percentage" shall mean, with respect to any
Collection Period, a percentage (which percentage shall never be less than 0%
nor more than 100%) equal to (a) 100% minus, when used with respect to
Non-Principal Receivables, Defaulted Receivables and Principal Receivables
during the Revolving Period or the Controlled Amortization Period (through
and including the February 2004 Collection Period), the sum of (i) the
Floating Allocation Percentage with respect to such Collection Period and
(ii) the percentage equivalent of a fraction, the numerator of which is the
Available Subordinated Amount as of the Determination Date occurring in such
Collection Period (after giving effect to the allocations, distributions,
withdrawals and deposits to be made on the Distribution Date immediately
following such Determination Date) and the denominator of which is the
product of (x) the Pool Balance as of the last day of such immediately
preceding Collection Period and (y) the Series 1997-1 Allocation Percentage
for the Collection Period in respect of which the Excess Seller's Percentage
is being calculated or (b) 100% minus, when used with respect to Principal
Receivables during the Controlled Amortization Period (from and including the
March 2004 Collection Period), a Reinvestment Period or an Early Amortization
Period, the sum of (i) the Principal Allocation Percentage with respect to
such Collection Period and (ii) the percentage equivalent of a fraction, the
numerator of which is the Available Subordinated Amount as of the
Determination Date occurring in such Collection Period (after giving effect
to the allocations, distributions, withdrawals and deposits to be made on the
Distribution Date immediately following such Determination Date) and the
denominator of
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which is the product of (x) the Pool Balance as of the last day of such
immediately preceding Collection Period and (y) the Series 1997-1 Allocation
Percentage for the Collection Period in respect of which the Excess Seller's
Percentage is being calculated.
"Excess Servicing" shall mean, with respect to any
Distribution Date, the sum of the amount, if any, specified pursuant to
Section 4.06(a)(vii)(A) with respect to such Distribution Date.
"Expected Payment Date" shall mean the August 2004
Distribution Date.
"FHLMC" shall mean the Federal Home Loan Mortgage Corporation.
"Final Payment Date" shall mean the first Distribution Date on
which, after giving effect to all payments to be made on that Distribution
Date, the outstanding principal amount of the Series 1997-1 Certificates will
be paid in full.
"Floating Allocation Percentage" shall mean, with respect to
any Collection Period, the percentage equivalent (which percentage shall
never exceed 100%) of a fraction, the numerator of which is the Invested
Amount as of the last day of the immediately preceding Collection Period and
the denominator of which is the product of (a) the Pool Balance as of such
last day and (b) the Series 1997-1 Allocation Percentage for the Collection
Period in respect of which the Floating Allocation Percentage is being
calculated; provided, however, that, with respect to the August 1997
Collection Period, the Floating Allocation Percentage shall mean the
percentage equivalent of a fraction, the numerator of which is the Initial
Invested Amount on the Closing Date and the denominator of which is the
product of (x) the Pool Balance on the Series Cut-Off Date and (y) the Series
1997-1 Allocation Percentage with respect to the Series Cut-Off Date.
"Fully Reinvested Date" shall mean the first Distribution Date
on which the amount on deposit in the Principal Funding Account (other than
Investment Proceeds), after giving effect to the allocations, distributions,
withdrawals and deposits to be made on such Distribution
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Date, equals the outstanding principal amount of the Series 1997-1
Certificates.
"Incremental Subordinated Amount" shall mean, with respect to
any Determination Date, the result obtained by multiplying (a) a fraction,
the numerator of which is the sum of (i) (A) the Invested Amount on the last
day of the immediately preceding Collection Period or (B) with respect to the
first Determination Date, the Invested Amount on the Closing Date and (ii)
(A) the Available Subordinated Amount for such Determination Date (calculated
without adding the Incremental Subordinated Amount for such Distribution Date
as described in clause (c) of the definition thereof) or (B) with respect to
the first Determination Date, the product of the Invested Amount on the
Closing Date and the Subordinated Percentage and the denominator of which is
the Pool Balance on such last day by (b) the Trust Incremental Subordinated
Amount.
"Initial Distribution Date" shall mean September 15, 1997.
"Initial Invested Amount" shall mean the portion of initial
principal amount of the Series 1997-1 Certificates which is invested in
Principal Receivables on the Closing Date, which is $[ ], plus (a) the amount
of any withdrawals from the Excess Funding Account in connection with the
purchase of an additional interest in Principal Receivables of the Trust,
minus (b) the amount of any additions to the Excess Funding Account in
connection with a reduction in the Principal Receivables in the Trust or an
increase in the Subordination Factor; provided, however, that for purposes of
calculating the Required Participation Amount and the Adjusted Invested
Amount with respect to Series 1997-1 during the Controlled Amortization
Period (through and including the February 2004 Collection Period), the
Initial Invested Amount will be reduced by the amount, without duplication,
of all principal payments made to Series 1997-1 Certificateholders and
thereafter, for such purposes, the Initial Invested Amount will be the Initia
Invested Amount as of the last day of the February 2004 Collection Period;
provided further, upon the occurrence of the Fully Reinvested Date and after
all allocations, distributions, withdrawals and deposits required to be made
on such date have been made, the Initial Invested Amount shall be zero.
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"Initial Principal Amount" shall mean $700,000,000.
"Initial Reserve Fund Deposit Amount" shall mean $2,450,000.
"Initial Yield Supplement Account Deposit Amount" shall mean
$1,750,000.
"Insufficiency Amount" shall have the meaning specified in
Section 8.01(a).
"Interest Calculation Agent" shall mean the Trustee.
"Interest Period" shall mean, with respect to any Distribution
Date, the period from and including the Distribution Date immediately
preceding such Distribution Date to but excluding such Distribution Date (or,
in the case of the Initial Distribution Date, the period from and including
the Closing Date to but excluding the Initial Distribution Date).
"Interest Rate Swap" shall mean the interest rate swap
agreement dated as of August 18, 1997, between the Trust and the Swap
Counterparty and any replacement agreement therefor between the Trust and the
Contingent Swap Counterparty, or between the Trust and a Replacement
Counterparty.
"Interest Shortfall" shall have the meaning specified in
Section 4.02.
"Invested Amount" shall mean, when used with respect to any
date, an amount equal to (a) the Initial Invested Amount, minus (b) the
amount, without duplication, of all principal payments (except principal
payments made from the Excess Funding Account and any transfers from the
Excess Funding Account to the Principal Funding Account) made to Series
1997-1 Certificateholders or deposited to the Principal Funding Account prior
to such date, minus (c) the excess, if any, of the aggregate amount of
Investor Charge-Offs over Investor Charge-Offs reimbursed pursuant to
Section 4.08 prior to such date. In addition, for purposes of the definitions
of "Early Amortization Period" and
17
"Reinvestment Period" and Section 12.01 of the Agreement, the Invested Amount
shall be an amount equal to the outstanding principal amount of the Series
1997-1 Certificates.
"Investment Proceeds" shall mean, with respect to any
Determination Date, all interest and other investment earnings (net of losses
and investment expenses) on funds on deposit in the Series 1997-1 Accounts,
together with an amount equal to the Series 1997-1 Allocation Percentage of
the interest and other investment earnings on funds held in the Collection
Account credited to the Collection Account pursuant to Section 4.02 of the
Agreement.
"Investor Charge-Offs" shall have the meaning specified in
Section 4.09.
"Investor Default Amount" shall mean, with respect to any
Distribution Date, an amount equal to the product of (a) the Allocable
Defaulted Amount for the related Collection Period and (b) the Floating
Allocation Percentage for the related Collection Period.
"Investor Non-Principal Collections" shall mean, with respect
to any Distribution Date, an amount equal to the product of (a) the Floating
Allocation Percentage for the related Collection Period and (b) Allocable
Non-Principal Collections deposited in the Collection Account for the
related Collection Period.
"Investor Principal Collections" shall mean, with respect to
any Distribution Date, the sum of (a) the product of (i) the Floating
Allocation Percentage, with respect to the Revolving Period or the Controlled
Amortization Period (through and including the February 2004 Collection
Period), or the Principal Allocation Percentage, with respect to the
Controlled Amortization Period (from and including the March 2004 Collection
Period), a Reinvestment Period or an Early Amortization Period for the
related Collection Period (or any partial Collection Period which occurs as
the first Collection Period during a Reinvestment Period or an Early
Amortization Period) and (ii) Allocable Principal Collections deposited in
the Collection Account for the related Collection Period (or any partial
Collection Period which occurs as the first Collection Period during a
Reinvestment Period or an Early Amortization Period) and
18
(b) the amount, if any, of Collections of Non-Principal Receivables, Excess
Servicing and Available Seller's Collections to be distributed pursuant to
Section 4.06(a)(iv), 4.08(b) or 4.10(a) on such Distribution Date.
"LIBOR" shall mean, with respect to any Interest Period, the
offered rate for United States dollar deposits for one month that appears on
Telerate Page 3750 as of 11:00 A.M., London time, on the LIBOR Determination
Date. If on any LIBOR Determination Date the offered rate does not appear on
Telerate Page 3750, the Interest Calculation Agent will request each of the
reference banks (which shall be major banks that are engaged in transactions
in the London interbank market selected by the Interest Calculation Agent) to
provide the Interest Calculation Agent with its offered quotation for United
States dollar deposits for one month to prime banks in the London interbank
market as of 11:00 A.M., London time, on such date. If at least two reference
banks provide the Interest Calculation Agent with such offered quotations,
LIBOR on such date will be the arithmetic mean, rounded upwards, if
necessary, to the nearest 1/100,000 of 1% (.0000001), with five
one-millionths of a percentage point rounded upward, of all such quotations.
If on such date fewer than two of the reference banks provide the Interest
Calculation Agent with such quotations, LIBOR on such date will be the
arithmetic mean, rounded upwards, if necessary, to the nearest 1/100,000 of
1% (.0000001), with five one-millionths of a percentage point rounded upward,
of the offered per annum rates that one or more leading banks in The City of
New York selected by the Interest Calculation Agent are quoting as of 11:00
A.M., New York City time, on such date to leading European banks for United
States dollar deposits for one month; provided, however, that if such banks
are not quoting as described above, LIBOR for such date will be LIBOR
applicable to the Interest Period immediately preceding such Interest Period.
"LIBOR Business Day" shall mean any day that is both a
Business Day and a day on which banking institutions in the City of London,
England are not required or authorized by law to be closed.
"LIBOR Determination Date" shall mean, with respect to any
Interest Period, the second LIBOR Business Day prior to such Interest Period.
19
"Make-Whole Payment" shall mean the amount, if any, payable by
the Trust to the Swap Counterparty in respect of any Early Termination Date
under the Interest Rate Swap.
"Make-Whole Receipt" shall mean the amount, if any, payable by
the Swap Counterparty to the Trust in respect of any Early Termination Date
under the Interest Rate Swap.
"Mandatory Purchase Date" shall mean the first Distribution
Date with respect to the Controlled Amortization Period or a Reinvestment
Period on which the outstanding principal amount of the Series 1997-1
Certificates will be reduced to $70,000,000 or less, after giving effect to
all payments of principal on such Distribution Date, other than the payments
provided for in Section 8.01.
"Monthly Amortization Rate" shall mean, with respect to any
Distribution Date, the percentage that corresponds on the Prepayment
Calculation Table with the PSA Index Rate for such Distribution Date.
"Monthly Interest" shall have the meaning specified in Section
4.02.
"Monthly Payment Rate" shall mean, for any Collection Period,
the percentage derived from dividing the Principal Collections for such
Collection Period by the average daily Pool Balance for such Collection
Period.
"Monthly Principal" shall have the meaning specified in
Section 4.03.
"Monthly Servicing Fee" shall have the meaning specified in
Section 3.01.
"Net Trust Swap Payment" shall mean, for any Collection
Period, the monthly payment, if any, excluding any Make-Whole Payment, made
by the Trust to the Swap Counterparty pursuant to the Interest Rate Swap for
such Collection Period to the extent that such monthly payment exceeds the
monthly payment made by the Swap Counterparty to the Trust pursuant to the
Interest Rate Swap for such Collection Period, it being understood that only
such excess amount shall be paid by the Trust to the Swap Counterparty.
"Net Trust Swap Receipt" shall mean, for any Collection
Period, the amount of the monthly payment, if any, excluding any Make-Whole
Receipt, made by the Swap Counterparty to the Trust pursuant to the Interest
Rate Swap for such Collection Period to the extent that such monthly payment
exceeds the monthly payment made by the Trust to the Swap Counterparty
pursuant to the Interest Rate Swap for such
20
Collection Period, it being understood that only such excess amount shall be
paid by the Swap Counterparty to the Trust.
"Notional Amount" shall mean, with respect to any Distribution
Date, an amount equal to the outstanding principal amount of the Series
1997-1 Certificates as of the preceding Distribution Date (or, in the case of
the September 1997 Distribution Date, as of the Closing Date), after giving
effect to all distributions on such date.
"Pool Factor" shall mean, with respect to any Determination
Date, a number carried out to 11 decimals representing the ratio of the
Invested Amount as of such Determination Date (determined after taking into
account any increases or decreases in the Invested Amount which will occur on
the following Distribution Date) to the Initial Invested Amount.
"Prepayment Calculation Table" shall mean the table set forth
in Schedule A hereto.
"Prepayment Determination Date" shall mean, with respect to
any Distribution Date on which a payment of principal on the Series 1997-1
Certificates is due, the first Business Day of the month in which such
Distribution Date occurs.
"Principal Allocation Percentage" shall mean, with respect to
any Collection Period, the percentage equivalent (which percentage shall
never exceed 100%) of a fraction, the numerator of which is the Invested
Amount as of the last day of the period with respect to which the Floating
Allocation was last used to allocate Allocable Principal Collections as
provided in the definition of Investor Principal Collections and the
denominator of which is the
21
product of (a) the Pool Balance as of the last day of the immediately
preceding Collection Period and (b) the Series 1997-1 Allocation Percentage
with respect to the Collection Period in respect of which the Principal
Allocation Percentage is being calculated; provided, however, that, with
respect to that portion of any Collection Period that falls after the date on
which any Early Amortization Event or Reinvestment Event occurs (other than a
Reinvestment Event which has resulted in a Reinvestment Period which has
ended as described in clause (c) or clause (d) of the definition thereof in
this Series Supplement), the Principal Allocation Percentage shall be reset
using the Pool Balance as of the close of business on the date on which such
Early Amortization Event or Reinvestment Event shall have occurred and
Principal Collections shall be allocated for such portion of such Collection
Period using such reset Principal Allocation Percentage.
"Principal Calculation Agent" shall mean the Swap Counterparty
under the Interest Rate Swap.
"Principal Funding Account" shall have the meaning specified
in Section 4.04(c)(i).
"Principal Funding Account Balance" shall mean the amount on
deposit in the Principal Funding Account other than interest and other
investment earnings (net of losses and investment expenses).
"PSA Index Rate" shall mean, with respect to any Distribution
Date (in the following order of priority): (a) the rate that appears as of
3:00 p.m. (New York City time) on the related Prepayment Determination Date
on the Reference Bloomberg Page under the column heading "1 MO" opposite the
row "PSA"; (b) if such rate does not appear on the Reference Bloomberg Page
as of 3:00 p.m. (New York City time) on such Prepayment Determination Date,
the Principal Calculation Agent will request FHLMC to provide a quotation of
the monthly prepayment speed (calculated according to the PSA Standard
Prepayment Model) for the Reference Collateral Pool for the applicable month.
If FHLMC provides such quotation, the PSA Index Rate will be the quotation
provided by FHLMC; (c) if the Principal Calculation Agent determines that
FHLMC has not provided such quotation by 5:00 p.m. on the second Business Day
following such Prepayment Determination Date, the Principal Calculation Agent
will request five major securities dealers selected by the Principal
22
Calculation Agent to provide a quotation of the monthly prepayment speed
(calculated according to the PSA Standard Prepayment Model) for the Reference
Collateral Pool for the applicable month. If only one quotation is so
provided, the PSA Index Rate will be the quotation so provided. If two or
three such quotations are so provided, then the PSA Index Rate will be the
arithmetic mean of such quotation (rounded to the nearest whole integer) as
determined by the Principal Calculation Agent. If four or five such
quotations are provided, the highest quotation (or, in the event of equality,
one of the highest) and lowest quotation (or, in the event of equality, one
of the lowest) will be eliminated and the PSA Index Rate will be the
arithmetic mean (rounded to the nearest whole integer) of the remaining
quotations as determined by the Principal Calculation Agent; and (d) if no
such quotation is provided as requested in clause (c) above, then the PSA
Index Rate will be the PSA Index Rate determined with respect to the
Distribution Date preceding the applicable Distribution Date (or, in the case
of the first Distribution Date, the monthly prepayment speed (calculated
according to the PSA Standard Prepayment Model) for the Reference Collateral
Pool obtained from the sources specified in clauses (a)-(c) above, in that
order, with respect to the most recent month for which such information is
available. The Seller reserves the right, exercisable by the Servicer in its
sole discretion on behalf of the Seller, to determine whether any
modification in PSA methodology or in the timing or procedures affecting
publication or dissemination of the PSA prepayment rate for the Reference
Collateral Pool warrants an adjustment to the foregoing calculation
procedures, whereupon such procedures will be deemed to be amended as so
determined by the Servicer; provided that no change in such procedures will
be effective without the written consent of the Swap Counterparty.
"PSA Standard Prepayment Model" or "PSA" shall mean the
methodology set forth under "Mortgage Prepayment Models -- The PSA Standard
Prepayment Model" in the "Uniform Practices for the Clearance and Settlement
of Mortgage-Backed Securities and Other Related Securities of the Public
Securities Association."
"Reassignment Amount" shall mean, with respect to any
Distribution Date, after giving effect to any deposits
23
and distributions otherwise to be made on such Distribution Date, the sum of
(a) the Invested Amount on such Distribution Date, (b) accrued and unpaid
interest on the unpaid balance of the Series 1997-1 Certificates (calculated
on the basis of the outstanding principal balance of the Series 1997-1
Certificates at the Certificate Rate as in effect during the applicable
Interest Periods) through the day preceding such Distribution Date, (c) the
amount of Additional Interest, if any, for such Distribution Date and any
Additional Interest previously due but not distributed to the Series 1997-1
Certificateholders on a prior Distribution Date, (d) the amount of any
accrued and unpaid Net Trust Swap Payments, (e) any unpaid Make-Whole Payment
(together with interest thereon calculated pursuant to the Interest Rate
Swap), (f) any Carry-over Amount for such Distribution Date and any
Carry-over Amount previously due but not distributed to the Swap Counterparty
on a prior Distribution Date and (g) any Additional Carry-Over Amount for
such Distribution Date and any Additional Carry-Over Amount previously due
but not distributed to the Swap Counterparty on a prior Distribution Date.
"Reference Bloomberg Page" shall mean the display designated
as page "FMAC A013" and titled "Reference Collateral 30-year Gold 8.00,
Issued in 1995" (or such other page selected by the Principal Calculation
Agent as may replace page FMAC A013 for the purpose of displaying the monthly
prepayment speed (calculated based on the PSA Standard Prepayment Model) for
the Reference Collateral Pool) on the Bloomberg Financial Markets Service (or
such other service selected by the Principal Calculation Agent as may replace
such service).
"Reference Collateral Pool" shall mean the 30-year FHLMC Gold
8.00% mortgage participation certificates issued in calendar year 1995.
"Reinvestment Event" shall mean any Reinvestment Event
specified in Section 6.01 of this Series Supplement.
"Reinvestment Period" shall mean a period beginning on the day
on which a Reinvestment Event specified in Section 6.01 of this Series
Supplement shall have occurred with respect to Series 1997-1 and terminating
on the earliest of (a) the payment in full of the outstanding principal
balance of the Series 1997-1 Certificates; (b) the
24
Termination Date; (c) if such Reinvestment Period has resulted from the
occurrence of a Reinvestment Event described in Section 6.01(a) of this
Series Supplement, the end of the first Collection Period during which a
Reinvestment Event would no longer be deemed to exist pursuant to such
Section 6.01(a), so long as no other Reinvestment Event (other than a
Reinvestment Event which has resulted in a Reinvestment Period which has
terminated as described in this clause (c) or clause (d) below) shall have
occurred and the scheduled termination of the Revolving Period shall not have
occurred; and (d) if such Reinvestment Period has resulted from the
occurrence of a Reinvestment Event described in Section 6.01, other than
Section 6.01(a), (g), (h), (i) or (j), of this Series Supplement, the end of
the first Collection Period after which (i) the Trustee has received written
confirmation from Standard & Poor's that termination of such Reinvestment
Period will not result in the downgrading or withdrawal of such entity's
rating of the Series 1997-1 Certificates, and (ii) Series 1997-1
Certificateholders holding Series 1997-1 Certificates evidencing more than
50% of the aggregate unpaid principal amount of the Series 1997-1
Certificates shall have consented to the termination of such Reinvestment
Period; provided that (X) no other Reinvestment Event (other than a
Reinvestment Event which has resulted in a Reinvestment Period which has
terminated as described in this clause (d) or clause (c) above) shall have
occurred, and (Y) the scheduled termination of the Revolving Period shall not
have occurred.
"Replacement Counterparty" shall have the meaning specified in
the Contingent Assignment Agreement.
"Required Participation Percentage" shall mean, with respect
to Series 1997-1, 103%; provided, however, that if the aggregate amount of
Principal Receivables due from any Dealer or group of affiliated Dealers at
the close of business on the last day of any Collection Period with respect
to which such determination is being made pursuant to Section 10.04 is
greater than 1.5% of the Pool Balance on such last day, the Required
Participation Percentage shall mean, as of such last day and with respect to
such Collection Period and the immediately following Collection Period only,
104%; provided further that the Seller may, upon 10 days' prior notice to the
Trustee and each Rating Agency, reduce the Required Participation Percentage
to a
25
percentage which shall not be less than 100%; provided that no Rating
Agency shall have notified the Seller or the Servicer that any such reduction
will result in a reduction or withdrawal of the rating of any outstanding
Series or Class with respect to which it is a Rating Agency.
"Required Subordinated Amount" shall mean, as of any date of
determination, the sum of (a) the product of (i) the Subordinated Percentage
and (ii) the Invested Amount on such date and (b) the Incremental
Subordinated Amount.
"Required Subordination Draw Amount" shall have the meaning
specified in Section 4.05.
"Reserve Fund" shall have the meaning specified in Section
4.04.
"Reserve Fund Deposit Amount" shall mean, with respect to any
Distribution Date, the amount, if any, by which (a) the Reserve Fund Required
Amount for such Distribution Date exceeds (b) the amount of funds in the
Reserve Fund after giving effect to any withdrawals therefrom on such
Distribution Date.
"Reserve Fund Required Amount" shall mean, with respect to any
Distribution Date, an amount equal to the product of (a) 0.35% and (b) the
outstanding principal balance of the Series 1997-1 Certificates on such
Distribution Date (after giving effect to any changes therein on such
Distribution Date).
"Revolving Period" shall mean the period beginning at the
close of business on the Business Day immediately preceding the Series
Cut-Off Date and terminating on the earlier of (a) the close of business on
the last day of the June 1999 Collection Period and (b) the close of business
on the day an Early Amortization Period or Reinvestment Period commences;
provided, however, that, if any Reinvestment Period terminates as described
in clause (c) or clause (d) of the definition thereof in this Series
Supplement, the Revolving Period will recommence as of the close of business
on the day such Reinvestment Period terminates.
"Seller's Collections" shall mean, with respect to any
Collection Period, the sum of (a) the Seller's Percentage of Allocable
Non-Principal Collections for the
26
related Collection Period, plus (b) the Seller's Percentage of Allocable
Principal Collections for the related Collection Period.
"Seller's Percentage" shall mean 100% minus (a) the Floating
Allocation Percentage, when used with respect to Non-Principal Receivables,
Defaulted Receivables and Principal Receivables during the Revolving Period
or the Controlled Amortization Period (through and including the February
2004 Collection Period), and (b) the Principal Allocation Percentage, when
used with respect to Principal Receivables during the Controlled Amortization
Period (from and including the March 2004 Collection Period), any
Reinvestment Period and an Early Amortization Period.
"Series 1997-1" shall mean the Series of Investor
Certificates, the terms of which are specified in this Series Supplement.
"Series 1997-1 Accounts" shall have the meaning specified in
Section 4.04(e)(i).
"Series 1997-1 Allocation Percentage" shall mean the Series
Allocation Percentage with respect to Series 1997-1.
"Series 1997-1 Certificateholders" shall mean the Holders of
Series 1997-1 Certificates.
"Series 1997-1 Certificateholders' Interest" shall mean that
portion of the Certificateholders' Interest evidenced by the Series 1997-1
Certificates.
"Series 1997-1 Certificates" shall mean any one of the
certificates executed by the Seller and authenticated by the Trustee,
substantially in the form of Exhibit A.
"Series 1997-1 Excess Principal Collections" shall mean that
portion of Excess Principal Collections allocated to Series 1997-1 pursuant
to Section 4.11.
"Series 1997-1 Principal Shortfall" shall have the meaning
specified in Section 4.11.
"Series Cut-off Date" shall mean July 31, 1997.
27
"Servicing Fee Rate" shall mean, with respect to Series
1997-1, l% or, for any Distribution Date in respect of which the Monthly
Servicing Fee has been waived, 0%.
"Special Payment Date" shall mean each Distribution Date with
respect to any Early Amortization Period.
"Subordinated Percentage" shall mean the percentage equivalent
of a fraction, the numerator of which is the Subordination Factor and the
denominator of which will be the excess of 100% over the Subordination
Factor.
"Subordination Factor" means 10%; provided, however, that the
Subordination Factor will be 11% in the event that the rating of the
long-term unsecured debt of CFC is lowered below BBB- by Standard & Poor's or
withdrawn by Standard & Poor's, unless, in either such case, the Seller
receives written confirmation from Standard & Poor's that the failure to so
increase the Subordination Factor would not result in the downgrade or
withdrawal of Standard & Poor's rating of the Series 1997-1 Certificates.
"Swap Counterparty" shall mean AIG Financial Products Corp.,
or its successor in interest, or any successor swap counterparty.
"Swap Counterparty Default" shall mean an Event of Default (as
defined in the Interest Rate Swap) by the Swap Counterparty which does not
result in an assignment of the transaction under the Interest Rate Swap
pursuant to Section 1.02(a) of the Contingent Assignment Agreement).
"Swap Early Termination" shall mean the occurrence of an Early
Termination Date (as defined in the Interest Rate Swap) which does not result
in an assignment of the transaction under the Interest Rate Swap pursuant to
Section 1.02(a) of the Contingent Assignment Agreement.
"Swap Guarantee" shall mean the guarantee dated as of August
18, 1997, by the Swap Guarantor in favor of the Trust, and any replacement
therefor.
"Swap Guarantor" shall mean American International Group,
Inc., or its successor in interest, or any successor swap guarantor.
28
"Swap Rate" shall mean, with respect to any Interest Period,
the lesser of (a) LIBOR for such Interest Period, plus 0.017% and (b) the
Assets Receivables Rate for such Interest Period.
"Telerate Page 3750" shall mean the display page so designated
on the Dow Jones Telerate Service (or such other page as may replace that
page on that service, or such other service as may be nominated as the
information vendor, for the purpose of displaying London interbank offered
rates of major banks).
"Termination Date" shall mean the August 2006 Distribution
Date.
"Termination Proceeds" shall mean any Termination Proceeds
arising out of a sale of Receivables (or interests therein) pursuant to
Section 12.02(c) of the Agreement with respect to Series 1997-1.
"Trust Available Subordinated Amount" means the sum of the
Available Subordinated Amount and the sum of the aggregate available
subordinated amounts for all other outstanding Series.
"Yield Supplement Account" shall have the meaning specified in
Section 4.04.
"Yield Supplement Account Deposit Amount" shall mean, with
respect to any Distribution Date, the amount, if any, by which the Yield
Supplement Account Required Amount exceeds the amount on deposit in the Yield
Supplement Account after giving effect to any deposits thereto and
withdrawals therefrom otherwise to be made on such Distribution Date.
"Yield Supplement Account Required Amount" shall mean, with
respect to any Distribution Date, an amount equal to the product of (a)
0.25%, (b) the ratio of (i) 84 less the number of full Collection Periods
elapsed following the last day of the August 1997 Collection Period and (ii)
84 and (c) the outstanding principal balance of the Series 1997-1
Certificates on such Distribution Date (after giving effect to any changes
therein on such Distribution Date).
29
(b) Notwithstanding anything to the contrary in this Series
Supplement or the Agreement, the term "Rating Agency" shall mean, whenever
used in this Series Supplement or the Agreement with respect to Series
1997-1, Moody's and Standard & Poor's. As used in this Series Supplement and
in the Agreement with respect to Series 1997-1, "highest investment category"
shall mean (i) in the case of Standard & Poor's, A-l+ or AAA, as applicable,
and (ii) in the case of Moody's, P-1 or Aaa, as applicable.
(c) All capitalized terms used herein and not otherwise
defined herein have the meanings ascribed to them in the Agreement. The
definitions in Section 2.01 are applicable to the singular as well as to the
plural forms of such terms and to the masculine as well as to the feminine
and neuter genders of such terms.
(d) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Series Supplement shall refer to this Series
Supplement as a whole and not to any particular provision of this Series
Supplement; references to any Article, Section or Exhibit are references to
Articles, Sections and Exhibits in or to this Series Supplement unless
otherwise specified; and the term "including" means "including without
limitation".
30
ARTICLE III
Servicing Fee
SECTION 3.01. Servicing Compensation. The monthly servicing
fee (the "Monthly Servicing Fee") shall be payable to the Servicer, in
arrears, on each Distribution Date in respect of any Collection Period (or
portion thereof) occurring prior to the earlier of the first Distribution
Date following the Series 1997-1 Termination Date and the first Distribution
Date on which the Invested Amount is zero, in an amount equal to one-twelfth
of the product of (a) the Servicing Fee Rate, (b) the Pool Balance as of the
last day of the Collection Period second preceding such Distribution Date and
(c) the Series 1997-1 Allocation Percentage with respect to the immediately
preceding Collection Period. The share of the Monthly Servicing Fee allocable
to the Series 1997-1 Certificateholders with respect to any Distribution Date
(the "Certificateholders Monthly Servicing Fee") shall be equal to
one-twelfth of the product of (a) the Servicing Fee Rate and (b) the Invested
Amount as of the last day of the Collection Period second preceding such
Distribution Date. The remainder of the Monthly Servicing Fee shall be paid
by the Seller and in no event shall the Trust, the Trustee or the Series
1997-1 Certificateholders be liable for the share of the Monthly Servicing
Fee to be paid by the Seller; and the remainder of the Servicing Fee shall be
paid by the Seller and the Investor Certificateholders of other Series and
the Series 1997-1 Certificateholders shall in no event be liable for the
share of the Servicing Fee to be paid by the Seller or the Investor
Certificateholders of other Series. The Certificateholders Monthly Servicing
Fee shall be payable to the Servicer solely to the extent amounts are
available for distribution in accordance with the terms of this Series
Supplement.
The Servicer will be permitted, in its sole discretion, to
waive the Monthly Servicing Fee for any Distribution Date by notice to the
Trustee on or before the related Determination Date; provided that the
Servicer believes that sufficient Collections of Non-Principal Receivables
will be available on any future Distribution Date to pay the
Certificateholders Monthly Servicing Fee relating to the waived Monthly
Servicing Fee. If the Servicer so waives the Monthly Servicing Fee for any
31
Distribution Date, the Monthly Servicing Fee and the Certificateholders
Monthly Servicing Fee for such Distribution Date shall be deemed to be zero
for all purposes of this Series Supplement and the Agreement; provided,
however, that such Certificateholders Monthly Servicing Fee shall be paid on
a future Distribution Date solely to the extent amounts are available
therefor pursuant to Section 4.10(b); provided further that, to the extent
any such waived Certificateholders Monthly Servicing Fee is so paid, the
related portion of the Monthly Servicing Fee to be paid by the Seller shall
be paid by the Seller to the Servicer.
ARTICLE IV
Rights of Series 1997-1 Certificateholders and
Allocation and Application of Collections
SECTION 4.01. Allocations; Payments to Seller; Excess
Principal Collections and Unallocated Principal Collections. (a) Collections
of Non-Principal Receivables and Principal Receivables, Miscellaneous
Payments and Defaulted Amounts allocated to Series 1997-1 pursuant to Article
IV of the Agreement shall be allocated and distributed as set forth in this
Article.
(b) Subject to Section 4.01(d) below, the Servicer shall
instruct the Trustee to withdraw from the Collection Account and pay to the
Seller on the dates set forth below the following amounts:
(i) on each Deposit Date:
(A) an amount equal to the Excess Seller's Percentage
for the related Collection Period of Allocable Non-Principal
Collections deposited in the Collection Account for such
Deposit Date; and
(B) an amount equal to the Excess Seller's Percentage
for the related Collection Period of Allocable Principal
Collections deposited in the Collection Account for such
Deposit Date, if the Seller's Participation Amount (determined
after giving effect to any Principal Receivables transferred
to the Trust on such Deposit Date)
32
exceeds the Trust Available Subordinated Amount for the
immediately preceding Determination Date (after giving effect
to the allocations, distributions, withdrawals and deposits to
be made on the Distribution Date immediately following such
Determination Date); and
(ii) on each Deposit Date with respect to the Revolving
Period, an amount equal to the Available Seller's Principal
Collections for such Deposit Date, if the Seller's Participation
Amount (determined after giving effect to any Principal Receivables
transferred to the Trust on such Deposit Date) exceeds the Trust
Available Subordinated Amount for the immediately preceding
Determination Date (after giving effect to the allocations,
distributions, withdrawals and deposits to be made on the
Distribution Date immediately following such Determination Date);
provided, however, that Available Seller's Principal Collections
shall be paid to the Seller with respect to any Collection Period
only after an amount equal to the sum of (A) the Deficiency Amount,
if any, relating to the immediately preceding Collection Period and
(B) the excess, if any, of the Reserve Fund Required Amount over the
amount in the Reserve Fund on the immediately preceding Distribution
Date (after giving effect to the allocations of, distributions from,
and deposits in, the Reserve Fund on such Distribution Date) has been
deposited in the Collection Account from such Available Seller's
Principal Collections.
The withdrawals to be made from the Collection Account
pursuant to this Section 4.01(b) do not apply to deposits into the Collection
Account that do not represent Collections, including Miscellaneous Payments,
payment of the purchase price for the Certificateholders' Interest pursuant
to Section 2.03 of the Agreement, payment of the purchase price for the
Series 1997-1 Certificateholders' Interest pursuant to Section 8.01 of this
Series Supplement and proceeds from the sale, disposition or liquidation of
Receivables pursuant to Section 9.02 or 12.02 of the Agreement.
(c) The Servicer shall instruct the Trustee to withdraw from
the Collection Account and deposit into the Reserve Fund on Deposit Dates
with respect to the Revolving Period Available Seller's Principal Collections
for such
33
Deposit Date, up to the amount of the excess, if any, determined pursuant to
Section 4.01(b)(ii)(B).
(d) Notwithstanding the provisions of Section 4.01(b)(i), on
each Deposit Date during any Collection Period on which any amount is on
deposit in the Excess Funding Account or Principal Funding Account, the
Servicer shall instruct the Trustee to withdraw from the Collection Account
and deposit in the Yield Supplement Account the amounts otherwise
distributable to the Seller pursuant to Section 4.01(b)(i) until the amount
on deposit in the Yield Supplement Account is equal to the Yield Supplement
Account Required Amount.
SECTION 4.02. Monthly Interest. The amount of monthly interest
("Monthly Interest") with respect to the Series 1997-1 Certificates on any
Distribution Date, commencing with the Initial Distribution Date, shall be an
amount equal to 1/12 of the product of (i) the Certificate Rate and (ii) the
outstanding principal balance of the Series 1997-1 Certificates as of the
close of business on the preceding Distribution Date (after giving effect to
all repayments of principal made to Series 1997-1 Certificate holders on such
preceding Distribution Date, if any); provided, however, in the event that
the Series 1997-1 Certificates are still outstanding following the Expected
Payment Date, then the amount of Monthly Interest with respect to the Series
1997-1 Certificates on any Distribution Date thereafter shall be an amount
equal to the product of (i) the Certificate Rate, (ii) the outstanding
principal balance of the Series 1997-1 Certificates as of the close of
business on the preceding Distribution Date (after giving effect to all
repayments of principal made to Series 1997-1 Certificateholders on such
preceding Distribution Date, if any) and (iii) a fraction, the numerator of
which is the actual number of days elapsed in such Interest Period and the
denominator of which is 360.
On the Determination Date preceding each Distribution Date,
commencing with the Initial Distribution Date, the Servicer shall determine
the excess, if any (the "Interest Shortfall"), of (x) the aggregate Monthly
Interest for the Interest Period applicable to such Distribution Date over
(y) the amount which will be available to be distributed to Series 1997-1
Certificateholders on such Distribution Date in respect thereof pursuant to
this Series
34
Supplement. If the Interest Shortfall with respect to any Distribution Date
is greater than zero, an additional amount ("Additional Interest") equal to
1/12 of the product of (i) the Certificate Rate and (ii) such Interest
Shortfall (or the portion thereof which has not been paid to Series 1997-1
Certificateholders), shall be payable as provided herein with respect to the
Series 1997-1 Certificates on each Distribution Date following such
Distribution Date to and including the Distribution Date on which such
Interest Shortfall is paid to Series 1997-1 Certificateholders; provided,
however, in the event that the Series 1997-1 Certificates are still
outstanding following the Expected Payment Date then the Additional Interest
payable as provided herein with respect to the Series 1997-1 Certificates on
any Distribution Date thereafter shall be equal to the product of (i) the
Certificate Rate, (ii) such Interest Shortfall (or the portion thereof which
has not been paid to Series 1997-1 Certificateholders) and (iii) a fraction,
the numerator of which is the actual number of days elapsed in such Interest
Period (or in a subsequent Interest Period) and the denominator of which is
360. Notwithstanding anything to the contrary herein, Additional Interest
shall be payable or distributed to Series 1997-1 Certificateholders only to
the extent permitted by applicable law.
SECTION 4.03. Determination of Monthly Principal. The amount
of monthly principal ("Monthly Principal") distributable with respect to the
Series 1997-1 Certificates on each Distribution Date with respect to an Early
Amortization Period, a Reinvestment Period and the Controlled Amortization
Period shall be equal to the Available Investor Principal Collections with
respect to such Distribution Date; provided, however, that, for each
Distribution Date with respect to the Controlled Amortization Period, Monthly
Principal shall not exceed the Controlled Distribution Amount for such
Distribution Date; and provided further, that Monthly Principal shall not
exceed the Invested Amount of the Series 1997-1 Certificates.
SECTION 4.04. Establishment of Reserve Fund and Funding
Accounts. (a) (i) The Servicer, for the benefit of the Series 1997-1
Certificateholders, shall cause to be established and maintained in the name
of the Trustee, on behalf of the Trust, an Eligible Deposit Account (the
35
"Reserve Fund") which shall be identified as the "Reserve Fund for the CARCO
Auto Loan Master Trust, Series 1997-1" and shall bear a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Series 1997-1 Certificateholders. On the Closing Date, the Seller shall cause
to be deposited in the Reserve Fund the Initial Reserve Fund Deposit Amount.
(ii) At the direction of the Servicer, funds on deposit in the
Reserve Fund shall be invested by the Trustee in Eligible Investments
selected by the Servicer that will mature so that such funds will be
available at the close of business on or before the Business Day next
preceding the following Distribution Date. All Eligible Investments shall be
held by the Trustee for the benefit of the Series 1997-1 Certificateholders.
On each Distribution Date, all interest and other investment earnings (net of
losses and investment expenses) on funds on deposit in the Reserve Fund
received prior to such Distribution Date shall be applied as set forth in
Section 4.06(a) of this Series Supplement. Funds deposited in the Reserve
Fund on a Business Day (which immediately precedes a Distribution Date) upon
the maturity of any Eligible Investments are not required to be invested
overnight.
(b) (i) The Servicer, for the benefit of the Swap
Counterparty, shall establish and maintain in the name of the Trustee, on
behalf of the Trust, an Eligible Deposit Account (the "Yield Supplement
Account"), which shall be identified as the "Yield Supplement Account for the
CARCO Auto Loan Master Trust Series 1997-1" and shall bear a designation
clearly indicating that the funds deposited therein are held for the benefit
of the Swap Counterparty. On the Closing Date, the Seller shall cause to be
deposited into the Yield Supplement Account the Initial Yield Supplement
Account Deposit Amount.
(ii) At the direction of the Servicer or, during any
Reinvestment Period or Early Amortization Period, at the direction of the
Swap Counterparty, funds on deposit in the Yield Supplement Account shall be
invested by the Trustee in investments consisting of financial assets
selected by the Servicer; provided, however, that such assets must, by their
terms, convert to cash within a finite period of time. All such financial
assets shall be held by the Trustee for the benefit of the Swap Counterparty.
On each Distribution
36
Date, all interest and other investment earnings (net of losses and
investment expenses) on funds on deposit in the Yield Supplement Account
shall be applied as set forth in Section 4.06(a) of this Series Supplement.
(iii) If on any Distribution Date there is a Carryover Amount,
the Servicer shall cause the Trustee to apply the amounts on deposit in the
Yield Supplement Account up to the amount of such Carry-over Amount to
satisfy such Carryover Amount. The Trustee shall be authorized to dispose of
investments in the Yield Supplement Account in order to obtain funds with
which to satisfy any Carry-over Amount.
(iv) If on any Distribution Date the amount on deposit in the
Yield Supplement Account (after giving effect to any withdrawals to be made
from the Yield Supplement Account on such Distribution Date) is greater than
the Yield Supplement Account Required Amount, the Servicer shall cause the
Trustee to pay to the Seller on such Distribution Date the excess of such
amount on deposit in the Yield Supplement Account over the Yield Supplement
Account Required Amount.
(c) (i) The Servicer, for the benefit of the Series 1997-1
Certificateholders, shall establish and maintain in the name of the Trustee,
on behalf of the Trust, an Eligible Deposit Account (the "Principal Funding
Account"), which shall be identified as the "Principal Funding Account for
CARCO Auto Loan Master Trust, Series 1997-1" and shall bear a designation
clearly indicating that the funds deposited therein are held for the benefit
of the Series 1997-1 Certificateholders.
(ii) At the direction of the Servicer or, during any
Reinvestment Period, at the direction of the Swap Counterparty, funds on
deposit in the Principal Funding Account shall be invested by the Trustee in
Eligible Investments selected by the Servicer. All such Eligible Investments
shall be held by the Trustee for the benefit of the Series 1997-1
Certificateholders. On each Distribution Date all interest and other
investment earnings (net of losses and investment expenses) on funds on
deposit therein shall be applied as set forth in Section 4.06(a) of this
Series Supplement. Funds on deposit in the Principal Funding Account shall be
invested at the direction of the Servicer in Eligible Investments that will
mature so that
37
such funds will be available on or before the close of business on the
Business Day next preceding the Expected Payment Date. Funds deposited in the
Principal Funding Account on a Business Day (which immediately precedes the
Expected Payment Date) upon the maturity of any Eligible Investments are not
required to be invested overnight.
(d) (i) The Servicer, for the benefit of the Series 1997-1
Certificateholders, shall establish and maintain in the name of the Trustee,
on behalf of the Trust, an Eligible Deposit Account (the "Excess Funding
Account"), which shall be identified as the "Excess Funding Account for CARCO
Auto Loan Master Trust, Series 1997-1" and shall bear a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Series 1997-1 Certificateholders. On the Closing Date, the Seller shall cause
to be deposited in the Excess Funding Account an amount equal to the excess
of (x) the Initial Principal Amount over (y) the Initial Invested Amount on
the Closing Date, which excess is equal to $[ ].
(ii) At the direction of the Servicer, funds on deposit in the
Excess Funding Account shall be invested by the Trustee in Eligible
Investments selected by the Servicer. All such Eligible Investments shall be
held by the Trustee for the benefit of the Series 1997-1 Certificateholders.
On each Distribution Date, all interest and other investment earnings (net of
losses and investment expenses) on funds on deposit in the Excess Funding
Account shall be applied as set forth in Section 4.06(a) of this Series
Supplement. Funds deposited in the Excess Funding Account on any Distribution
Date shall be invested at the direction of the Servicer in Eligible
Investments that will mature so that such funds will be available on or
before the close of business on the Business Day next preceding the following
Distribution Date. Funds deposited in the Excess Funding Account on a
Business Day (which immediately precedes a Distribution Date) upon the
maturity of any Eligible Investments are not required to be invested over
night.
(e) (i) The Trustee shall possess all right, title and
interest in and to all funds on deposit from time to time in, and all
Eligible Investments and other financial assets credited to, the Reserve
Fund, the Yield Supplement Account, the Principal Funding Account and the
Excess
38
Funding Account (collectively the "Series 1997-1 Accounts") and in all
proceeds thereof. The Series 1997-1 Accounts shall be under the sole dominion
and control of the Trustee for the benefit of the Series 1997-1
Certificateholders or, in the case of the Yield Supplement Account, the Swap
Counterparty. If, at any time, any of the Series 1997-1 Accounts ceases to be
an Eligible Deposit Account, the 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
Series 1997-1 Account meeting the conditions specified in paragraph (a)(i),
(b)(i), (c)(i) or (d)(i) above, as applicable, as an Eligible Deposit Account
and shall transfer any cash and/or any investments to such new Series 1997-1
Account. Neither the Seller, the Servicer nor any person or entity claiming
by, through or under the Seller, the Servicer or any such person or entity
shall have any right, title or interest in, or any right to withdraw any
amount from, any Series 1997-1 Account, except as expressly provided herein.
Schedule 1, which is hereby incorporated into and made part of this Series
Supplement, identifies each Series 1997-1 Account by setting forth the
account number of each such account, the account designation of each such
account and the name of the institution with which such account has been
established. If a substitute Series 1997-1 Account is established pursuant to
this Section, the Servicer shall provide to the Trustee an amended Schedule
1, setting forth the relevant information for such substitute Series 1997-1
Account.
(ii) Pursuant to the authority granted to the Servicer in
Section 3.01(a) of the Agreement, the Servicer shall have the power,
revocable by the Trustee, to make withdrawals and payments or to instruct the
Trustee to make withdrawals and payments from the Series 1997-1 Accounts for
the purposes of carrying out the Servicer's or Trustee's duties hereunder.
SECTION 4.05. Deficiency Amount. With respect to each
Distribution Date that occurs on or prior to the Fully Reinvested Date,
commencing with the Initial Distribution Date, on the related Determination
Date, the Servicer shall determine the amount (the "Deficiency Amount"), if
any, by which (a) the sum of (i) Monthly Interest for such Distribution Date,
(ii) any Monthly Interest previously due but not distributed to the Series
1997-1 Certificateholders
39
on a prior Distribution Date, (iii) Additional Interest, if any, for such
Distribution Date and any Additional Interest previously due but not
distributed to the Series 1997-1 Certificateholders on a prior Distribution
Date; (iv) Net Trust Swap Payments, if any, for such Distribution Date, (v)
any unpaid Make-Whole Payment (together with interest thereon calculated
pursuant to the Interest Rate Swap), (vi) the Certificateholders Monthly
Servicing Fee for such Distribution Date, (vii) the Investor Default Amount,
if any, for such Distribution Date; (viii) the Series 1997-1 Allocation
Percentage of the amount of any Adjustment Payment required to be deposited
in the Collection Account pursuant to Section 3.09(a) of the Agreement with
respect to the related Collection Period that has not been so deposited as of
such Determination Date; and (ix) if such Distribution Date constitutes the
Final Payment Date the sum of (A) the amount of any Carry-over Amount for
such Distribution Date, (B) the amount of any Carry-over Amount previously
due but not previously distributed to the Swap Counterparty on a prior
Distribution Date, (C) the amount of any Additional Carry-over Amount for
such Distribution Date and (D) the amount of any Additional Carry-over Amount
previously due but not previously paid to the Swap Counterparty on a prior
Distribution Date, in each case that will not be satisfied on such date by
application, pursuant to Section 4.04(b)(iii), of amounts on deposit in the
Yield Supplement Account or by application of Available Seller's Collections
pursuant to Section 4.08(f), exceeds (b) the sum of (i) Investor
Non-Principal Collections for such Distribution Date plus any Investment
Proceeds with respect to such Distribution Date, (ii) Net Trust Swap
Receipts, if any, for such Distribution Date, (iii) any unpaid Make-Whole
Receipt (together with interest thereon calculated pursuant to the Interest
Rate Swap) and (iv) the amount of funds in the Reserve Fund which are
available pursuant to Section 4.08(a) and Section 4.08(d) to cover any
portion of the Deficiency Amount. The lesser of the Deficiency Amount and the
Available Subordinated Amount shall be the "Required Subordination Draw
Amount".
SECTION 4.06. Application of Investor Non-Principal
Collections, Investment Proceeds, Net Trust Swap Receipts and Available
Investor Principal Collections. The Servicer shall cause the Trustee to
apply, on each Distribution Date, commencing with the Initial Distribution
Date, Investor Non-Principal Collections, Investment
40
Proceeds, Net Trust Swap Receipts, if any, any unpaid Make-Whole Receipt
(together with interest thereon calculated pursuant to the Interest Rate
Swap) and Available Investor Principal Collections to make the following
distributions:
(a) On each Distribution Date, commencing with the Initial
Distribution Date, an amount equal to the sum of Investor Non-Principal
Collections, any Investment Proceeds, any Net Trust Swap Receipts and any
unpaid Make-Whole Receipt (together with interest thereon calculated pursuant
to the Interest Rate Swap) with respect to such Distribution Date will be
distributed in the following priority:
(i) first, provided that no Swap Counterparty Default under
the Interest Rate Swap shall have occurred and be continuing, the Net
Trust Swap Payment, if any, for such Distribution Date and any unpaid
Make-Whole Payment (together with interest thereon calculated
pursuant to the Interest Rate Swap) shall be paid to the Swap
Counterparty; and then an amount equal to Monthly Interest for such
Distribution Date, plus the amount of any Monthly Interest previously
due but not distributed to the Series 1997-1 Certificateholders on a
prior Distribution Date, plus the amount of any Additional Interest
for such Distribution Date and any Additional Interest previously due
but not distributed to the Series 1997-1 Certificateholders on a
prior Distribution Date shall be distributed to the Series 1997-1
Certificateholders;
(ii) second, if such Distribution Date relates to a Collection
Period that ends prior to the Fully Reinvested Date, an amount equal
to the Certificateholders Monthly Servicing Fee for such Distribution
Date shall be distributed to the Servicer (unless such amount has
been netted against deposits to the Collection Account or waived) and
then, any remaining Net Trust Swap Payment and any unpaid Make-Whole
Payment (together with interest thereon calculated pursuant to the
Interest Rate Swap) shall be paid to the Swap Counterparty;
(iii) third, an amount equal to the Reserve Fund Deposit
Amount, if any, for such Distribution Date shall be deposited in the
Reserve Fund;
41
(iv) fourth, if such Distribution Date relates to a Collection
Period that ends prior to the Fully Reinvested Date, an amount equal
to the Investor Default Amount for such Distribution Date shall be
treated as a portion of Available Investor Principal Collections for
such Distribution Date;
(v) fifth, an amount equal to the Carry-over Amount (after
giving effect to any withdrawals from the Yield Supplement Account on
such Distribution Date), if any, for such Distribution Date, plus the
amount of any Carry-over Amount previously due but not previously
distributed to the Swap Counterparty on a prior Distribution Date,
plus the amount of any Additional Carry-over Amount for such
Distribution Date and any Additional Carry-over Amount previously due
but not previously distributed to the Swap Counterparty on a prior
Distribution Date shall be distributed to the Swap Counterparty;
(vi) sixth, an amount equal to the Yield Supplement Account
Deposit Amount, if any, for such Distribution Date shall be deposited
in the Yield Supplement Account; and
(vii) seventh, (A) if such Distribution Date relates to a
Collection Period that ends prior to the Fully Reinvested Date, the
balance, if any, shall constitute Excess Servicing and shall be
allocated and distributed as set forth in Section 4.10; or (B) if
such Distribution Date relates to a Collection Period that ends after
the Fully Reinvested Date, the balance, if any, shall be distributed
to the Seller.
(b) On each Distribution Date, commencing with the Initial
Distribution Date, with respect to the Revolving Period, an amount equal to
Available Investor Principal Collections deposited in the Collection Account
for the related Collection Period shall be allocated first to make a deposit
to the Excess Funding Account if the sum of (i) the Invested Amount (reduced
for this purpose by the amount, if any, by which the Required Participation
Amount exceeds the Pool Balance due to an increase in the Subordination
Factor) and (ii) the amount on deposit in the Excess Funding Account (other
than any Investment Proceeds) prior to the allocation on such Distribution
Date is less than the outstanding principal balance of the Series 1997-1
Certificates and
42
second treated as Excess Principal Collections and applied in accordance with
Section 4.04 of the Agreement.
(c) On each Distribution Date with respect to the Controlled
Amortization Period, an amount equal to Available Investor Principal
Collections will be distributed in the following priority:
(i) first, an amount equal to the Controlled Distribution
Amount for such Distribution Date, shall be distributed to the Series
1997-1 Certificateholders;
(ii) second, for each Distribution Date following the last day
of the February 2004 Collection Period, an amount equal to the
Additional Accumulation Amount shall be deposited in the Principal
Funding Account; and
(iii) third, for each Distribution Date with respect to the
Controlled Amortization Period unless an Early Amortization Event or
a Reinvestment Event has occurred (other than a Reinvestment Event
which has resulted in a Reinvestment Period which has ended as
described in clause (c) or clause (d) of the definition thereof in
this Series Supplement), after giving effect to the transactions
referred to in clauses (i) and (ii) above, an amount equal to the
balance, if any, of such Available Investor Principal Collections
shall be allocated first, if such Distribution Date is on or prior to
the March 2004 Distribution Date to make a deposit to the Excess
Funding Account if the sum of (i) the Invested Amount (reduced for
this purpose by the amount, if any, by which the Required
Participation Amount exceeds the Pool Balance due to an increase in
the Subordination Factor) and (ii) the amount on deposit in the
Excess Funding Account (other than any Investment Proceeds) prior to
the allocation on such Distribution Date is less than the outstanding
principal balance of the Series 1997-1 Certificates and second
treated as Excess Principal Collections and applied in accordance
with Section 4.04 of the Agreement.
(d) On each Distribution Date with respect to any Reinvestment
Period, out of Available Investor Principal
43
Collections, an amount equal to Monthly Principal will be deposited in the
Principal Funding Account.
(e) On each Distribution Date with respect to any Early
Amortization Period:
(i) first, out of Available Investor Principal Collections,
any Make-Whole Payment (together with interest thereon calculated
pursuant to the Interest Rate Swap) due to the Swap Counterparty that
has not been paid pursuant to Section 4.06(a)(i) or (ii) shall be
paid to the Swap Counterparty provided that no Swap Counterparty
Default under the Interest Rate Swap shall have occurred and be
continuing; and
(ii) second, the balance, if any, of such Available Investor
Principal Collections, up to an amount equal to Monthly Principal,
will be distributed to Series 1997-1 Certificateholders.
SECTION 4.07. Distributions to Series 1997-1
Certificateholders and the Swap Counterparty. (a) The Servicer shall cause
the Trustee to make the following distributions at the following times from
the Collection Account (including deposits thereto of Net Trust Swap
Receipts, if any, and any Make-Whole Receipts (together with interest thereon
calculated pursuant to the Interest Rate Swap)), the Reserve Fund, the
Principal Funding Account, the Excess Funding Account and the Yield
Supplement Account:
(i) on each Distribution Date, all amounts on deposit in the
Collection Account or the Reserve Fund that are payable to the Series
1997-1 Certificatehol ders with respect to accrued interest will be
distributed to the Series 1997-1 Certificateholders;
(ii) on each Distribution Date relating to the Controlled
Amortization Period, other than the Mandatory Purchase Date, all
amounts on deposit in the Collection Account as are payable to the
Series 1997-1 Certificateholders with respect to principal and, if
such Distribution Date is on or after the April 2004 Distribution
Date, the amount on deposit in the Excess Funding Account, shall be
distributed to Series 1997-1 Certificateholders up to a maximum
amount of the
44
Controlled Distribution Amount for such Distribution Date;
(iii) on each Distribution Date relating to any Reinvestment
Period (unless such Distribution Date is the Expected Payment Date
or the Mandatory Purchase Date), the Principal Funding Account
Balance (after transfer to the Principal Funding Account of any
amount of deposit in the Excess Funding Account) and all amounts on
deposit in the Collection Account as are payable to Series 1997-1
Certificateholders with respect to principal shall be distributed to
Series 1997-1 Certificateholders up to a maximum amount of the
Controlled Distribution Amount for such Distribution Date;
(iv) on each Special Payment Date, on the Mandatory Purchase
Date and on the Expected Payment Date, all amounts on deposit in the
Principal Funding Account and the Excess Funding Account, and all
amounts on deposit in the Collection Account that are payable to the
Series 1997-1 Certificateholders with respect to principal, up to a
maximum amount on any such day equal to the excess of the outstanding
principal balance of the Series 1997-1 Certificates over the
unreimbursed Investor Charge-Offs, shall be distributed to the Series
1997-1 Certificateholders.
(b) On each Distribution Date, all amounts on deposit in the
Collection Account or the Reserve Fund that are payable to the Swap
Counterparty with respect to Net Trust Swap Payments and, provided that no
Swap Counterparty Default shall have occurred and be continuing, any Make-
Whole Payment (together with interest thereon calculated pursuant to the
Interest Rate Swap) will be distributed to the Swap Counterparty.
(c) On each Distribution Date on which there is any Carry-over
Amount or Additional Carry-over Amount, the Servicer shall instruct the
Trustee to distribute to the Swap Counterparty the amounts on deposit in the
Yield Supplement Account and the Collection Account payable with respect
thereto pursuant to Section 4.04(b)(iii) and Section 4.06(a) (other than from
Available Seller's Collections), respectively, and the amounts payable with
respect thereto pursuant to Section 4.08(f).
45
(d) If, on the Final Payment Date, there is any Carry-over
Amount or Additional Carry-over Amount (after giving effect to any
distributions on such date pursuant to Section 4.07(c)), the Servicer shall
instruct the Trustee to distribute to the Swap Counterparty the amounts
payable with respect thereto pursuant to Sections 4.08(b) and 4.08(d).
(e) The distributions to be made pursuant to this Section are
subject to the provisions of Sections 2.03, 9.02, 10.01 and 12.02 of the
Agreement and Sections 9.01 and 9.02 of this Series Supplement.
SECTION 4.08. Application of Reserve Fund and Available
Subordinated Amount. (a) If the portion of Investor Non-Principal Collections
and Investment Proceeds allocated to the Series 1997-1 Certificateholders,
Net Trust Swap Receipts, if any, and any Make-Whole Receipts (together with
interest thereon calculated pursuant to the Interest Rate Swap) on any
Distribution Date pursuant to Section 4.06(a) is not sufficient to make the
entire distributions required on such Distribution Date by Sections
4.06(a)(i), (ii) and (iv), the Servicer shall cause the Trustee to withdraw
funds from the Reserve Fund to the extent available therein, and apply such
funds to complete the distributions pursuant to Section 4.06(a)(i), (ii) and
(iv); provided, however, that during any Early Amortization Period or
Reinvestment Period (other than a Reinvestment Period which has ended as
described in clause (c) or clause (d) of the definition thereof in this
Series Supplement) funds shall not be withdrawn from the Reserve Fund to make
distributions otherwise required by Section 4.06(a)(iv) to the extent that,
after giving effect to such withdrawal, the amount on deposit in the Reserve
Fund shall be less than $1,000,000.
(b) If there is a Required Subordination Draw Amount for such
Distribution Date, and such Distribution Date is not the Final Payment Date,
the Servicer shall apply or cause the Trustee to apply the Available Seller's
Collections on deposit in the Collection Account on such Distribution Date,
but only up to the amount of the Required Subordination Draw Amount, to make
the distributions required by Sections 4.06(a)(i), (ii) and (iv) that have
not been made through the application of funds from the Reserve Fund in
accordance with the preceding paragraph. If there
46
is a Required Subordination Draw Amount for such Distribution Date, and such
Distribution Date is the Final Payment Date, the Servicer shall apply or
cause the Trustee to apply the Available Seller's Collections on deposit in
the Collection Account on such Distribution Date, but only up to the amount
of the Required Subordination Draw Amount, to make the distributions required
by Sections 4.06(a)(i), (ii), (iv) and (v) that have not been made through
the application of funds from the Reserve Fund in accordance with Section
4.08(d) or the application of Available Seller's Collections in accordance
with Section 4.08(f). Any such Available Seller's Collections remaining after
the application thereof pursuant to the first or second preceding sentence,
as applicable, shall be treated as a portion of Investor Principal
Collections for such Distribution Date, but only up to the amount of unpaid
Adjustment Payments allocated to Series 1997-1 as described in Section
4.05(a)(viii). The amount of the Available Seller's Collections applied in
accordance with the three preceding sentences other than any such collections
applied in accordance with Section 4.08(f) shall reduce the Available
Subordinated Amount in all other cases as described in clause (A) of the
definition thereof. If the Required Subordination Draw Amount exceeds
Available Seller's Collections for such Distribution Date, the Available
Subordinated Amount shall be further reduced by the amount of such excess,
but not by more than the sum of (x) the Investor Default Amount and (y) the
amount of unpaid Adjustment Payments allocated to Series 1997-1 as described
in Section 4.05(a)(viii).
(c) If, after giving effect to the allocations of,
distributions from, and deposits in, the Reserve Fund made pursuant to
Sections 4.01(c), 4.04, 4.06(a), 4.08(a) and 4.08(e), (i) the amount in the
Reserve Fund is greater than the Reserve Fund Required Amount (or, for any
Distribution Date with respect to a Reinvestment Period or an Early
Amortization Period, the Excess Reserve Fund Required Amount) for such
Distribution Date, the Servicer shall cause the Trustee to distribute such
excess amount to the Seller, subject to the proviso contained in paragraph
(f) or (ii) the amount in the Reserve Fund is less than such Reserve Fund
Required Amount, then the Trustee shall deposit any remaining Available
Seller's Collections on deposit in the Collection Account for such
Distribution Date after giving effect to Section 4.08(b) into the Reserve
Fund until
47
the amount in the Reserve Fund is equal to such Reserve Fund Required Amount.
On the Termination Date, any funds in the Reserve Fund will be treated as
Available Investor Principal Collections.
(d) If, on the Final Payment Date, after giving effect to (c)
above, there is a Carry-over Amount or Additional Carry-over Amount or any
unpaid Make-Whole Payment (or unpaid interest thereon calculated pursuant to
the Interest Rate Swap) after giving effect to withdrawals from the Yield
Supplement Account on such date, the Servicer shall cause the Trustee to
withdraw funds in the amount of such Carry-over Amount and Additional
Carry-over Amount and any unpaid Make-Whole Payment (together with interest
thereon calculated pursuant to the Interest Rate Swap) from the Reserve Fund
(to the extent available therein), and distribute such funds to the Swap
Counterparty. Any funds remaining on deposit in the Reserve Fund after the
earlier of (i) payment in full of the outstanding principal balance of the
Series 1997-1 Certificates and (ii) the Series Termination Date shall be paid
to the Seller.
(e) If, for any Distribution Date with respect to a
Reinvestment Period or an Early Amortization Period, after giving effect to
the allocations of, distributions from, and deposits in, the Reserve Fund
made pursuant to Sections 4.01(c), 4.04, 4.06(a) and 4.08(a), the amount in
the Reserve Fund is less than the Excess Reserve Fund Required Amount for
such Distribution Date, the Trustee shall deposit any remaining Available
Seller's Collections on deposit in the Collection Account for such
Distribution Date into the Reserve Fund until the amount in the Reserve Fund
is equal to such Excess Reserve Fund Required Amount.
(f) The balance of Available Seller's Collections on any
Distribution Date, after giving effect to any distributions thereof pursuant
to Section 4.08(a), (b), (c) or (e), shall be applied first to pay to the
Swap Counterparty any Carry-over Amount and Additional Carry-over Amount and
any unpaid Make-Whole Payment (together with interest thereon calculated
pursuant to the Interest Rate Swap) that has not been paid from withdrawals
from the Yield Supplement Account or the Reserve Fund, but only to the extent
the Available Subordination Amount exceeds the Required Subordination Amount
on such Distribution Date (after giving effect to the allocations,
distributions, withdrawals and deposits to be made on such Distribution
48
Date) and second distributed to the Seller on such Distribution Date.
Notwithstanding the foregoing, in the case of any remaining Available
Seller's Principal Collections, if the Trust Available Subordinated Amount
for the immediately preceding Determination Date exceeds the Seller's
Participation Amount on such date (determined after giving effect to any
Principal Receivables transferred to the Trust on such Distribution Date),
Section 4.08(c) hereof shall not apply and the amount of such excess shall be
deposited into the Reserve Fund, with any remaining Available Seller's
Principal Collections in accordance with the first sentence of this Section
4.08(f).
SECTION 4.09. Investor Charge-Offs. If, on any Distribution
Date on which the Available Subordinated Amount on the preceding
Determination Date (after giving effect to the allocations, distributions,
withdrawals and deposits to be made on such Distribution Date) is zero and
the Deficiency Amount for such Distribution Date is greater than zero, the
Invested Amount shall be reduced by the amount of the excess of such
Deficiency Amount over any remaining Available Subordinated Amount on such
Determination Date, but not by more than the Investor Default Amount (an
"Investor Charge-Off"). Investor Charge-Offs shall thereafter be reimbursed
and the Invested Amount increased (but not by an amount in excess of the
aggregate unreimbursed Investor Charge-Offs on any Distribution Date) by the
sum of (a) Allocable Miscellaneous Payments with respect to such Distribution
Date and (b) the amount of Excess Servicing allocated and available for that
purpose pursuant to Section 4.10(a).
49
SECTION 4.10. Excess Servicing. The Servicer shall cause the
Trustee to apply, on each Distribution Date with respect to a Collection
Period that ends prior to the Fully Reinvested Date, commencing with the
Initial Distribution Date, Excess Servicing with respect to the Collection
Period immediately preceding such Distribution Date, to make the following
distributions in the following priority:
(a) an amount equal to the aggregate amount of Investor
Charge-Offs which have not been previously reimbursed as provided in
Section 4.09 (after giving effect to the allocation on such
Distribution Date of any amount for that purpose pursuant to Section
4.09) shall be treated as a portion of Available Investor Principal
Collections with respect to such Distribution Date;
(b) an amount equal to the aggregate outstanding amounts of
the Certificateholders Monthly Servicing Fee which have been
previously waived pursuant to Section 3.01 shall be distributed to
the Servicer; and
(c) the balance, if any, shall be distributed to the Seller.
SECTION 4.11. Excess Principal Collections. (a) That portion
of Excess Principal Collections for any Distribution Date equal to the amount
of Series 1997-1 Excess Principal Collections for such Distribution Date will
be allocated to Series 1997-1 and will be distributed as set forth in this
Series Supplement.
(b) Series 1997-1 Excess Principal Collections, with respect
to any Distribution Date, shall mean an amount equal to the Series 1997-1
Principal Shortfall for such Distribution Date; provided, however, that, if
the aggregate amount of Excess Principal Collections for all Series for such
Distribution Date is less than the aggregate amount of Principal Shortfalls
for all Series for such Distribution Date, then Series 1997-1 Excess
Principal Collections for such Distribution Date shall equal the product of
(x) Excess Principal Collections for all Series for such Distribution Date
and (y) a fraction, the numerator of which is the Series 1997-1 Principal
Shortfall for such Distribution Date and the denominator of which is the
aggregate amount of
50
Principal Shortfalls for all Series for such Distribution Date. The Series
1997-1 Principal Shortfall, with respect to any Distribution Date, shall
equal the excess of (i) (x) for any Distribution Date with respect to the
Controlled Amortization Period, the Controlled Distribution Amount plus, if
such Distribution Date is after the last day of the February 2004 Collection
Period, the Additional Accumulation Amount for such Distribution Date, or (y)
for any Distribution Date with respect to a Reinvestment Period or an Early
Amortization Period, the Invested Amount, over (ii) Available Investor
Principal Collections for such Distribution Date (excluding any portion
thereof attributable to Excess Principal Collections).
SECTION 4.12. Excess Funding Account. (a) Any funds on deposit
in the Excess Funding Account on the March 2004 Distribution Date will be
deposited in the Principal Funding Account on such date. In addition, no
funds will be deposited in the Excess Funding Account during any Reinvestment
Period, any Early Amortization Period or with respect to any Collection
Period following the February 2004 Collection Period.
(b) On each Determination Date during the Revolving Period or
the Controlled Amortization Period (prior to the February 2004 Collection
Period), the Seller shall determine whether the sum of the Invested Amount
(reduced for this purpose by the amount, if any, by which the Required
Participation Amount exceeds the Pool Balance due to an increase in the
Subordination Factor) and the amount on deposit in the Excess Funding Account
(other than any Investment Proceeds) is greater than the outstanding
principal balance of the Series 1997-1 Certificates. If on any such
Determination Date such sum is greater than the outstanding principal balance
of the Series 1997-1 Certificates and thus there are sufficient Principal
Receivables in the Trust to permit an increase in the Invested Amount without
causing an early amortization event or reinvestment event to occur with
respect to any outstanding Series, the Seller shall notify the Trustee of the
amount of the increase in the Invested Amount. Subject to the provisions set
forth below in this Section 4.12(b) and to Sections 4.12(c) and (d) below,
upon receipt of such notice the Invested Amount shall be increased by the
amount specified, and the Servicer shall instruct the Trustee to withdraw
from the Excess Funding Account and pay to the
51
Seller or allocate to one or more other Series, on the immediately succeeding
Distribution Date, an amount equal to the amount of such increase in the
Invested Amount. Such payment shall be in payment or partial payment pursuant
to the Receivables Purchase Agreement for additional Principal Receivables
transferred to the Trust or allocated to Series 1997-1. To the extent that
the Invested Amount is increased by any payment to the Seller or any
allocation to one or more other Series, the Seller's Interest or such other
Series' invested amount, as applicable, shall be reduced by the amount of
such payment. In addition, any increase in the Invested Amount is subject to
the condition that after giving effect to such increase (i) the Pool Balance
equals or exceeds (ii) the sum of (A) the Required Participation Amount, (B)
the sum of the Required Subordinated Amount and the sum of the required
subordinated amounts for all other Series (or, if such other series shall
have no required subordinated amount, the available subordinated amount with
respect to such Series) and (C) the sum of any subordinated amounts
supporting any Enhancement for all other Series. In connection with the
foregoing, the Seller shall endeavor (taking into account any seasonality
experienced in the Accounts in the Trust) to minimize the amounts on deposit,
from time to time, in the Excess Funding Account.
(c) In the event that other Series issued by the Trust provide
for excess funding accounts or other arrangements similar to the Excess
Funding Account involving fluctuating levels of investments in Principal
Receivables, (i) the allocation of additional Principal Receivables to
increase the Invested Amount and the invested amounts of such other Series
(and the related withdrawals from the Excess Funding Account and the other
excess funding or similar accounts) will be based on the proportion that the
amount on deposit in the Excess Funding Account bears to amounts on deposit
in the excess funding accounts of all Series providing for excess funding
accounts or such similar arrangements or to amounts otherwise similarly
available and (ii) the deposit of amounts into the Excess Funding Account and
the excess funding accounts of such other Series will be pro rata based on
the proportion that the Adjusted Invested Amount bears to the adjusted
invested amounts of all Series providing for excess funding accounts or such
similar arrangements.
52
(d) In the event that any other Series is in an amortization,
early amortization, reinvestment or accumulation period the amounts of any
withdrawals from the Excess Funding Account shall be applied first to satisfy
in full any then applicable funding or payment requirements of such Series
and second to make a payment to the Seller. In the event that more than one
other Series is in an amortization, early amortization, reinvestment or
accumulation period, the amounts of any withdrawals from the Excess Funding
Account shall be allocated (and, if necessary, reallocated) among such Series
as specified in the related Series Supplement to meet the funding or payment
requirements of each such Series first to satisfy in full all then applicable
funding or payment requirements of each such Series and second to make a
payment to the Seller.
SECTION 4.13. Interest Rate Swap. (a) The Servicer hereby
represents that it has obtained the Interest Rate Swap in favor of the Trust
for the benefit of the Series 1997-1 Certificateholders. The Interest Rate
Swap shall entitle the Trust to receive monthly Net Trust Swap Receipts and
Make-Whole Receipts (together with interest thereon calculated pursuant to
the Interest Rate Swap), if any, and shall obligate the Trust to make monthly
Net Trust Swap Payments and Make-Whole Payments (together with interest
thereon calculated pursuant to the Interest Rate Swap), if any, as set forth
in the Interest Rate Swap.
(b) On the Determination Date preceding each Distribution
Date, commencing with the Initial Distribution Date, the Servicer shall
determine the excess, if any (the "Carry-over Shortfall"), of (x) the
Carry-over Amount, if any, for such Distribution Date over (y) the amount
which will be available to be distributed to the Swap Counterparty in respect
thereof on such Distribution Date pursuant to this Series Supplement. If the
Carry-over Shortfall with respect to any Distribution Date is greater than
zero, the Carry-over Shortfall together with an additional amount
("Additional Carry-over Amount") equal to the product of (i) the Swap Rate
(calculated pursuant to clause (a) of the definition thereof) for the
Interest Period commencing on the related Distribution Date (or, for
subsequent Interest Periods, the Swap Rate (calculated pursuant to clause (a)
of the definition thereof) for such subsequent Interest Periods), (ii) such
Carry-over Shortfall (or the portion thereof which has not been paid to the
Swap Counterparty)
53
and (iii) a fraction, the numerator of which is the actual number of days
elapsed in such Interest Period (or in a subsequent Interest Period) and the
denominator of which is 360, shall be payable as provided herein to the Swap
Counterparty on each Distribution Date following such Distribution Date to
the Distribution Date on which such Carry-over Shortfall is paid to the Swap
Counterparty. Notwithstanding anything to the contrary herein, any Additional
Carry-Over Amount shall be payable or distributed to the Swap Counterparty
only to the extent permitted by applicable law.
ARTICLE V
Distributions and Reports
to Series 1997-1 Certificateholders
SECTION 5.01. Distributions. (a) On each Distribution Date,
commencing with the Initial Distribution Date, the Trustee shall distribute
to each Series 1997-1 Certificateholder of record on the preceding Record
Date (other than as provided in Section 12.02 of the Agreement respecting a
final distribution) such Certificateholder's pro rata share (based on the
aggregate fractional undivided interests represented by the Series 1997-1
Certificates held by such Certificateholder) of the amounts on deposit in the
Series 1997-1 Accounts as is payable to the Series 1997-1 Certificateholders
on such Distribution Date pursuant to Section 4.07.
(b) Except as provided in Section 12.02 of the Agreement with
respect to a final distribution, distributions to Series 1997-1
Certificateholders hereunder shall be made by check mailed to each Series
1997-1 Certificateholder at such Certificateholder's address appearing in the
Certificate Register without presentation or surrender of any Series 1997-1
Certificate or the making of any notation thereon; provided, however, that,
with respect to Series 1997-1 Certificates registered in the name of a
Depository, such distributions shall be made to such Depository in
immediately available funds.
SECTION 5.02. Reports and Statements to Series 1997-1
Certificateholders and the Swap Counterparty. (a) At least two Business Days
prior to each Distribution
54
Date, commencing with the Initial Distribution Date, the Servicer will
provide to the Trustee, and on each such Distribution Date, the Trustee shall
forward to each Series 1997-1 Certificateholder and the Swap Counterparty, a
statement substantially in the form of Exhibit B prepared by the Servicer
setting forth certain information relating to the Trust and the Series 1997-1
Certificates.
(b) A copy of each statement provided pursuant to paragraph
(a) will be made available for inspection at the Corporate Trust Office.
(c) On or before January 31 of each calendar year, beginning
with calendar year 1998, the Trustee shall furnish or cause to be furnished
to each Person who at any time during the preceding calendar year was a
Series 1997-1 Certificateholder (or Certificate Owner) and the Swap
Counterparty, a statement prepared by the Servicer containing the information
which is required to be contained in the statement to Series 1997-1
Certificateholders and the Swap Counterparty as set forth in paragraph (a)
above, aggregated for such calendar year or the applicable portion thereof
during which such Person (or any related Certificate Owner) was a Series
1997-1 Certificateholder (or Certificate Owner), together with other
information as is required to be provided by an issuer of indebtedness under
the Internal Revenue Code and such other customary information as is
necessary to enable the Series 1997-1 Certificateholders (or Certificate
Owners) to prepare their tax returns. Such obligation of the Trustee shall be
deemed to have been satisfied to the extent that substantially comparable
information shall be provided by the Trustee pursuant to any requirements of
the Internal Revenue Code as from time to time in effect.
55
ARTICLE VI
Reinvestment Events
SECTION 6.01. Reinvestment Events. Notwithstanding anything to
the contrary in the Agreement, the occurrence of any of the following events
shall be deemed to be a Reinvestment Event solely with respect to Series
1997-1:
(a) a failure by the Seller to convey Receivables in
Additional Accounts to the Trust within five Business Days after the
day on which it is required to convey such Receivables pursuant to
the Agreement;
(b) on any Determination Date, the average of the Monthly
Payment Rates for the three preceding Collection Periods is less than
20%;
(c) on any Determination Date, the Available Subordinated
Amount for the next Distribution Date will be less than the Required
Subordinated Amount on such Determination Date, after giving effect
to the distributions to be made on the next Distribution Date;
(d) any Service Default with respect to Series 1997-1 occurs;
(e) on any Determination Date, as of the last day of the
preceding Collection Period, the aggregate amount of Principal
Receivables relating to Used Vehicles exceeds 20% of the Pool Balance
on such last day;
(f) any Carry-over Amount or Additional Carry-over Amount is
outstanding on six consecutive Distribution Dates;
(g) the Servicer (or CFC, if it is not the Servicer) shall
file a petition commencing a voluntary case under any chapter of the
Federal bankruptcy laws; or the Servicer (or CFC, as aforesaid) shall
file a petition or answer or consent seeking reorganization,
arrangement, adjustment, or composition under any other similar
applicable Federal law, or shall consent to the filing of any such
petition, answer, or consent; or the
56
Servicer (or CFC, as aforesaid) shall appoint, or consent to the
appointment of, a custodian, receiver, liquidator, trustee, assignee,
sequestrator or other similar official in bankruptcy or insolvency of
it or of any substantial part of its property; or the Servicer (or
CFC, as aforesaid) shall make an assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debts
generally as they become due;
(h) any order for relief against the Servicer (or CFC, if it
is not the Servicer) shall have been entered by a court having
jurisdiction in the premises under any chapter of the Federal
bankruptcy laws, and such order shall have continued undischarged or
unstayed for a period of 60 days; or a decree or order by a court
having jurisdiction in the premises shall have been entered approving
as properly filed a petition seeking reorganization, arrangement,
adjustment, or composition of the Servicer (or CFC, as aforesaid)
under any other similar applicable Federal law, and such decree or
order shall have continued undischarged or unstayed for a period of
120 days; or a decree or order of a court having jurisdiction in the
premises for the appointment of a custodian, receiver, liquidator,
trustee, assignee, sequestrator, or other similar official in
bankruptcy or insolvency of the Servicer (or CFC, as aforesaid) or of
any substantial part of its property, or for the winding up or
liquidation of its affairs, shall have been entered, and such decree
or order shall have remained in force undischarged or unstayed for a
period of 120 days;
(i) Chrysler shall file a petition commencing a voluntary case
under any chapter of the Federal bankruptcy laws; or Chrysler shall
file a petition or answer or consent seeking reorganization,
arrangement, adjustment, or composition under any other similar
applicable Federal law, or shall consent to the filing of any such
petition, answer, or consent; or Chrysler shall appoint, or consent
to the appointment of, a custodian, receiver, liquidator, trustee,
assignee, sequestrator or other similar official in bankruptcy or
insolvency of it or of any substantial part of its property; or
Chrysler shall make an assignment for the benefit of creditors, or
shall admit in writing its
57
inability to pay its debts generally as they become due;
(j) any order for relief against Chrysler shall have been
entered by a court having jurisdiction in the premises under any
chapter of the Federal bankruptcy laws, and such order shall have
continued undischarged or unstayed for a period of 60 days; or a
decree or order by a court having jurisdiction in the premises shall
have been entered approving as properly filed a petition seeking
reorganization, arrangement, adjustment, or composition of Chrysler
under any other similar applicable Federal law, and such decree or
order shall have continued undischarged or unstayed for period of 120
days; or a decree or order of a court having jurisdiction in the
premises for the appointment of a custodian, receiver, liquidator,
trustee, assignee, sequestrator, or other similar official in
bankruptcy or insolvency of Chrysler or of any substantial part of
its property, or for the winding up or liquidation of its affairs,
shall have been entered, and such decree or order shall have remained
in force undischarged or unstayed for a period of 120 days;
(k) failure on the part of the Servicer, or CFC, as
applicable, (i) to make any payment or deposit (including any
Transfer Deposit Amount or Adjustment Payment) required by the terms
of the Agreement or the Receivables Purchase Agreement on or before
the date occurring two Business Days after the date such payment or
deposit is required to be made under the Agreement, or (ii) to
deliver a Distribution Date Statement within five Business Days of
the day such item is due to be delivered under the Agreement, or
(iii) duly to observe or perform in any material respect the covenant
of the Seller set forth in Section 2.06(a) of the Agreement or (iv)
duly to observe or perform in any material respect any other
covenants or agreements of the Servicer set forth in the Agreement,
which failure in the case of this clause (iv) continues unremedied
for a period of 45 days after the date on which written notice of
such failure, requiring the same to be remedied, shall have been
given to the Seller by the Trustee or any Enhancement Provider; and
58
(l) any representation or warranty made by CFC in the
Receivables Purchase Agreement, (i) shall prove to have been
incorrect in any material respect when made or when delivered, and
shall continue to be incorrect in any material respect 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 to the
Seller by the Trustee and (ii) as a result of such incorrectness the
interests of the Holders of the Investor Certificates or the Swap
Counterparty are materially and adversely affected; provided,
however, that a Reinvestment Event shall not be deemed to have
occurred under this paragraph if the Seller has repurchased the
related Receivable or all such Receivables, if applicable, during
such period in accordance with the provisions of the Agreement.
The Trustee agrees that upon gaining knowledge of the
occurrence of any event described in Section 6.01 of this Series Supplement
it shall (a) promptly provide notice to the Rating Agencies of the occurrence
of such event and (b) notify the Series 1997-1 Certificateholders and the
Swap Counterparty of the occurrence of such event within 45 days of the
expiration of the applicable grace period, if any. In the case of any event
described in Section 6.01(d), (k) or (l) of this Series Supplement, a
Reinvestment Event with respect to Series 1997-1 will be deemed to have
occurred only if, after the applicable grace period described in such
Sections, if any, either the Trustee or Series 1997-1 Certificateholders
evidencing more than 50% of the aggregate unpaid principal amount of the
Series 1997-1 Certificates by written notice to the Seller and the Servicer
(and the Trustee, if given by Series 1997-1 Certificateholders) declare that
a Reinvestment Event has occurred as of the date of such notice. In the case
of any other Reinvestment Event, such Reinvestment Event will be deemed to
have occurred immediately upon the occurrence of such event, without any
notice or other action on the part of the Trustee or the Series 1997-1
Certificateholders.
In the case of any Reinvestment Event described in this
Section 6.01, other than Section 6.01(a), (g), (h), (i) or (j), provided that
(i) no other Reinvestment Event (other than a Reinvestment Event which has
resulted in a Reinvestment Period which has terminated as described in clause
(c) or clause (d) of the definition thereof in this
59
Series Supplement) has occurred and (ii) the scheduled termination of the
Revolving Period has not occurred, the Trustee agrees that it shall give
notice to Moody's of the occurrence of such Reinvestment Event and shall
request written confirmation from Standard & Poor's, Duff & Phelps, Inc. and
Fitch Investors Service, Inc. that the termination of the Reinvestment Period
caused by the occurrence of such Reinvestment Event will not result in the
downgrading or withdrawal of such entity's rating of the Series 1997-1
Certificates.
The Trustee further agrees that, where applicable, it shall
promptly notify the Series 1997-1 Certificateholders and the Swap
Counterparty that it has received the written confirmation referred to in the
preceding paragraph, and that the Series 1997-1 Certificateholders may elect
to terminate the related Reinvestment Period.
ARTICLE VII
Amortization Events
SECTION 7.01. Amortization Events. Notwithstanding anything to
the contrary in the Agreement, the occurrence of any of the following events
shall be deemed to be an Early Amortization Event solely with respect to
Series 1997-1:
(a) the occurrence of a Swap Early Termination;
(b) the failure to pay in full the outstanding principal
amount of the Series 1997-1 Certificates by the Expected Payment
Date;
(c) the Trust shall file a petition commencing a voluntary
case under any chapter of the Federal bankruptcy laws; or the Trust
shall file a petition or answer or consent seeking reorganization,
arrangement, adjustment, or composition under any other similar
applicable Federal law, or shall consent to the filing of any such
petition, answer, or consent; or the Trust shall appoint, or consent
to the appointment of, a custodian, receiver, liquidator, trustee,
assignee, sequestrator or other similar official in bankruptcy or
60
insolvency of it or of any substantial part of its property; or the
Trust shall make an assignment for the benefit of creditors, or shall
admit in writing its inability to pay its debts generally as they
become due;
(d) any order for relief against the Trust shall have been
entered by a court having jurisdiction in the premises under any
chapter of the Federal bankruptcy laws, and such order shall have
continued undischarged or unstayed for a period of 60 days; or a
decree or order by a court having jurisdiction in the premises shall
have been entered approving as properly filed a petition seeking
reorganization, arrangement, adjustment, or composition of the Trust
under any other similar applicable Federal law, and such decree or
order shall have continued undischarged or unstayed for a period of
120 days; or a decree or order of a court having jurisdiction in the
premises for the appointment of a custodian, receiver, liquidator,
trustee, assignee, sequestrator, or other similar official in
bankruptcy or insolvency of the Trust or of any substantial part of
its property, or for the winding up or liquidation of its affairs,
shall have been entered, and such decree or order shall have remained
in force undischarged or unstayed for a period of 120 days;
(e) the Seller shall file a petition commencing a voluntary
case under any chapter of the Federal bankruptcy laws; or the Seller
shall file a petition or answer or consent seeking reorganization,
arrangement, adjustment, or composition under any other similar
applicable Federal law, or shall consent to the filing of any such
petition, answer, or consent; or the Seller shall appoint, or consent
to the appointment of, a custodian, receiver, liquidator, trustee,
assignee, sequestrator or other similar official in bankruptcy or
insolvency of it or of any substantial part of its property; or the
Seller shall make an assignment for the benefit of creditors, or
shall admit in writing its inability to pay its debts generally as
they become due;
(f) any order for relief against the Seller shall have been
entered by a court having jurisdiction in the premises under any
chapter of the Federal bankruptcy
61
laws, and such order shall have continued undischarged or unstayed
for a period of 60 days; or a decree or order by a court having
jurisdiction in the premises shall have been entered approving as
properly filed a petition seeking reorganization, arrangement,
adjustment, or composition of the Seller under any other similar
applicable Federal law, and such decree or order shall have continued
undischarged or unstayed for a period of 120 days; or a decree or
order of a court having jurisdiction in the premises for the
appointment of a custodian, receiver, liquidator, trustee, assignee,
sequestrator, or other similar official in bankruptcy or insolvency
of the Seller or of any substantial part of its property, or for the
winding up or liquidation of its affairs, shall have been entered,
and such decree or order shall have remained in force undischarged or
unstayed for a period of 120 days; and
(g) the Trust or the Seller shall become an "investment
company" within the meaning of the Investment Company Act.
In the case of any event described in this Section 7.01, an
Early Amortization Event with respect to Series 1997-1 will be deemed to have
occurred immediately upon the occurrence of such event, without any notice or
other action on the part of the Trustee or the Series 1997-1
Certificateholders.
62
ARTICLE VIII
Mandatory Purchase
SECTION 8.01. Mandatory Purchase. (a) On the Mandatory
Purchase Date, the Series 1997-1 Certificateholders' Interest will be repaid,
after payment to the Swap Counterparty of (i) any Net Trust Swap Payment,
(ii) provided that no Swap Counterparty Default under the Interest Rate Swap
shall have occurred and be continuing, if any Make-Whole Payments (together
with interest thereon calculated pursuant to the Interest Rate Swap), and
(iii) Carry-over Amount and Additional Carry-over Amount then owed to the
Swap Counterparty, at a purchase price equal to the Reassignment Amount less
amounts owed to the Swap Counterparty by the Trust for the Mandatory Purchase
Date using funds on deposit in the Principal Funding Account and the Excess
Funding Account and amounts on deposit in the Collection Account as are
payable to the Series 1997-1 Certificateholders or the Swap Counterparty or,
to the extent of any insufficiency of such funds (the "Insufficiency
Amount"), funds in an amount equal to the Insufficiency Amount provided by
Chrysler Financial Corporation.
(b) The Seller shall give the Servicer, the Swap Counterparty
and the Trustee at least 10 days' prior written notice of the Mandatory
Purchase Date. In the event that Chrysler Financial Corporation is obliged,
pursuant to Section 8.01, to provide funds to repay the Series 1997-1
Certificateholders' Interest and pay amounts owed by the Trust to the Swap
Counterparty, not later than 12:00 noon, New York City time, on the Mandatory
Purchase Date Chrysler Financial Corporation shall deposit the Insufficiency
Amount into the Collection Account in immediately available funds. The
Reassignment Amount shall be distributed as set forth in Section 9.01(b).
ARTICLE IX
Final Distributions
SECTION 9.01. Sale of Certificateholders' Interest Pursuant to
Section 2.03 of the Agreement; Distributions Pursuant to Section 8.01 of this
Series Supplement or Section 2.03 or 12.02(c) of the Agreement.
63
(a) The amount to be paid by the Seller to the Collection Account with
respect to Series 1997-1 in connection with a purchase of the Series 1997-1
Certificateholders' Interest pursuant to Section 2.03 of the Agreement shall
equal the Reassignment Amount for the Distribution Date on which such
repurchase occurs.
(b) With respect to the Reassignment Amount deposited into the
Collection Account pursuant to Section 8.01 or 9.01 of this Series Supplement
or Section 2.03 of the Agreement or any Termination Proceeds deposited into
the Collection Account pursuant to Section 12.02(c) of the Agreement, the
Trustee shall, not later than 12:00 noon, New York City time, on the
Distribution Date on which such amounts are deposited (or, if such date is
not a Distribution Date, on the immediately following Distribution Date) (in
the priority set forth below): (i) first, (w) deposit the Invested Amount on
such date into the Principal Funding Account, (x) pay the amount of any Net
Trust Swap Payments and any unpaid Make-Whole Payment (together with interest
thereon calculated pursuant to the Interest Rate Swap) to the Swap
Counterparty, (y) deposit the amount of accrued and unpaid interest on the
unpaid balance of the Series 1997-1 Certificates, plus the amount of
Additional Interest, if any, for such Distribution Date and any Additional
Interest previously due but not paid to Series 1997-1 Certificateholders on
any prior Distribution Date and (z) deposit the amount of any Carryover
Amount and Additional Carryover Amount previously due but not paid to the
Swap Counterparty on any prior Distribution Date, up to the Reassignment
Amount for Series 1997-1 and (ii) second, pay the remainder of any
Termination Proceeds to the Seller.
(c) Notwithstanding anything to the contrary in this Series
Supplement or the Agreement, the entire amount deposited in the Principal
Funding Account pursuant to Section 8.01 or 9.01 and all other amounts on
deposit therein shall be distributed in full to the Series 1997-1
Certificateholders on such date and any distribution made pursuant to
paragraph (b) above shall be deemed to be a final distribution pursuant to
Section 12.02 of the Agreement with respect to Series 1997-1.
SECTION 9.02. Distribution of Proceeds of Sale, Disposition or
Liquidation of the Receivables Pursuant to
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Section 9.02 of the Agreement. (a) Not later than 12:00 noon, New York City
time, on the Distribution Date following the date on which the Insolvency
Proceeds are deposited into the Collection Account pursuant to Section
9.02(b) of the Agreement, the Trustee shall first (in each case, after giving
effect to any deposits and distributions otherwise to be made on such
Distribution Date) deduct an amount equal to the Invested Amount on such
Distribution Date from the portion of the Insolvency Proceeds allocated to
Allocable Principal Collections and deposit such amount in the Principal
Funding Account; provided that the amount of such deposit shall not exceed
the product of (x) the portion of the Insolvency Proceeds allocated to
Allocable Principal Collections and (y) 100% minus the Excess Seller's
Percentage with respect to the related Collection Period. The remainder of
the portion of the Insolvency Proceeds allocated to Allocable Principal
Collections shall be allocated to the Seller's Interest and shall be released
to the Seller on such Distribution Date.
(b) Not later than 12:00 noon, New York City time, on such
Distribution Date, the Trustee shall first (in each case, after giving effect
to any deposits and distributions otherwise to be made on such Distribution
Date) deduct an amount equal to the sum of (i) Net Trust Swap Payments, any
unpaid Make-Whole Payment (together with interest thereon calculated pursuant
to the Interest Rate Swap), any Carry-over Amount for such Distribution Date
and any Carry-over Amount previously due but not distributed to the Swap
Counterparty on a prior Distribution Date, (ii) the amount of any Additional
Carry-over Amount for such Distribution Date and any Additional Carry-over
Amount previously due but not distributed to the Swap Counterparty on a prior
Distribution Date, (iii) Monthly Interest for such Distribution Date, (iv)
any Monthly Interest previously due but not distributed on a prior
Distribution Date and (v) the amount of Additional Interest, if any, for such
Distribution Date and any Additional Interest previously due but not
distributed on a prior Distribution Date, from the portion of the Insolvency
Proceeds allocated to Allocable Non-Principal Collections and deposit such
amount in the Collection Account with such funds designated by the Trustee as
being held for the benefit of the Series 1997-1 Certificateholders or the
Swap Counterparty, as applicable; provided that the amount of such
distribution shall not exceed (x) the product of (A) the portion of the
Insolvency
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Proceeds allocated to Allocable Non-Principal Collections and (B) 100% minus
the Excess Seller's Percentage. The remainder of the portion of the
Insolvency Proceeds allocated to Allocable Non-Principal Collections shall be
allocated to the Seller's Interest and shall be released to the Seller on
such Distribution Date.
(c) Notwithstanding anything to the contrary in this Series
Supplement or in the Agreement, the entire amount deposited in the Principal
Funding Account and the Collection Account pursuant to this Section and all
other amounts on deposit therein shall be distributed in full to the Series
1997-1 Certificateholders or the Swap Counterparty, as applicable, on the
Distribution Date on which funds are deposited pursuant to this Section (or,
if not so deposited on a Distribution Date, on the immediately following
Distribution Date) and any distribution made pursuant to this Section shall
be deemed to be a final distribution pursuant to Section 12.02 of the
Agreement with respect to Series 1997-1.
ARTICLE X
Miscellaneous Provisions
SECTION 10.01. Certain Permitted Actions; Amendments to the
Agreement; Additional Covenants. (a) Notwithstanding anything to the contrary
in the Agreement, funds on deposit in the Collection Account may be invested
in any Eligible Investments (as that term is defined in this Series
Supplement).
(b) Notwithstanding anything to the contrary in the Agreement,
including Section 2.07(c) thereof, the Seller shall not be required to make
any deposit to the Collection Account in respect of the Repurchased
Receivables Price of any receivables repurchased by the Seller from the Trust
pursuant to such Section.
(c) Notwithstanding anything to the contrary contained herein
or in the Agreement, the Seller shall have the right to require the
reassignment to it of all the Trust's right, title and interest in, to and
under the Receivables then existing and thereafter created, all monies
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due or to become due and all amounts received with respect thereto and all
proceeds thereof in or with respect to the Accounts ("Automatic Removed
Accounts") designated by the Seller, upon satisfaction of the following
conditions: (a) on or before the fifth business day immediately preceding the
date upon which such Accounts are to be removed, the Seller shall have given
the Trust, each Enhancement Provider and the Rating Agencies a Removal Notice
specifying the date for removal of the Automatic Removed Accounts (the
"Automatic Removal Date"); (b) on or prior to the date that is five Business
Days after the Automatic Removal Date, the Seller shall have delivered to the
Trustee a computer file or microfiche or written list containing a true and
complete list of the Automatic Removed Accounts specifying for each such
Account, as of the removal notice date, its account number and the aggregate
amount of Receivables outstanding in such Account; (c) the Seller shall have
represented and warranted as of each Automatic Removal Date that the list of
Automatic Removed Accounts delivered pursuant to clause (b) above, as of the
Automatic Removal Date, is true and complete in all material respects; (d)
the Trustee shall have received confirmation from each Rating Agency that
such removal will not result in a reduction or withdrawal of such Rating
Agency's rating of any outstanding Series or Class of Certificates; (e) the
Seller shall have delivered to the Trustee, each Rating Agency and any
Enhancement Providers an officers' certificate, dated the Automatic Removal
Date, to the effect that the Seller reasonably believes that such removal
will not cause an early amortization event to occur with respect to any
Series; and (f) the Seller shall have delivered to the Trustee, each Rating
Agency and any Enhancement Providers a Tax Opinion, dated the Automatic
Removal Date, with respect to such removal.
Upon satisfaction of the above conditions, on the Automatic
Removal Date all the right, title and interest of the Trust in and to the
Receivables arising in the Automatic Removed Accounts, all monies due and to
become due and all amounts received with respect thereto and all proceeds
thereof shall be deemed removed from the Trust for all purposes.
(d) Notwithstanding anything to the contrary herein or in the
Agreement, subject to the other limitations described in Section 4.03 of the
Agreement, CFC need not
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deposit collections with respect to any Collection Period in the Collection
Account until the related Distribution Date.
(e) Unless otherwise agreed to by the Rating Agencies,
notwithstanding anything to the contrary herein or in the Agreement, the
Seller may from time to time, at its discretion, and subject only to the
limitations specified in this paragraph, designate Additional Accounts to be
added to the Trust. (Additional Accounts designated to be added to the Trust
in accordance with the provisions of this Section 10.01(e) are referred to
herein as "Automatic Additional Accounts".) On the Addition Date with respect
to any Automatic Additional Accounts, the Trust shall purchase the
Receivables in such Automatic Additional Accounts (and such Automatic
Additional Accounts shall be deemed to be Accounts for purposes of the
Agreement) as of the close of business on the applicable Additional Cut-Off
Date, subject to the satisfaction of the following conditions:
(i) such Automatic Additional Accounts shall be Eligible
Accounts;
(ii) the Seller shall, to the extent required by Section 4.03
of the Agreement, have deposited in the Collection Account all
Collections with respect to such Automatic Additional Accounts since
the Additional CutOff Date;
(iii) no selection procedures believed by the Seller to be
adverse to the interests of the Series 1997-1 Certificateholders were
used in selecting such Automatic Additional Accounts;
(iv) as of each of the Additional Cut-Off Date and the
Addition Date, no Insolvency Event with respect to CFC or the Seller
shall have occurred nor shall the transfer of the Receivables arising
in the Automatic Additional Accounts to the Trust have been made in
contemplation of the occurrence thereof;
(v) the addition of the Receivables arising in the Automatic
Additional Accounts shall not cause an early amortization event or
any event that, after the giving of notice or the lapse of time,
would constitute a early amortization event to occur with respect to
any Series;
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(vi) on or before each Addition Date with respect to Automatic
Additional Accounts, the Seller shall have delivered to the Trustee
and the Rating Agencies (A) an Opinion of Counsel with respect to the
Receivables in the Automatic Additional Accounts substantially in the
form of Exhibit G-2 to the Agreement and (B) a Tax Opinion with
respect to such addition;
(vii) within ten Business Days of the date on which any such
Receivables are added to the Trust, the Seller shall have delivered
to the Trustee a written assignment and a computer file or a
microfiche list containing a true and complete list of the related
Automatic Additional Accounts specifying for each such Account its
account number, the collection status, the aggregate amount
outstanding in such Account and the aggregate amount of Principal
Receivables outstanding in such Account; and
(viii) the Seller shall have delivered to the Trustee an
Officer's Certificate of the Seller, dated the Addition Date, to the
effect that conditions (i) through (v) and (vii) above have been
satisfied.
The Seller hereby represents and warrants to the Trust as of
the related Addition Date as to the matters relating to it set forth in
paragraphs (iii) and (iv) above and that the file or list described below is,
as of the applicable Additional Cut-Off Date, true and complete in all
material respects.
In connection with the designation of Automatic Additional
Account to be added to the Trust, the Seller shall deliver to the Trustee (i)
the computer file or microfiche list required to be delivered pursuant to
Section 2.01 of the Agreement with respect to such Automatic Additional
Accounts and (ii) a duly executed, written Assignment (including an
acceptance by the Trustee for the benefit of the Certificateholders),
substantially in the form of Exhibit B to the Agreement (the "Assignment").
Unless each Rating Agency otherwise consents, the number of
Automatic Additional Accounts added to the Trust with respect to any of the
three consecutive Collection Periods beginning in January, April, July and
October of
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each calendar year shall not exceed 8% of the number of Accounts as of the
first day of the calendar year during which such Collection Periods commence
and the number of Automatic Additional Accounts designated during any such
calendar year shall not exceed 20% of the number of Accounts as of the first
day of such calendar year. On or before the first business day of each
Collection Period beginning in January, April, July and October of each
calendar year, the Seller shall have requested and obtained notification from
each Rating Agency of any limitations to the right of the Seller to designate
Eligible Accounts as Automatic Additional Accounts during any period which
includes such Collection Period. To the extent that Automatic Additional
Accounts have been added to the Trust during the three consecutive Collection
Periods ending in the calendar month prior to such date, on or before January
31, April 30, July 31, October 31 of each calendar year, the Trustee shall
have received confirmation from each Rating Agency that the addition of all
Automatic Additional Accounts included as Accounts during the three
consecutive Collection Periods ending in the calendar month prior to such
date shall not have resulted in any applicable Rating Agency reducing or
withdrawing its rating of any outstanding Series or Class of Certificates. If
such Rating Agency confirmation with respect to any Automatic Additional
Accounts is not so received, such Automatic Additional Accounts will be
removed from the Trust.
(f) Each Holder of a Series 1997-1 Certificate, by such
Holder's acceptance thereof, will be deemed to have consented to an amendment
to the Agreement that incorporates the provisions of Sections 9.01(a) and
9.01(b), 9.01(c), 9.01(d) and 9.01(e), it being understood that no such
amendment shall be effective unless and until each Series of Investor
Certificates issued prior to October 20, 1994 shall no longer be outstanding
or shall have consented to such amendment in accordance with the Agreement.
(g) Except for the conveyance hereunder to the Trustee, the
Seller will not sell, pledge, assign or transfer to any other Person any
rights it might have to funds on deposit in the Reserve Fund, the Principal
Funding Account, the Excess Funding Account or the Yield Supplement Account,
or Investment Proceeds with respect thereto.
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(h) Notwithstanding anything in the Agreement to the contrary,
during the Controlled Amortization Period (through and including the February
2004 Collection Period), provided that CFC remains the Servicer, the Servicer
need not make the daily deposits of Allocable Principal Collections in the
Collection Account on any day on which the Pool Balance equals or exceeds the
Required Participation Amount, but shall instead deposit Allocable Principal
Collections for any Collection Period in the Collection Account on the
related Distribution Date.
SECTION 10.02. Effect of Fully Reinvested Date; Conveyance of
Receivables. (a) Notwithstanding anything to the contrary in the Agreement,
upon the occurrence of the Fully Reinvested Date, after giving effect to all
allocations, distributions, withdrawals and deposits to be made on such date,
the following provisions of the Agreement shall no longer apply to the Seller
or the Servicer, as applicable, the Series 1997-1 Certificates or the Series
1997-1 Certificateholders:
(i) Section 2.01 (except to the extent it relates to amounts
received with respect to the Receivables and the Collateral Security
and proceeds (including "proceeds" as defined in Section 9-306 of the
UCC as in effect in the State of Michigan and Recoveries) thereof on
deposit in the Series 1994-1 Accounts on the Fully Reinvested Date,
after giving effect to all such allocations, distributions,
withdrawals and deposits);
(ii) Section 2.03(i) and Section 2.03(j) (except to the extent
it relates to amounts received with respect to the Receivables and
the Collateral Security and proceeds (including "proceeds" as defined
in Section 9-306 of the UCC as in effect in the State of Michigan and
Recoveries) thereof on deposit in the Series 1997-1 Accounts on the
Fully Reinvested Date, after giving effect to all such allocations,
distributions, withdrawals and deposits) and all obligations and
remedies in Section 2.03 relating to a breach of the representations
contained in those Sections other than to the extent provided above);
(iii) Section 2.04;
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(iv) Section 2.05; provided, that the Seller may from time to
time at its sole discretion, voluntarily designate additional
Accounts (including Partial Accounts) to be included as Accounts and
transfer to the Trust the Receivables (and the related Collateral
Security) of such Additional Accounts;
(v) Sections 2.06(a),(b),(c) and (d);
(vi) Section 2.07; provided, that the Seller may from time to
time at its sole discretion remove Accounts from the Trust;
(vii) Section 2.08;
(viii) Section 2.09;
(ix) the first sentence of Section 3.01(a), Section 3.01(b)
and Section 3.01(d);
(x) Section 3.03(a)(vii), Section 3.03 (viii), Section 3.03
(ix), Section 3.03(x) and Section 3.03(xi) and all obligations and
remedies contained in Sections 3.03(a) and 3.03(b) relating to a
breach of the representations contained in those Sections;
(xi) Section 3.06;
(xii) Section 3.07;
(xiii) Section 3.09;
(xiv) Section 4.03;
(xv) Section 4.04;
(xvi) Section 6.03(b) (except for the first, second and last
sentences thereof) and the last two sentences of Section 6.03(c) and
the conditions set forth in Section 6.03(c) to the exchange of CARCO
Certificate;
(xvii) Section 8.06;
(xviii) Section 8.08;
(xix) Section 11.01(e); and
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(xx) Sections 13.02(a),(b) and (c) and] clauses (ii) and (iii)
of Section 13.02(d).
(b) Upon the later to occur of (i) the Fully Reinvested Date
and the making of all allocations, distributions, withdrawals and deposits to
be made on such date and (ii) the date on which each other Series is either
no longer outstanding or the fully reinvested date has occurred with respect
thereto, the Trustee shall sell, assign and convey to the Seller or its
designee, without recourse, representation or warranty, all right, title and
interest of the Trust in the Receivables, whether then existing or thereafter
created, all Collateral Security with respect thereto, all monies due or to
become due and all amounts received with respect thereto and all proceeds
thereof except for amounts on deposit in the Collection Account that are
allocable to Investor Certificates and amounts on deposit in any Series
Account. The Trustee shall execute and deliver such instruments of transfer
and assignment, in each case without recourse, as shall be reasonably
requested by the Seller to vest in the Seller or its designee all right,
title and interest which the Trust had in all such property.
SECTION 10.03. Additional Provision regarding Automatic
Additional Accounts. The purchase by the Trust of Receivables in any
Automatic Additional Accounts shall be subject to the condition that no
selection procedure believed by the Seller to be adverse to the interests of
the Swap Counterparty were used in selecting such Automatic Additional
Accounts. In connection with any designation of Automatic Additional Accounts
to be added to the Trust, the Seller shall deliver to the Swap Counterparty a
copy of the Opinion of Counsel and the Tax Opinion (which need not be
addressed to the Swap Counterparty) delivered by the Seller to the Trustee
and the Rating Agencies in connection therewith.
SECTION 10.04. Ratification of Agreement. As supplemented by
this Series Supplement, the Agreement is in all respects ratified and
confirmed and the Agreement as so supplemented by this Series Supplement
shall be read, taken and construed as one and the same instrument.
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SECTION 10.05. Counterparts. This Series Supplement may be
executed in two or more counterparts (and by different parties on separate
counterparts) each of which shall be an original, but all of which together
shall constitute one and the same instrument.
SECTION 10.06. Dealer Concentrations. So long as this Series
1997-1 shall be outstanding, on the last day of each Collection Period, the
Servicer shall determine if the aggregate amount of Principal Receivables due
from any Dealer or group of affiliated Dealers on such date is greater than
1.5% of the Pool Balance on such date. The Servicer shall promptly provide
the Trustee a report setting forth the basis for such determination. The
Trustee upon request from any Rating Agency will make such report available
to such Rating Agency.
SECTION 10.07. GOVERNING LAW. THIS SERIES SUPPLEMENT 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.
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IN WITNESS WHEREOF, the Seller, the Servicer and the Trustee
have caused this Series Supplement to be duly executed by their respective
officers as of the day and year first above written.
U.S. AUTO RECEIVABLES COMPANY,
Seller,
by
/s/ Dennis M. Cantwell
----------------------
CHRYSLER FINANCIAL CORPORATION,
Servicer,
by
/s/ Dennis M. Cantwell
----------------------
THE BANK OF NEW YORK,
Trustee,
by
/s/ Todd Niemy
----------------------